Consider the following statements about the early steps taken to manage the economic crisis of 1991:
(A) The Foreign Investment Promotion Board was set up to negotiate proposals from large international firms and expedite clearances.
(B) The MRTP Act was amended to remove the need for prior approval of the Central Government by large companies for capacity expansion.
(C) Gold earlier pledged to the World Bank and the International Monetary Fund was brought back.
(D) Under the Liberalised Exchange Rate Management System, a single exchange rate system was established.
(E) The measures of import control and credit squeeze were continued.
Choose the incorrect statements from the above.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → (C) and (D) only
(A) The Foreign Investment Promotion Board was set up to negotiate proposals from large international firms and expedite clearances. — Correct statement. The FIPB was established to negotiate proposals from large international firms and to speed up clearance of their investment proposals.
(B) The MRTP Act was amended to remove the need for prior approval of the Central Government by large companies for capacity expansion. — Correct statement. The amendment removed prior approval for capacity expansion, diversification and mergers.
(C) Gold earlier pledged to the World Bank and the International Monetary Fund was brought back. — Incorrect statement. The gold brought back had been pledged to the Bank of England and the Bank of Japan.
(D) Under the Liberalised Exchange Rate Management System, a single exchange rate system was established. — Incorrect statement. LERMS set up a dual exchange rate system, with one rate floated in the market.
(E) The measures of import control and credit squeeze were continued. — Correct statement. The early steps included the continuance of import control and credit squeeze.
NCERT (2026-27 Edition):
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