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In the middle of 1991 India came within a fortnight of not being able to pay for its imports. Foreign exchange reserves had fallen to roughly one billion US dollars — about two weeks of import cover — and the government physically shipped gold abroad as collateral to raise cash. What followed was the sharpest change of economic direction in independent India's history.
This is the single most frequently examined episode in the modern Indian economy, and it is examined as a case: a cause, a sequence of decisions, and a set of named consequences. Almost nothing is asked in the abstract.
Before 1991 the state licensed who could produce what, how much, and where. The 1956 Industrial Policy Resolution had reserved the commanding heights for the public sector; the MRTP Act of 1969 capped how large a private firm could grow; FERA of 1973 kept foreign capital out. Learn that starting position, because every reform of 1991 is the dismantling of one piece of it.
1. Who was the Prime Minister of India when the New Economic Policy was announced in 1991?
2. In mid-1991 India's foreign exchange reserves had fallen to roughly how much import cover?
3. Under the New Industrial Policy of 1991, the number of industries reserved for the public sector was reduced from 17 to:
4. The Foreign Exchange Regulation Act (FERA) of 1973 was replaced by FEMA in which year?
5. The Narasimham Committee of 1991 was constituted to recommend reforms in which area?
6. In July 1991 the Indian rupee was deliberately reduced in value by the authorities in two steps. This action is correctly called:
7. India became a founding member of the World Trade Organization with effect from:
8. In 1991 India pledged gold to raise foreign exchange. The larger consignment, of about 47 tonnes, was sent to: