Question

In 1960 to 1970 how do goverment handle the problem of foreign exchange

Answer 1

FERA was enacted in September 1973 and it came in force from January 1, 1974. It was amended by the Foreign Exchange Regulation (Amendment) Act 1993 and later in 2000, was replaced by FEMA.

FERA applied to all citizens of India, all over India.

The idea was to regulate the foreign payments, regulate the dealings in Foreign Exchange & securities and conservation of Foreign exchange for the nation.

Key Features

Important features of FERA are as follows:

RBI can authorize a person / company to deal in foreign exchange.

RBI can authorize the dealers to do transact the Foreign Currencies, subject to review and RBI was given power to revoke the authorization in case of non-compliancy

RBI would authorize the persons as Money Changers who will convert the currency of one nation to currency of their nation at rates “Determined by RBI”

NO person, other than “authorized dealer” would enter in any transaction of the foreign currency.

Answer 2

They removed trade barriers for easier flow of goods

Due to fallowing reasons, the Government of India removed trade barriers

(i) India was lacing a serious/economic crisis  because of slow economic growth, inefficient public enterprises, high inflation and rising fiscal defecit.

(ii) The Government of India decided that the time had come for Indian producers to compete with producers around the globe.

(iii) The decision to remove trade barriers was supported by powerful international organisations like IMF, WTO, etc.

(iv) Removing barriers or restrictions set by the government is known as liberalisation.

:) Hope this helps !!!!!

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