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Q42 (IAS/2020) Economy › Economy Current Affairs › External sector statistics Official Key

With reference to the international trade of India at present, which of the following statements is/are correct ? 1. India's merchandise exports are less than its merchandise imports. 2. India's imports of iron and steel, chemicals, fertilisers and machinery have decreased in recent years. 3. India's exports of services are more than its imports of services .- 4. India suffers from an overall trade/current account deficit. Select the correct answer using the code given below :

Explanation

The correct answer is Option 4 (1, 3, and 4 only). Based on India's current economic profile and Trade Statistics, the analysis is as follows:

  • Statement 1 is correct: India consistently faces a merchandise trade deficit. Our expenditure on importing physical goods (especially crude oil, electronic goods, and gold) significantly exceeds the revenue generated from exporting them.
  • Statement 3 is correct: India maintains a surplus in the services sector. Driven by IT, software services, and business outsourcing, our service exports consistently remain higher than our service imports.
  • Statement 4 is correct: Although the services surplus helps offset the merchandise deficit, it is usually insufficient to bridge the gap completely. Consequently, India typically records an overall trade deficit and a Current Account Deficit (CAD).
  • Statement 2 is incorrect: Imports of essential industrial inputs like chemicals, machinery, and fertilizers have generally increased or fluctuated due to domestic demand and infrastructure growth, rather than showing a consistent decrease.

Therefore, statements 1, 3, and 4 accurately reflect the current dynamics of India's international trade.

PROVENANCE & STUDY PATTERN
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Don’t just practise – reverse-engineer the question. This panel shows where this PYQ came from (books / web), how the examiner broke it into hidden statements, and which nearby micro-concepts you were supposed to learn from it. Treat it like an autopsy of the question: what might have triggered it, which exact lines in the book matter, and what linked ideas you should carry forward to future questions.
Q. With reference to the international trade of India at present, which of the following statements is/are correct ? 1. India's merchandise…
At a glance
Origin: Books + Current Affairs Fairness: Low / Borderline fairness Books / CA: 3.8/10 · 2.5/10
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This question tests your grip on the 'External Sector' chapter of the Economic Survey. While the Trade Deficit (Statement 1) and CAD (Statement 4) are static basics, Statement 2 is a classic 'Trend Trap'—grouping diverse sectors under one uniform trend. The strategy is to master the 'Direction of Trade' for top 5 commodities, not just the total volume.

How this question is built

This question can be broken into the following sub-statements. Tap a statement sentence to jump into its detailed analysis.

Statement 1
As of 2020, were India's merchandise exports less than its merchandise imports?
Origin: Direct from books Fairness: Straightforward Book-answerable
From standard books
Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 17: India’s Foreign Exchange and Foreign Trade > India's Foreign Trade in Recent Years > p. 502
Presence: 5/5
“• Year: 2020 - 21 (Dec); Exports (US$ Billion): 174.11; Imports (US$ Billion): 218.87; Trade Balance (i.e. deficit if figures in negative): -44.75; Remarks: • Year: 2019-20; Exports (US$ Billion): 313.4; Imports (US$ Billion): 474.7; Trade Balance (i.e. deficit if figures in negative): -161.34; Remarks: • Year: 2018-19; Exports (US$ Billion): 330.0; Imports (US$ Billion): 514.0; Trade Balance (i.e. deficit if figures in negative): -184.”
Why this source?
  • Gives explicit annual merchandise export and import values: 2019-20 exports US$313.4 bn vs imports US$474.7 bn (exports < imports).
  • Also lists 2020-21 figures showing the same pattern: exports US$174.11 bn vs imports US$218.87 bn.
  • Provides the trade balance (negative), directly confirming a merchandise trade deficit in those years.
INDIA PEOPLE AND ECONOMY, TEXTBOOK IN GEOGRAPHY FOR CLASS XII (NCERT 2025 ed.) > Chapter 8: International Trade > INTERNATIONAL TRADE > p. 86
Presence: 4/5
“Can you calculate the percentage growth in 2020-21 over 1950-51? There are numerous reasons for this sharp rise in overseas trade, such as the momentum picked up by the manufacturing sectors, the liberal policies of the government and the diversification of markets. The nature of India's foreign trade has changed over the years (Table 8.1). Though there has been an increase in the total volume of import and export, the value of import continued to be higher than that of exports.”
Why this source?
  • States that the value of imports continued to be higher than that of exports, summarizing the prevailing relationship between imports and exports.
  • Frames the persistent nature of imports exceeding exports around the 2020–21 period, supporting the 2020 inference.
Statement analysis

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Statement analysis

This statement analysis shows book citations, web sources and indirect clues. The first statement (S1) is open for preview.

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Statement analysis

This statement analysis shows book citations, web sources and indirect clues. The first statement (S1) is open for preview.

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Statement analysis

This statement analysis shows book citations, web sources and indirect clues. The first statement (S1) is open for preview.

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Statement analysis

This statement analysis shows book citations, web sources and indirect clues. The first statement (S1) is open for preview.

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Statement analysis

This statement analysis shows book citations, web sources and indirect clues. The first statement (S1) is open for preview.

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Statement analysis

This statement analysis shows book citations, web sources and indirect clues. The first statement (S1) is open for preview.

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SIMILAR QUESTIONS

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