Which of the following is not a component of India's 1991 economic reforms?
Show answer & explanation
Correct answer: C
Explanation
Solution: The correct answer is (C) Socialisation.
Explanation:
☛ In July 1991, India launched the New Economic Policy (NEP) to overcome a severe balance of payments crisis.
☛ This policy reform model is popularly known as the LPG model, which stands for Liberalisation, Privatisation, and Globalisation.
☛ Liberalisation: Aimed at ending cumbersome industrial licensing, regulations, and bureaucratic controls to promote business growth.
☛ Privatisation: Involved reducing the role of the public sector by selling government equity (disinvestment) and opening sectors to private enterprise.
☛ Globalisation: Aimed at integrating the Indian economy with the global market through reduced trade tariffs and encouraging foreign investment.
☛ Socialisation was not a component of these reforms; rather, the reforms marked a shift away from earlier socialist-leaning economic policies.
Extra Exam-Relevant Facts:
☛ At the time of the 1991 reforms, P. V. Narasimha Rao was the Prime Minister and Dr. Manmohan Singh was the Finance Minister of India.
☛ Under the industrial reforms, licensing was abolished for all except 18 industries in 1991, which has now been reduced to just a few strategic sectors.
☛ To stabilise external balances, the Indian rupee was devalued in two steps in July 1991.
☛ As a component of the financial sector reforms, the Narasimham Committee was established in August 1991 to recommend banking sector restructuring.
Important One-Liners for Upcoming Exams:
☛ Who is widely regarded as the political architect of India's 1991 economic reforms? → P. V. Narasimha Rao
☛ Which international organisations provided financial bailout loans to India during the 1991 economic crisis? → IMF and World Bank
☛ In which year did India adopt a full market-determined exchange rate system under the LERMS initiative? → 1993
☛ Which statutory body was established in 1992 to regulate the Indian securities market? → SEBI (Securities and Exchange Board of India)
☛ The abolition of which act in 2002 replaced the restrictive anti-monopoly regulations from 1969? → MRTP Act (replaced by the Competition Act, 2002)