The proposed action of not depending on short-term foreign borrowings (option 1) is correct as it reduces India's vulnerability to sudden capital flight and currency volatility, which often exacerbate financial crises. Short-term loans can lead to liquidity issues if investors withdraw their funds quickly during global turbulence, making the economy susceptible to external shocks. In contrast, opening up to more foreign banks (option 2) and maintaining full capital account convertibility (option 3) could increase exposure to global financial systems and risks, thereby potentially undermining economic stability in times of crisis.