Long answer question
Evaluate Inward Looking Trade Policy of the Government during 1950-1990.
During the initial years of planning, India followed an inward looking trade policy wherein, emphasis was laid on import substitution. Such a policy had both the positive as well as negative impacts.
The following are the positive impacts of the inward looking trade policy.
1. It insulated the domestic industries from stiff competition from foreign industries, thereby provided a protective environment for their growth.
2. It helped to save scarce foreign exchange.
3. It provided ample scope for industrialisation process.
4. It facilitated India to attain self-sufficiency and self-reliance, thereby reducing foreign dependence.
However, such a policy had certain negative impacts as well, some of which are as follows.
1. In the way of making India self-reliant through the policy of import substitution, it was realised that India was running short of foreign exchange reserves and it became difficult to import even the goods that are necessary for the development of the country.
2. Such a policy restricted the imports of even those goods that were necessary for the development of the country.