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Question

What immediate measure was taken in 1991 to resolve the balance of payments crisis in India?

The correct answer is

Devaluation of the rupee against foreign currencies.

In 1991 India faced a severe balance of payments crisis, with foreign exchange reserves shrinking to critically low levels.

To make exports cheaper and more competitive and to discourage imports, the government took immediate corrective action.

The rupee was devalued sharply against major foreign currencies in two steps during July 1991.

Devaluation helped narrow the trade gap and formed part of the wider economic reforms and liberalisation that followed.

Hence, the immediate measure was the devaluation of the rupee against foreign currencies.

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