Multiple choice

Why did India export Gold to Bank of England U.K. in 1991?

  1. To meet foreign exchange crisis.

  2. India returned U.K. gold.

  3. For investments in British companies.

  4. India returned gold taken as loan from U.K.
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A Correct answer
Explanation

India export Gold to Bank of England U.K. in 1991 in order to meet foreign exchange crisis. By 1967, India had started having balance of payments problems. By the end of 1990, it was in a serious economic crisis. The government was close to default, its central bank had refused new credit and foreign exchange reserves had reduced to such a point that India could barely finance three weeks' worth of imports. India had to airlift its gold reserves to pledge it with International Monetary Fund (IMF) for a loan. 

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