Question

India has witnessed a number of acute problems immediately prior to implementation of economic reforms in early $1990$'s. Among the following, which one was severe and unmanageable?

• A. Industrial backwardness
• B. Balance of payments crisis
• C. Backwardness of agriculture
• D. Shortage of food grains

Answer 1

The correct option is B Balance of payments crisis

India was facing major BOP deficit issues since $1985$ and had borrowed from international bodies heavily to solve to BOP problem. However, it kept on rising and by the end of 1990 it turned in to serious crisis like situation. The foreign exchange reserves were at an all time low and the IMF refused to provide further assistance.