Which of the following has/have occurred in India after its liberalization of economic policies in 1991?

1. Share of agriculture in GDP increased enormously.
2. Share of India’s exports in world trade increased.
3. FDI inflows increased.
4. India’s foreign exchange reserves increased enormously.

Select the correct answer using the codes given below:

1. 1 and 4 only
2. 2, 3 and 4 only
3. 2 and 3 only
4. 1, 2, 3 and 4

Explanation

Statement 1 is incorrect

1. Since the 1990s, India’s economy has been transitioning from agriculture to a more service-oriented focus, with agriculture contributing a decreasing share to the country’s GDP. Economic Survey 2023-24 says that the Indian agriculture sector provides livelihood support to about 42.3 per cent of the population and has a share of 18.2 per cent in the country’s GDP at current prices.

Statements 2, 3 and 4 are correct

• After the liberalisation of its economic policies in 1991, India experienced a notable increase in its share of exports in world trade, as the economy opened up and integrated more with global markets. Additionally, liberalization policies played a crucial role in encouraging foreign direct investment (FDI), leading to a significant rise in FDI inflows into the country. Furthermore, post-liberalization, India saw a substantial increase in its foreign exchange reserves, driven by heightened trade and FDI activities.

Answer: (b) 2, 3 and 4 only; Difficulty Level: Easy