1. The economic reforms in India in 1991 were mainly aimed at:
A. Increasing import tariffs
B. Liberalization, Privatization, and Globalization
C. Nationalizing more industries
D. Increasing government control on business
The 1991 reforms focused on LPG – liberalization (reducing govt control), privatization (promoting private sector), and globalization (opening economy to foreign trade and investment).
2. Which of the following was a key trigger for the economic reforms of 1991 in India?
A. High agricultural output
B. Decrease in industrial production
C. Low inflation rate
D. Balance of Payment crisis
India faced a severe balance of payment crisis in 1991, leading to depletion of foreign exchange reserves and forcing the government to implement economic reforms.
3. Economic transformation in the real sector primarily focuses on:
A. Agriculture, industry, and infrastructure development
B. Stock market reforms
C. Banking sector liberalization only
D. Fiscal deficit management
Real sector transformation deals with production and growth in agriculture, industry, and infrastructure, which directly impacts GDP and employment.
4. Which of the following measures was part of industrial reforms during the 1991 economic transformation?
A. Increasing licensing requirements
B. Restricting private investment
C. Removing industrial licensing for most sectors
D. Nationalizing large industries
Industrial licensing was abolished for most sectors to promote ease of doing business and encourage private investment.
5. Economic reforms led to greater foreign investment in India. This is an example of:
A. Globalization
B. Privatization
C. Fiscal consolidation
D. Import substitution
Globalization involves opening the economy to foreign trade and investment, allowing FDI and foreign capital inflow.
6. Which of the following was a major reform in the financial sector during the 1991 economic transformation?
A. Nationalization of more banks
B. Introduction of prudential norms for banks
C. Restricting private sector entry
D. Eliminating foreign investment in banking
Financial sector reforms included introducing prudential norms, reducing government control, strengthening banking regulations, and allowing private and foreign banks.
7. The Narasimham Committee (1991 & 1998) was significant because it recommended:
A. Nationalization of all banks
B. Increasing statutory liquidity ratio to 50%
C. Reducing foreign bank presence
D. Banking sector reforms and prudential regulations
The Narasimham Committee recommended reforms for improving banking efficiency, strengthening prudential norms, and encouraging competition and financial discipline.
8. The liberalization of interest rates in India led to:
A. Decrease in savings
B. Increase in statutory pre-emption
C. Market-determined deposit and lending rates
D. Fixation of interest rates by RBI only
Liberalization allowed banks to set deposit and lending rates based on market conditions, promoting efficiency and competition.
9. Entry of private sector and foreign banks in India post-1991 is an example of:
A. Privatization
B. Nationalization
C. Monetary tightening
D. Fiscal consolidation
Privatization in the financial sector included allowing private banks and encouraging foreign banks to operate in India, increasing competition and efficiency.
10. Establishment of SEBI as a regulator was a key reform in which financial segment?
A. Banking sector
B. Capital market
C. Insurance sector
D. Microfinance sector
SEBI (Securities and Exchange Board of India) was established to regulate capital markets, protect investors, and ensure transparency in stock market operations.
11. Which of the following is a key feature of India’s integration with the global economy post-1991?
A. Complete self-sufficiency in all sectors
B. Restriction of foreign trade
C. Liberalization of imports and exports
D. Increased government control over foreign investment
Integration with the global economy involved reducing trade barriers, liberalizing imports and exports, and encouraging foreign investment.
12. The World Trade Organization (WTO) membership helped India by:
A. Providing a platform for global trade rules and dispute resolution
B. Eliminating foreign investment completely
C. Imposing trade barriers on Indian exports
D. Nationalizing foreign companies in India
WTO membership enabled India to follow standardized global trade rules, settle trade disputes, and access international markets efficiently.
13. Foreign Direct Investment (FDI) in India post-1991 reforms contributed to:
A. Reduced industrial growth
B. Restriction of technology transfer
C. Decrease in employment opportunities
D. Capital inflow, technology transfer, and employment generation
FDI brought in foreign capital, modern technology, and created jobs, helping India integrate with the global economy.
