In the late 1980s, the government of India approached an International Bank for Reconstruction and Development to tackle with the economic crisis, that bank is also known as _____.
Show answer & explanation
Correct answer: A
Explanation
The correct answer is Option 1: World Bank.
Explanation:
In the late 1980s and early 1991, India faced a severe economic crisis (specifically, a Balance of Payments crisis). To address this situation, the Government of India sought assistance from international institutions.
IBRD and the World Bank: The International Bank for Reconstruction and Development (IBRD) is commonly referred to as the World Bank.
Resolution of the Crisis: India secured a loan of $7 billion from the World Bank and the International Monetary Fund (IMF). In return, India was required to implement comprehensive reforms within its economy—reforms collectively known as LPG (Liberalization, Privatization, and Globalization).
Additional Facts:
- World Bank Group: The World Bank is a group comprising five international organizations, with the IBRD and the IDA (International Development Association) being the primary entities.
- Headquarters: Washington, D.C. (USA).
- The 1991 Reforms: At that time, P.V. Narasimha Rao served as the Prime Minister, and Dr. Manmohan Singh served as the Finance Minister. These reforms were termed the 'New Economic Policy.'
Potential Questions for Upcoming Exams:
Question: Who was India's Finance Minister during the economic crisis of 1991?
Answer: Dr. Manmohan Singh.
Question: Which institution, together with the IBRD, primarily constitutes what is known as the 'World Bank'?
Answer: The International Development Association (IDA).
Question: In which year was the World Trade Organization (WTO) established?
Answer: January 1, 1995 (replacing GATT).