Question : Assertion: External sector reforms aimed to attract foreign direct investment (FDI).
Reason: FDI can contribute to economic development by bringing in capital and technology.
Option 1: Both assertion and reason are true, and the reason is the correct explanation of the assertion.
Option 2: Both assertion and reason are true, but the reason is not the correct explanation of the assertion.
Option 3: Assertion is true, but the reason is false.
Option 4: Assertion is false, but the reason is true.
Correct Answer: Both assertion and reason are true, and the reason is the correct explanation of the assertion.
Solution : The correct answer is (a) Both assertion and reason are true, and the reason is the correct explanation of the assertion.
External sector reforms in many countries, including India, aim to attract foreign direct investment (FDI) by creating a favorable business environment and removing barriers to investment. The reason provided is also true because FDI can contribute to economic development by bringing in capital, technology, managerial expertise, and access to new markets. It can stimulate job creation, increase productivity, foster innovation, and enhance competitiveness in the domestic market. Therefore, the reason correctly explains the assertion.
