Which international organizations played a crucial role in triggering the 1991 economic reforms in India?
Show answer & explanation
Correct answer: B
Explanation
The correct answer is option 2 i.e. World Bank and IMF.
In 1991, India faced a severe Balance of Payments crisis, with foreign exchange reserves barely enough to cover two weeks of imports. To avoid default, India approached the International Monetary Fund (IMF) and the World Bank for a loan of $7 billion. These organizations granted the loan on the condition that India implement structural reforms, leading to the Liberalization, Privatization, and Globalization (LPG) policy that transformed the Indian economy.