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RAS question

Foreign Exchange Management Act (FEMA) replaced which act?

Correct answer: (A) FERA (Foreign Exchange Regulation Act).

The Foreign Exchange Management Act, 1999 replaced the Foreign Exchange Regulation Act, 1973.

  1. (A)

    FERA (Foreign Exchange Regulation Act)

  2. (B)

    Companies Act

  3. (C)

    Foreign Trade Act

  4. (D)

    RBI Act

Explanation

FEMA is linked directly to the repeal of FERA. FEMA, 1999 replaced FERA, 1973, moving India's foreign-exchange law from a stricter criminal-law approach to a more liberal civil-management framework. The RBI circular confirms the operative legal change: the Government notified that the Foreign Exchange Management Act, 1999 would come into force on 1 June 2000, and the Foreign Exchange Regulation Act, 1973 stood repealed from 1 June 2000. The key point is not merely the abbreviation FEMA; it is the shift from foreign-exchange regulation under FERA to foreign-exchange management under FEMA.

Why the other options are wrong

  • (B) The Companies Act governs company law, whereas FEMA replaced the foreign-exchange statute FERA when it came into force.
  • (C) The Foreign Trade Act governs foreign trade, whereas FEMA replaced the Foreign Exchange Regulation Act, 1973.
  • (D) The RBI Act was not replaced by FEMA; FEMA replaced the earlier foreign-exchange law, FERA, and the RBI circular formally communicated the FEMA transition.

Concept

FEMA and FERA belong to the Indian Economy concept of external-sector regulation and the post-liberalisation shift in foreign-exchange governance. FEMA versus FERA is a compact RAS theme because it combines statute chronology with the regulatory philosophy behind the change.

Source

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