Question : Assertion: Devaluation of the Indian rupee in 1991 resulted in the inflow of foreign exchange.
Reason: Devaluation of the Indian rupee was a step to get more foreign investments.
Option 1: Both assertion and reason are true, and the reason is the correct explanation of the assertion.
Option 2: Both assertion and reason are true, but the reason is not the correct explanation of the assertion.
Option 3: Assertion is true, but the reason is false.
Option 4: Assertion is false, but the reason is true.
Correct Answer: Assertion is true, but the reason is false.
Solution : The correct answer is (c) Assertion is true, but the reason is false.
The assertion is true. Devaluation of the Indian rupee in 1991 did result in the inflow of foreign exchange. By devaluing the currency, Indian exports became cheaper for foreign buyers, leading to an increase in export earnings and foreign exchange inflows.
However, the reason provided is incorrect. Devaluation of the Indian rupee was primarily aimed at addressing the balance of payments crisis and improving the competitiveness of Indian exports. While an increase in foreign investments can be a positive outcome of devaluation, it was not the primary objective.
Therefore, the assertion is true, but the reason is false.
