Q. Which of the following is/are reason/s for balance of payments crisis in the Indian economy in 1991?
1.High combined deficit of the central and state governments.
2.Elevated inflationary pressures.
3.Large and unsustainable current account deficit (CAD).
Choose the correct answer from below given codes:

[A] 1 only

[B] 1 and 2 only

[C] 2 and 3 only

[D] 1, 2 and 3

Answer: D
Notes:

Explanation: The macroeconomic imbalances of the late 1980s and early 1990s pushed the government towards introducing the structural reforms of 1991.

The high combined deficit of the central and state governments, elevated inflationary pressures, and large and unsustainable current account deficit (CAD) led to a balance of payments crisis in the Indian economy.

Source: Economic Survey 2022 – 23

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