question_answer

Define the term 'trade surplus'. How was the income received from trade surplus with India used by Britain?                                                                                                                                           [AI 2008]

Answer:

The value of British exports to India was much higher than the value of British imports from India. This difference was the trade surplus for Britain. Britain used this surplus to balance its trade deficits with other countries, that is with those countries from which Britain was importing more than exporting.

Britain's trade surplus also helped it in paying the so-called home charges which included private remittances to home by British officials and traders, interest payments of India's external debt and business of British officials in India.