CA Foundation P4 · Chapter 10 · Question 2 of 15
The immediate trigger for the economic reforms of 1991 was:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) A severe balance of payments crisis with very low foreign exchange reserves
Explanation
In 1991 India faced a serious balance of payments crisis: foreign exchange reserves had fallen to a level barely sufficient for a few weeks of imports, fiscal deficits were high and inflation was elevated. This led to stabilisation and structural reform measures.
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