Topic Details (Notes format)

Economic Reforms of 1991

Subject: Economics

Book: Comprehensive Indian Economy

In 1991, India faced a severe balance of payments crisis that triggered sweeping reforms known as Liberalization, Privatization, and Globalization (LPG). These reforms dismantled the license-quota system, opened markets to foreign investment, devalued the rupee for export competitiveness, and paved the way for private sector efficiency. The goal was to integrate India with the global economy and revive growth by reducing state controls. Exam-oriented insights include the reasons for the crisis, specifics of structural adjustment policies, and the impact on sectors like banking, trade, and manufacturing over subsequent decades.

Practice Questions

Which of the following best describes “capital formation”?

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Which of the following measures is most effective in controlling inflation?

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Which is the largest source of tax revenue for the Government of India?

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Which of the following is NOT an example of a direct tax?

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What is the main feature of a free-market economy?

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What is the concept of “invisible hand” associated with?

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Which of the following is an example of a non-renewable resource?

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What is “open market operations” (OMO)?

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Which of the following sectors contributes the most to India’s GDP?

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What does the term “capital account” refer to in the balance of payments?

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