Question : Statement 1: The Foreign Exchange Regulation Act (FERA) was enacted to regulate foreign trade in India.
Statement 2: FERA was replaced by the Foreign Exchange Management Act (FEMA) in 1991.
Option 1: Both statements are true.
Option 2: Both statements are false.
Option 3: Statement 1 is true, and statement 2 is false.
Option 4: Statement 1 is false, and statement 2 is true.
Correct Answer:
Both statements are true.
Solution : The correct answer is (a) Both statements are true.
Statement 1 is true. The Foreign Exchange Regulation Act (FERA) was enacted in India in 1973 to regulate foreign exchange transactions, control capital flows, and manage foreign trade. It aimed to ensure the proper utilization of foreign exchange resources and prevent illegal transactions.
Statement 2 is also true. FERA was replaced by the Foreign Exchange Management Act (FEMA) in 1999. The introduction of FEMA brought significant changes to the regulatory framework governing foreign exchange transactions in India. It aimed to liberalize and simplify foreign exchange regulations, aligning them with the changing economic policies and facilitating foreign investments.
Therefore, both statements are true. FERA was enacted to regulate foreign trade, and it was later replaced by FEMA in 1991.
