Which type of measures did the government take to correct the balance of payments position of the country during the economic crisis of 1991?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Stabilisation measures
The reforms of 1991 were of two kinds. Stabilisation measures were short-term steps meant to correct the weaknesses in the balance of payments (keeping enough foreign exchange) and to bring inflation under control. Structural reform measures were long-term steps to improve the efficiency of the economy by removing rigidities in its different sectors.
Why the other options are incorrect
Option (1) Structural measures — Incorrect. These were the long-term reforms to improve efficiency and competitiveness by removing rigidities in the economy.
Option (3) Situational measures — Incorrect. There is no such term.
Option (4) Rigid measures — Incorrect. There is no such term.