External Economic Constraints and Domestic Economic Policy

Domestic Economic Policy Sunanda Sen This paper analyses the recent adverse changes in the international economic climate and the pressures on the Indian economy to adjust to these developments with a view to arriving at a judgment on the feasibility of an autonomous, non-dependent path of development in India. The paper begins with a brief reference to the 1985-86 Union Budget which helps to trace current official thinking on issues having a bearing on the external viability Of the economy The variables in the economy considered to be crucial in determining its international economic standing are next analysed to bring out the role of the international economy in regard to domestic development policy. In the concluding section of the paper, the underlying rationale of the policy options recently exercised by the government is spelt out and it is concluded that the rationale is far removed from the requirements of autonomous, non-dependent development.