QUESTION 12
GS3
15 marks
How would the recent phenomena of protectionism and currency manipulations in world trade affect macroeconomic stability of India?
WRITE IN
11 min
250 words
What the examiner wants
Explain how rising trade protectionism and currency manipulation affect India's macroeconomic stability.
ExplainMake clear how and why it happens: causes, process, and an example for each point.
Demand-wise check
- 12018 context: US steel and aluminium tariffs, US-China trade war, WTO dispute body weakened≈40 words
- 2Trade: lower exports, trade deficit, dumping of diverted goods into India≈40 words
- 3Currency: competitive devaluation makes imports cheaper and exports weaker; capital outflows weaken the rupee; imported inflation≈40 words
- 4Macro: current account deficit, forex reserves, inflation, fiscal pressure, growth≈40 words
- 5Response: trade diversification, FTAs, anti-dumping, RBI intervention, competitiveness (PLI)≈40 words
Open in about 30 words and close in about 30.
Answer plan
Global trendChannels (trade, currency, capital)Effects on CAD, inflation, growthPolicy responseConclusion
Where marks usually go
- Not separating protectionism from currency manipulation
- No link to macro indicators
Draw this
- Flowchart: protectionism/currency moves → exports, imports, capital flows → CAD, rupee, inflation
Value addition
- FactThe US imposed 25% tariffs on steel and 10% on aluminium in March 2018 under Section 232.US Government, 2018
- FactThe US withdrew India's GSP trade benefits in June 2019.USTR, 2019
- UpdateIn August 2025 the US raised tariffs on most Indian goods to 50%, including a penalty for buying Russian oil.US Government, 2025
Next: plan for one minute, write it in 11 minutes, then get it checked.