Previous Year Question
Which of the following was not a part of the Structural Adjustment Programmes under the New Economic Policy (NEP) of 1991?
Correct Answer: C
Detailed Solution
To understand the New Economic Policy of 1991, it is important to distinguish between Stabilisation Measures and Structural Reform Measures. According to NCERT, Stabilisation Measures were short-term measures intended to correct weaknesses in the Balance of Payments, maintain adequate foreign-exchange reserves and bring inflation under control. Therefore, Balance of Payments adjustment belonged primarily to stabilisation measures rather than structural reforms.
In contrast, Structural Reform Measures were long-term measures aimed at improving economic efficiency, removing rigidities and restrictions in different sectors, and increasing the international competitiveness of the Indian economy. NCERT discusses reforms in areas such as the industrial sector, financial sector, taxation, foreign-exchange markets, and trade and investment policy as important components of the wider reform process.
This distinction is important for examinations: Balance of Payments correction = Stabilisation, whereas industrial deregulation, tax reforms and other long-term institutional changes = Structural Reforms. Fiscal reforms formed part of the wider 1991 reform programme, although immediate fiscal-deficit correction also had a stabilisation dimension. The official 1991 Budget Speech itself treated fiscal correction as an important response to the prevailing economic crisis.