Question

In 1991, India faced the problem of an insufficient foreign currency reserve.

Which of the following statement(s) is/are correct regarding the situation mentioned above?

• A. India had to import foodgrains from other countries.
• B. India maintained sufficient reserve of foreign currencies.
• C. India adopted special economic policies to overcome the crisis.
• D. India tried to overcome this crisis by imposing trade barriers.

Answer 1

Answer: (A), (C)

India adopted special economic policies to overcome the crisis.

By 1990s, the Indian economy was in a worrying condition. Illiteracy, poverty, and unemployment were constant hurdles to development. Despite being an agrarian economy, India had to import foodgrains from other countries. Imports of other goods like crude oil were also rising. It led to a foreign currency crisis. In order to overcome this, India launched special economic policies in 1991.