Which major global economic institution provided assistance during India's 1991 crisis, requiring economic reforms?
Show answer & explanation
Correct answer: B
Explanation
Solution: The correct answer is International Monetary Fund (IMF).
Explanation:
☛ In 1991, India faced a severe Balance of Payments (BoP) crisis, leaving foreign exchange reserves sufficient to finance only about two weeks of imports.
☛ To manage the crisis, India approached the International Monetary Fund (IMF) and the World Bank for financial assistance.
☛ The IMF provided a multi-billion dollar emergency bailout package attached with conditions of structural adjustment reforms.
☛ As part of these conditionalities, Prime Minister P. V. Narasimha Rao and Finance Minister Dr. Manmohan Singh introduced the New Economic Policy of 1991, leading to the landmark LPG (Liberalisation, Privatisation, and Globalisation) reforms.
Extra Exam-Relevant Facts:
☛ International Monetary Fund (IMF): Established at the Bretton Woods Conference in 1944, headquartered in Washington, D.C., it focuses on ensuring international financial stability and assisting countries during BoP crises.
☛ World Bank: Also created at the 1944 Bretton Woods Conference and headquartered in Washington, D.C., it provides financial and technical assistance for development projects.
☛ Asian Development Bank (ADB): Established in 1966, headquartered in Mandaluyong (Manila), Philippines, it promotes economic and social development in the Asia-Pacific region.
☛ United Nations (UN): Founded on 24 October 1945, headquartered in New York City, it promotes international peace, security, and cooperation.
Important One-Liners for Upcoming Exams:
☛ Who was the Finance Minister of India during the 1991 economic reforms? → Dr. Manmohan Singh
☛ What do the letters 'LPG' stand for in the context of the 1991 reforms? → Liberalisation, Privatisation, and Globalisation
☛ Where is the headquarters of the International Monetary Fund (IMF) located? → Washington, D.C., USA
☛ What was the primary economic trigger for the 1991 crisis in India? → Balance of Payments (BoP) crisis
☛ In which year was the International Monetary Fund (IMF) established? → 1944