ABSTRACT
During the past few years India's current account balance (CAB), which measures receipt and payment of commodity trade, as well as services, has been adverse, resulting in a steep fall in the value of the rupee in relation to the dollar. In India, no serious efforts have been made to cut down imports as the policymakers have become victims of a neoliberal economic philosophy, which advocates a free trade regime. Nobel Prize–winning economist Gunnar Myrdal observes that while international trade theory argues that it has an equalizing effect on factor prices, leading to equalization of income between countries. The World Trade Organization (WTO) came into existence in January 1995, replacing General Agreement on Trade and Tariff, and included in its ambit agriculture, which was earlier excluded from multilateral trading system. The foreign trade policy is self-defeating, as it is unable to boost exports and protect both domestic industries and agricultural products from unfair foreign competition.
