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Question

Which of the following steps were taken during the Liberalisation process in India?

I- The new policy encouraged the entry of private sector firms by ending the public sector monopoly in many sectors

II- initiating the automatic approval policy for FDI up to 51 per cent

III- The exchange rate was made flexible and allowed to depreciate as necessary to maintain competitiveness

IV- The rupee was made fully convertible on the current account and partially on the capital account

A I & II Correct Answer Incorrect Answer
B II & III Correct Answer Incorrect Answer
C I, II, & III Correct Answer Incorrect Answer
D II, III, & IV Correct Answer Incorrect Answer
E I, II, III, & IV 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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