Consider the following statements 1 Import substitution is an inward looking trade strategy aimed at...........

Indian Economic System(RAS) External Sector

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Consider the following statements:

1.Import substitution is an inward-looking trade strategy aimed at replacing imports with domestic production.

2.Import cover is the number of months of imports that could be paid for by a country’s Forex reserves.

Which of the above statements is/are correct?

1 only

2 only

Both 1 and 2

Neither 1 nor 2

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Explanation:

Import cover is the number of months of imports that could be covered for by a country’s international reserves. Import cover is an important indicator of the stability of a currency.

‘Import Substitution’ (IS) generally refers to policy that eliminates the importation of the commodity and allows for the production in the domestic market. The objective of this policy is to bring about structural changes in the economy.