From 50 Years Ago: From Postures to Action

From Postures to Action

What impact the recent dramatic political developments will ultimately have on the economy remains to be seen, but their immediate effect has been to persuade Government of the need for an activist posture in economic matters. Since the end of the Third Plan and till after last year’s Budget, Government had deliberately opted for a passive policy of letting the economy take its course on the argument that after the war with Pakistan and the agricultural disasters that followed, there had to be a period of ‘consolidation’. Thanks to the favourable turn in food production, a certain measure of price stability has been achieved, but at the cost of a steady downward spiral in saving and investment in the economy. Nationalisation of the major banks, whatever the immediate political provocation, has raised popular expectations and set off political pressures which make it difficult for Government to persist in its economic passivism. The last session of Parliament saw the passing of the Monopolies Bill, and announcement of a revamped industrial licensing policy based on the Hazari and Dutt Committee reports has been expected for some time.