India’s Internal Trade: Characteristics and Problems

India’s internal trade is many times larger than its foreign trade. This is because of the vastness of the country, its varied climate and diverse natural resources. Unfortunately, adequate and reliable statistics are not available to make an exact estimate of the volume and composition of internal trade. Statistics of bank clearances of goods and traffic carried by railways serve only as a rough estimate of the extent of internal trade.

The figures of bank clearances are not a reliable index of either the volume or the extent of internal trade. Similarly, the railway statistics are not dependable. The amount of goods carried by railway largely depends upon the prevailing conditions of trade and on the degree of competition from road transport services.

Regarding the extent of internal trade before independence, the Sub-Committee of the National Planning Committee (NPC) made the following observations- “It would be safe to assume that our internal trade is not less than Rs. 7000 crores in 1940. This figure may be contrasted with the size of our external trade which is about Rs. 500 crores.”

Since independence, internal trade has increased appreciably due to developmental planning in the country. In the course of five year plans, a balanced expansion of internal trade has taken place as a result of planned development of transport, communication and banking.

Some indication of the magnitude of internal trade in the country is given by the goods traffic and earnings from goods carried on the Indian railways. Over the years, the revenue-earning goods traffic on Indian railways has increased from 732 lakh tonnes in 1950-51 to 9691 lakh tonnes in 2010-11. The earnings from goods carried have increased from Rs. 139crorein 1950-51 to Rs. 67761 crore in 2010-11.

Similarly, the increase in the length of National Highways (NHs) and the number of goods vehicles also indicate a boost in the internal trade. The length of NHs has increased from 20 thousand km to 82 thousand km in 2010-11. The number of goods vehicles increased from 82 thousand to 7074 thousand in the same period during 1950-51 to 2010-11.

The internal trade of India can be classified under five broad heads-

(a) Rail-borne trade

(b) River-borne trade

(c) Coastal trade

(d) Trade borne on other craft

(e) Trade by air. Information on rail-and-river-borne trade is collected on the basis of the invoices of railway and streamer companies.

For this purpose, India is divided into a number of trade blocks, roughly representing the states of the Indian Union. The chief port towns of Bombay, Calcutta, Cochin, and Madras are constituted as separate blocks. The number of trade blocks since 1977 is 38.

Characteristics of India’s Internal Trade

1. Internal trade is carried on within the boundaries of one country.
2. In this form of trade goods are carried on from one place to another place through railways and roadways.
3. In this form of trade payment is made or received in local currency.
4. In internal trade wide choice of goods are available.
5. In this type of trade payments can be made in cash, cheque and draft.
6. In this form of trade generally license need not be obtained, whereas it is a must in foreign trade.
7. In this type of trade, local rules and regulations have to be followed.

Problems in India’s Internal Trade