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

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50 Years Ago: Narrowing Exchange Gap.

Editorial from Vol X, Nos 4, 5 & 6, Annual no, January 1958.,

That India’s Second Plan has run into serious foreign exchange difficulties fairly early in its career – this the whole world knows. That the Plan was consequently going to be pruned, rephased or otherwise modified was first violently denied, and then came to be taken for granted. But no one seems to know why the foreign exchange estimates went so far wrong, and still less, how much of the Plan will be or can be salvaged, would it be the ‘core’ or the ‘hard core’ that would be saved and the fringes lopped off ?

Without knowing what the Government’s outstanding commitments are on foreign exchange account on which, under any circumstances, it will not or cannot go back, and how much of the Plan is intended to be implemented, no re-appraisal of the foreign exchange situation is possible. But now that the Panel of Economists has been given the same old Rs 4,800 crores as the basic figure of investment in public sector, it is possible to take stock of the situation and survey the foreign exchange prospects, not with any certainty, of course, but with some degree of plausibilit y. ...the causes of recent difficulties were discussed in these columns six months ago (“Why Drain on Foreign Resources?” – Special Number, July 6, 1957) and data which became available subsequently have confirmed these findings. The main causes of the extraordinary strain, it was pointed out then, were:

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