Despite the overarching import substitution strategy, the Indian economy in the late 1980s began to show signs of which subtle shift in its trade policy outlook?
Show answer & explanation
Correct answer: C
Explanation
Solution: The correct answer is Selective export promotion and partial liberalization.
Explanation:
☛ Following independence, India followed an inward-looking trade strategy focused primarily on import substitution to protect domestic industries.
☛ By the mid-to-late 1980s, facing growing trade deficits and industrial stagnation, the government began shifting towards selective export promotion and partial import liberalization.
☛ Under Prime Minister Rajiv Gandhi, reforms included easing import licensing for capital goods, rationalizing raw material tariffs, and expanding the Open General Licence (OGL) list.
☛ This incremental policy shift aimed to modernize Indian manufacturing and enhance export competitiveness before the comprehensive economic reforms of 1991.
Extra Exam-Relevant Facts:
☛ Alexander Committee (1978) and Tandon Committee (1980): Recommended simplifying export procedures and introducing export incentives.
☛ Abid Hussain Committee (1984): Strongly advocated a transition from import substitution to export promotion and trade liberalization.
☛ Full Convertibility of the Rupee: The rupee was made fully convertible on the current account in August 1994, not during the 1980s.
☛ New Industrial Policy (1991): Formally abolished industrial licensing (License Raj) for most sectors and ended public sector monopolies.
Important One-Liners for Upcoming Exams:
☛ Which committee in 1984 recommended shifting India's focus to export-led growth? → Abid Hussain Committee
☛ In which year did India adopt the New Economic Policy (LPG reforms)? → 1991
☛ What was the primary goal of the Import Substitution Industrialization (ISI) model? → Replacing foreign imports with domestic production
☛ When was the Export-Import Bank of India (EXIM Bank) established? → 1982
☛ In which year was the rupee declared fully convertible on the current account? → 1994