RESTRICTED Report No. AS-105a This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as representing their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION CURRENT ECONOMIC POSITION AND PROSPECTS OF INDIA May 8, 1964 Department of Operations South Asia and Middle East F ILE COPYU CURRENCY EQUIVALENTS 1 Indian Rupee = U.S. $0. 21 1 U.S. Dollar = Rs. 4. 762 Rs. 1 crore = $2. 1 million FISCAL YEARS AND FIVE-YEAR PLAN PERIODS The Indian fiscal year begins on April 1. The periods covered by the different five-year plans are as follows: FIRST PLAN April 1, 1951 - March 31, 1956 SECOND PLAN April 1, 1956 - March 31, 1961 THIRD PLAN April 1, 1961 - March 31, 1966 TABLE OF CONTENTS Page MAP OF INDIA i BASIC STATISTICS ii PREFACE iv SUM1ARY v I. CURRENT ECONOMIC SITUATION Production Prices 2 Internal Finance 2 Overseas Trade and Payments II. DEVELOPMENT PROGRAMS AND POLICIES Planning and Controls 6 Private Foreign Investment 9 Public Sector Enterprises 10 Iron and Steel 11 Iron Ore 13 Coal 13 Petroleum 14 Power 15 Transport 17 Agriculture 18 III. EXTERNAL FINANCE General Outlook 21 Exports 24 Immediate Import Requirements 25 External Assistance 25 IV. CONCLUSIONS 27 STATISTICAL APPENDIX 29 FILE COPY - INDIA Memorandum on Economic Situation Summary 1. India has just come to the end of the fourth year of her Third Five- Year Plan. This was a difficult year for the Indian economy in spite of the fact that, for the first time since the beginning of the Plan, there was a marked increase in agricultural production. The comparative stagna- tion in agriculture during the three previous years, combined with the stepping up of expenditures on defence and investment, resulted in food shortages and sharply rising food prices. The food crisis in tum reacted on the external balance of payments by forcing the Government to spend sub- stantial amounts of foreign exchange on rice imports, in addition to obtain- ing greatly increased quantities of wheat from the United States under PL 480. Exports of sugar and vegetable oils were also adversely affected. 2. There were other factors which exerted pressure on Indiats foreign exchange resources last year. Some of these had been foreseen, such as the increase of nearly 50 per cent in service payments on foreign debt. Others had not been allowed for in the Government's forecasts of a year ago,D Thus, movements in banking funds and other short-term capital transactions were worse than expected, partly it would appear because of the rise in interest rates in the United Kingdom. The result was that, whereas in 1963/64 India repaid $50 million to the International Monetary Fund and still managed to increase her foreign exchange reserves by about $25 million, during 196)/65 the reserves declined by over $120 million without any net repayments to the Fund. 3. At the end of April 1965 total official holdings of gold and foreign exchange, including government balances abroad, stood at $519 million or the equivalent of about two monthst expenditure on imports. India entered into a new stand-by arrangement with the International Monetary Fund in March 1965, under which she may draw up to $200 million over a three-year period. The first drawing of $100 million was made in March, matching the repayments made to the Fund during 1964/65, and another $25 million was drawn in April. Disbursements of external assistance from the consortium and other sources have meanwhile been increasing fairly rapidly and in 1964/65 for the first time exceeded new aid commitments. 4. Shortage of foreign exchange has necessitated the maintenance of severe restrictions on imports, though it would appear that total foreign exchange allocations for commercial imports were slightly higher in 19614/65 -2- than in the previous year. Difficulties in obtaining imported materials and components have remained a major obstacle to the expansion of industrial production and to the growth of the economy in general. Agricultural production too could have expanded more rapidly if there had been no foreign exchange constraints on supplies of fertilisers and other key inputs. 5, The Budget for the final year of the Third Plan, which was introduced at the end of February 1965, was designed to :impose some restraint on the growth of internal demand and to give a stimulus to production and exports. A special 10 per cent surcharge on imports was announced just before the Budget, and provision was made in the Budget for increases in import duties. on a number of cormodities, along with selective tax incentives for exporters. It is too early to judge the effects of these measures. The record harvest of foodgrains in 1964/65 has eased pressure on prices, but foodgrain prices have declined only slightly and remain about 20 per cent higher than a year ago. Meanwhile, although the stock market is depressed, there is no evidence of any slow-down in new investment. National Outout 6. Real output in India is provisionally estimated to have increased by about 6 per cent in 1964/65; this compares with increases of nearly L42 per cent in 1963/64 and of only about 21 per cent in each of the two preceding years. The slow rate of growth during the early part of the Third Plan was mainly attributable to the stagnation in agricultural production, and it was the good harvest last year which was primarily responsible for the higher overall rate of growth. Industrial production has grown fairly steadily, though more slowly than envisaged in the Third Plan; the increase in mine and factory production in the first year of the Plan was 61 per cent, in the second 8 per cent, in the third 9 per cent and in the fourth probably about 7 per cent. 70 The uneven year-to-year performance of agriculture appears to be due to variations in the weather more than to anything else. Agricultural production has been moving up over the past 10-15 years at an average rate of around 3 per cent a year, and there is no reason to suppose that there has yet been any significant change in the trend. The final year of the Second Plan (1960/61) was an exceptionally good one, and it would appear that the second and third years of the Third Plan (1962/63 and 1963/64) were exceptionally bad ones. In 1964/65 the production of foodgrains at an estimated 87 million tons, though 10 per cent higher than in 1963/6t, was very slightly below the trend line - and well below the target set in the Third Plan. Sugarcane production has still to regain the 1960/61 level, and with the exception of jute most of the other major crops have recorded only comparatively small advances over the peaks attained at the end of the Second Plan. -3- 8. The slowing down in the rate of expansion of industrial production in 196h/65 does not necessarily reflect any unfavourable long-term trend. Some large-scale industries reached the point where their productive capacity was fully utilised. This was notably true for iron and steel and aluminium. In such industries, where the size of each manufacturing unit is large, it is inevitable that production should grow in jumps, The growth of jute textile manufacturing also slowed down partly because of limitations on capacity. The coal industry, by contrast, was faced by a slight decline in demand, and production of low-grade coals had to be cut back. Since for the most part this reflected greater efficiency in the use and transport of coal, it was on the whole a healthy development. 9. Another group of industries, based on agriculture, had difficulties in obtaining sufficient raw materials. This was notably true of sugar manufacturing, not only because sugarcane production had fallen from the level of 1)60/61, but also because controls on the sugar mills handicapped them in competing for raw material with small-scale producers of country-made substi- tutes (gur and khandsari). 10. Activity continued to increase in engineering and chemicals which are two of the fastest growing sectors of the Indian economy. Here the main problem was shortages of imported raw materials and components. The aid extended through the Indian consortium has been of considerable value in helping to relieve some of these shortages, in that a substantial part of such aid has been available for financing imports of raw materials and semi- manufactures required by industry. Thus output expanded rapidly in the industries producing motor vehicle ancillaries, machine tools and cutting tools, heavy electrical equipment and construction equipment, all of which were assisted by the industrial import credit extended by the International Development Association in June 1964. Some other engineering industries, however, fared less well, and shortages of raw materials and components were the main factor restricting output in the group as a whole. This was also generally true of chemicals. 11, The mill sector of the cotton textile industry, which still accounts for almost one quarter of the value added in the manufacturing sector, experienced difficulties in selling its products both at home and ?.broad. Output in the first ten months of 196/65 was 7 per cent higher than in the corresponding period of the previous year. 12, Supplies of electric power have for the most part been adequate to meet the demands of industry, and power generation in the first ten months of 196b/65 was about 16 per cent higher than in the same period of 1963/64. However, intermittent power shortages persisted in some parts of the country. 13, Rail capacity was in temporary surplus during 1964/65, and in the first ten months of the year rail movement of freight was 6 per cent less than in the same period a year before. Road transport remains inadequate to the needs of the country and is a specially difficult problem for agriculture. -4- The weakest link in the transport system during the past twelve months has been the ports, particularly Calcutta and Bombay, Exceptionally large ship- ments of PL 480 foodgrains have been arriving in India to meet the food shortage, and arrivals have been irregular, partly because of the longshore- ments strike in the United States. Serious congestion has resulted at Indian ports where methods of grain handling are very unsatisfactory. Urgent attention needs to be given to measures for improving port efficiency. Prices 111 The wholesale price level, which had risen by only 7 per cent during the three preceding years, rose by about 8 per cent in the course of the calendar year 1963. During 1964 the increase accelerated, and the whole- sale price index was about 17 per cent higher at the end of September 1964 than a year before. Since then the index has declined slightly reflecting in part seasonal factors affecting foodgrain prices,. The main cause of the rise in the index was the rise in prices of foodgrains. In the spring of 1963 these were at the same level as ten years before, but during the ensuing eighteen months up to September 1964 they rose by 55 per cent. Thereafter there was a slight decline, the index falling by about 6 per cent from September to mid-February. The orices of other foods rose less during the period, although some of them - especially sugar and oils - are higher than cereal prices in relation to the base period (1952/53), Foodgrain prices in the nine years up to 1964 had declined alraost continuously relative to other prices and were probably too low to provide adequate incentives to production. The Government has now instituted a system of support prices and a buffer stock scheme intended to moderate price fluctuations. 15. Prices of manufactures rose less during 1964 than those of raw materials, and mainly in reaction to cost increases. This is partly because the index is heavily weighted with items subject to price control. The wholesale price index of textiles increased by 4 per cent during the year, after having remained roughly stable -or several years previously. The prices of engineering and chemical products moved up by one or two percentage points only. Internal Finance 16. Honey supply with the public rose by 6 per cent during 1964/65, as compared with an increase of 11 per cent in the previous year. The loss of foreign assets was an important contractionary influence, helping to offset the increase in bank credit to Government which was on approximately the same scale as in 1963/64, Bank credit to the private sector continued to expand in 1964/65, but at a slower rate than in the previous year. 17, Revised estimates put the total increase in the expenditure of the Central Government in 1964/65 at around Rs. 300 crores (9 per cent). / The 1/ One crore (i.e. 10 million) rupees are equivalent at the present exchange rate to $2.1 million. greater part of this increase was attributable to increases in expenditure on development. The rise in defence spending levelled off, but there were additions to non-Plan expenditures on account of increases in the allowances of central government employees, refugee relief and government trading opera- tions in foodgrains and fertilisers. Defence spending is now at almost three times the level prevailing before the Chinese attack in 1962; it accounts for approximately 4 per cent of the gross national product. 