Trend, Composition and Impact of Indian Foreign Trade on Economic Growth during Post- Liberalisation Era

Abstract

After the colonial rule Indian trade faced many facets and undergone many changes. The most fundamental changes occurred after the introduction of New Economic Policy in the year 1991. After the introduction of New Economic Policy, 1991 Indian trade was open to many countries and thus the trend and composition of trade was changed. Every trade has an economic impact and hence the changes in Indian trade system after the liberalisation era affected the country’s economy also. On this background the paper attemoted to analyse the trend and composition of India’s foreign trade along with its impact on economic growth of the country, referring to the period 1991-92 to 2012-13. Using data from various issues of statistical handbooks published by Reserve Bank of India the trend and composition was estimated by calculating growth rates of foreign trade and using simple percentage, bar diagrams, line diagrams. To anlyse the impact of froeign trade on Indian economy linear regression was carried out. The study found that after the liberalisation era the trend and composition of India’s foreign trade has changed. Export of agricultural sector especially gone down whereas the same of the manufacturing sector has increased. The export share in GDP was found to be decreased over the time period of 1991-92 to 2012-13.