India's Trade Policy: The Impact on Economic Growth, Balance of Payments and Current Account Deficit

Ramakrishna, G.
January 2011
Journal of International Economics (0976-0792);Jan2011, Vol. 2 Issue 1, p4
Academic Journal
India has been experiencing a major transformation since 1990s in the wake of unilateral economic reforms initiated since 1991. The unilateral trade policy measures initiated include: market oriented exchange rate policy, removal of trade restrictions and subsidies, drastic reduction in tariffs on imports and removal of non- tariff barriers, easing the restrictions on foreign investments, and measures relating to external borrowing and import licensing. This paper discusses the features of the trade policy of India in general along with the recent trade policy of 2004-2009. The study assesses the impact of the recent Trade policy on India's economic growth, balance of payments and current account deficit. The empirical findings underscore the fact that trade liberalization played a positive role in influencing economic growth of India. The structural shift analysis on the growth rates of BOP mainly indicate that all the components have shown a statistically significant change during liberalization period and the open policies had a positive impact on India's current account balances.


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