This paper examines trends in broad macro aggregates like exports, imports, industrial production, inflation and external debt in order to assess the impact of the structural adjustment programme in India, at work since July 1991 Using monthly data since 1980, our results indicate that exports, imports and the balance of trade are following a long-term trend which has been unaffected by the two doses of devaluation in I991. This leads us to question the utility of devaluation as a corrective mechanism for achieving a desired trade balance. At the same time, indications are that devaluation would worsen the debt burden, ceteris paribus. Thus the BOP deficits are unsustainable, as they are accompanied neither by improved net export earnings, nor by easier external finance. There is also some indication of stagnation in industrial production and acceleration in inflation since 1991, Introduction IT is commonly believed that the New Economic Policy (NEP) in India started in July 1991 as a response to the external debt and foreign exchange crisis. It has been argued that the NEP, in the sense of a departure from the post independence model of planned development, actually can be traced hack to the mid-late 1980s. However, it is equally true that it was only as a response to the 1991 crisis that the IMF-World Bank advocated Structural Adjustment Program me (SAP) began in lull earnest and the process that had begun in the mid-1980s unfolded itself in its myriad tacets. Thus it would not be unreasonable to regard July 1991 as the starting point of the structural adjustment and stabilisation programme,1 constituting reforms, winch are broadly summed up in the phrase; the New Economic Policy, Liberalisation and reform in India has been the subject of much interest and speculation [see, for instance, Sen and Das 1992;Basu 1993; Joshi and Little 1994; Sen 1994; Sengupta I995| and so far most of the work rests on assertions. The working of the SAP in other developing countries has been studied extensively [Payer 1974; Pool and Stamos 1985;Sachs l986;Cooper 1989; George 1989; Chossudovsky 1992 to mention just a few works) mainly reflecting the much longer time period for which the SAP has been in operation there. In India any comment on the SAP is dismissed as invalid on the ground that the lime period for its operation has been too short, amongat other things. However, given thatthe country is in the fifth year of its operation, we feel that it is time to take stock of at least certain major trends in the economy. Also, the relatively short time span has not stopped the enthusiasts of the SAP from making tall claims of success on broad macro aggregates, The aim of this paper is precisely an examination of these claims.
