UPSC Prelims 2017 · Question 27 of 99
UPSC Prelims 2017 question on Post 1991 Liberalization Effects
- ExamUPSC CSE
- Year2017
- PaperGeneral Studies Paper I
- SubjectIndian Economy
- TopicPlanning and Economic Reforms
- DifficultyEasy
- TypeStatement
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 code given below:
Show answer
Answer: B. 2, 3 and 4 only
Verdict
The answer is 2, 3 and 4 only. Exports, foreign direct investment and reserves all rose after 1991, but agriculture's share of GDP fell.
Analysis
Statement 1 is INCORRECT and reversed. Agriculture's contribution to GDP declined steadily after liberalisation, from about twenty nine per cent in 1991 to roughly fifteen per cent, which is the normal structural shift as services and industry expand faster. Statement 2 is CORRECT. India's share in world exports rose after 1991. Statement 3 is CORRECT. Foreign investment was negligible before the reforms, with about seventy four million dollars in the first year, and rose steadily thereafter. Statement 4 is CORRECT. Foreign exchange reserves grew enormously from the crisis level of 1991.
Source
Press analysis of twenty five years of liberalisation.
How to crack it
Distinguish absolute growth from share of GDP, because agricultural output did grow while its share fell, and the statement is about share. Structural transformation means the primary sector's share declines as an economy develops, so any claim that it increased enormously contradicts the basic development pattern. Testing a statement against the standard direction of structural change is faster and more reliable than recalling the numbers.