UPSC Prelims 2003 Q104: Indian Economy – International Trade & WTO
Assertion (A): The new EXIM Policy is liberal, market - oriented and favours global trade.
Reason (R): GATT has played a significant role in the liberalisation of economy.
- (a) Both A and R are individually true and R is the correct explanation of A
- (b) Both A and R are individually true but R is NOT the correct explanation of A
- (c) A is true but R is false
- (d) A is false but R is true
Answer: (c) A is true but R is false
Explanation
> Note for students: The reason mentions GATT, which was replaced by the WTO in 1995; the published key treats the reason as false. Choose (c), or skip it to avoid the negative mark.
EXIM Policy and GATT
| Part | Verdict |
|---|---|
| A. The new EXIM Policy is liberal, market-oriented and favours global trade | True |
| R. GATT has played a significant role in the liberalisation of the economy | Not accepted as the reason for India's EXIM Policy; the policy followed the WTO, which succeeded GATT |
As keyed, A is true and R is not accepted as a true statement in this context, since the EXIM Policy was shaped by the WTO commitments and domestic reforms rather than by GATT.
Answer: (c) A is true but R is false.
Why each option is right or wrong
- (a) Incorrect. R is not accepted, so it cannot explain A.
- (b) Incorrect. R is not accepted as true here.
- (c) CORRECT. A is true as the EXIM Policy was liberal, but R is not accepted as correct.
- (d) Incorrect. A is true, as the policy is liberal.
Key point
EXIM Policy 2002-07: export promotion, WTO-compatible; GATT replaced by WTO in 1995.
Remember
India's EXIM Policy of that period was liberal and WTO-oriented.
Common mistakes
- Mixing GATT with the later WTO.
- Thinking the EXIM Policy was inward looking in nature.
- Forgetting that the policy was reviewed for WTO compliance.
Exam tip
GATT of 1947 became the WTO in 1995.
Sources
- Ministry of Commerce and Industry, Government of India — Export–Import Policy 2002–2007
- General Agreement on Tariffs and Trade, 1947, and the Marrakesh Agreement establishing the World Trade Organization (1994)