SSC Stenographer 2026 PYQ — Question 30

Solution: The correct answer is Reached historic highs in following decades.
Explanation:
☛ In 1991, India faced a severe Balance of Payments (BoP) crisis, causing its foreign exchange reserves to plummet to approximately 1.2 billion, which was barely sufficient to cover about two weeks of essential imports.
☛ To resolve this crisis, the government under Prime Minister P. V. Narasimha Rao and Finance Minister Dr. Manmohan Singh initiated comprehensive economic reforms based on LPG (Liberalisation, Privatisation, and Globalisation).
☛ Measures such as currency devaluation, opening the economy to Foreign Direct Investment (FDI), and trade liberalization stimulated capital inflows and exports.
☛ Consequently, India's foreign exchange reserves experienced substantial growth over the subsequent decades, eventually crossing the 600 billion mark and reaching historic highs.
Extra Exam-Relevant Facts:
☛ Custodian of Forex Reserves: The Reserve Bank of India (RBI) acts as the custodian of India's foreign exchange reserves under the RBI Act, 1934.
☛ Four Components: India's forex reserves consist of Foreign Currency Assets (FCA), Gold, Special Drawing Rights (SDR), and the Reserve Tranche Position (RTP) in the IMF.
☛ LERMS: The Liberalised Exchange Rate Management System (LERMS) was introduced in 1992, paving the way for full convertibility of the rupee on the current account in August 1994.
Important One-Liners for Upcoming Exams:
☛ Who was the Finance Minister of India during the 1991 economic reforms? → Dr. Manmohan Singh
☛ Which institution serves as the custodian of India's foreign exchange reserves? → Reserve Bank of India (RBI)
☛ In which year did India achieve full convertibility of the Rupee on the current account? → 1994
☛ What is the largest component of India's foreign exchange reserves? → Foreign Currency Assets (FCA)
☛ On which date was the New Industrial Policy of 1991 announced? → 24 July 1991