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The Resources Picture

The Resources Picture Rajiv THE tax effort of the Central Government has considerably flagged in the last two or three years, the ratio of Union taxes to national income declining from 10 per cent in 1965-66 to 8.7 per cent in 1968-69. The tax effort this year is likely to lead to only a marginal increase in the ratio to around 9 per cent. The favourable experience of the last year has led to renewed optimism as to the feasibility of "safe"' deficit financing; past experience suggests that the impact of deficit financing in any year on prices is limited to the increase in national product (and not its absolute level) in the previous year. Thus the 9 per cent increase in national output in 1967-68, which ensured greater market supplies in 1968-69, was responsible for the absence of price increase last year. In 1968-69 national income rose by just 3 per cent and the fresh bout of deficit financing this year would in all probability lead to a price increase of 3-4 per cent in 1969-70.

Relaxation without Perspective

Relaxation without Perspective Rajiv THE Reserve Bank is currently reviewing its programme of publications. The Report on Currency and Finance, with the comprehensive information it provides on various aspects of economic and financial developments, is an excellent reference source. The Bank is considering replacement of this Report by a number of separate problem- oriented studies on different aspects of the economy. While problem-oriented studies as such would be welcome, it would be a pity if the Currency and Finance Report in its present form were to be discontinued since it is the most authentic source of information and statistical data on the economy as a whole.

Time to Worry about Costs

SHORTLY after its inception in 1952! it was realised that active public participation was necessary for the success of the community project movement, later recast into national extension and development blocks. Even after local representatives were associated in an advisory capacity, it was found that local initiative was still not aroused and institutions that would ensure continuous improvement of social and economic conditions in rural areas were still lacking. The Balwantray Mehta Committee examined the working of the movement and recommended a three-tier Panchayati Raj and reorganisation of district administration. Since the adoption of the Panchayati Raj resolution by AICC at its Bhavnagar session in 1961 most States have introduced Panchayati Raj.

Spring Cleaning of Tax Structure

not been adverse to it Nobody has blamed the producer of foodgrains for the rise in prices. Nor is it fair economics to suggest that PL 480 imports "punished food grain producers". PL 480 imports did restrain foodgrain prices, especially when the situation demanded such restraint. AH imports do so in their respective fields. Are they, therefore, to be condemned? As a national objective, I ardently support the slogan "freedom from foreign food". But the way to attain is not through a prior decree of starvation

The Cost of Taking It Easy

March 9, 1968 RECESSION has cut into sales of commercial vehicles and most of the manufacturers have had to drastically reduce production. Bajaj-Tempo, which commenced production of its 4-wheerer delivery vans in October 1966, has been working much below its installed capacity of 4,000 vehicles (3-wheeiers and 4-wheelers), although it introduced in the market several new models such as station wagons, mini-buses, amburances and pick-up vans. The company has had to take on other work to keep its machine shop busy. Sales of commercial vehicles have lately started to pick up following appointment of additional dealers and inclusion of the Tempo Viking 4-wheelers in the DGS and D rate contract. The company is seeking a foreign exchange loan of Rs 28 lakhs from IFCl for import of balancing equipment to reach the installed capacity and to increase the indigenous content of vehicles. Efforts are also being made to further diversify the manufacturing programme. Results for the year to September 1967 turned out to be poor. Sales and machining charges together fetched 14 per cent more at Rs 2.54 crores but, with margins dropping by 4 points to around 61/2 per cent, gross profits fell by 13 per cent to Rs 16 lakhs. After providing for lull depreciation of Rs 23 lakhs-(Rs 9 lakhs), there is a deficit of Rs 6 lakhs. No dividend is recommended, therefore, for the fourth consecutive year.

Agreement with Pakistan

March 2, 1968 effective protection on their own manufactures. Our own commodity tax structure, together with the present system of rebates, discriminates against our industries in the export market in precisely the same manner.

Tax Concessions Will Not Help

February 24, 1968 at much less than full capacity either for lack of inputs or of demand. Fixed costs per unit of output are high and, protected as these industries are from foreign competition, there is hardly any inducement to bring them down. Extra- economic considerations often lead to faulty location and high raw material costs (for instance, of cotton, jute and sugarcane). Industries are often saddled with redundant labour as a result of political pressures

The Petrochemical Revolution

February 10, 1968 tures of Modern India", p 47.
46 Interview with Bhalchandra Apte, Secretary, Delhi Branch, Dakshin Bharat Hindi Prachar Sabha, New Delhi, in May 1965.

De Gaulle s Pound of Flesh

December 2, 1967 the CPI(M) in Kerala, the DMK in Madras and the Swatantra in Orissa will continue to rule and that these territories be treated as lost. Probably, in order to prevent a continental polarisation between the Right and Left, which would lead to grave instability and rob the Congress Party of its very relevant centrist role in a federal polity, the High Command may well consolidate and further build its rapport with these governments. A satisfied Namboodiripad and Annadurai could neutralise somewhat the dangerous repercussions of recent events in Bengal. Politicking certainly moves in strange ways in India.

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