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    Question

    Which of the following Steps was not taken by the Indian Government during the Liberalisation process?

    A Import licensing on almost all intermediate inputs was removed Correct Answer Incorrect Answer
    B Import licensing on almost all intermediate capital goods was done away with Correct Answer Incorrect Answer
    C the entry restrictions for firms were simplified Correct Answer Incorrect Answer
    D a cap on booking excess profit was introduced Correct Answer Incorrect Answer
    E The rupee was made fully convertible on the current account and partially on the capital account Correct Answer Incorrect Answer

    Solution

    Import licensing on almost all intermediate inputs and capital goods was done away with, and the entry restrictions for firms were simplified. The new policy encouraged the entry of private sector firms by ending the public sector monopoly in many sectors and initiating the automatic approval policy for FDI up to 51 per cent. The exchange rate was made flexible and allowed to depreciate as necessary to maintain competitiveness. The rupee was made fully convertible on the current account and partially on the capital account. These reforms had a positive effect on the economy.

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