UPSC Prelims 2006 Q42: Indian Economy – External Sector & Balance Of Payments
Consider the following statements:
1. In India, during the financial year 2004 - 2005 an increase of below 10 % over the value of
exports (in rupee terms) in the financial year 2003 - 2004 was reported.
2. According to the WTO, India’s share in the world merchandise exports is 2 % in the year 2005.
Which of the statements given above is/are correct?
- (a) 1 only
- (b) 2 only
- (c) Both 1 and 2
- (d) Neither 1 nor 2
Answer: (d) Neither 1 nor 2
Explanation
India's exports in 2004-05
| Statement | Verdict | Reason |
|---|---|---|
| 1. Rupee value of exports rose below 10% in 2004-05 | False | Exports grew strongly, at more than 20% in 2004-05 |
| 2. India's share in world merchandise exports was 2% in 2005 | False | India's share was below 1% (about 0.9%) |
Both statements are incorrect.
Answer: (d) Neither 1 nor 2.
Why each option is right or wrong
- (a) Incorrect. Statement 1 is false; export growth in 2004-05 was well above 10%.
- (b) Incorrect. Statement 2 is false; India's share was under 1%, not 2%.
- (c) Incorrect. Neither statement is true.
- (d) CORRECT. Export growth was far above 10% and India's world share was below 1%.
Key point
India's exports grew by over 20% in 2004-05, and its share of world merchandise exports in 2005 was below 1%, so both statements are false.
Remember
Exports rose sharply in 2004-05; world share about 0.9%.
Common mistakes
- Overstating India's world trade share; it was below 1% in 2005.
- Assuming export growth in 2004-05 was slow.
- Mixing merchandise exports with services exports.
Exam tip
India's share of world merchandise exports was under 1% in 2005 (WTO).
Sources
- Ministry of Finance, Government of India — Economic Survey 2005–06 (External Sector)
- World Trade Organization — International Trade Statistics 2006