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

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Unreformed Systems

Unreformed Systems IT does not take much reading between the lines in the Reserve Bank of India's Annual Report 1996-97, released last Sunday, to come to the conclusion that many seemingly positive aspects of the performance of the economy the comfortable external payments position and rise in foreign exchange reserves to record levels or even the moderate rate of inflation are really indicative of developing soft spots, the most serious of which is of course the deceleration of industrial growth. The moderation of inflation, far from being wholly an achievement of the central bank's sagacious monetary management, is thus the product of the wide-ranging slackening of demand which has been responsible for the industrial slow-down consumer demand, investment demand from business and industry, export demand and government investment. It is the reduced demand for imports similarly which, despite a sharp fall in the rate of growth of exports, almost halved the current account deficit to I per cent of GDP in 1996-97 from 1,8 per cent in the previous year and together with the larger capital inflows made possible the $ 5.8 bn accumulation of foreign exchange reserves during the year.

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