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

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From 50 Years Ago: The Tightning Screw.

Editorial from Volume IX, No 40, October 5, 1957.

Even though the Plan has been cut down by about 12 per cent the hazards which it continues to face are of no mean proportions. Even in its watered down form the Plan is estimated to involve a balance of payments deficit of a far higher order than was estimated when the Plan was drawn up. The latest official estimate puts the likely order of this deficit over the entire Plan period at Rs 1,600 crores, which is in excess of the original Plan estimate by Rs 500 crores. Further, it is not only in the estimation of the overall deficit that the original calculations of our planners went wrong but even the phasing of this deficit over time has also come to be very different from the course it was originally expected to follow.

According to the Plan, the year 1958-59 was expected to have the largest deficit in our balance of payments. The deficit was to be of the order of Rs 347 crores. But in the very first year of the Plan, i e, 1956-57, the deficit (after excluding official donations) very nearly approached the figure set for the ‘hump’ year. As for the current year, the figures in respect of the months gone by have given cause for much concern because the pace at which the deficit has been piling up during these months, were it allowed to continue, it would easily have exceeded Rs 450 crores by the end of the year. Apart from the fact that a deficit of this magnitude would deplete our reserves to a point at which they may be far from adequate, it also raised a suspicion that even the latest calculation of the order of our foreign exchange requirements might have to be revised upward very soon.

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