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    Question

    In which of the following years, India took its first major step towards liberalisation?

    A 1989 Correct Answer Incorrect Answer
    B 1990 Correct Answer Incorrect Answer
    C 1991 Correct Answer Incorrect Answer
    D 1993 Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    The macroeconomic imbalances of the late 1980s and early 1990s pushed the government towards introducing the structural reforms of 1991. The high combined deficit of the central and state governments, elevated inflationary pressures, and large and unsustainable current account deficit (CAD) led to a balance of payments crisis in the Indian economy. In response to the situation, trade and investments were liberalised in 1991.

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