The New Economic Policy of 1991 had two groups of measures. Consider the following aims:
(A) Correcting the weaknesses that had developed in the balance of payments
(B) Removing the rigidities in various segments of the economy
(C) Bringing inflation under control
(D) Increasing the international competitiveness of the economy
Which option correctly classifies these aims?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Stabilisation: (A) and (C); Structural reform: (B) and (D)
Stabilisation measures are short-term: they correct the balance of payments and control inflation. Structural reforms are long-term: they raise efficiency and international competitiveness by removing rigidities in the economy.
(A) Correcting the weaknesses that had developed in the balance of payments — Stabilisation, a short-term aim.
(B) Removing the rigidities in various segments of the economy — Structural reform, a long-term aim.
(C) Bringing inflation under control — Stabilisation, short-term.
(D) Increasing the international competitiveness of the economy — Structural reform, long-term.
NCERT (2026-27): “3.2 Background … Stabilisation measures are short-term measures, intended to correct some of the weaknesses that have developed in the balance of payments and to bring inflation under control. In simple words, this means that there was a need to maintain sufficient foreign exchange reserves and keep the rising prices under control. On the other hand, structural reform policies are long-term measures, aimed at improving the efficiency of the economy and increasing its international competitiveness by removing the rigidities in various segments of the Indian economy. …” |