Question

“India adopted an inward-looking trade strategy during the planning period.”

Briefly describe any two ways in which the government implemented this policy.

Hint:

The government used tariffs (a tax that makes imports costlier) and quotas (a fixed limit on imported quantity) to restrict imports and protect domestic firms.

Answer 1

Step 1: Know the tools of the policy:
To keep imports low, the government used trade barriers.
The two main ways were tariffs and quotas, and each earns 1 and a half marks.

Step 2: Way 1: tariffs:
A tariff is a tax on imported goods.
It makes the imported goods more expensive for buyers.
Higher prices discourage people from using foreign goods, so imports fall.

Step 3: Way 2: quotas:
A quota fixes the quantity of a good that may be imported.
It is imposed to restrict imports.
Because foreign supply is limited, domestic firms are protected from foreign competition.

Final Answer:
The government implemented the inward-looking trade strategy through tariffs (a tax on imports that makes them costlier) and quotas (a fixed limit on the quantity of imports that protects domestic firms).