Correct Option
The correct option is 2 and 3 only.
Explanation
The trade policy reforms initiated in 1991 aimed to liberalize the external sector by dismantling the restrictive regime of quantitative restrictions and licensing (Quota-Permit Raj). These reforms were designed to integrate the Indian economy with the global market, improve efficiency, and address the Balance of Payments crisis.
Statement-wise Analysis
- Statement 1 is Incorrect. Quantitative restrictions (QRs) on imports were not fully removed immediately in 1991. While restrictions were eased for capital goods and intermediates, QRs on manufactured consumer goods and agricultural products were retained to protect domestic industries. These were fully removed only in April 2001, largely to comply with World Trade Organization (WTO) rulings.
- Statement 2 is Correct. To address the trade deficit and boost foreign exchange earnings, export duties were removed. This measure was intended to increase the price competitiveness of Indian goods in international markets.
- Statement 3 is Correct. The system of import licensing was abolished for almost all categories of goods to encourage deregulation. Exceptions were maintained only for a small negative list consisting of hazardous and environmentally sensitive industries.
Key Takeaway
The 1991 trade reforms abolished import licensing and export duties to promote liberalization. However, Quantitative Restrictions (QRs) on consumer goods were phased out gradually and were fully removed only in 2001.