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

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Planning in the New Federal Balance

 the wage-productivity relationship. For instance the higher reject rates of Indian mills, sub-optimal labour allocation, underloading of workers, poor machine utilisation due to yarn breaks and other defects and wasteful use of chemicals, colours and fuel are potential resources of high costs. Perhaps in these matters, the Japanese and other competitors maybe more efficient than India, There is scope for cost reduction in the use of these resources through im- proved practices and methods. A comparison of the performance of Indian mills with foreign mills on the difference aspects referred to above might reveal the scope for internal cost reduction. It is within the control of the managements to explore the level of efficiency of resource use in their mills and to introduce improved practices and methods.

A Policy for Sugar

our basic socialistic pattern insofar as it corrects economic inequality and prevents inordinate and enduring differences among persons and families in wealth, power and opportunities".10 How the extreme progressiveness of the tax structure helps to meet "urgent economic needs", is not so obvious. One cannot accept the Finance Ministry's contention unless one assumes that (i) total savings (government's, wealthy persons', and lower income classes', out of government transfers or multiplier effects of government expenditure) would increase with reduction in "economic inequality", or (ii) that all Government expenditure is of national priority in- vestment type, or (iii) that if left in the pockets of . the people, tax reduction (from present levels) will be frittered away into consumption. Of course, one may tend to grant the socialistic achievements of the progressiveness of the tax structure, though this is also subject to debate when one considers the marginal (direct and indirect) tax burden in recent years.11 But then one ought to know the economic cost of doing so.

Future of the Planning Commission

Arthagnani It is a measure of the decline of the Planning Commission that nobody in the country, the Government included, has taken the Fourth Plan seriously. The outlay in the first year of the Plan and that proposed for the second year have had very little to do with the programmes included in the Plan; the rate and pattern of licensing of industries even less. Doubts have been raised about the feasibility of the Plan and even the technical consistency of its targets has been questioned.

On Not Sticking to One s Last

Arthagnani THE PRESIDENTIAL ADDRESS to the Forty-Ninth Session of the All- India Economic Conference dealt with a topic which, besides being of general interest, was one on which the President could speak with intimate knowledge. The topic was "The Limits of Economic Policy", and the speaker I G Patel, Chief Economic Adviser, Government of India. Economists are interested in the subject not only because as citizens they are consumers of the product but also because as economists, they are its suppliers. The market for the product, as defined by employment in Government agencies, has increased tremendously in recent times. Patel, however, was concerned with the technical limitations of the product and he magnanimously proposed to deal with the subject "not in the best traditions of a trade union gather- ing"(3).1 The main theme of Patel's address was that the response to economic instruments is indeterminate and, therefore, it is not possible to work out all the implications of an economic policy decision. Secondly, in taking economic decisions, an economist needs to be guided by considerations derived from other disciplines (belonging both to the social and the physical sciences). Thirdly, there are various constraints

The Petro-Chemicals Debate

The Petro-Chemicals Debate Arthagnani THE DEBATE on fertilisers and petro-chemicals has started again. A Seminar was organised at Delhi, by the Fertiliser Association to discuss the cost and financing of fertiliser projects. And last week, Minister Alagesan used the opportunity provided by the Annual Meeting of the Indian Chemical Manufacturers Association to go into some aspects of the same problem.

Monetary Policy for the Busy Season

planning for economic development). The mildest form of controls being advocated is the reporting-system employed during the early part of the Korean War. Because of the ineffectiveness of this system wage and price controls were slapped on the economy after January 1951. Under the reporting system 200 companies, that carry on 50 per cent of nation's business, regularly and frequently report to the Administration wage, price and operations in order to enable the Government to determine the trends and movements AS NOVEMBER approaches, the question of the monetary policy for the busy season becomes an important issue for discussion. This was not so till 1964, until when the Reserve Bank more or less stood by to provide, at a fixed and to some extent cheap rate, the funds required by banks to finance the seasonal increase in agricultural supplies, subject to selective controls (which took the form of restrictions on the volume of lending against specific commodities). In practice, selective controls did not prove efficient as they could more or less be avoided in the early stages by clean credit and later by replacing the non-acceptable commodity by an acceptable commodity as security.

Decline of Planning Commission

The failures and difficulties of the Third Plan seem nowhere to have been taken into account in determining the outlines of the Fourth Plan. The tendency is to attribute the failures of the Third Plan to exogenous factors — the Chinese and Pakistani aggressions, the bad harvest of 1965-66 — and to imply that but for these developments all would have been well. As a consequence in determining the size of the plan, assessing the resources available, setting the priorities and detailing the means of achieving targets, the Fourth Plan closely follows the Third. All this points to the lack of sufficient detailed work at the ground level which, in turn, reflects the administrative bias of the organisation and staffing of the Planning Commission,

A Survey of Industry

What is the extent of reliance of industry on imports? The answer to this that one comes across is often a business harangue rather than cold calculation.


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