18, The budget deficit in 1964/65 was originally forecast at Rs, 97 crores, but according to the revised estimates is expected to come out at only about Rs. 80 crores - the deficit being here defined in the conventional Indian sense as the sum of net issues of Treasury Bills plus use of cash balances. The Budget for 1965/66 aims at eliminating the deficit and replacing it by a small overall surplus, larger receipts under PL 480 accounting for much of the prospective improvement. 19. This yearts Budget has provided for a continuation of the upward trend in development expenditures, for a moderate further increase in defence spending and for substantially larger payments on account of debt service. In 1964/65 total outlays under the Plan, including the contributions of State Governments and public enterprises, were budgeted at Rs. 1,984 crores. The corresponding figure this year is Rs. 2,225 crores - an increase of 11 per cent, By comparison, the rise in the ordinary current expenditures of the Central Government, including defence, is comparatively modest (less than 6 per cent). 20, As usual, the tax revenues of the Central Government last year showed a marked improvement over the budget estimate and this year they are expected to show a substantial further increase. In large part this reflects rising income, together with elasticity built into the tax system, but changes in tax rates, particularly increases in customs duties, account for some part of the expected increase. If all the tax changes are taken together, including those announced in advance of the Budget, the losses to the revenue (mainly from concessions on income tax and excise duties on consumer goods) come close to offsetting the gains (mainly from increases in customs duties and excise duties on steel and non-ferrous metals). 21. The reliefs given in the Budget in respect of income tax are consider- able and affect most classes of taxpayer. The highest marginal rate of tax on unearned income is to go down from 88 per cent to 81 per cent and on earned income from 82- per cent to 75 per cent, and these rates will in future be reached at higher levels of income than in the past. At the same time the structure of personal taxation has been simplified. 22, The Finance Minister has proposed a number of changes in corporation tax, but hore the relief for industry as a whole during the current year will be only marginal, and the reaction of the stock market has been unfavourable. The changes have been primarily designed to provide a stimulus to increased production. The most important is a proposal under which manufacturing -6- companies will receive tax credits (up to a azKum of 10 per cent of the tax payable) to the extent of 20 per cent of their additional tax liability over and above their liability in the base year (normally 1965/66). A similar concession will be made in respect of excise duty payable by manufacturers where production increases over the base year, Industry will also be affected by changes in development rebate, the rate of which has been increased from 20 per cent to 25 per cent for certain key industries and reduced from 20 per cent to 15 per cent for most others (in the latter case starting in 1966/67). 23, A novel feature of the Budget was a proposal under which exporters would be entitled to a tax credit of up to 1' per cent of the value of their exports, depending on the commodities concerned. This proposal has still to be implemented, and it is not clear how the concession is to be applied. 24. Fiscal action to contain inflationary pressures has been reinforced by monetary measures. The bank rate was raised from 4i per cent to 5 per cent in September 1964 and again from 5 per cent to 6 per cent in February 1965. Other interest rates have moved up in line with this change, and the terms on which commercial banks may borrow from the Reserve Bank have been further stiffened. 25. The stock market has not yet recovered from its decline at the end of 1962. The index of variable dividend securities fell from its peak of 195 in Hay 1962 to 159 in March 1965. The underwriters have had to take up a substantial part of new issues during the past two years. However, it seems that the public responded well to certain issues by firms which, for one reason or another, were considered to be particularly promising. Overseas Trade and Payments 26, India's balance of payments on current account deteriorated slharply in 1964/65. Full details of trade and payments during the year are not yet available, but preliminary estimates prepared for the consortium meeting in March indicate that expenditure on merchandise imports, exclusive of imports under PL 480, increased by about 1' per cent, while earnings from merchandise exports did not increase at all. The resulting increase of about $350 million in the visible trade deficit (again excluding PL 8O) was largely covered by higher disbursements of foreign aid. There was, however, a simultaneous worsening of the current invisible account to the extent of about $L0 million, while the balance of capital transactions was much less favourable than in the previous year, partly because of an increase of $70 million in amortisation payments on foreign debt and partly on account of short-term capital movements. The result was that India had to draw heavily on her already depleted foreign exchange reserves (see paragraphs 2-3 above). 7 27. About half of last year's increase in imports was due to additional imports of machinery and transport equipment, about one quarter to cereals and fertilisers and the rest mainly to industrial materials such as rubber, non-ferrous metals, iron and steel. It is notable that in no major category of imports was there any significant decline. 28. The balance of payments figures for exports in 1963/64 and 1964/65 do not correctly reflect the actual movements of trade because of an exceptional lag in receipts in the latter part of 1964/65, the reason for which is not wholly clear. The trade figures show that there has been a sustained increase in the volume of Indiats exports since the beginning of the Third Plan, contrasting with their static performance during the Second Plan. The rate of increase in the value of exports appears to have been averaging around 6 or 7 per cent a year, and the increase in 1964/65 was probably not far short of this. However, there are some indications that export performance was flagging towards the end of the year. The reduced availability of sugar and vegetable oils was partly responsible. The increase in exports of cotton and jute textiles has also slowed down. On the other hand, some other agricultural cormmodities such as cashew nuts, coffee, wool and hair fared better in 1964 than in the previous year. There was also a marked increase in exports of manganese ore and fcrro-ma,.ganese. Exports of engineering goods increased by 50 per cent from Rs. 10 crores in 1963 to Rs. 15 orores in 1964. Although these goods still contribute less than 2 per cent of total exports, they account for more than 10 per cent of the increase between the two years. Iron ore exports have been particularly disappointing. They have increased slightly, but to nothing like the extent expected in the Third Plan. South Asia Department may 19, 1965 GHINA AFGHANISTAN T l B E T - r-- 0 N E P A L )N - . , T CALCUTTA BUR M A 0BHOPAL. AHMEDABAD BOMBAY- *RDERABAD s E Below 1,000 ft. 1,000 -4,000 ft. Above 10,000 ft. TRIVANDRUM CE JUNE 1962 SBRD-720R11 - ii - BASIC STATISTICS Area Total area 1/ 811 million acres or 1,270,000 sq. miles of which: Cultivated 40% (325 mn. acres) of which: Irrigated 21% ( 67 mn. acres) Population (1961 Census data) Total population (revised estimate) 438 million Overall population density 345 per sq. mile Rate of growth of population (1951-1961) 2.1% per annum Assumed rate of population growth (1961-1976) 2.% per annum National Output (1962/63) Net national output at factor cost Rs. 15,400 crores of which: Agriculture, forestry and fisheries 45% Mining 1% Factory establishments 11% Small enterprises 8% Commerce and transport 17% Government administration 8% Other services 10o Output per head Rs. 330 Net national expenditures at market prices Rs. 17,180 crores of which (very approx.): Government consumption 9% Net investment 10-12% Private consupition 80% Government Finance: Centre (R.E. 1963/64) and States (B.E. 1963/64) combined Total revenue receipts Rs. 2,64h crores of which: Tax revenue 74% Non-tax revenue 26% 1/ Excluding Goa and other ex-Portuguese territories recently incorporated in the Indian Union. Estimates of cultivated and irrigated areas relate to the beginning of the Third Plan. - iii - Total expenditure on revenue account Rs. 2,796 crores of which: Defence expenditure 25% Social and development services 341o Civil administration, debt service, etc 4l1 Foreign Trade and Payments (1962/63) Payments for imports, c.i.f. Rs. 1,111 crores of which: Foodgrains 110' Petroleum 7 9 Iron and steel 91% Capital equipment 34% Other imports 38% Exports and re-exports, f.o.b. Rs. 710 crores of which: Jute goods 22% Tea 17 % Cotton goods 9% Mineral ores 7% Nuts and spices % Hides and leather 5% Oilcakes 14% Vegetable oils 2 0 Raw cotton 21d Other exports 25% Net invisible receipts (exc. foreign aid) -Rs. 5 crores Foreign grants and loans (inc. PL480) Rs. 4h4 crores Foreign Assets (end-March 1964) Gold with Reserve Bank Rs. 118 crores Foreign exchange with Reserve Bank Rs. 122 crores Government balances abroad Rs. 67 crores Total Rs. 307 crores - iv - PREFACE The last economic report on India was circulated to Executive Directors in April 1963. The present report up-dates the statistical information given in last yearts report, describes recent changes in government policy and discusses in general terms some of the choices which India faces in undertaking the further development of her resources. The report also deals with the immediate balance of payments situation in relation to the Indian Governmentts request for new pledges of aid from the consortium for the fiscal year beginning April 1, 1964. This request was considered by the consortium at a meeting held in Paris in March, and the consortium will be meeting again in the near future to decide on pledges. - v - SUMtlARY i. The performance of the Indian economy during the past three years has been disappointing. National output has barely kept pace with the rise in population. The slow rate of growth in output is largely attri- butable to agriculture which has suffered from bad weather. Industrial production has done better, increasing at a rate of about 8 per cent a year. However, even in industry the pace of expansion has been considerably slower than envisaged in the Third Plan. Shortages of power and transport have been greatly eased during the past eighteen months, but industrial produc- tion is still being held back by shortages of imported materials and components. ii. Food prices have risen quite sharply in recent months, reflecting the combined effects of lagging agricultural production and expanding money supply. Taxation has already been raised well above the levels ccntem- plated in the Third Plan, but the additional revenues have been largely swallowed up by the increase in defence expenditures following the Chinese attack on India in October 1962. The Budget for 1964/65 provides for a continuance in the upward trend of expenditures on debt service and general government administration, for a further (comparatively modest) increase in defence ex'penditures and for a more substantial rise in Plan outlays. Of the total provision made for development in the Third Five-Year Plan, just over half appears to have been spent in the first three years. iii. Pressure on India's foreign exchange reserves has eased somewhat during the past year. India repaid $50 million to the International Monetary Fund in 1963/64 and in spite of this repayment increased her reserves by $25 million during the year. Exports - with the notable exception of iron ore - have done better than expected, rising by more than 10 per cent during the past two years. Imports rose by about 25 per cent over the same period, the principal increases being in cereals, petroleum and capital equipment. iv. Some action has been ta2ken by the Government to relax controls over industry, so that the price mechanism can function more freely. In particular, price c,,ntrols have been taken off a number of commodities, including many categories of iron and steel, and controls over steel distri- bution have been considerably reduced. A genuine effort is also being made by the Government to simplify procedures for granting licences for industrial development. However, more drastic changes will be needed in Indian economic policies and planning