Which of the following measures was announced by the Government of India in the year 1994?
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2 marks, −0.667Indian EconomyIndia's external sector and trade policyConvertibility, reserves and capital flowsModerateabout 1 min
IIT JAM 2022 Question 20: India's external sector and trade policy
Answer and worked solution
Answer: (B)
India adopted full convertibility on the current account in 1994 by accepting the obligations of Article VIII of the IMF Articles of Agreement.
The answer is (B). Capital account convertibility has never been made full, and the committees named in the other options date from other years.
The trap: (A) Full convertibility on capital account
Capital account convertibility (A) is often confused with current account convertibility; India moved only to the latter in 1994 and remains cautious on the former.
India's external sector and trade policy has come up 25 times in 6 exams since 2011.
What this question tests
This question is on Convertibility, reserves and capital flows, part of India's external sector and trade policy in Indian Economy.
Opening India's capital account and building reserves.
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Question from the IIT JAM 2022 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.