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

Answer: (b) 2, 3 and 4 only

Notes:
  • The share of agriculture in India`s GDP has been declining since the 1990s, as the country has been transitioning towards a more service-oriented economy. According to data from the World Bank, the share of agriculture in India`s GDP was 29.1% in 1991 and has since decreased to around 15% in recent years.
  • India’s share of world exports has been steadily increasing since the 1990s. In 1991, India`s share of world exports was just 0.5%, but by 2019, it had increased to 1.7%. This growth can be attributed to several factors, including the liberalization of trade policies, the development of export-oriented industries, and improvements in infrastructure and logistics.
  • After the liberalization of economic policies, India saw a significant increase in foreign direct investment (FDI) inflows. In 1991, India received just $132 million in FDI, but by 2020, this had increased to $81.7 billion. FDI inflows have played an important role in driving economic growth in India, particularly in sectors such as manufacturing, services, and infrastructure.
  • India’s foreign exchange reserves have increased significantly since the 1990s, reaching an all-time high of $608 billion in May 2021. These reserves provide a cushion against external shocks and help maintain macroeconomic stability. The increase in reserves can be attributed to several factors, including the growth in exports, remittances, and FDI inflows.