Which of the following statements are correct ? 1. British ‘trade su

Which of the following statements are correct ?

1. British ‘trade surplus’ with India in the nineteenth century meant that the value of British exports to India was much higher than the value of British imports from India.
2. India played a crucial role in the late-nineteenth-century world economy by helping Britain balance its deficits.
3. Britain grew opium in India and exported it to China and, therefore, for a while after the 1820s, opium became India’s single largest export.
4. The nineteenth century saw export of Indian raw materials decline, and that of manufactured goods increase.

Select the answer using the code given below :

1 and 2 only

3 and 4 only

1, 2, 3 and 4

1, 2 and 3 only

This question was previously asked in

UPSC NDA-1 – 2024

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Statements 1, 2, and 3 are correct. Statement 4 is incorrect.

– **Statement 1:** British ‘trade surplus’ with India in the nineteenth century meant that the value of British exports to India was much higher than the value of British imports from India. This statement is generally considered correct when “trade surplus” is interpreted as the overall financial flow or balance of payments, including visible and invisible trade, as well as remittances and ‘home charges’. While Britain often imported more goods *from* India than it exported *to* India in visible trade, the overall economic relationship resulted in a significant ‘drain’ of wealth from India to Britain, effectively a surplus for Britain.
– **Statement 2:** India played a crucial role in the late-nineteenth-century world economy by helping Britain balance its deficits. This is correct. India’s large trade surplus with countries like China and other parts of the world, primarily through the export of raw materials and opium, generated foreign exchange that was remitted to Britain to cover Britain’s own trade deficits with countries like the US and in Europe.
– **Statement 3:** Britain grew opium in India and exported it to China and, therefore, for a while after the 1820s, opium became India’s single largest export. This is largely correct. Opium cultivation in India was promoted and controlled by the British East India Company and later the British government. The export of opium to China, especially after the 1820s, became hugely profitable and constituted a significant portion of India’s export revenue, arguably becoming the single largest commodity export during certain periods.
– **Statement 4:** The nineteenth century saw export of Indian raw materials decline, and that of manufactured goods increase. This is incorrect. The 19th century was characterized by the deindustrialization of India, particularly its traditional textile industry, due to competition from British manufactured goods and colonial policies. Consequently, exports of Indian manufactured goods declined, while exports of raw materials (cotton, jute, indigo, tea, etc.) increased significantly to feed British industries.

The economic relationship between Britain and India in the 19th century was a key aspect of colonial exploitation. The “drain of wealth” from India to Britain occurred through various mechanisms, including favorable trade balances for Britain (overall financial flows), remittances, salaries and pensions of British officials, and profits of British businesses. This asymmetrical relationship was fundamental to the functioning of the global British economy.

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