Which of the following has/have occurred in India after its liberalization of economic policies in 1991?
- The share of agriculture in GDP increased enormously.
- The share of India’s exports in world trade increased.
- FDI inflows increased.
- India’s foreign exchange reserves increased enormously.
Select the correct answer using the codes given below :
Detailed Explanation:
Answer: Option 2 — 2, 3 and 4 only
After the 1991 economic liberalization, India witnessed significant structural changes in its economy. The service sector expanded rapidly while agriculture's contribution to GDP declined, foreign trade and investment increased substantially, and forex reserves grew dramatically due to improved external sector management.
❌ Statement 1 – Incorrect: The share of agriculture in GDP has consistently decreased since 1991, falling from around 30% to approximately 15-18%, as the service and industrial sectors expanded.
✅ Statement 2 – Correct: India's share in world exports increased from less than 0.5% in 1991 to around 1.7-2% currently, reflecting greater global economic integration.
✅ Statement 3 – Correct: FDI inflows increased dramatically from negligible amounts (less than $100 million annually) in the pre-liberalization era to billions of dollars annually post-1991.
✅ Statement 4 – Correct: India's foreign exchange reserves grew enormously from about $1 billion in 1991 (barely covering 2 weeks of imports) to over $600 billion in recent years, reflecting improved macroeconomic stability.
Question 2 of 2 LPG Reforms 1991
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