Correct Answer: Both statements are false.

Solution : The correct answer is (b) Both statements are false.

Statement 1 is false. The Foreign Exchange Regulation Act (FERA) enacted in 1973 did impose strict controls on foreign exchange transactions in India. It aimed to regulate and control foreign exchange dealings to conserve and manage the country's foreign exchange resources. FERA imposed restrictions on various aspects of foreign currency transactions, such as acquisition, holding, and transfer of foreign exchange.

Statement 2 is also false. FERA was not replaced by the Foreign Exchange Management Act (FEMA) in 1999. Instead, FERA was repealed and replaced by the Foreign Exchange Management Act (FEMA) in 1973. FEMA introduced a more liberalized and modern framework for foreign exchange management in India.

Therefore, the correct answer is that both statements are false.