Question

Which of the following is NOT related to the structural adjustment programmes implemented in India after 1991?

• A. Deregulation
• B. Quantitative restrictions on trade
• C. Fiscal austerity
• D. Reduction of subsidies

Answer 1

The Correct Option is B

The structural adjustment programmes (SAPs) implemented in India after 1991 were primarily aimed at liberalizing the Indian economy by overcoming excessive restrictions, improving efficiency, and promoting foreign investment and trade. These reforms were part of a larger attempt to overcome the financial crisis faced by India in the early 1990s and were aligned with the broader goals of economic stabilization and growth. Let's analyze the options provided:

1. Deregulation:

   A key element of the structural adjustment was deregulation, which involved reducing governmental control in the business sector. This meant loosening restrictions on industries to foster competitive market conditions. Therefore, deregulation is related to structural adjustments.

2. Quantitative restrictions on trade:

   The removal of quantitative restrictions was part of trade liberalization, allowing more free trade and reducing traditional trade barriers. However, the term "quantitative restrictions on trade," as provided here, implies limiting trade – which would contradict the essence of structural reforms aimed at opening up trade. Thus, this does not align with the objectives of the 1991 reforms, making it the correct choice.

3. Fiscal austerity:

   Fiscal austerity refers to the measures taken to reduce government deficits and debt accumulation, which included cutting down on excessive government spending. This was indeed part of the structural adjustments to stabilize the economy.

4. Reduction of subsidies:

   Reducing subsidies was part of fiscal reforms aimed at reducing the fiscal deficit. High subsidies distorted market prices and placed a heavy burden on the national budget, so reducing them was in line with SAP goals.

Therefore, the concept that is NOT related to the structural adjustment programmes is Quantitative restrictions on trade since the reforms intended to reduce such restrictions.