Question

How did India land in a foreign exchange crisis in 1991? Sort the events in the sequential order.

• A. Iraq-Kuwait war
• B. Oil price surge
• C. Low foreign reserve
• D. Crisis began

Answer 1

In 1991, a war broke out between Iraq and Kuwait, which are major oil-producing countries. The war caused a surge in the oil prices, affecting India as well. However, India did not have sufficient foreign currency to pay for these imports. This put India in a foreign exchange crisis, as India couldn't meet its oil requirements.