UPSC Prelims 1995 · General Studies
Question 64: Economy and Social Development
The Narasimham Committee for Financial Sector Reforms has suggested reduction in
AnswerThe answer is (b).
The Narasimham Committee (1991) on the financial system recommended phased cuts in the Statutory Liquidity Ratio and the Cash Reserve Ratio so that banks could lend more, and a reduction in directed credit: it wanted priority sector lending, then a 40 per cent target, cut sharply. It did not propose cutting finance to the capital goods sector. Remember: lower SLR, lower CRR, lower priority sector lending.
Why each option is right or wrong
- (a) Incomplete: the Committee also wanted priority sector lending reduced.
- (b) Right: SLR, CRR and priority sector lending.
- (c) Wrong: financing to the capital goods sector was not what it proposed to cut, and CRR is left out.
- (d) Wrong: leaves out SLR and includes capital goods financing.
Explanation: written by UPSC Grade, not by UPSC.
Source: UPSC, Civil Services (Preliminary) Examination 1995, General Studies. UPSC's own paper isn't online; the words are from a published compilation. The paper on upsc.gov.in.