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

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Narrow Vision

Narrow Vision THE Reserve Bank of India's annual report for 1994-95 is a cautionary document, contrary to first impressions. While it applauds the improvement in the overalI performance of the economy, it reflects serious concern at developments in many areas of economic management. The report's earnestness in discussing, within the structural adjustment framework of course, the successes and slippages of economic, fiscal and financial policies is to he commended. Having said this, it must be added that many aspects of the RBI's review of economic developments are less than satisfactory. First, contrary to the impression the report seeks to convey, the RBI cannot absolve itself of responsibility for some of the areas of concern, such as the persistent price rise, the continuing fiscal mess and the low rate of domestic saving. Second, the report's explicit perception that it is enough to judge the performance of the economy in terms of macro numbers of GDP, agricultural and industrial production, budget deficit, export-import performance, the current account deficit and so on is seriously questionable. These macro numbers very often hide grave socio-economic malaise, as indeed they do in the case of the Indian economy today. Conspicuous in this respect is the silence of the RBI's report on the performance on the employment front, the impact of current policies on distributional goals, the adverse developments in the sphere of social infrastructure so vital for improving labour productivity and competitive efficiency and the long-term implications of the present policies towards foreign direct investment and investment by foreign institutional investors in the capital market. Finally, reflecting its well known prejudices, the RBI has shown little vision or innovation in regard to the need for special credit programmes for the poor and neglected sections of society and has generally moved only when it has been pushed by the government. Further, in the implementation of special credit programmes the RBI has willingly gone along with the commercial banks in diluting the importance of advances to agriculture, small-scale industries and other priority sectors. It is impossible not to be struck by the contrast between the RBI's disinterest in these areas and its high voltage initiatives in the money and foreign exchange markets.

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