methods if the country's resources are to be efficiently deployed for the promotion of economic growth. v. There is growing recognition in India that shortages of foreign capital and trained management are the priacipal factors limiting the progress of industrialisation, and the Government is looking to private - vi - foreign investment as an important source of both. Special efforts are being made to secure the participation of private foreign capital on a minority basis in public sector enterprises. vi. A more businesslike and scientific approach to the task of raising agricultural production is long overdue. The effectiveness of government action in this field has hitherto been limited by the diffusion of effort over too wide a field, the confusion of production and welfare objectives andinsufficient attention to the technical factors involved. Nothing less than a 5 per cent rate of growth in agricultural output can be regarded as a tolerable long-run objective. This should be technically feasible if available resources of finance and expertise are concentrated on helping the more efficient farmers to produce more and giving them the incentive to do so. vii. The steady worsening of India's external balance of payments on current account is disquieting, and there is no firm evidence to show that the gap between domestic savings and investment is being narrowed. With rapidly mounting debt service obligations to meet, India will have great difficulty in finding the means to pay for the imports needed to sustain the growth of the economy along the lines at present mapped out. The con- tinuing prospect of acute foreign exchange shortage underlines the importance for planning purposes of using prices for capital and foreign exchange which reflect their true scarcities. It is equally important that every effort should be made,in planning investments, to find "minimum cost solutions" for expanding production. At the same time, the members of the consortium should do all they can to improve the terms of aid extended to India. viii. India is seeking the equivalent of $1,100-$l,150 million in new pledges of aid from the consortium for the fiscal year beginning April 1, 1964. This compares with last year's request for $1,255 million, against which the consortium actually pledged $1,052 million. The most valuable form of aid which India can receive in present circumstances is aid which can be used quickly to finance additional imports of materials and components for agriculture and industry. The more aid that is available in this form, the easier it will be for the Government to liberalise maintenance imports and relax controls over internal prices and distribution. I. CURRENT ECONOMIC SITUATION Production 1. India has just come to the end of the third year of her Third Five- Year Plan. The growth of national income in the first two years of the Plan was at an average rate of 2 per cent a year, or less than half the rate envisaged. The slow rate of growth was largely attributable to the lag in agricultural production, which increased by less than 1 per cent in the first year and fell by over 3 per cent in the second. Industrial production increased by 6 per cent in the first year and by another 8 per cent in the second. 2. In the third year of the Plan, there appears to have been a slight recovery in agriculture after the exceptionally poor harvest of the previous year. The only crop for which final estimates are already available is jute, and here the figures show an increase in production of about 9 per cent. Rice production, provisionally estimated at around 36-37 million tons, was the highest on record, but production of wheat, barley and millets was adversely affected by unfavorable weather - drought in some areas, together with an exceptionally cold winter in northern India. Total foodgrain production is consequently expected to remain below the level of 81 million tons reached in 1960/61 and 1961/62. Amongst other crops, groundnuts and cotton are expected to do somewhat better than in 1962/63 and sugarcane about the same. More reliable estimates should be available towards the end of May. 3. Estimates of industrial production are available for the first nine months of 1963/64, and these show an increase of 8g per cent over the cor- responding period of the previous year. Most of the principal industries participated in varying degrees in this expansion. Notable increases occurred in outputs of coal, aluminium, sulphuric acid, caustic soda, chemical ferti- lisers, paper and board, electrical equipment and railway wagons. On the other hand, production of sugar and motor vehicles declined. In textiles activity in the cotton industry increased only slightly, but more rapid advances took place in jute and woollen goods. 4. Coal production, though it increased. sharply towards the end of 1962 following the introduction of seven-day working in the mines, has since levelled off as supply has caught up with demand. There is still a short- age of the better quality coals, but inferior grades are now in surplus and output has been cut back as pithead stocks have accumulated. Total produc- tion in 1963/64 is estimated at about 66 million tons, as compared with just under 64 million tons in 1962/63. 5. Output of finished steel in 1963/64 is estimated at 4.3 million tons, as against 4.C million tons in 1962/63. All the main plants are now working at or close to full capacity, after the interruption of production at Rourkela in March and April as a result of communal disturbances. Little further increase can be looked for in the quantities produced until the expansion schemes at the public sector plants are completed. The Bhilai - 2 - expansion is the furthest advanced and should contribute most of the additional output expected during the next two years. Total production of finished steel is forecast as rising to lt.9 million tons in 1964/65 and 5.3 million tons in 1965/66. 6. A marked improvement has taken place during the past eighteen months with respect to supplies of electric power and transport, and neither is at the moment considered by the Government a serious obstacle to increasing industrial production, although local power shortages create difficulties from time to time. Power generation is estimated to have been about 15-2C per cent higher in 1963/64 than in the previous year and rail movement of freight nearly 10 per cent higher. The railways are having no difficulty now in moving all the coal produced. 7. There are many indications that production is still being held back by shortages of materials and components, particularly in the metal-using industries. Hoever, no comprehensive study has been made of the extent to which capacity is under-used on this account. Flat steel products, special steels and non-ferrous metals are all in short supply. Scarcity of cement is a problem in some parts of the country. There is still reported to be a large unsatisfied demand for chemical fertilisers. Prices 8. The decline in agricultural production in the second year of the Plan was followed by a marked increase in wholesale prices during 1963, and the wholesale price index rose by 7 per cent in the course of the year, from December to December. There were particularly sharp increases in prices of sugar and gur, rice and pulses. Prices of kerosene, cigarettes and some other articles were enhanced by additional taxation, but generally speaking prices of industrial raw materials and manufactured goods remained fairly stable. The index of working class consumer prices started to move up during the summer of 1963 and in December was 7 per cent higher than a year before. Rising food prices have been a source of increasing concern in recent months. Internal Finance 9. Money supply with the public rose by 13 per cent during 1963/64, mainly as a result of the expansion of bank credit to the Government, but with some increase also in bank credit to the private sector. Although taxation has already been raised well above the levels contemplated in the Third Plan, there has also been some further increase in deficit financing to meet rising expenditures on defence and public investment (Statistical Appendi:, Table 16). The tax revenues of the Central Government are estimated to have risen by Rs. 285 crores (22 per cent) between 1962/63 and 1963/64. Against this, defence expenditures alone rose by Rs. 335 crores (over 70 per cent) and capital expenditures on development by Rs. 107 crores (over 20 per cent). Details are given in Tables 18 and 19 of the Statistical Appendix. * 3 4* 10. Nearly two thirds of the increase in tax receipts achieved during the past year was attributable to customs and excise duties and rather over one third to corporation tax and income tax. Revenue from both direct and indirect taxes appears to have comfortably exceeded the estimates made at the time of the Budget a year ago. The tax revenues of the Centre and States together are now equivalent to 12-13 per cent of national income, as against about 10 per cent at the beginning of the Third Plan and 8 per cent at the beginning of the Second Plan. This impressive tax effort has borne heavily on the Indian consumer. It has not, however, been accompanied by a corresponding expansion of domestic savings because of the sharp increase in defence expenditures following the Chinese invasion and the steady growth in the other current expenditures of government. 11. The Budget for 1964/65, which was introduced at the end of February, provides for a continuance in the upward trend of expenditures on debt ser- vice and general government administration, for a further (comparatively modest) increase in defence expenditures and for a more substantial rise in Plan outlays. Last year total outlays under the Plan, including the con- tributions of State Governments and public sector enterprises, were budgeted at Rs. 1,651 crores. The corresponding figure this year is Rs. 1,984 crores. The Third Plan contemplated that a total of Rs. 7,500 crores would, be spent on development in the public sector during the five-year period. It appears that just over half this amount has actually been spent during the first three years. 12. The additional expenditures included in the Budget considerably out- weighed the extra receipts that could be expected on the basis of existing taxation, and the Finance Minister put forward a complicated series of proposals for changes in taxes and other measures which he estimated would have the effect of reducing the overall budgetary gap in 1964/65 by Rs. 90 crores. The remaining gap, which would have to be covered by borrowing from the banking system, would be much smaller than the deficit actually incurred in 1963/64 (Rs. 91 crores, as against Rs. 158 crores). 13. A number of the Finance Minister's proposals were specifically designed to encourage private foreign investment in India and to help foreign companies which have already invested there. The reduction of the tax on inter-corporate dividends, for example, would be of special advantage to foreign companies which have Indian subsidiaries. Foreign companies would also benefit from the proposed income tax concessions in respect of children of non-Indian citizens receiving education outside India and from minor extensions of the concessions under which the salaries of certain categories of foreign technicians are exempt from tax for a period of three years. The Budget contains a number of features ihich are generally favourable to business, including some reduction in the taxes payable by companies engaged in certain key industries and what amounts in effect to a modifica- tion of the super profits tax which was introduced a year ago. On the other hand, the Finance Minister proposes to introduce a special tax of 72 per cent on dividends (subject to certain qualifications) and to make bonus issues liable to the capital gains tax. 14. So far as taxation of personal income and property is concerned, the Budget provides for some lowering of present rates of income tax and surtax, particularly at the bottom end of the scale, but the rates of capital gains tax, estate duty and gift tax are to be stepped up, and the expenditure tax, which was dropped a year ago, is to be reintroduced. The compulsory savings scheme introduced last year to help pay for re- armament has been considerably modified and is now to take the form of an annuity deposit scheme which will apply only to incomes above Rs. 1,000 a year. This change, like some of the other changes proposed in the Budget, will tend to benefit the middle income groups in India at the expense of the wealthiest classes. It still seems that direct taxation falls comparatively lightly on those with incomes ranging between Rs. 5,000 and Rs. 20,000 a year. 15. The private capital market reacted rather unfavourably to this yearts Budget and is still suffering from the shock of the Chinese invasion. The index of share prices at the end of December was 12 per cent below the all- time high of May 1962, and prices have declined further in recent months. However, new issues offered by companies with attractive growth prospects have generally met with an excellent response, and some recent issues in chemicals and engineering have been heavily over-subscribed. Basic industries like coal, cement and fertilisers, which are subject to price controls, have found it much more difficult to raise money. 