In _______, a crisis in the balance of payments led to the introduction of economic reforms in India.

The correct answer is 1991.

Key Points

• The economic crisis in the balance of payments was triggered by a sharp increase in oil prices, which led to a surge in imports and a depletion of foreign exchange reserves.
• The government of India was forced to seek a bailout loan from the International Monetary Fund (IMF) to avoid defaulting on its external debt payments.
• As a condition for the loan, the IMF demanded a set of economic reforms that aimed to address the structural weaknesses of the Indian economy, including its high fiscal deficit, inflation, and inefficient public sector enterprises.
• The reforms, known as the New Economic Policy (NEP) or the Liberalization-Privatization-Globalization (LPG) policy, included measures such as reducing trade barriers, deregulating industries, attracting foreign investment, and cutting subsidies.
• The NEP was controversial and faced opposition from various quarters, including political parties, trade unions, and farmers, who argued that it favored big businesses and foreign interests at the expense of domestic industries and workers.

Additional Information

• 1997 was not a significant year in India's economic history. It was a year of relative stability and growth, with the economy expanding at a rate of around 7%.
• 2001 was a year of global economic slowdown and uncertainty, following the dot-com bubble burst and the 9/11 attacks. India's economy was affected by these events, but it did not experience a crisis in the balance of payments.
• 1981 was a year of economic difficulties for India, marked by high inflation, low growth, and a fiscal deficit. However, it was not a year of balance of payments crisis, as India had a surplus in its current account and foreign exchange reserves.