UPSC Civil Services Model Paper 7

India agreed to the conditionalities of the World Bank and IMF and announced the New Economic Policy ( NEP ) which consisted of wide-ranging economic reforms.
The thrust of the policies was towards creating a more competitive environment in the economy and removing the barriers to entry and growth of firms .
This set of policies can broadly be classified into two groups:
the stabilization measures and the structural reform measures. Hence, Statement 1 is correct.
Stabilization measures are short-term measures, intended to correct some of the weaknesses that have developed in the balance of payments and to bring inflation under control.
There was a need to maintain sufficient foreign exchange reserves and keep rising prices under control.
Structural reform policies are long-term measures, aimed at improving the efficiency of the economy and increasing its international competitiveness by removing the rigidities in various segments of the Indian economy.
The government initiated a variety of policies which fall under three heads viz., liberalization , privatization , and globalization .
It converted the Indian economy into a market economy by removing all kinds of unnecessary restrictions.
Hence, Statement 3 is correct.
The main objective of the policy was intended to move towards a higher economic growth rate and to build sufficient foreign exchange reserves.
Hence, Statement 2 is incorrect.
The policy aimed at increasing the participation of private players in all sectors of the economy.