1996 General Studies, all questions

UPSC Prelims 1996 · General Studies

Question 27: Economy and Social Development

Which one of the following is correct regarding stabilization and structural adjustment as two components of the new economic policy adopted in India?

aStabilization is a gradual, multi-step process while structural adjustment is a quick adaptation process
bStructural adjustment is a gradual, multi-step process, while stabilization is a quick adaptation process
cStabilization and structural adjustment are very similar and complementary policies. It is difficult to separate one from the other
dStabilization mainly deals with a set of policies which are to be implemented by the Central Government while structural adjustment is to be set in motion by the State Governments

AnswerThe answer is (b).

Stabilisation is a short-term, demand-side exercise to correct the balance of payments and curb inflation; it can be done quickly. Structural adjustment is the longer-term, supply-side programme of reforms in industry, trade, finance and the public sector, carried out step by step over years. So structural adjustment is the gradual, multi-step process and stabilisation the quick one. Remember: stabilisation - short term; structural adjustment - long term.

Why each option is right or wrong
  • (a) Reverses the two: stabilisation is the quick adaptation and structural adjustment the gradual one.
  • (b) Right: structural adjustment is gradual and multi-step, stabilisation is quick.
  • (c) The two are complementary but are distinct in time-frame and aim, and are easy to tell apart.
  • (d) Both were pursued through the Centre's policy, not divided between the Centre and the states.

Explanation: written by UPSC Grade, not by UPSC.

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Source: UPSC, Civil Services (Preliminary) Examination 1996, General Studies. UPSC's own paper isn't online; the words are from a published compilation. The paper on upsc.gov.in.