ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

A+| A| A-

Calcutta Diary

Calcutta Diary AM THIS is going to be a tale of a few quotations First comes the following uit of confessing, incorporated in the memorandum on the Statement of Economic Policies annexed to the letter the then Union Finance Minister wrote on September 28, 1981 to the Managing (Director of the International Vonetary Fund, as part of the package of undertakings for the SDR 5 billion Expended Fund Facility loan: "It is our intention that the import policies for 1882-83 and 1083-84 will contain significant steps aimed at liberalising imports. It is intended to take further measures to simplify and rationalise the regulations and pro- ceatues governing import approval. Policies regarding imports, including capital goods imports, will be flexibly administered. Where appropriate in the interest of economic efficiency, consideration will be given to further imports of selected categories being produced at present. Measures introduced will be greater in impact than any adjustment to tighten restrictions. Specific measures contemplated include increasing the access to imports of restricted and banned items permitted under automatic import licences as well as changes in the classification of items under the restricted, banned and open lists. An assessment of the significance of such measures in terms of the overall objective of providing liberal access to import requirements of the economy will be made." On the basis of these explicit commitments, the IMF staff, in its forwarding note to the Executive Board of the Fund recommending the sanction of the Extended Fund Facility arrangement, summed up the bill of goods; "It is important that the authorities pursue efforts at a further progressive liberalisation of imports. These will be a necessary complement to other policies aimed at achieving greater levels of efficiency in the economy and strengthening competitive influences, while also being beneficial to growth and, ultimately, the balance of payments. In this context, the staff stresses the importance of the authorities' statement that the import policy for 1982- 83 and 1983-84 will contain significant steps aimed at liberalising imports." The story since then is by now generally well known. Roughly 40 per cent of the EFF loan from the Fund has already been drawn. Despite that the nation's foreign exchange reserves are roughly around Its 400 crore less than what they were a year ago. Meanwhile, the authorities have kept their promise to the Fund. Imports of items for which there is adequate domestic capacity have been encouraged, and arranged under official auspices. These have covered the import of intermediate items like steel and fertilisers, but also of finished items such as mining and power equipment, apart from the generous import of durable and non-durable consumer goods, for example, of wall paper at one end and colour television sets at the other. There is a method to this induced madness. Import liberalisation has particularly affected the domestic production of categories for which capacity has been built in the public sector in the course of the past quarter of a century. Government enterprises rendered particularly vulnerable by the Fund's

Dear Reader,

To continue reading, become a subscriber.

Explore our attractive subscription offers.

Click here

Back to Top