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Which of the following was NOT a part of the structural reforms introduced in the 1991 New Economic Policy?
Nationalization of major banks
Devaluation of the Rupee
Abolition of Industrial Licensing
Liberalization of Foreign Investment
Nationalization of major banks
The 1991 New Economic Policy (NEP) focused on Liberalization, Privatization, and Globalization (LPG) to dismantle the license-permit raj, whereas the nationalization of banks occurred much earlier in 1969 and 1980. These 1991 reforms were designed to integrate the Indian economy with the global market by reducing state control and bureaucratic intervention.
The 1991 New Economic Policy (NEP) focused on Liberalization, Privatization, and Globalization (LPG) to dismantle the license-permit raj, whereas the nationalization of banks occurred much earlier in 1969 and 1980. These 1991 reforms were designed to integrate the Indian economy with the global market by reducing state control and bureaucratic intervention.
The 1969 Nationalization of 14 major commercial banks was a flagship policy of the Indira Gandhi administration, occurring under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1969.
1991 reforms shifted India from a closed economy to a market-oriented framework under the leadership of PM P.V. Narasimha Rao and Finance Minister Manmohan Singh.
The New Economic Policy aimed to restore the balance of payments crisis and control runaway inflation.
Industrial licensing was abolished for almost all sectors except those related to security, strategic concerns, and environmental hazards.
Devaluation of the Rupee: In July 1991, the Rupee was devalued by nearly 18-19% against major foreign currencies to boost exports and check imports.
Liberalization of Foreign Investment: The Foreign Investment Promotion Board (FIPB) was established to facilitate foreign direct investment (FDI) inflows.
Nationalization of banks (Option A) is incorrect because it was a measure of 'Social Control over Banks' aimed at expanding credit to rural sectors, not a structural reform of the 1991 NEP.
A is correct тАФ Nationalization of major banks was a policy initiative of 1969 and 1980, not the 1991 New Economic Policy.
When studying the 1991 reforms, always distinguish between 'Financial Sector Reforms' (post-1991, like the Narasimham Committee recommendations) and 'Social Control measures' (1969/1980 nationalization) to avoid confusion in exam questions.