Question

Directions for questions 86 to 90: Study the tables of the Indian foreign trade given below to answer the questions.

Principal Commodities\' Import - Weight (%)
COMMODITIES	2003-04	2004-05	2005-06
Bulk imports	37.87	39.09	42.56
Pearls, precious & semi-precious stones	9.25	8.80	6.42
Machinery	10.63	10.00	10.94
Project Goods	0.49	0.54	0.57
Others	41.76	41.57	39.51
TOTAL IMPORTS	100.00	100.00	100.00
Total Imports (in Crore of Rupees)	359107.66	501064.54	630526.77

Principal Commodities\' Export - Weight (%)
COMMODITIES	2003-04	2004-05	2005-06
Plantations	0.92	0.78	0.71
Agri & allied products	8.39	7.61	7.21
Marine products	2.08	1.60	1.40
Ores & minerals	3.69	5.29	6.02
Leather & mfrs.	3.19	2.89	2.56
Gems & jewellery	16.56	17.29	15.13
Sports goods	0.15	0.12	0.13
Chemicals & related products	15.43	16.00	15.10
Engineering goods	16.41	18.41	18.66
Electronic goods	2.74	2.28	2.18
Project goods	0.09	0.06	0.13
Textiles	18.86	15.16	14.80
Handicrafts	0.70	0.43	0.40
Carpets	0.90	0.75	0.81
Cotton raw incl. waste	0.28	0.10	0.61
Petroleum products	5.54	8.57	11.21
Unclassified exports	4.07	2.66	2.94
GRAND TOTAL	100.00	100.00	100.00
Total Exports in Rupees Crore	293366.75	375339.53	454799.97
US Dollar Exchange Rate	45.9513	44.9315	44.2735

In the two year period from 2004-05 to 2005-06, the average growth in import (in Indian Rupees) of which commodity to India was maximum?

• A. bulk imports
• B. pearls, precious and semi-precious stones
• C. machinery
• D. project goods

Hint:

Convert each commodity's weight percentage into an actual rupee value for 2003-04, 2004-05 and 2005-06, then average the two year-on-year rupee increases to compare the commodities.

Answer 1

The Correct Option is A

Again the phrase "in Indian Rupees" tells us to compare absolute rupee amounts, not percentage growth rates. Bulk imports already has by far the largest weight share of any category (around 38 to 43 per cent of all imports), so even a modest percentage rise on that huge base produces a very large rupee increase, bigger than what smaller categories like project goods or pearls and stones could ever add, even with faster percentage growth.

Work out the rupee value for each commodity across the three years using Total Imports (Rs. 359107.66 crore in 2003-04, Rs. 501064.54 crore in 2004-05, Rs. 630526.77 crore in 2005-06), then take the average of the two year-on-year increases:

\[ \text{Bulk imports}: \; 135994.1 \to 195866.1 \to 268352.2 \; \Rightarrow \; \text{avg increase} = \frac{59872.0 + 72486.1}{2} = 66179.1 \]\[ \text{Machinery}: \; 38173.1 \to 50106.5 \to 68979.6 \; \Rightarrow \; \text{avg increase} = \frac{11933.4 + 18873.1}{2} = 15403.3 \]\[ \text{Pearls \\& stones}: \; 33217.5 \to 44093.7 \to 40479.8 \; \Rightarrow \; \text{avg increase} = \frac{10876.2 - 3613.9}{2} = 3631.2 \]\[ \text{Project goods}: \; 1759.6 \to 2705.7 \to 3594.0 \; \Rightarrow \; \text{avg increase} = \frac{946.1 + 888.3}{2} = 917.2 \]

Bulk imports adds over four times as much as machinery, and pearls and stones actually fell in the second year, dragging its average down. Project goods stays tiny throughout because its weight share never crosses 0.6%.

Let's summarize:

• A large base category like bulk imports can post the biggest rupee increase even without the fastest percentage growth.
• Bulk imports averaged about Rs. 66179 crore of increase per year, well ahead of machinery, pearls and stones, and project goods.

So the answer is bulk imports.