Question

What were the primary reasons for the economic crisis in the 1980s?

• A. Spending on development programmes which didn't generate additional revenue
• B. Internal sources like taxation weren't generating enough revenue
• C. Income from public sector was not very high
• D. All of the above

Answer 1

The correct option is D All of the above

The origin of the financial crisis can be traced from the inefficient management of the Indian economy in the 1980s. Development policies required that even though the revenues were very low, the government had to overshoot its revenue to meet problems like unemployment, poverty and population explosion. The continued spending on development programmes of the government did not generate additional revenue.

Moreover, the government was not able to generate sufficiently from internal sources such as taxation. The income from public sector undertakings was also not very high to meet the growing expenditure.