16. Interest rates in India continue to edge upwards in line with govern- ment policy. The rediscount rate of the Reserve Bank was raised from 4 to 2 per cent at the beginning of 1963, and since that date the minimum rate of interest on commercial bank advances has been 62 per cent. New govern- ment loans issued during 1963 mostly carried interest at h-hper cent, as against 3k-1 per cent in previous years. The rate of interest on Post Office Savings Deposits was raised from 22 to 3 per cent in the summer of 1962, and the rate of interest on 12-year National Defence Certificates issued after the Chinese attack was 4.75 per cent compound, as against h per cent for the earlier National Plan Certificates. The dividend payable by the Indian Railways to the Government on their capital-at-charge was raised from 4 to hz per cent in 1961 and from bl to 421 per cent in 1963; it has now been decided to raise the rate to 5-3/ per cent for capital made available to the railways after March 31, 1964. Rates of interest charged by the Government on loans to public enterprises have also been progressively stepped up and now generally range between 5 and 6 per cent. Rates of interest on loans to State Governments vary between 3 per cent, for loans up to one year, to 5! per cent for loans beyond fifteen years. The lending rates of industrial financing institutions such as the Industrial Finance Cornoration and the Industrial Credit and Investment Corporation of India are generally around 7 per cent, with somewhat higher rates for loans in foreign exchange. -5- Overseas Trade and Payments 17. Pressure on India's foreign exchange reserves has eased somewhat during the past year. India repaid $50 million to the International honetary Fund during 1963/64 and in spite of this repayment increased her reserves by $25 million during the year. Total official gold and foreign exchange assets, including government balances abroad, amounted at the end of March 1964 to the equivalent of $645 million. 18. Exports have done better than expected - mainly because of the continued buoyancy of jute exports, coupled with larger sales of sugar, vegetable oils and tobacco. Jute, sugar and oilcakes between them have accounted for over half the increase in total export earnings during the past three years, jute manufactures and sugar both having benefitted from what antear to be exceptionally favourable world market conditions. Iron ore exorts were boosted by the incorporation of Goa in the Indian Union at the end of 1961, but apart from Goa progress in this field has been disappointing. 19. Expenditure on imports in 1963/61, including imports under PL 480, is estimated to have been 15 per cent higher than in the previous year. Larger foodgrain imports have been required to help make good the deficiency in domestic supplies, and there has been a steady rise in imports of capital goods, reflecting the progress of investment in industry, power and transport, Equipment is now being delivered against orders placed abroad in the early part of the Third Plan. Kuch of this equipment is being financed by foreign aid, and aid disbursements too have been rising. But as in previous years both equipment deliveries and corresponding disburse- ments of project aid have risen less than forecast. Imports of machinery and transport equipment in 1963/64 are now estimated at nearly $250 million less than projected a year ago and total aid disbursements at $300400 million less. 20. Imports other than cereals, machinery and transport equipment apparently rose very little during 1963/64. There was a sharp increase in expenditure on petroleum, but other maintenance imports continued to be tightly restricted and remained at about the same level in total as in 1902/63. Little of the non-project aid pledged by the consortium a year ago has so far been disbursed. If this aid had been negotiated earlier, it might have open-ed the way for more liberal import licensing policies. 21. India's overall deficit on current account, excluding official grants, has grown from $7l million in 1961/62 to an estimated $1,154 million in 1963/6L. The increase in the deficit is almost wholly attribut:ble to merchandise trade. On invisible account, there has been a fairly sharp rise in interest payments on foreign loans, but this has been largely offset by an increase in net receipts from other sources. The net balance of current invisibles, as now estimated for 1963/6k, is rather better than forecast a year ago. - 6 - II. DEVELOPMENT PROGRMIS AND POLICIES Planning and Controls 22. An account of investment programs and policies in the main sectors of the economy was given in Annex I. of last yearts Economic Report. Brief comments on some of these programs are made in paragraphs LC-73 below. First, however, a few general observations are called for on methods of economic planning and on the policies being followed with respect to industrial development. 23, As industrialisation progresses, the choices that have to be made become more and more complex. The task of planning investment in detail is correspondingly more difficult. This the Government has recognised, and a number of steps have been taken to reduce and simplify licensing con- trols over industry and to relax controls over prices, so that market forces can play a larger part in determining the allocation of resources. Practi- cal limits to the extent of de-control are set primarily by the shortage of foreign exchange. But while the complete removal of controls over the use of foreign exchange is plainly out of the question for the foreseeable future, greater reliance on the price mechanism, coupled with the use of appropriate fiscal devices, can help to take the pressure off the licensing system. 2h. A start was made last December by removing controls over the prices of sixteen commodities: these were rayon yarn, staple fibre, caustic soda, soda ash, hydrochloric acid, chlorine, calcium carbide, bleaching powder, chilean nitrate, muriate of potash, sulphate of potash, washing soap, tyres and tubes, sheet glass, paper board and natural rubber. In March this year statutory controls were also taken off prices and distribution of most categories of iron and steel, except pig iron and flat steel products. Controls have been retained over coal prices, however, and this seems to be a rather questionable decision. There also appears to be a prima facie case for removing controls over cement prices; the control of cement prices has discouraged new investment and helped to perpetuate a condition of shortage. Prices of fertilisers are regulated through the operations of the fertiliser pool, which equalises delivered prices of domestic and imported fertilisers. Apart from these basic commodities, articles still subject to price control include sugar, kerosene, woollen yarn, ethyl alcohol and molasses. Informal arrangements exist under which certain industries have agreed not to increase prices without consulting the Government; the industries concerned are paper, cotton yarn and textiles, motor vehicles, bicycles and petroleum. 25. A genuine effort is being made by the Government to simplify the procedures for granting licences for industrial development (and related licences for the import of capital goods) and to cut doin the time taken to consider applications. The committee looking into this question, which includes representatives of private industry, has already announced a change in procedures which should reduce the time required by the prospec- tive investor to obtain the Government's approval in principle. The committee has also been scrutinising the application forms that have to be - 7 - submitted to see if they can be simplified. One of the important changes envisaged is that applicants will in future be invited to appear before the licensing sub-committee in person to answer questions rather than having to deal with them by correspondence. Cases involving private foreign investment or technical collaboration will be reviewed by a special commit- tee of top level officials, assisted by a special officer, who will be responsible for seeing that applications are processed without unnecessary delay. 26. The Department of Technical Development (formerly the Development Wing of the Ministry of Commerce and Industry) plays a central role in scrutinising proposals for industrial investment. Complaints are frequently made that officials of this Department, who are mostly people with technical qualifications, lack the detailed and specialised knowledge required to reach a sensible judgement on matters referred to them - for example, whether or not a particular proposal for investment is technically sound; whether the proposed scale of manufacture is economic; whether such and such an item has to be imported, or whether an adequate substitute can be found from indigenous production; and so forth. Naturally, the degree of competence and common sense displayed will vary from individual to individual. But however capable the officials may be, there are limits to the extent to which a body of this kind can usefully attempt to "second guess" the industrialists concerned, It may be necessary to have some sort of technical screening to sift out obviously unsound projects, but there are dangers in trying to go beyond this. The cost of the delays caused in the past by arguing over minor details (particularly on the question whether indigenous components can be substituted for imports) has probably been out of all proportion to the benefits. 27. It is significant that, in examining applications for industrial investment both from the public and private sectors, the licensing authorities and their technical advisers have given comparatively little thought to the economic or financial evaluation of projects. Indeed, the Departnent of Technical Development is composed almost entirely of techni- cal people and does not have an economic section. Even in the case of public sector projects involving substantial investment, decisions appear to be guided largely by considerations of technical feasibility and physical need, and the question of production costs is apt to be regarded very much as a secondary matter. The defects of this approach are aggra- vated by the fact that the actual prices charged for capital and foreign exchange are quite unrealistic. Consequently, insufficient attention is given to the possibility of economising in these scarce factors in deciding both what should be produced in India and what techniques should be employed in producing it. The time factor is also liable to be ignored in arriving at investment decisions. All this helps to explain what many would regard as an excessive bias in India towards highly capital-intensive (and import-intensive) investments. 28. Economic planning in India is still conceived of essentially in terrs of physical planning enforced by means of direct controls. The use of indirect methods of control, and the corollary that the price mechanism - 8 - has an essential function to perform in allocating resources, is only gradually coming to be considered. The move is now in this direction, as it becomes increasingly evident that the Government has neither adequate staff nor adequate information to make a success of detailed physical planning in a more and more complex and diversified economy. Nevertheless, physical production targets laid down in the five-year plans continue to exercise a strong hold over the minds of the Planning Commission and the government departments responsible for investment, even though circumstances may have changed completely since the targets were set. Projects may be added to the Plan from time to time, but once a project has been included, it is difficult to get it dropped. All this contributes to rigidity and lack of realism in economic thinking, and it is to be hoped that the Fourth Plan will be more flexible in conception and spelt out in less detail. 29. Criticism of Indian planning methods must be tempered by an appreciation not only of the enormous difficulties of organising develop- ment in such a vast country, but also of the limits of the federal power in relation to the sixteen States. Much of the time - probably too much of the time - of the Planning Commission is taken up with negotiations with State Governments, and one of the principal functions of the five-year plans is to provide an agreed basis for the allocation of investment resources between the Centre and the States. State and regional interests have con- tinually to be weighed against the economic interests of India as a whole, and it is inevitable that some concessions should be made to the former at the expense of the latter when it comes to deciding such matters as the location of industry and the development of transport. Nevertheless, before these concessions are made, the cost of making them should be objectively assessed, and this is not always done. 30. Another criticism of Indian planning both at the Centre and in the States concerns what is sometimes considered to be the excessive influence of the general administrator. 