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

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Not for the Asking

DESPITE official statistics which suggest quite impressive growth of exports, the government's mounting anxiety about the balance of payments situation is only too obvious. It is reflected in the plans and proposals mooted almost weekly to boost exports. One of the latest of these has come from a committee headed by the special secretary to the commerce ministry which addressed itself to the task of getting the large business houses to make more substantial contributions to exports than they have been doing. Newspaper reports quote the committee as observing that "there are several large houses who have an excess net outflow of foreign exchange and the time has come for a serious examination as to how long such a situation can be allowed to continue.. " Not just some business houses but the corporate industrial sector as a whole is a net spender of foreign exchange. And, what is more, this foreign exchange drain has been growing, reflecting both the import liberalisation and the relaxation of domestic industrial controls (which has spawned a wide variety of import-intensive industries). As a study published in this journal (Vidya Pitre, 'Net Foreign Exchange Earnings of Private Corporate Sector', September 23) pointed out, whereas the Reserve Bank of India's sample of medium and large public limited companies had a surplus of foreign exchange earnings over foreign exchange expenditure of around Rs 248 crore in 1975-76, by 1985-86 this had been transformed into a deficit of Rs 1,444 crore. As a proportion of these companies' gross value of production, while their foreign exchange expenditure rose from 4,55 per cent to 7.12 per cent between the above two years, their foreign exchange earnings came down from 6.43 per cent to 4.11 per cent. These trends reflect, quite simply, that the growth in the country's exports has been relatively narrow-based, with a few products such as garments, leather and leather goods and gems and jewellery contributing the bulk of it; on the other hand, the general run of industries, and in particular the industries which have shown the most rapid growth rates in recent years and which have soaked up imports at an accelerated pace, have been geared to meeting domestic demand (though it is a fact that, in terms of formal policy statements, a good part of the import liberalisation has been, and continues to be, justified as being necessary to modernise these industries and make their products internationally competitive).

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