Question

What led the Indian government to adopt LPG policy?

• A. Foreign exchange reserves dropped immensely
• B. Rising prices of essential goods
• C. Government was unable to repay borrowings from abroad
• D. All of the above

Answer 1

The correct option is D All of the above

In 1991, India met with an economic crisis relating to its external debt — the government was not able to make repayments on its borrowings from abroad; foreign exchange reserves, which we generally maintain to import petrol and other important items, dropped to levels that were not sufficient for even a fortnight. The crisis was further compounded by rising prices of essential goods. All these led the government to introduce the LPG policy.