Question : The 1991 economic policy aimed to reduce the fiscal deficit and promote fiscal discipline through:
Option 1: Increased government spending
Option 2: Higher taxes on individuals
Option 3: Public debt management
Option 4: Fiscal consolidation measures
Correct Answer: Fiscal consolidation measures
Solution : The correct answer is (d) Fiscal consolidation measures
The 1991 economic policy in India aimed to address the economic challenges the country was facing, including a high fiscal deficit. Fiscal deficit refers to the excess of government spending over its revenue. To tackle this issue and promote fiscal discipline, the policy introduced several fiscal consolidation measures.
Fiscal consolidation measures typically involve a combination of expenditure control and revenue enhancement. The objective is to reduce the fiscal deficit and bring the government's finances on a sustainable path. Some of the measures adopted under the 1991 economic policy included:
1. Reduction in unproductive and wasteful government expenditure.
2. Rationalization of subsidies and targeted delivery mechanisms.
3. Introduction of tax reforms to broaden the tax base and increase revenue collection.
4. Streamlining public debt management to improve debt sustainability.
5. Enhancing transparency and accountability in public finances.
Question : Which policy aimed to reduce the fiscal deficit and promote fiscal discipline in the 1991 economic policy?
Option 1: Monetary policy
Option 2: Fiscal policy
Option 3: Public debt policy
Option 4: External debt policy
Question : Which of the following is a tool for fiscal consolidation?
Option 1: Tax cuts
Option 2: Increased government spending
Option 3: Deficit financing
Option 4: Austerity measures
Question : The process of increasing government spending and/or decreasing taxes in order to stimulate economic growth is known as:
Option 1: Fiscal austerity
Option 2: Fiscal stimulus
Option 3: Fiscal responsibility
Option 4: Fiscal consolidation
Question : The government's policy of reducing taxes to stimulate economic growth is known as ____________.
Option 1: Austerity measures
Option 2: Expansionary fiscal policy
Option 3: Contractionary fiscal policy
Option 4: Supply-side economics
Question : The 1991 economic policy in India aimed to address:
Option 1: Increasing government control in the economy
Option 2: High inflation and fiscal deficit
Option 3: Excessive privatization of public enterprises
Option 4: Declining foreign direct investment (FDI)
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