π Chapter 09 Β· Previous Year Questions
Economic Reforms LPG 1991 β Previous Year Questions
10 actual questions from UPSC, APPSC, and TGPSC previous year papers on Economic Reforms.
π‘ Tip: Previous year questions reveal the exact pattern. Study these carefully.
π 10 Previous Year Questions
With reference to the 1991 economic reforms in India, consider the following statements:
1. The reforms were launched due to a Balance of Payments crisis.
2. India pledged gold to get emergency loans.
3. The reforms were launched by PM Rajiv Gandhi.
Which of the statements given above is/are correct?
1. The reforms were launched due to a Balance of Payments crisis.
2. India pledged gold to get emergency loans.
3. The reforms were launched by PM Rajiv Gandhi.
Which of the statements given above is/are correct?
A) 1 and 2 only
B) 2 and 3 only
C) 1 and 3 only
D) 1, 2 and 3
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Answer: A) 1 and 2 onlyStatements 1 and 2 are correct. The 1991 reforms were launched due to a BoP crisis, and India pledged 67 tonnes of gold. Statement 3 is incorrect β the reforms were launched by PM P.V. Narasimha Rao (not Rajiv Gandhi, who was assassinated in May 1991).
The “Licence Raj” in India refers to the system of:
A) Licensing of foreign companies
B) Elaborate system of licences required for businesses to operate (1947-1991)
C) Licensing of small businesses
D) Tax on business licences
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Answer: B)The Licence Raj (1947-1991) was an elaborate system where businesses needed government licences for almost every activity β starting a business, expanding capacity, importing raw materials, etc. This system was dismantled by the New Industrial Policy of 1991.
The New Industrial Policy of 1991 was announced on:
A) July 1, 1991
B) July 24, 1991
C) August 15, 1991
D) September 1, 1991
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Answer: B) July 24, 1991The New Industrial Policy was announced on July 24, 1991 β the same day as Dr. Manmohan Singh’s landmark budget speech. It abolished industrial licensing for most industries, reduced public sector monopoly, and liberalised FDI.
Which of the following was a major cause of the 1991 economic crisis in India?
A) Demonetisation
B) Gulf War (1990-91) leading to rise in oil prices
C) Global financial crisis
D) COVID-19 pandemic
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Answer: B) Gulf War (1990-91)The Gulf War (1990-91) was a major cause of the 1991 crisis. Oil prices doubled, increasing India’s import bill. Indian workers in Gulf returned home, reducing remittances. Combined with political instability and high fiscal deficit, this led to the BoP crisis.
India’s foreign exchange reserves in 2023 are approximately how many times more than in 1991?
A) 10 times
B) 100 times
C) 500 times
D) 1000 times
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Answer: C) ~500 timesIndia’s forex reserves were $1.2 billion in 1991 and are $600+ billion in 2023 β approximately 500 times more. This dramatic increase reflects India’s economic transformation through LPG reforms, IT boom, FDI inflows, and remittances.
The Competition Commission of India (CCI) was established under:
A) MRTP Act, 1969
B) Competition Act, 2002
C) SEBI Act, 1992
D) Companies Act, 2013
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Answer: B) Competition Act, 2002The Competition Commission of India (CCI) was established under the Competition Act, 2002. It replaced the MRTP Commission. CCI prevents anti-competitive practices, promotes competition, and protects consumer interests. It is a second generation reform.
Which of the following best describes “Globalisation” in the context of Indian economy?
A) Selling Indian goods abroad
B) Integration of Indian economy with the world economy through trade, investment, and technology
C) Allowing foreign companies to operate in India
D) Reducing import duties
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Answer: B)Globalisation is the process of integration of the Indian economy with the world economy through trade, investment, technology, and movement of people. It has three dimensions: trade globalisation, financial globalisation, and technology globalisation.
India’s IT exports are approximately:
A) $50 billion per year
B) $100 billion per year
C) $200 billion per year
D) $500 billion per year
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Answer: C) ~$200 billion per yearIndia’s IT exports are approximately $200 billion per year, making India the world’s largest exporter of IT services. This IT boom was enabled by globalisation β India’s English-speaking, technically skilled workforce could serve global clients through the internet.
Which of the following is a criticism of the 1991 LPG reforms?
A) GDP growth declined after 1991
B) Foreign exchange reserves fell after 1991
C) Rising inequality and jobless growth
D) IT sector declined after 1991
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Answer: C) Rising inequality and jobless growthA major criticism of LPG reforms is rising inequality β the rich benefited more than the poor. GDP grew but formal employment didn’t grow proportionally (jobless growth). Agriculture was neglected. Regional disparities increased. ~90% of workforce remains in informal sector.
The famous quote “No power on earth can stop an idea whose time has come” was used by Dr. Manmohan Singh in the context of:
A) GST implementation
B) Demonetisation
C) 1991 economic reforms
D) NITI Aayog formation
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Answer: C) 1991 economic reformsDr. Manmohan Singh used this famous quote from Victor Hugo in his budget speech on July 24, 1991 to describe India’s economic reforms. The quote captured the inevitability and urgency of the reforms that transformed India’s economy.