IMPORT POLICY-Economic Realities Ignored

Economic Realities Ignored THE import policy for the current year, announced on April 3, cannot be said to reflect the significant developments that are taking place on the trade and balance of payments front. The estimated trade deficit for 1980-81 of about Rs 5,000 crore, against likely exports of around Rs 7,000 crore, suggests that the economy is back to a situation similar to that of the mid- 1960s when trade deficits were around 80 per cent of the value of exports or around 45 per cent of the import bill. The expected trends in the next three-four years indicate a worsening of the situations, unless corrective actions are taken in time. In the mid- 1960s, after the devaluation of the rupee in 1966, the US and the IMF underwrote all payments deficits, through both IMF accommodation and sizeable US official aid. However, now the US is cutting its already low levels of bilateral aid and is also threatening IDA aid by dragging its feet over replenishment of IDA resources. With borrowers lining up before the IMF with large demands, the extent of accommodation that India can hope to get from the IMF now would be proportionately smaller than what it could get in the 1960s in relation to the trade deficit of those days. What is it then that has prompted the government to further liberalise its import policy?