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UPSC 1996: One of the important goals of the economic liberalisation policy is to achieve full convertibility of the Indian rupee. This is being advocated because
(a)convertibility of the rupee will stabilize its exchange value against major currencies of the world
(b)it will attract more foreign capital inflow in India
(c)it will help promote exports
(d)it will help India secure loans from the world financial markets at attractive terms
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Not attemptedCorrect Answer: (c) it will help promote exports
Full convertibility removes exchange-control restrictions, letting exporters freely convert export proceeds and obtain foreign currency for inputs, which directly encourages and facilitates a higher volume of exports. While capital inflows or loan terms may also benefit, the prime policy objective stated in 1990s liberalisation documents was export promotion; therefore option (c) is the best description. ([scribd.com](https://www.scribd.com/document/731910047/1996))
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Frequently Asked Questions
What is the correct answer to this UPSC 1996 Indian Economy question?▼
The correct answer is option (c): it will help promote exports. Watch the detailed video explanation in our Sherlocking Prelims course on UnlockIAS.
Which year was this External Sector & Balance Of Payments question asked in UPSC Prelims?▼
This question was asked in UPSC CSE Prelims 1996, GS Paper 1, as Question 34. It falls under Indian Economy > External Sector & Balance Of Payments.
What is the difficulty level of this UPSC question?▼
This question is rated "moderate". It requires sound conceptual understanding of the topic.
How many UPSC Prelims questions have been asked from External Sector & Balance Of Payments?▼
UPSC has asked 49 questions from External Sector & Balance Of Payments (under Indian Economy) across multiple years. Visit the topic page to see the full list and year-wise trends.