In the economic crisis of 1991, what happened to the foreign exchange reserves of India?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → They dropped to levels not sufficient for even a fortnight.
In the 1991 crisis, India’s foreign exchange reserves fell so low that they could not pay for imports for even a fortnight (two weeks).
NCERT (2026-27): “3.1 Introduction … In 1991, India met with an economic crisis relating to its external debt — the government was not able to make repayments on its borrowings from abroad; foreign exchange reserves, which we generally maintain to import petroleum and other important items, dropped to levels that were not sufficient for even a fortnight. The crisis was further compounded by rising prices of essential goods. …” |