The New Economic Policy of 1991 was introduced to address India's severe economic crisis. It comprised two main parts: 1. Stabilization Measures These were short-term measures aimed at correcting macroeconomic imbalances quickly, primarily by controlling inflation and reducing the current account deficit (BoP crisis). Examples include fiscal consolidation and exchange rate adjustments. 2. Structural Adjustment Measures These were long- term measures aimed at removing the rigidities in the economy and improving its efficiency and growth potential. These involved comprehensive reforms like liberalization (dismantling controls), privatization (reducing the role of the state), and globalization (integrating the Indian economy with the world). These changes were implemented over several years.
Which one of the following is correct regarding stabilization and structural adjustment as two components of the new economic policy adopted in India?
Asked in UPPCS Prelims 1996 · Topic: Nature of Indian Economy (Evolution from Planned to Market-Oriented Economy)
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Answer: B. Structural adjustment is a gradual, multi-step process, while stabilization is a quick adaptation process
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