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

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THE import policy for 1984-85 shows scant regard for the worsening foreign exchange situation. The small increase in foreign exchange reserves in the last 8-10 months is, as has been pointed out in these columns, a reflection of temporary and largely reversible factors. A sizable amount (Rs 973 crore) had been drawn from the IMF during April-October 1983. The inflow of deposits into non-resident external accounts amounted to Rs 800 crore during the nine-month period April-December 1983. The inflow of net foreign aid during 1983-84 was almost one-fifth larger than in the previous year. Further, relatively high interest rates in the country are reported to have prompted quicker inflow of export earnings, and this is reliably estimated to have added some Rs 1,000 crore to foreign exchange receipts in 1983-84. Inward remittances by Indian workers abroad too have continued to be buoyant. Lastly, there was a further step up in crude oil output in 1983-84. With the strengthening of the economic recovery in the US. global interest rates are expected to rise and, with this, the leads built up in repatriation of export earnings or the inflow of deposits into non-resident external accounts should taper off, leading to a possibly precipitate fall in foreign exchange reserves. The country's vulnerability on this score can be appreciated from the fact that 'hot money' type of deposits aggregated as much as Rs 2700 crore at the end of December 1983, These factors. and the fact of the trade balance continuing to show a staggering deficit of around Rs 5,000 crore even in 1983-84, should reasonably have influenced the Commerce Ministry's import policy.

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