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

Given that the weight (%) of Petroleum crude and products in the total imports of India is 26.70, 27.87, and 30.87 in the years 2003-04, 2004-05, and 2005-06 respectively. What is the ratio of yearly difference in the export of Petroleum Products and import of Petroleum crude and products, in dollar terms, in the year 2005-06 versus 2004-05?

• A. 1.36
• B. 1.38
• C. 1.46
• D. 1.48

Hint:

Convert each year's total imports and total exports to dollar terms using the given exchange rate, apply the petroleum weight percentages to get petroleum-specific import and export values, subtract export from import for each year, then divide the 2005-06 gap by the 2004-05 gap.

Answer 1

The Correct Option is A

Step 1: Write the ratio as one algebraic expression before plugging in numbers.
Let \(I_t\) and \(E_t\) stand for the dollar value of petroleum imports and petroleum exports in year t. The quantity we need is
\[ \text{Ratio} = \dfrac{I_{2005\text{-}06} - E_{2005\text{-}06}}{I_{2004\text{-}05} - E_{2004\text{-}05}} \]
where each \(I_t\) and \(E_t\) is found as (weight per cent) times (total trade in dollar terms for that year).

Step 2: Work out the 2005-06 numerator first.
Total imports in 2005-06 in dollar terms: \(\dfrac{630526.77}{44.2735} \approx 14241.68\), so \(I_{2005\text{-}06} = 0.3087 \times 14241.68 \approx 4396.4\).
Total exports in 2005-06 in dollar terms: \(\dfrac{454799.97}{44.2735} \approx 10272.42\), so \(E_{2005\text{-}06} = 0.1121 \times 10272.42 \approx 1151.5\).
Numerator: \(4396.4 - 1151.5 = 3244.9\)

Step 3: Work out the 2004-05 denominator the same way.
Total imports in 2004-05 in dollar terms: \(\dfrac{501064.54}{44.9315} \approx 11151.87\), so \(I_{2004\text{-}05} = 0.2787 \times 11151.87 \approx 3108.0\).
Total exports in 2004-05 in dollar terms: \(\dfrac{375339.53}{44.9315} \approx 8352.30\), so \(E_{2004\text{-}05} = 0.0857 \times 8352.30 \approx 715.8\).
Denominator: \(3108.0 - 715.8 = 2392.2\)

Step 4: Divide to get the final ratio.
\[ \text{Ratio} = \dfrac{3244.9}{2392.2} \approx 1.36 \]

Final Answer:
The petroleum trade gap in 2005-06 is about 1.36 times what it was in 2004-05. \[ \boxed{1.36} \]