7hile the regular civil service has a fine tradition, it does not always seem to be aware of its own limitations. There tends to be too little delegation of authority down the line, and insufficient use is made of expert advice in arriving at important decisions. The Problem is aggravated by the difficulty of attracting competent special- ists into the public service when their status in the service is so low and when they can earn much more outside. The Government recognises the need to build up in the departments responsible for investment a staff of econo- mists and technicians capable of preparing and evaluating projects and advising on policies. But little has so far been achieved, and the Planning Commission itself is still quite inadequately equipped with this sort of talent. In the long run, a solution of this problem may have to be sought in a reform of the civil service based on a reassessment of the relative values of different qualifications. The more the Government tries to plan at the Centre, the more important this reform becomes. Meanwhile, greater use is being made of outside experts to help with particular aspects of economic planning. The Power and Energy Survey Committees, which were organised with the help of the help of the United States Government, and the Coal Transport Study Group, which has been assisted by the World Bank, afford examples of the way in which this can be done. Consulting firms in India and the technical staffs of some of the public corporations are also making a useful contribution to the country's planning resources. 31. Preparatory work is now proceeding on the Fourth Plan. A prelimi- nary outline assessing the resources that may be available and indicating some of the policy choices that have to be made is expected to be completed by the Planning Commission this summer for consideration by the National Development Council. There appears to be a danger in the meantime that the authorities responsible for putting forward investment proposals will continue to plan on the basis of rather unrealistic assumptions about the availability of capital and about attainable rates of economic growth. Very large numbers have already been mentioned in public in connection with programs for the expansion of some of the basic industries, and the wider currency these gain, the more difficult it becomes for the Government to get away from them. The sooner a hard look is taken at the limitations likely to be imposed by such factors as foreign exchange resources, domestic savings and the lag in agricultural production, the easier it will be to impress on the planning authorities the need to find the most economical solutions to their problems. Private Foreign Investment 32. The respective roles of the private and public sectors in India's mixed economy have by now been fairly clearly demarcated. This demarcation follows the line laid down in the 1996 Industrial Policy Resolution, and although there have been occasional deviations from it, the Government apparently has no intention of introducing any radical changes. At the same time, there is growing recognition in India that shortages of foreign capital and trained management are the principal factors limiting the progress of industrialisation, and the Government is looking to private foreign investment as an important source of both. As the Finance Minister stated in his budget speech, "we should specially welcome foreign investment in the shape of equity capital which not only brings with it technical know- how and managerial skills, but has the special advantage of not adding to the heavy and growing burden of debt repayment". 33. In spite of high taxation and other deterrents, many foreign firms have found that investment in Indian industry can be highly profitable, and the Government's attitude towards private foreign investment seems to be more welcoming today than at any time in the recent past. Special efforts are being made to secure the participation of private foreign capital on a minority basis in public sector enterprises. This is something of a new departure and is being tried out to begin with in the petroleum industry (see paragraphs 50-56 below). The idea is that the foreign investor should take a share of the equity and also help i providing management and techni- cal services. - 10 - 34. There is a lack of reliable and up-to-date statistical information on the actual inflow of private long-term capital, and it is time that better arrangements were made for collecting the data. The official estimate is that, excluding reinvestment of retained earnings, the present gross inflow is at the rate of around $50-60 million a year. This could be an under-estimate, but it would still be unrealistic to expect private foreign capital to make more than a marginal contribution in the foresee- able future to covering India's balance of payments deficit. Nor can it always be assumed that servicing of an equity investment will be less onerous from a balance of payments point of view than servicing of conven- tional loans. Private foreign investment is therefore no substitute for official aid. Indeed, the continuance of aid to India is essential if foreign enterprises are to be persuaded to invest their own money in the country. Public Sector Enterprises 35. The Government is now giving more careful attention to the problem of management in public sector enterprises. As an initial experiment in greater decentralisation of control, the Minister of Steel, Mines and Heavy Engineering has introduced important changes in the management of the Sindri fertiliser factory and the Durgapur steel plant. The Government's inten- tion is that similar changes should be made at other plants, several of which are admitted to be in serious difficulties. Major obstacles to more efficient management are still the insistence of the Ministry of Finance on outside financial control and continual interference by the Comptroller and Auditor-General, whose officers are stationed in every plant. No enterprise can be expected to operate efficiently under these conditions. 36. Too many of the top posts in the new public sector enterprises are still occupied by persons drawn from the civil service or from long- established organisations such as the Railway Board where the qualifications required are quite different. Efforts are, however, being made to encour- age promotion from within and to give more weight to technical skills and specialised know-how and less to seniority. Many of the younger men who have worked their way up in the enterprises are reported to show great promise. A recent study carried out by the Indian Institute of Public Administration at the Government's request has some eminently sensible things to say on this subject. 1/ As the author remarks, "the idea that age and seniority should weigh more than talent is normally prevalent in all traditional societies. But it has to be given up by a society which wants to bring about a technical and economic revolution.....The fact that at this stage of our economic growth some persons, especially specialists, rise to important positions at a comparatively young age need not be con- sidered alarming.....The tendency to insist on a certain rigid relationship between the age of a person and the grade that is to be given to him needs to be firmly resisted." The Flight of Technical Personnel in Public Undertakings, by H.K. Paranjape. Indian Institute of Public Administration, New Delhi, 1964. - 11 - 37. The same study focusses attention on the controversial subject of pay scales in public sector enterprises and concludes that substantial increases in pay will be required to attract and retain qualified technical personnel. More specifically, the recomendation is made that the top salaries in public undertakings should be raised to Rs. 5,OO a month, as against the present maximum of Rs. 2,750, and that the lowest salaries in these undertakings should be at least about 90 per cent of those in good private firms. The problem is seen as one of competing for talent not merely with private enterprise in India, but also with employers abroad. Thousands of Indian technicians, as well as many economists and scientists, are at present working overseas because the rewards there are higher than in their own country. India cannot afford to lose these people, and ways have to be found of encouraging them to come back. 38. Genuine competition between public and private undertakings can often be of benefit to both. There are cases in India where public under- takings have provided a useful and necessary stimulus to greater efficiency and enterprise in the private sector. Equally, without private competi- tion, it will be difficult to ensure the long-run efficiency of the public plants. From this point of view, it seems desirable to avoid any hard and fast demarcation of spheres of activity between the two sectors. 39. The Finance Minister drew particular attention in his budget speech to some of the shortcomings in the performance of government enterprises in India. He said: "Many of the public sector projects are lagging behind the schedule of their construction and what is more disappointing is that their contribution to our resources is nowhere near the Plan estimates. It is of the utmost importance for our economy that enterprises in the public sector should not only make profits, but should make good profits. By that I mean that they should give a good dividend to the Exchequer and yet be able to build up reserves to finance their own future expansion." Iron and Steel 40. The five main steel plants are working close to capacity, and three of them are in process of expansion. Domestic production of many categories of steel is now more or less adequate to meet demand, but there are large deficits in flat products and special steela; there is also a shortage of pig iron for sale to foundries. Highest priority in the further expansion of the industry will be given to the creation of additional capacity for flat products and to the installation of two more blast furnaces, one at Bhilai and the other at Durgapur. 4l. The project for a continuous strip mill at Bokaro, where steel-making would be based on the LD process, has now been worked out in detail, and assistance for the project will be extended by the Soviet Union. A separate company has been established to run the plant, and design and engineering services are being provided by a firm of Indian consultants who have been responsible for the project report. It is intended that a capacity of 1- million ingot tons should be installed in the first stage of the project, with expansion to 4 million tons later on. - 12 - 42. Other possibilities of increasing output of flat products are also to be exploited. The Government attaches particular importance to the projects for the further expansion of the TISCO and Rourkela plants, since both will produce mainly this type of steel. Allowing for further expansion to be undertaken at the IISGO plant and at Bhilai and Durgapur, the five existing plants could have a combined capacity of around T1h million tons of ingot steel by the end of the Fourth Plan or shortly thereafter. Adding another l1 million tons for the first stage of Bokaro, total. steel- making capacity-would be in the region of 16 million tons of ingots or 11 million tons of finished steel. There are good prospects that there will be adequate demand for this amount of steel if it can be produced at reasonable cost. It would seem rather unrealistic at this point to think in terms of higher production targets for 197Q/71, but additional capacity should be under construction by that date. Apart from the second stage of develop- ment at Bokaro, the Government is considering the feasibility of estab- lishing another 2 million ton plant, possibly either at Goa or on the east coast near Visakhapatnam. 