(a)

Explain the likely impact of implementation of ‘Exports Promotion Scheme’ of Government of India on the Balance of Payment (BoP) of the country. (Keeping other factors constant)

(b)

State the meaning of Trade Surplus.

Keeping all other factors are constant, the ‘Exports Promotion Scheme’ of Government of India is likely to improve the situation of Balance of Payments (BoP) of India as it may increase the domestic production and promote exports. Higher exports will lead to greater inflow of foreign exchange, which is recorded on the credit side of the current account, thereby improving the overall BoP position.

Trade Surplus refers to a situation where value of exports of goods is more than value of imports of goods.