Impact of Foreign Trade on Indian Economy–A Study

This paper evaluates the trend pattern of India’s Foreign Trade during the pre- and post-liberalization periods. Further, the study is mainly based on the secondary data collected from published sources. To study the impact of the foreign trade, data relating to the Gross Domestic Product (GDP), one of the most important economic indicators, has been collected for the period of 54 years that include pre- and post-liberalization periods. For analysis, statistical tools like multiple regression method, ANOVA, and Durbin Waston autocorrelation tests are applied. The results revealed that country’s foreign trade increased consistently during pre- and post-liberalization periods, but it increased more during the post-liberalization period compared to pre-liberalization period. During the study period, the growth rate of imports was more than the growth rate of exports. This led to deficit in the balance of payment of the country. The volume of trade and GDP has been increasing year by year. A positive and increasing trend during the period of study has also been observed.