Question

FERA stands for

• A. Foreign Exchange Reservation Act
• B. Foreign Embassy Regulation Act
• C. Foreign Exchange Rules and Act
• D. Foreign Exchange Regulation Act

Hint:

Make sure to remember the pair of historical acts together:
- FERA (1973): Foreign Exchange Regulation Act (Stringent/Criminal).
- FEMA (1999): Foreign Exchange Management Act (Liberal/Civil).
The replacement of "Regulation" with "Management" reflects the economic transition of India.

Answer 1

The Correct Option is D

Step 1: Understanding the Question:
The question is based on Legal and Economic legislations in India.
We need to identify the correct expansion of the abbreviation "FERA".

Step 2: Detailed Explanation:

• FERA stands for the

Foreign Exchange Regulation Act.

• It was passed by the Indian Parliament in 1973 and came into force on January 1, 1974.

• The primary purpose of FERA was to conserve foreign exchange resources and regulate transactions affecting foreign exchange, foreign securities, and the import/export of currency.

• FERA was extremely stringent and treated violations of foreign exchange rules as criminal offenses.

• Due to the liberalization of the Indian economy in 1991, FERA's restrictive policies became a hurdle for foreign trade and investments.

• Consequently, in 1999, FERA was repealed and replaced by the more liberal

FEMA (Foreign Exchange Management Act, 1999), which shifted the focus from "regulation and control" to "management and facilitation" of foreign exchange. Under FEMA, violations became civil infractions rather than criminal offenses.

• Let us evaluate the options:
- Option (A) uses "Reservation" - Incorrect.
- Option (B) uses "Embassy" - Incorrect.
- Option (C) uses "Rules and Act" - Incorrect.
- Option (D) correctly uses "Foreign Exchange Regulation Act".


Step 3: Final Answer:
FERA stands for Foreign Exchange Regulation Act, which corresponds to Option (D).