Which of the following was not a goal of 1991 economic reforms?
Show answer & explanation
Correct answer: B
Explanation
Answer: Expand public sector control
Explanation:
- The primary objective of the economic reforms of 1991 (known as the LPG reforms—Liberalization, Privatization, and Globalization) was to open up the Indian economy and reduce government control.
- Under the Industrial Policy of 1991, control over the public sector was curtailed, and the number of industries reserved for the public sector was reduced to facilitate increased private sector participation. Therefore, 'expanding public sector control' was not a goal of these reforms; rather, the emphasis was placed on the contrary—specifically, on 'Disinvestment' and privatization.
Analysis of Other Options:
- Industrial Competition: A key objective was to make domestic industries globally competitive through liberalization.
- Foreign Investment (FDI): Regulations were simplified to attract foreign capital and technology into India.
- Fiscal Discipline: Controlling the widening fiscal deficit was one of the priorities of the reforms.
Additional Points:
- Prime Minister and Finance Minister: At the time of these reforms, P.V. Narasimha Rao was the Prime Minister, and Dr. Manmohan Singh was the finance minister.
- Immediate Cause: In 1991, India possessed foreign exchange reserves sufficient to cover imports for only two weeks; this situation came to be known as the 'Balance of Payments Crisis.'
Potential Questions and Answers:
Question: By what other name are the economic reforms of 1991 known?
Answer: The Rao-Manmohan Model or the LPG Model.
Question: In which year was the New Economic Policy (NEP) announced?
Answer: July 24, 1991.
Question: Currently, how many industries are mandatorily reserved for the public sector?
Answer: Only 2 (Atomic Energy and Railway Operations).