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ECONOMIC REFORMS SINCE 1991
LIBERALISATION, PRIVATISATION AND GLOBALISATION: AN APPRAISAL Question 1: Why were reforms introduced in India? Answer: We know that since independence, India followed the mixed economy framework by combining the advantages of the market economic system wit those of the planned economic system. But over the years, this policy resulted in the establishment of a variety of rules and laws which were aimed at controlling and regulating the economy and instead ended up hampering the process of growth and development. The economy was facing problems of declining foreign exchange, growing imports without matching rise in exports and high inflation. India changed its economic policies in 1991 due to a financial crisis and pressure from international organizations like the World Bank and IMF. Question 2: How Many countries are members of the WTO? Answer: The WTO has 153 member countries. Question 3: What is the most important function of RBI? Answer: The most important function of RBI is to control and facilitate the financial sector of India. All the banks and other financial institutions in India are controlled through various norms and regulations of the RBI. Question 4: How was RBI controlling the commercial banks? Answer: All the banks in India are controlled through various norms and regulations of the RBI. The RBI decides the amount of money that the banks can keep with themselves, fixes interest rates, nature of lending to various sectors etc. Question 5: What do you understand by devaluation of rupee? Answer: Devaluation of rupee means decreasing rupee value in the foreign exchange market.. In 1991, as an immediate measure to resolve the balance of payments crisis, the rupee was devalued against foreign currencies. This was to boost the export and this led to an increase in the inflow of foreign exchange. Question (i) (ii) (iii) 6: Distinguish between the following Strategic and Minority sale Bilateral and...