CBSE 2025, Set 2

Question

Read the following statements - Assertion (A) and Reason (R).
Choose the correct alternative from the options given below :

**Assertion (A):** Under the financial sector reforms introduced in 1991, foreign investment limit in banks was raised up to around 74%.
**Reason (R):** Foreign Institutional Investors (FIIs) were allowed to invest in Indian financial markets, post-1991. A). Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A). B). Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A). C). Assertion (A) is true, but Reason (R) is false. D). Assertion (A) is false, but Reason (R) is true.

Edvaya · Accepted Answer

The correct answer is Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).. (B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A). **Explanation:** Both statements are historically true facts regarding the 1991 financial sector reforms. However, allowing FIIs (the Reason) is a separate reform action and does not *explain* why the foreign investment limit in banks was raised to 74% (which was done to increase competition and efficiency).

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Economics > Indian Economic Development > Economic Reforms 1991

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