14. The convertibility of the Indian Rupee on the current account was introduced to:
A. Limit foreign trade
B. Facilitate free exchange of currency for trade and investment
C. Nationalize foreign banks
D. Increase government control over imports
Current account convertibility allows Indian rupee to be freely exchanged for foreign currencies in trade transactions, promoting global integration.
15. India’s global economic integration post-1991 led to which of the following outcomes?
A. Increased exports, FDI inflows, and access to global markets
B. Reduced foreign trade and investment
C. Nationalization of multinational companies
D. Complete elimination of imports
Reforms enabled India to expand exports, attract foreign investment, and participate actively in global markets.
16. One major impact of the 1991 economic reforms in India was:
A. Complete closure of public sector enterprises
B. Decline in foreign trade
C. Enhanced economic growth and efficiency
D. Reduction in private sector participation
The reforms promoted liberalization, privatization, and globalization, leading to higher efficiency, economic growth, and private sector participation.
17. Which sector benefited the most from technological modernization due to economic reforms?
A. Information Technology and services
B. Agriculture only
C. Traditional handicrafts
D. Railways
Liberalization and global exposure led to significant investment in IT and service sectors, driving modernization and exports.
18. One social impact of economic reforms in India is:
A. Elimination of poverty completely
B. Uniform income distribution
C. Closure of all small businesses
D. Increase in employment opportunities, especially in services
Economic reforms created new jobs, especially in IT, finance, and service sectors, though challenges like inequality still exist.
19. One challenge faced by India post-economic reforms is:
A. Decline in exports
B. Growing income inequality
C. Decrease in private investment
D. Reduced access to foreign capital
While reforms boosted growth, they also contributed to widening income gaps between urban and rural areas and skilled vs unskilled workers.
20. Which of the following statements best describes the overall impact of India’s 1991 economic reforms?
A. Accelerated growth, global integration, and improved financial sector efficiency
B. Complete elimination of poverty and inequality
C. Reversal of globalization policies
D. Reduction of private sector participation
The 1991 reforms accelerated economic growth, improved efficiency in the financial sector, and integrated India with the global economy, while some social challenges remain.
21. A bank notices that several small exporters are facing delays due to high documentation for export incentives. Which 1991 economic reform principle could help reduce such procedural barriers?
A. Nationalization of banks
B. Liberalization and simplification of procedures
C. Increasing import tariffs
D. Restriction of foreign trade
Liberalization reforms aimed to reduce procedural hurdles for trade and industry, facilitating easier access to incentives and global markets.
22. A private company plans to set up a manufacturing unit in India post-1991 reforms. Which of the following changes benefits the company the most?
A. Increased industrial licensing
B. Higher tariffs on imported machinery
C. Removal of industrial licensing for most sectors
D. Nationalization of the private company
Removal of industrial licensing made it easier for private companies to invest and operate in most sectors without government permission.
23. An Indian IT firm receives a large FDI from a foreign investor. Which reform does this scenario reflect?
A. Fiscal consolidation
B. Monetary tightening
C. Trade protectionism
D. Globalization and foreign investment liberalization
Allowing FDI reflects globalization reforms, enabling foreign capital inflow and technology transfer to India.
24. A commercial bank needs to follow new capital adequacy norms as per the Narasimham Committee recommendations. This is an example of:
A. Real sector transformation
B. Financial sector reforms
C. Global trade liberalization
D. Import substitution strategy
Capital adequacy norms were introduced to strengthen banks' financial stability, part of financial sector reforms.
25. A company exports software services and benefits from reduced procedural restrictions and lower taxes on foreign earnings. Which reform category does this benefit belong to?
A. Privatization of public sector units
B. Agricultural reforms
C. Trade liberalization and incentives
D. Banking nationalization
Export incentives and easier trade procedures reflect trade liberalization measures introduced in the 1991 reforms.