43. A committee of economists appointed by the Minister of Steel, Mines and Heavy Engineering reported last year in favour of a considerable simpli- fication of the present system of steel controls, along with a major revision of the price structure. The Government's decision in March to abolish controls over prices and distribution of most categories of iron and steel was in line with the general approach recommended by-the committee. The de-controlled categories constitute about two thirds of total production. h. A Joint Plant Committee, consisting of the Iron and Steel Controller, representatives of the public and private plants and an official of the railways, will in future be responsible for planning production both of con- trolled and de-controlled categories with a view to making the best use of available capacity to meet consumers'. requirements. The Joint Plant Committee will notify the prices at which the de-controlled categoies can be bought from producers. These prices will be uniform throughout India, but wholesale and retail prices will be free to vary in response to market forces, and anybody who wishes will in future be allowed to trade in steel (in place of the old system under which the trade was restricted by law to "controlled" and "registered" stockists). Prices of the controlled. categories will continue to be fixed by the Government under arrangements which provide for variable excise duties to be levied on top of the ex-factory prices: prices of flat products continue to be controlled also at the wholesale and retail levels. 45. These measures constitute an important step forward in the direction of the complete de-control of steel. Eventually, prices should be allowed to find a level which enables the steel plants to operate at a satisfactory profit. There seems to be a good deal of doubt at present about what the costs of producing the various products are, and one of the first tasks which the industry must undertake is to develop reasonably accurate cost data as a basis for the determination of a sensible pricing policy. - 13 - Iron Ore 46. The way in which Indiats iron ore resources are being developed for local consumption and export exhibits many weaknesses in planning and execution. Major investments have been undertaken on the basis of quite inadequate technical studies, one result of this being that few of the mines have succeeded in producing ore of the qualities envisaged. A number of the public sector mines appear to have been heavily over-capitalised by comparison with similar ventures in the private sector, or in other parts of the world. The result is that costs of production at some mines (e.g., Kiriburu in Orissa) are quite uncompetitive. The various export projects have been taken up without detailed cost comparisons, without adequate attention to economics of scale and without an expert study of marketing possibilities and requirements. Nor have the related investments in mining, rail transport and ports been properly coordinated. The capacity planned to handle iron ore exports at Goa, Vishakapatnam, Paradip, Madras and possibly Haldia appears to be greatly in excess of possible require- ments. Serious delays have occurred in the installation of the necessary port facilities at Vishakapatnam with the result that deliveries of ore to Japan under a long-term contract for the export of 2 million tons a year will be delayed by at least six months and possibly longer. 47. The fact that many different authorities are involved in the iron ore export business and that nobody can be held responsible for things going wrong is perhaps in itself significant. Whatever the reasons for what is happening, the situation appears serious enough to warrant radical changes in planning methods, in arrangements for the exploration and mining of iron ore and in the handling of exports. A proposal to set up a small committee of officials to supervise the progress of the various export schemes hardly seems to meet the case. Coal 48. The present situation with respect to the supply and demand for coal illustrates the distortions that can be caused by rigid price controls. Too much appears to have been invested in developing production of inferior grades, particularly in the outlying fields, and too little in the mining and mechanical washing of the higher grades. The narrow differential between prices of the superior and inferior grades has given the mines little incentive to concentrate on producing what the consumer wants, and the low average return on capital invested in the industry has made it difficult for the private sector to secure the finance needed for expansion. The Govern- ment has recognised these problems and is now giving fresh thought to the whole system of controls and prices. Further small price increases ranging from Rs. 1.25 to Rs. 0.75 per ton were allowed in March of this year for superior and medium grades of coal, but these are merely palliatives which do not strike at the roots of the trouble. 49. Plans for the expansion of production are based on the assumption that consumption of coal in India will rise as high as 85-88 milli;on tons in 1965/66, and that output of around 90 million tons will be needed to - L - provide for this. Some preliminary calculations made by the Energy Survey Committee suggest that consumption may rise rather more slowly. At the margin, much will depend on the extent to which oil continues to be substi- tuted for coal in areas distant from the coalfields, and this in turn will depend on the relative prices at which alternative fuels are available. There are still restrictions on private companies extending their activities into new areas. If these restrictions were removed and prices de-controlled, the need for additional public investment in the industry could be reduced. Petroleum 50. Relations between the Government and the private oil companies in India have improved considerably during the past year. At the same time the Governmentls policies towards private investment in the industry con- tinue to be based on the Industrial Policy Resolution of 1956. Broadly speaking, the majority ownership and control of all new ventures is reserved to the public sector. Private participation is welcomed on a minority basis. Units established in the private sector prior to 1956 continue to operate, but their expansion is controlled by the Government. 51. As far back as November 1959 private companies were invited to put forward proposals for participating in the exploration and production of oil in specified areas of India and a number of companies expressed interest in doing so. More recently, in June 1963, it was announced that the Govern- ment would welcome private participation in exploration in Kerala, the Cauvery Basin and the Andaman Islands. Three oil companies showed interest in the announcement. As yet, however, no new agreements have been negotiated. 52. The Burmah Oil Company, through its 50 per cent participation with the Government in Oil India Limited, is still the only private company with an equity investment in exploration and production. Oil India has recently been granted new concessions in Assam. All other exploratory work is being carried out by the Government's Oil and Natural Gas Commission, which is receiving technical assistance from the Soviet Uhion, Italy and France. The foreign exchange costs of the 0NGC's operations during the Third Plan have been largely covered by credits from the Soviet Union, Rumania, France and Italy (ENI). ENI and the French Petroleum Institute have both concluded agreements for contract drilling, the former in the Ganges Valley and the latter in the Jaisalmer area of Rajasthan. 53. On the basis of discoveries made so far, production of crude oil in India can be expected to rise from just over 11 million tens in 1963 to 6-7 million tons a year early in the Fourth Plan. This would be more or less equally divided between Assam and Gujarat. 54. All the new refineries built in India since 1956 have been in the. public sector. The first three - at Nunmati (in operation since 1962), Barauni (first stage nearing completion), and Koyali (still under construc- tion) - are wholly owned by the Government. and their foreign exchange costs - 15 - have been covered out of credits from the Soviet Bloc. A new pattern has been set by the agreement reached last year with the Phillips Petroleum Company for the construction of a 21 million ton refinery at Cochin. The Central Government has subscribed 51 per cent of the equity, the State Government 7 per cent, Phillips 25 per cent and their Indian partners 2 per cent. The remaining 15 per cent has been offered for public subscription in India and has been fully subscribed. The foreign exchange costs of the refinery are to be covered mainly by loans of up to $18 million from banks in the United States. The effective rate of interest payable by India on these loans will be 5-3/4 per cent, with repayments commencing in 1967 and extending up to 1980. Management and technical services are to be provided by Phillips. 55. Invitations have been extended to other oil companies to participate on a minority basis in additional refineries to be established at Madras and Haldia (outside Calcutta), and a number of offers have been received which are at present under study. The Government is also interested in attract- ing private capital and technical know-how into the petrochemical industries. Two complexes are contemplated, one in Bombay and the other in Gujarat or possibly at Haldia. The intention is that the Government should have a majority interest in the main units (e.g., refineries and naphtha crackers), but that the peripheral plants should be wholly private. 56. Arrangements which provide for the greater participation of private capital and management in the development of Indiats oil resources mark an important step forward. Of course, the Government's adherence to the principles embodied in the Industrial Policy Resolution continue to some extent to restrict the scope for such participation. This is true not only of exploration, production and refining, but also of distribution, in which the government-ow,ned Indian Oil Company is investing substantial sums with the object eventually of taking over the greater part of the domestic market. The existing private refineries are not being allowed to expand any further for the time being. The Government maintains that the regional pattern of demand for petroleum products in India does not yet justify any further expansion of refining in Bombay, where the two largest private refineries are located. Against this must be set the fact that the per-ton cost of expanding these refineries would be very much lower than the cost of establishing new capacity elsewhere. The basis on which the so-called "economic supply areas" for the different refineries are demarcated is also open to question. Costs of transport from the refinery to the point of consumntion are assumed to be equal to the prevailing railway freight rate, and no account is taken of the fact that actual costs of transport by pipe- line may be very different. Power 57. The work done by the Power and Energy Survey Committees should provide a useful basis for the more systematic planning of power facilities in India in future, and when the Committees have completed their work, the list of power projects already drawn up for the Fourth Plan should be reviewed in the light of their findings. There appears to be some tendency - 16 - on the part of the power authorities to assume that very few changes will be needed, but this assumption should not be allowed to pass unchallenged. Few of the Fourth Plan projects have yet been committed beyond the stage where major changes can be made. 58. The Government has accepted the need to put more emphasis in future on investment in transmission and distribution facilities and is looking into the practical possibilities of extra high voltage transmission of power generated in large thermal stations burning by-product coal. The concept of regional planning of power facilities has also been accepted by the Centre, and two regional Electricity Boards have already been established to assist in forming interstate power grids, one in the north and the other in the south. The State Electricity Boards will, however, continue to be respons- ible for "planning, construction and operation of power stations and trans- mission systems", and it is not clear how far the State Government will be ready to cooperate in putting the new policies into practice. Consideration is meanwhile being given to the possibility of strengthening the Central Electricity Authority, so that it can play a more effective role in future in the development of India's power resources. 59. The work done by the Energy Survey Committee appears among other things to support the view that, if realistic prices are charged for capital, nuclear energy is not in present circumstances competitive in India with thermal or hydro power. The argument is, however, advanced by the Indian Atomic Energy Commission that in the long run nuclear energy will have to be developed in certain regions of India for lack of adequate alternatives, and that a start must be made now in building up experience in the operation of nuclear plants. Two such plants have accordingly been included in the power program for the next five years, one at Tarapore on the coast north of Bombay (being assisted by the United States) and the other in Rajasthan (to be built with Canadian assistance). 