Which of the following statements correctly describes the process which India took to initiate the "Foreign exchange reforms"?

None of the above

The correct answer is option 4: None of the above

The government decided to introduce the fixed exchange rate system: This is incorrect. The government adopted flexible exchange rate system which set the tone to free the determination of rupee value in the foreign exchange market from government control.

The rupee is depreciated against the foreign currency. This is also incorrect. In 1991, as an immediate measure to resolve the balance of payments crisis, the rupee was devalued (not depreciated) against foreign currencies. This led to an increase in the inflow of foreign exchange.