Match the reform measure in List-I with its aim or expected result in…

Match the reform measure in List-I with its aim or expected result in List-II.

List-I	List-II
(A) Moderate rates of income tax	(I) To improve financial discipline and facilitate modernisation
(B) Devaluation of the rupee in 1991	(II) To encourage savings and voluntary disclosure of income
(C) Removal of export duties	(III) An immediate measure in 1991 to resolve the balance of payments crisis
(D) Disinvestment of public sector enterprises	(IV) To increase the competitive position of Indian goods in international markets

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → (A)-(II), (B)-(III), (C)-(IV), (D)-(I)

Each measure belongs to a different area of the reforms and had its own aim.

List-I	List-II	Reason
(A) Moderate rates of income tax	(II) To encourage savings and voluntary disclosure of income	High rates led to tax evasion. Moderate rates encourage savings and honest disclosure of income.
(B) Devaluation of the rupee in 1991	(III) An immediate measure in 1991 to resolve the balance of payments crisis	It was the immediate step in the foreign exchange market. It raised the inflow of foreign exchange.
(C) Removal of export duties	(IV) To increase the competitive position of Indian goods in international markets	Removing them helps Indian goods compete better in international markets.
(D) Disinvestment of public sector enterprises	(I) To improve financial discipline and facilitate modernisation	This was the purpose given by the government for selling part of the equity of PSEs.

NCERT (2026-27): “Tax Reforms: … Since 1991, there has been a continuous reduction in the taxes on individual incomes as it was felt that high rates of income tax were an important reason for tax evasion. It is now widely accepted that moderate rates of income tax encourage savings and voluntary disclosure of income. …”

“Foreign Exchange Reforms: The first important reform in the external sector was made in the foreign exchange market. In 1991, as an immediate measure to resolve the balance of payments crisis, the rupee was devalued against foreign currencies. This led to an increase in the inflow of foreign exchange. …”

“Trade and Investment Policy Reforms: … Import licensing was abolished except in case of hazardous and environmentally sensitive industries. Quantitative restrictions on imports of manufactured consumer goods and agricultural products were also fully removed from April 2001. Export duties have been removed to increase the competitive position of Indian goods in the international markets.”

“3.4 Privatisation … Privatisation of the public sector enterprises by selling off part of the equity of PSEs to the public is known as disinvestment. The purpose of the sale, according to the government, was mainly to improve financial discipline and facilitate modernisation. …”