What was the major short-term objective of the stabilization measures in the 1991 reforms?
Show answer & explanation
Correct answer: C
Explanation
The correct answer is option 3 i.e. Control inflation and restore balance of payments.
In 1991, India faced a severe economic crisis with foreign exchange reserves barely enough to cover two weeks of imports. The Stabilization Measures were immediate, short-term actions intended to correct these vulnerabilities. Their primary goal was to curb high inflation by controlling the money supply and to resolve the Balance of Payments (BoP) crisis by stabilizing the rupee. This created the necessary stability for the long-term structural reforms that followed.