What was a significant objective of the fiscal and monetary policy reforms initiated in India post 1991?
To stabilise the economy by liberalising interest rates and enhancing financial sector efficiency
The 1991 economic reforms in India were launched in response to a severe balance of payments crisis and aimed at liberalisation, privatisation and globalisation of the economy.
A central objective of the fiscal and monetary policy reforms was to stabilise the economy by deregulating administered interest rates, allowing them to be market-determined, and improving the efficiency and competitiveness of the financial sector.
The reforms actually encouraged, rather than decreased, foreign investment and reduced direct government control over banking, so those options are incorrect.
Hence, the correct objective was to stabilise the economy by liberalising interest rates and enhancing financial sector efficiency.
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