Economics · Indian Economy

Evaluate the following statements related to the comprehensive impact of Globalization on India's macroeconomic stability and policy independence post-1991: Statement I: The substantial increase in Foreign Exchange Reserves post-reforms provides a critical buffer against external shocks, enhancing India's overall macroeconomic resilience. Statement II: Adherence to the Fiscal Responsibility and Budget Management (FRBM) Act, 2003, which mandates a reduction in the fiscal deficit, is an entirely independent domestic policy choice and has no direct bearing on India's attractiveness to global credit rating agencies and foreign investors. Statement III: The phenomenon of 'premature de-industrialization', where India's manufacturing sector failed to grow to its full potential before the services sector boom, is partially attributed to the initial rush of cheap imports post-globalization, which stifled domestic industrial growth. Statement IV: The liberalization of the banking sector led to the creation of Local Area Banks (LABs) with the specific mandate of operating only within a limited geographical area, primarily to mitigate the risk of a globally systemic bank failure. Statement V: India's greater integration into the global financial system means that the Monetary Policy Committee (MPC) must now consider global factors (e.g., crude oil prices, US interest rates) more heavily than domestic factors (e.g., food inflation, monsoon) when setting the Repo Rate. Statement VI: Globalization has led to a major institutional challenge, as the simultaneous liberalization of the capital account and fixed exchange rate maintenance forces the RBI to sacrifice control over domestic money supply, illustrating the 'Impossible Trinity' principle. Statement VII: The competitive need to attract FDI and ensure global corporate compliance has necessitated the swift adoption of international intellectual property standards, leading to the enactment of the Patents (Amendment) Act, 2005, aligning Indian law with the TRIPS Agreement. Identify the set of statements that are factually correct and accurately reflect the complex interplay between globalization and Indian policy-making.