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The balance of payments crisis that emerged in early 1991 played a pivotal role in India’s decision to adopt the policy of Liberalisation, Privatisation, and Globalisation (LPG). Examine.

Topic: Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth.

4. The balance of payments crisis that emerged in early 1991 played a pivotal role in India’s decision to adopt the policy of Liberalisation, Privatisation, and Globalisation (LPG). Examine. (250 words)

Difficulty level: Easy

Reference: Insights on India

Why the question:

The question is part of the static syllabus of General studies paper – 3 and mentioned as part of Mission-2024 Secure timetable.

Key Demand of the question:

To write about the causes of LPG reforms and its impact.

Directive word:

Examine – When asked to ‘Examine’, we must investigate the topic (content words) in detail, inspect it, investigate it and establish the key facts and issues related to the topic in question. While doing so we should explain why these facts and issues are important and their implications.

Structure of the answer:

Introduction: 

Begin by giving context of BOP crisis of 1991.

Body:

First, write about the various factors that led to crisis of 1991.

Next, explain the Liberalisation, Privatisation and Globalisation of the India economy and what it meant.

Next, write about the impact of LPG reforms of 1991 – write both positives and negatives for the reforms.

Conclusion:

Suggest a way forward on how to do with negatives.