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

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The Economy-Treating the Symptoms

The Economy Treating the Symptoms THE Reserve Bank's Report on Currency and Finance for 1978-79 begins with the observation that the developments in the economy during 1978-79 (July-June) "brought into sharper focus some of the continuing weaknesses in the economy". The 'continuing weaknesses' referred to are slackness in industrial output, infrastructural inadequacies, decline in the pace of accretion to foreign currency holdings, and the emergence of inflationary pressures. However, these are basically symptoms of a deeper malady. Thus there was relative price stability for about 24 months between March 1977 and February 1979. Earlier, prices were again relatively stable for about 20 months upto September 1976, though after a sharp rise in the preceding period. Likewise, foreign exchange reserves rose rapidly for over three years from mid 1975-76. These are surface economic phenomena and to focus attention exclusively on them, as the Reserve Bank's report does, is to miss the basic maladies afflicting the economy.

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