CBSE 2025, Set 1

Question

(b) (i) "After 1991, reforms in external sector led to an increase in foreign exchange inflows".
Justify the given statement with valid argument.

(ii) "During the planning period, public sector was given a dominant role in Indian Economy."
Justify the rationale behind this step taken by the Government of India.

Edvaya · Accepted Answer

The correct answer is Subjective. **(i)** Post 1991, as an important reform in the external sector, rupee was devalued against foreign currencies. As a result, India is seen as a successful exporter of auto parts, pharmaceutical goods, engineering goods, IT software and textiles. This led to an increase in the inflow of foreign exchange. Moreover, a sharp rise in foreign direct investment led to a manifold increase in the foreign exchange reserves.

**(ii)** At the time of independence, the Indian industrialists lacked the financial and technical resources needed for the nation to be modernized and self-sufficient. Also, the market was not big enough to encourage industrialists to undertake major projects even if they had the capital to do so. Moreover, the decision to develop the Indian economy on socialist lines made it essential for the public sector to take the leading role.

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Economics > Indian Economic Development > Economic Reforms 1991

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