The 1991 crisis in India economy was originated from both domestic and external sectors.
The domestic sector was facing a number of problems, including high inflation, fiscal deficit, and a balance of payments crisis. The external sector was also facing problems, including a decline in foreign exchange reserves and a rise in the current account deficit.
The combination of these problems led to the 1991 crisis. The government responded to the crisis by implementing a number of reforms, including devaluation of the rupee, liberalization of the economy, and privatization of state-owned enterprises. These reforms helped to stabilize the economy and set the stage for India’s economic growth in the 1990s.
Here is a brief explanation of each option:
- Option A: Domestic sector. The domestic sector was facing a number of problems, including high inflation, fiscal deficit, and a balance of payments crisis. High inflation was caused by a number of factors, including the government’s expansionary fiscal policy and the increase in money supply. The fiscal deficit was caused by the government’s spending more than it was earning. The balance of payments crisis was caused by the decline in foreign exchange reserves and the rise in the current account deficit.
- Option B: External sector. The external sector was also facing problems, including a decline in foreign exchange reserves and a rise in the current account deficit. The decline in foreign exchange reserves was caused by the government’s spending more than it was earning, and the rise in the current account deficit was caused by the increase in imports and the decrease in exports.
- Option C: Both A and B. The 1991 crisis in India economy was originated from both domestic and external sectors. The domestic sector was facing a number of problems, including high inflation, fiscal deficit, and a balance of payments crisis. The external sector was also facing problems, including a decline in foreign exchange reserves and a rise in the current account deficit. The combination of these problems led to the 1991 crisis.
- Option D: None of these. The 1991 crisis in India economy was originated from both domestic and external sectors.