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Question

Which of the following statements are true with regard to the 1991 foreign currency crisis of India?

A
India faced an external aggression during the financial crisis of 1991.
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B
India's foreign currency reserves deteriorated.
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C
There was a rise in international price of oil.
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D
A series of five-year plans had failed before 1991.
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Solution

The correct option is D A series of five-year plans had failed before 1991.
The Indian economy was on the verge of collapse in 1991 due to a series of economic policy failures. Besidesthis, the rising international oil prices made imports very expensive. With a deteriorated foreign currency reserve, India did not have sufficient money to support the imports of essential commodities. All these factors led to the foreign currency crisis.

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