Question

Defend or refute the given statement with valid argument:

“New Economic Policy 1991 altered the role of Reserve Bank of India (RBI) in the economy.” 

Answer 1

1. The statement is correct. The 1991 New Economic Policy, which brought globalization, privatization, and liberalization, profoundly changed the Reserve Bank of India's (RBI) function.
2. The changes gave banks and other financial institutions more autonomy while reducing the RBI's influence over the financial markets.
3. The RBI's function changed to maintain financial stability in a more market-driven economy, and the emphasis switched from direct intervention to banking system regulation and supervision.