Question

Read the following statements – Assertion (A) and Reason (R). Choose the correct alternative from the options given below :
Assertion (A) : Under the financial sector reforms introduced in 1991, foreign investment limit in banks was raised up to around 74%.
Reason (R) : Foreign Institutional Investors (FIIs) were allowed to invest in Indian financial markets, post-1991.

• A. Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
• B. Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
• C. Assertion (A) is true, but Reason (R) is false.
• D. Assertion (A) is false, but Reason (R) is true.

Hint:

Financial reforms in India aimed at increasing foreign investments, improving market transparency, and liberalizing the economy.

Answer 1

The Correct Option is B

Assertion (A) is true because foreign investment limits in Indian banks were indeed raised to 74% during the financial reforms of 1991.
Reason (R) is also true because FIIs were allowed to invest in Indian financial markets post-1991. However, Reason (R) does not directly explain Assertion (A), as the reforms encompassed broader financial liberalization measures, not just foreign investments.