In the late 1980s economic crisis, the international agencies impose conditions on India to get the loan for tackling the economic crisis, which of the following was NOT included in that conditions?
Show answer & explanation
Correct answer: D
Explanation
Correct Answer:
Option 4: To open new public enterprises in consumer goods sector.
Explanation:
In the late 1980s, India was undergoing a severe economic crisis, marked particularly by a drastic shortage of foreign exchange reserves. To tackle this crisis, India sought loans from the IMF and the World Bank. In return, these international institutions imposed conditions on India related to economic liberalization, privatization, and globalization (LPG reforms). These conditions included removing restrictions on the private sector, reducing government intervention, and liberalizing foreign trade. However, opening new public sector undertakings in the consumer goods sector was not part of these conditions; on the contrary, the emphasis was placed on reducing the government's role and on disinvestment. These very reforms formed the basis of the New Economic Policy of 1991.
Additional Facts:
Option 1: This was a core component of liberalization.
Option 2: Reducing government control was included in the conditions.
Option 3: Trade liberalization was also a major condition.
Potential Questions for Upcoming Exams:
Question: When was the New Economic Policy implemented in India?
Answer: 1991
Question: What is the full form of LPG reforms?
Answer: Liberalisation, Privatisation, Globalisation
Question: What is the full name of the IMF?
Answer: International Monetary Fund
Question: Who was the Finance Minister during India's economic reforms?
Answer: Dr. Manmohan Singh