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E option = 10 extra minutes

• Austerity = Government measures to reduce expenditure/imports and conserve forex during economic stress. • Major Indian austerity phases: 1965–66 (war + food crisis), 1990–91 (BoP crisis), 2008–09 (global crisis), 2025–26 (CAD pressure). • Lal Bahadur Shastri’s 1965 “Monday fast” appeal aimed at saving food grains during severe shortage. • 1991 BoP crisis was triggered by Gulf War oil shock, high fiscal deficit and falling forex reserves. • India pledged gold reserves in 1991 to raise foreign exchange. • CAD (Current Account Deficit) rises when imports exceed exports; crude oil and gold are major contributors. • Import cover = Number of months imports can be financed using forex reserves. • Forex reserves are maintained by Reserve Bank of India and include foreign currency assets, gold, SDRs and IMF reserve position. • Fiscal Deficit = Total expenditure − (Revenue receipts + Non-debt capital receipts). • Revenue expenditure includes subsidies, salaries, pensions and interest payments; capital expenditure creates assets/infrastructure. • India abolished Plan vs Non-Plan expenditure classification in 2017. • 1991 crisis led to LPG reforms:- Liberalisation, Privatisation and Globalisation.

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