GK
INDIAN ECONOMY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Inflation
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Debt Trap
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Foreign exchange crisis
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All of the above
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Detailed explanation-1: -Causes and conscious. The crisis was caused by currency overvaluation; the current account deficit, and investor confidence played significant role in the sharp exchange rate depreciation. The economic crisis was primarily due to the large and growing fiscal imbalances over the 1980s.
Detailed explanation-2: -A massive foreign debt, with a debt-to-exports ratio and high debt-service ratio, which resulted in the state’s credit rating being downgraded and major repayment issues. Low levels of productivity across the economy, resulting in immense resource waste.
Detailed explanation-3: -Measures Taken by Government to Overcome Balance of Payment Crisis 1991. The Government took certain special measures and steps to overcome the BOP crisis in India. They were: Monetary measures, reforms in the industrial policy, and reforms in the trade policy.
Detailed explanation-4: -India’s foreign exchange reserves have grown significantly since 1991. The reserves, which stood at US$ 5.8 billion at end-March 1991 increased gradually to US$ 25.2 billion by end-March 1995.