Topics:
CH-3: LIBERALISATION, PRIVATISATION AND GLOBALISATION: AN APPRAISAL, Indian Economic Development, NCERT Books
1991 Economic Crisis Cause
In 1991, India met with an economic crisis relating to its:
- Internal political instability
- External debt — government could not repay foreign borrowings — Correct Answer
- Natural disaster causing crop failure
- Sudden decline in population
Explanation:
Correct Answer Explanation
In 1991, India faced an economic crisis relating to its external debt — the government was not able to make repayments on its borrowings from abroad.
Key Points:
- Foreign exchange reserves dropped to levels not sufficient for even a fortnight's imports.
- The crisis was compounded by rising prices of essential goods.
- Origin traced to inefficient management of economy in the 1980s.
- This led to the introduction of the New Economic Policy (NEP).
Why Other Options Are Wrong
- A: The crisis was economic, not political.
- C: It was a financial/debt crisis, not a natural disaster.
- D: Population decline was not a factor.
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This multiple choice question is from CH-3: LIBERALISATION, PRIVATISATION AND GLOBALISATION: AN APPRAISAL, Indian Economic Development, NCERT Books. It has 4 options with a detailed explanation of the correct answer. Practice more MCQs from CH-3: LIBERALISATION, PRIVATISATION AND GLOBALISATION: AN APPRAISAL to strengthen your preparation.
