Economic Reforms 1991 — Set 3
Economy Advanced · 1991 के आर्थिक सुधार · Questions 21–30 of 120
The 'Dunkel Draft' related to which international economic negotiation that culminated in the formation of WTO?
Correct Answer: B. Uruguay Round of GATT
The 'Dunkel Draft' was prepared by GATT Director General Arthur Dunkel in December 1991 as a comprehensive draft for the Uruguay Round negotiations. The Uruguay Round (1986-1994) was the 8th and final round of GATT trade negotiations that led to the establishment of WTO. India was a participant in the Uruguay Round. The Dunkel Draft addressed tariff reductions, agricultural trade, services (GATS), and intellectual property rights (TRIPS).
What was the name of the industrial policy that preceded the New Industrial Policy of 1991?
Correct Answer: D. Both 1956 and 1977 policies
The major industrial policies preceding the 1991 New Industrial Policy were the Industrial Policy Resolution of 1956 and the Industrial Policy of 1977. The 1956 resolution established the framework of public sector dominance and the Schedule A/B/C classification. The 1977 policy under the Janata government emphasised small-scale and cottage industries. The 1991 policy reversed course by dismantling licensing, reducing public sector dominance, and opening up to foreign investment.
The Current Account Convertibility was achieved in India in:
Correct Answer: B. 1993
India achieved current account convertibility in August 1994, which was effectively completed following the LERMS (Liberalized Exchange Rate Management System) introduced in 1993. Under current account convertibility, there are no restrictions on foreign exchange for trade in goods and services, remittances, and income flows. This was an IMF Article VIII obligation that India fulfilled. Capital account convertibility (for investment flows) remains restricted in India.
The Eighth Five Year Plan (1992-97) was associated with which finance minister who implemented 1991 reforms?
Correct Answer: B. Dr. Manmohan Singh
The Eighth Five Year Plan (1992-97) was closely associated with Dr. Manmohan Singh as Finance Minister (1991-96). He formulated this plan in the context of the post-liberalization economy, shifting from directive to indicative planning. The Eighth Plan achieved impressive 6.7% average GDP growth against a target of 5.6%, demonstrating that liberalization was generating results. It was the first plan to explicitly incorporate market-oriented policies.
The 1991 industrial reforms removed the requirement for 'prior approval' for large firms under which act?
Correct Answer: B. MRTP Act
The 1991 reforms removed the requirement for 'prior approval' for expansion by large firms (MRTP companies with assets exceeding ₹100 crore) under the Monopolies and Restrictive Trade Practices (MRTP) Act. These large companies had to obtain prior approval before expanding capacity, which was abolished. The MRTP Act itself was later replaced by the Competition Act, 2002. This removal freed large firms to invest and expand without government permission.
The 'Automatic Route' for FDI in India means:
Correct Answer: B. FDI does not require prior government approval
The 'Automatic Route' for FDI means foreign investment does not require prior approval from the government or RBI. Investors just need to notify RBI after the investment. This was introduced as part of the 1991 reforms to attract FDI. The 'Approval/Government Route' requires prior government permission for sensitive sectors. India has progressively expanded the automatic route, now allowing 100% FDI in most sectors. The FDI Policy is notified by DPIIT.
Which committee recommended the establishment of NSE (National Stock Exchange) in India?
Correct Answer: B. Pherwani Committee
The Pherwani Committee (High-Powered Study Group on Establishment of New Stock Exchanges) recommended the establishment of NSE. The committee was set up under M.J. Pherwani. Following its recommendations, NSE was incorporated in November 1992 and began trading in wholesale debt in 1994. NSE introduced screen-based trading in India, replacing the traditional open outcry system of BSE. This modernization dramatically improved market efficiency and transparency.
The fiscal deficit of the Central Government in India, which precipitated the 1991 crisis, was approximately what percentage of GDP in 1990-91?
Correct Answer: C. 8.5%
India's Central Government fiscal deficit was approximately 8.5% of GDP in 1990-91, which was unsustainably high. The government had been borrowing heavily through the 1980s under Rajiv Gandhi's government with little investment impact. This large fiscal deficit led to high inflation (around 10-12%) and a current account deficit. The combined public sector deficit (Centre + States + PSUs) was even higher at about 12% of GDP. Reducing the fiscal deficit was a core objective of the 1991 reforms.
The term 'Washington Consensus' is associated with the economic reforms of 1991. Which institution is primarily associated with this concept?
Correct Answer: B. World Bank and IMF
The 'Washington Consensus' refers to a set of market-oriented economic policy prescriptions advocated by Washington D.C.-based institutions — the World Bank and IMF. The term was coined by economist John Williamson in 1989. It included fiscal discipline, tax reform, trade liberalization, privatization, deregulation, and property rights. Critics argue that India's 1991 reforms were influenced by Washington Consensus conditionalities attached to IMF/World Bank loans.
The 'Rangarajan Committee' on privatization and disinvestment made recommendations in which year?
Correct Answer: B. 1993
The Rangarajan Committee on disinvestment made recommendations in 1993 (also called Disinvestment Commission). It was chaired by C. Rangarajan, former RBI Governor. The committee recommended a systematic approach to disinvestment, suggesting that the government should aim for majority ownership in strategic sectors while disinvesting in non-strategic PSUs. Its recommendations influenced India's subsequent disinvestment policy throughout the 1990s and 2000s.