UPSC Prelims 2001 Q4: Indian Economy – Banking & Financial Sector
Which of the following committees examined and suggested Financial Sector Reforms?
- (a) Abid Hussain Committee
- (b) Bhagwati Committee
- (c) Chelliah Committee
- (d) Narasimham Committee
Answer: (d) Narasimham Committee
Explanation
Committee that examined and suggested Financial Sector Reforms
| Committee | Subject |
|---|---|
| Narasimham Committee (1991, 1998) | Financial sector and banking reforms — lower SLR and CRR, prudential norms, fewer controls |
| Chelliah Committee (1991) | Tax reforms |
| Abid Hussain Committee (1997) | Small-scale industries |
| Bhagwati Committee (1970s) | Unemployment |
The Committee on the Financial System under M. Narasimham (1991) laid the base of India's financial sector reforms; the second Narasimham Committee (1998) dealt with banking sector reforms.
Answer: (d) Narasimham Committee.
Why each option is right or wrong
- (a) Incorrect. The Abid Hussain Committee examined small-scale industries.
- (b) Incorrect. The Bhagwati Committee examined unemployment.
- (c) Incorrect. The Chelliah Committee dealt with tax reforms.
- (d) CORRECT. The Narasimham Committee suggested the financial sector reforms.
Key point
Narasimham I (1991) — financial system; Narasimham II (1998) — banking sector; Chelliah — tax; Malhotra — insurance.
Remember
Financial sector reforms = Narasimham Committee.
Common mistakes
- Choosing Chelliah, another 1991 reform committee, on tax.
- Confusing Abid Hussain (small industry) with finance.
- Not separating financial sector reform from fiscal reform.
Exam tip
Pair each 1990s reform committee with one word: Narasimham — banks, Chelliah — taxes, Malhotra — insurance.
Sources
- Reserve Bank of India — Report of the Committee on the Financial System (Narasimham Committee), 1991
- Ramesh Singh — Indian Economy, chapter 'Banking in India'