60. The Central Government has long been pressing State Governments to increase their power rates to levels which would generate more adequate resources for the financing of future expansion. A proposal has been put forward that electricity tariffs should generally be franed so as to produce a return of about 10 per cent on capital invested. Many of the States, however, continue to resist this idea on the grounds that cheap power is necessary to attract new industries and to develop agriculture. No major changes in tariffs have been made during the past twelve months, but three States are understood to be revising their tariffs at the present time. These are Kerala, Madras and Punjab. 61. Considerable differences of opinion exist as to the likely trend of demand for power during the period of the Fourth Plan. Load forecasts prepared in the past by the Central Water and Power Commission, in consulta- tion with the State Governments, have tended to over-estimate demand, and the forecasts included in the First Electricity Power Survey of India, which was undertaken in 1963, may be on the high side. There can be no question, - 17 - however, of the importance of planning new facilities well in advance as part of a properly phased program, and the Government is rightly concerned to avoid a repetition of the bunching of projects which occurred at the start of the Third Plan, Some new schemes should be started every year if there is to be an even development of power supplies. Transport 62. The adoption of more rational taxation, pricing and regulatory policies could help to secure a better allocation of resources as between alternative modes of transport in India. The present very heavy taxation of road transport, for example, has been one of the factors inhibiting balanced development in this sector. The fact that gasoline is much more heavily taxed than diesel oil has induced road transport operators to con- centrate on diesel vehicles to the point where substantial quantities of diesel fuel have to be imported, while gasoline is in growing surplus. The fact that coal prices have been kept artificially low, while diesel fuel bears a heavy duty (which more than compensates for the scarcity of foreign exchange), has tended to obscure the possible economic benefits of converting the railroads in some parts of India from steam to diesel traction. Uneconomic use of transport resources has also been encouraged by the structure of railway freight rates, which has not always been closely related to the costs of different traffic movements. These and related questions are now receiving increasing attention in India. Some of them are being examined by the Coal Transport Study Group, which is expected to present its final report shortly. 63. This year's Railway Budget, introduced on February 12, provides for a supplementary charge of 2 per cent on freight rates, a downward adjust- ment in rates charged for certain high-rated commodities and an increase in the rate for coal carried over 500 kilometers. These changes are very much in line with recommendations made by last year's Bank economic mission. 64. The railways are now able to move all the freight offered and even have some surplus capacity. This is a welcome change from the situation a year or two ago and reflects credit on the railway management. Past experience in India supports the view that rail capacity should always be some way ahead of demand. Nevertheless, plans for future expansion need to be kept under close scrutiny in view of the continuing scarcity of capital in general and foreign exchange in particular. Earlier estimates, which suggested that originating freight traffic on the railways might rise from the present level of around 195 million tons a year to well over 00 million tons in 1970/71, are now recognised to have been greatly exag- gerated. If thermal power plants are in future located mainly on the coalfields, and if the possibilities of EHV transmission over long distances can be fully exploited, substantial economies should be achieved in rail movement of coal. The progressive dieselisation and electrification of the railways will have similar consequences. At the same time, there is still scope for reducing the need for additional investment in the railways - 18 - by further improvements in operational performance (e.g., measures to speed up the marshalling, movement and turn-round of freight trains, more efficient inspection and maintenance of rolling stock, etc.). 65. Indian roads have been planned in the past with insufficient regard to the economic justification of the investments proposed. Efforts are now being made to rectify this situation, but there is still evidence that projects are being undertaken without any serious attempt to evaluate their costs and benefits. A conspicuous example is the proposal to spend an additional Rs. 20 crores ($42 million) on roads in the West Bengal/Bihar region during the Third Plan mainly for the purpose of moving coal* Out of this, Rs. 8 crores are to be spent on improvements to the Grand Trunk Road between Calcutta and the coalfields and another Rs. 8 crores on what are described as feeder roads to the collieries. Now that congestion on the railways has been eased, it is difficult to see how the demand for moving coal by road could possibly justify investments on anything approach- ing this scale. There is the further consideration that the West Bengal Government still intends to build (and has already started work on) a new "expressway" from Calcutta to Durgapur which is designed to bypass the Grand Trunk Road over much of the distance to the coalfields. 66. Plans for the development of ports and coastal shippingin the Fourth Plan have to be based on a careful assessment of the demand for these facilities, and this assessment is still to be made. It seems rather doubt- ful whether there is likely to be any continuing demand for the coastal shipment of railway coal, and as already noted, there is already a danger of over-investment in port facilities for iron ore exports. Pressures from regional interests for the creation of new ports are difficult to resist, but equally India cannot afford to waste capital and foreign exchange by investing in facilities that are not really needed. Agriculture 67. Agriculture is beginning to receive from the Indian planners the attention which its importance demands. A more businesslike and scientific approach to the task of raising agricultural production is long overdue. The effectiveness of government action in this field has hitherto been limited by the diffusion of effort over too wide a field, the confusion of production and welfare objectives and insufficient attention to the techni- cal factors involved. Most schemes for community development and agricul- tural extension services in many parts of the country betray a lack of ex- pert knowledge of farming conditions and an incomplete understanding of the kind of incentives needed to stimulate fainers to increase their production. 68. The Planning Commission is now examining the implications for agri- culture of alternative rates of income growth and is considering how lower rates of growth in agriculture would affect the development of the economy as a whole. With the population growing at the rate of 21 per cent a year, nothing less than a 5 per cent rate of growth in agricultural output can be regarded as a tolerable long-run objective,, Some doubt exists as to the - 19 - actual rate of expansion achieved during the past ten years. Some esti- mates put it as low as 3 per cent a year, others as high as 4 per cent, depending on the base period and the method of calculation adopted.. There must anyhow be considerable uncertainty about the reliability of estimates which have to be based on samples collected over such a huge area from widely differing types of far. The achievement of a 5 per cent growth rate should be technically feasible if available resources of finance and expertise are concentrated on helping the more efficient and commercially minded farmers to produce more and giving them the incentive to do so. The necessary expansion certainly cannot be achieved so long as so much effort continues to be directed to looking after the less viable sections of the agricultural community, who consist mainly of very small farmers and agricultural labourers. Politically and in human terms, this is an extremely difficult choice to make, But -policies aimed primarily at assisting the lowest income groups must inevitably conflict with the objec- tive of maximising output. 69. One important advance that has been made in the last few years is the establishment of support prices for cereals as well as for jute. Admittedly, the prices so far fixed for cereals have generally been well below the prices prevailing in the market and have therefore had rather a limited impact. Indeed, except possibly for jute, where the buffer stock scheme is operated by the industry, the Government does not yet have the organisation needed to enforce an effective price support policy for these commodities. The number of procurement points will have to be greatly increased and additional storage facilities created. The whole question of how far the Government can intervene more effectively in the distribu- tion and marketing of agricultural commodities is one deserving of careful study. Attention must also be given to the problem of the relative prices of different crops. A conscious effort should be made to bring about through appropriate pricing policies the changes in cropping patterns that will be required to match the expected pattern of demand for agricultural products. For example, data on demand elasticities derived from national sample surveys, admittedly rather sketchy and out of date, suggest that special efforts will have to be made to stimulate production of wheat, cotton and oilseeds. 70. Present arrangements at the Centre for the follow-up of irrigation projects leave much to be desired. This is partly the result of the un- satisfactory division of functions between the Ministry of Irrigation and Power, which is responsible for supplying water for irrigation, ad the Ministry of Agriculture, which is concerned with its use. There has long been talk of the need to secure closer working cooperation at all levels between these two Departments, both at the Centre and in the States, but nothing very much has been done about it. The answer is not to be found simply in having officials from both Departments sitting together in commit- tees. Insufficient attention has been given to economic criteria in the selection of irrigation projects, and there has been a general tendency for water to be spread too widely so that as many farmers as possible can benefit, regardless of whether they can use the water effectively, Far - 20 - too many projects have been started in relation to the resources of money and talent available and much capital is locked up unproductively for long periods. Two conspicuous examples are the Kosi and Gandak projects in North Bihar, to which reference was made i an earlier Bank report. Not enough study has been given by the agricultural research and extension services to the practical problems involved in making full and efficient use of the water supplied. Financial returns as a rule are extremely low. 71. While something like Rs. 850 crores ($1,785 million) have been allocated for investment in irrigation during the Third Plan (11 per cent of the Plan total), some other agricultural inputs have been comparatively neglected. Schemes for soil conservation and improvement, including re- afforestation and measures to control waterlogging and salinity, do not appear to have received as much attention as they should, particularly in view of the opportunities for using under-employed rural labour on this type of work. A lot of emphasis has been placed on land reform and the imposition of ceilings on land holdings, but less thought has been given to the possibilities of increasing production through the consolidation of holdings. 72. Larger supplies of fertilisers are properly regarded as one of the principal requirements of Indian agriculture, and the serious delays that have occurred in the program for the domestic manufacture of chemical fertilisers are particularly unfortunate. They illustrate the inherent difficulties of working out mutually satisfactory arrangements for the collaboration of Indian and foreign firms in undertaking large industrial projects - difficulties which in this case have been aggravated by uncertain- ties about government pricing and distribution policies. Pending comple- tion of the fertiliser plants now under construction, one of the most effective forms of external assistance to India would be to provide addi- tional fertiliser imports to help in developing the market and building up knowledge of fertiliser use. At the same time, as supplies are increased, commercial methods of distribution should be encouraged. The present system under which most nitrogenous fertilisers are distributed by the Government to the farmers through cooperatives appears to be cumbersome and inefficient. 