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PSIR 2B-5.2 India – EU – Previous Year Questions – Solved

Model Answers to PYQs (2016-2023)

1] Explain Britain’s ouster from the EU and bring out its consequences on the world economy in general in India in particular. [2016/20m/250w/6a]

Brexit was the “British exit” from the EU, the economic and policy union that the U.K. had been a member of since 1973. That changed on June 23, 2016, when the U.K. voted to leave the EU.

The impact of Brexit on the EU and UK economies constitutes broadly of trade, migration and investment. Due to Brexit, bilateral costs between the UK and EU will increase from the newly applicable tariff and the non-tariff barriers. It will have a direct impact on trade flows among these two trading partners and an indirect impact on income growth and on their trading partners. After the withdrawal of the UK from the EU, existing international deals will no longer apply to the UK; and it will also have to submit its own schedule to remain a World Trade Organization (WTO) member.

Apart from economic consequences, Brexit also creates a case of de-globalization. This could pave the way for a more fragmented and protectionist world economy, as countries become more inward-looking. This could have a negative impact on trade around the world.

For India, the consequences of Brexit are likely to be mixed. Brexit will create trade disruptions between India and UK trade since India-EU agreements will no longer apply to the UK. And it could also lead to an investment slowdown, a natural feature in a period of uncertainty. Brexit also presents opportunities for India since the existing supply chains between UK-EU will be disrupted for a while, and India can capitalize on that.

A phenomenon like Brexit is not an everyday occurrence. It will have a long-term impact on the global economy and particularly on the UK. However, the direction of these impacts remains to be seen. [285 words]

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