Question

Q. Consider the following statements about Liberalised Exchange Rate Management System:

Select the correct answer using the code given below:

• A. 1 only
• B. 2 only
• C. Both 1 and 2
• D. Neither 1 nor 2

Answer 1

The correct option is B 2 only

Explanation:

Statement 1 is incorrect. The new system was announced by Manmohan Singh in the 1992 budget and, in early March, by the RBI. It opened up the way for exporters to realize 60% of their proceeds or earnings at the market rate while surrendering the remaining 40% at the official rate.

Statement 2 is correct. India moved from a fixed to a dual exchange rate system. Foreign exchange at the official rate was made available for importing essential items or products, including petroleum, fertilizers, and life-saving drugs.