73. The reform of agricultural administration in India is coming to be recognised as a necessary condition of more rapid advance. Farmers have suffered in the past from too much interference by government officials knowing very little about farming. The move should be in the direction of reducing the influence of the general administrator and the revenue officer and enhancing the status of the agricultural specialist. A pro- posal for the creation of an All-India Agricultural Service was discussed with State Governments two years ago and met with a negative response. Recently, however, there have been signs of greater willingness to accept the idea. - 21 - III. EXTERNAL FINANCE General Outlook 74. The official balance of payments estimates for the last three years of the Third Plan are shown in the table on the next page alongside the actuals for the first two years. The figures, which were prepared in January, show the sharp worsening of the current account position from year to year. The trend is disquieting. It would appear that, even in the last year of the Plan, over one quarter of net domestic investment is still likely to be financed from external sources. 1/ This is much the same proportion as at the end of the Second Plan and suggests that little or no progress is being made in narrowing the gap between investment and savings. 75. It is true that, because of the bunching of starts of new projects in the early part of the Third Plan, there will be a corresponding bunching of deliveries of imported equipment towards the end of the Plan, and this could mean that the high level of imports expected in 1964/65 and 1965/66 turns out to be a hump rather than part of a continuous rise. It is also true that, while domestic savings may not have been increased much during the past two years, taxation has been raised to a new plane, so that if defence expenditures can be levelled off or reduced there might be a margin of additional savings to finance investment. However, there is no assurance that this will happen. 76. If attention is switched from the savings gap to specific foreign exchange requirements, the outlook is equally disturbing. On the basis only of loans committed up to the end of 1963, external debt service pay- ments due during the period of the Fourth Flan are estimated by the Indian Government at over $1,800 million or an average of $360 million a year (including repayment of supplierst credits). If India goes on borrowing abroad on the same scale and pattern as in recent years, service payments due during the Fourth Plan could reach about $3,000 million. The corres- ponding figure for the Third Plan is likely to be about $1,300 million. Thus debt service alone can be expected on the assumption stated to cost India roughly $1,700 million more during the Fourth Plan than during the Third. If it is further assumed: (a) that visible exports rise during the Fourth Plan at the rate of 5 per cent a year (a considerably higher rate of increase than has been achieved over any long period in the past); 1/ This is on the assumption that PL 480 imports, or equivalent imports financed in other ways, will continue in 1965/66 at about the same level as in 1964/65. - 22 - India's Balance of Payments ($ million) Actuals Estimate Forecasts I961/62 1962/63 19 75 966 956 Current Account Imports (c.i.f.) Commercial a/ 1,940 2,075 2,297 2,622 2,820 PL 480 185 258 38L 260 b/ Total 2,125 2,333 2,681 2,882 2,820 Exports and re-exports (f.o.b.) 1s4D1 1,432 1,554 1,617 1,680 Visible trade balance -724 -901 -1,127 -1,265 -1,14C Invisibles net (excluding official grants) -17 -11 -27 -52 -82 Current balance (excluding official grants) -741 -912 -1,154 -1,317 -1,222 Capital Account Private foreign investment (gross inflow, excluding retained earnings) L6 55 55 63 71 Repayment of loans to IBRD -29 -33 -38 -L4 -h4 Repayment of other foreign loans -97 -78 -69 -95 -143 Other caital transactions net (including errors and omissions) -18 + 7 -21 -42 -49 Capital transactions (net) -98 -49 .73 -118 -165 Deficit covered or to be covered by foreign aid/use of reserves -839 -961 -1,227 -1,h35 -1,387 Financed by: PL 480 aid 185 258 38h 260 Disbursement of other foreign assistance already pledged 519 67L 918 1,063 1,082 Transactions with IMF (drawings +) 122 25 -50 -100 -100 Use of reserves c/ 13 L -25 - - Gap to be covered by disbursements of additional aid requested - - - 212 LOS Source: Government of India, Ministry of Finance a/ Includes that portion of PL L80 freight charges (50 per cent) which is financed out of Indiats own resources. 2/ Nothing has been included in the import forecast for 1965/66 for corimodities financed in previous years under PL 480. Whether or not a new PL 1480 agree- ment is concluded, the need for these imports will presumably continue. Both the total import bill and the current account deficit in 1965/66 are therefore likely to be considerably larger than shown in this table. c/ Including government balances held abroad, in addition to the gold and foreign exchange holdings of the Reserve Bank of India. The January estimate for 1963/64 has been adjusted to take account of the actual position at the end of the year. - 23 - (b) that there is no significant change in net invisible receipts (other than debt service); and (c) that gross receipts of external assistance, including PL 480, are about the same in the Fourth Plan as in the Third - then the implication would be that foreign exchange available for financing merchandise imports other than imports under PL 480 during the Fourth Plan would average about $2,400 million a year. This is somewhat above the 1963/64 level, but less than forecast for next year and about 15 per cent below the forecast for 1965/66. 77. Import requirements for investment are likely to remain high in spite of efforts to develop domestic production of capital goods. The foreign exchange component of the minimum steel expansion program envisaged for the period of the Fourth Plan can hardly be less than $200-250 million a year. Foreign exchange requirements for investment in energy over the same period have been tentatively assessed by the Energy Survey Committee at around $400 million a year. The railways still require imports of over $100 million a year. On top of all this, large amounts of foreign exchange will be needed to develop capacity in such import-intensive fields of investment as heavy engineering, fertilisers and petrochemicals. So far as maintenance imports are concerned, there is reason to believe that, if the present pattern of industrial growth is maintained, there will be increasing rather than decreasing demand during the Fourth Plan for imports of petroleum, steel and non-ferrous metall, notwithstanding the steps being taken to develop indigenous production. The possibilities of reducing imports of cereals and cotton must be regarded at best as highly uncertain. Imports of these five groups of commodities alone are already costing over $1,000 million a year. 78. While it is too early to come to any definitive conclusion, it looks as if it may be necessary to reconsider the pattern of investment envisaged for the Fourth Plan in the light of the balance of payments situation. The continuing prospect of acute foreign exchange shortage underlines the importance for planning purposes of using prices for capital and foreign exchange which reflect their true scarcities. It is equally important that every effort should be made, in planning investments, to find "minimum cost solutions" for expanding production. An appreciable amount of capital and foreign exchange has been misdirected in the past as a result of bad planning - for example, in major irrigation schemes, in the development of iron ore and in certain sections of the heavy engineering industry. Many other countries waste capital too, but India can afford to do so less than most. 79. Two other conclusions can be drawn from a cursory examination of the balance of payments outlook. The first is that an increase in foreign equity investment is badly needed to assist in financing the further expan- sion of Indian industry. The second is that everything possible should be - 24 - done to improve the terms of aid extended to India by members of the consortium. Otherwise it looks as if external debt service during the Fourth Plan will absorb at least one fifth of the country's total foreign exchange receipts on current account, and probably more; depending on how fast exports grow. Exports 80. The Government has done a lot in recent years to make Indian industry more export-conscious and it has taken a number of useful steps to promote exports. The benefits of these measures will be felt only gradually. Meanwhile, it is evident that export markets generally are insufficiently attractive by comparison with the home market, and costs and prices of many actual and potential Indian exports are uncompetitive. Various subsidies and incentive schemes have been introduced to deal with this situation. 81. Iron ore exports were originally intended to contribute one third of the total expansion of Indiats export earnings during the Third Plan. This was without Goa. Now, even including Goa, their contribution is likely to be much less. In fact, export receipts from iron ore have risen very little during the past two years, and the prospect of a major increase during the coming year has been disappointed by the unforeseen technical delays encoun- tered at the port of Vishakapatnan,. Unless drastic changes are made in the arrangements for developing iron ore exports (see paragraphs 46-47 above), India appears to be in serious danger of losing her chance of establishing herself as a major world supplier, Other countries such as Australia and Malaysia are also building up facilities tc serve the Japanese steel industry, which is the most promising outlet for India's exports, and a buyer's market is rapidly emergings India is handicapped in competing in the Western European market for iron ore by the long sea haul and the heavy incidence of Suez Canal dues. 82. The growth of India's total exports during the past two years has been encouraging. The trend is illustrated in Tables 30-32 of the Statistical Appendix which are based on the trade returns. 1/ To some extent the buoyancy of exports in 1963/64 may be explained by temporary factors, affecting particularly jute and sugar, and the forecasts for the next two years are quite possibly on the optimistic side. But there are also other factors not yet reflected in the figures which may work to India's advantage in the longer run. For example, a mission from the jute industry which recently visited Eastern Europe was very favourably impressed by the possibilities for expanding consumption of jute goods in this region. 1/ The payments figures reproduced on page 22 of this report give a rather misleading impression of export trends in 1962/63 and 1963/64 because there was an unusual hump in export shipments towards the end of 1962/63, after the hold-up caused by the Chinese invasion, and this was not reflected in receipts until the following year. - 25 - 83. An official committee has investigated the problems involved in increasing India's tourist earnings and has put forward a number of recommendations, a few of which have already been acted upon,. The expansion of the Indian Airlines Corporation's fleet by the purchase of three Caravelles will do something to improve facilities for internal transport: the new aircraft came into service at the beginning of February. Hotel accommodation is still the main bottleneck, but a few new hotels have been opened recently, and others are planned., Work is even being resumed again on the international hotel started some years ago in New Delhi, and the hope is that it will be ready for occupation early in 1965. Immediate Import Requirements 84. Unless production in agriculture and industry can be stepped up quickly, plans for mobilising larger domestic resources for investment during the Fourth Plan have little prospect of success. It is essential that larger outputs should be secured from the capital already invested in these sectors. Now that supplies of power and transport are more freely available, larger imports of fertilisers, industrial materials, components and balancing items of equipment would be of the greatest value to the economy. It is not possible to say exactly what the requirements of this or that item are. But there is no doubt at all that production is being held back for lack of maintenance imports, including particularly chemical fertilisers, many types of steel, non- ferrous metals and miscellaneous chemicals. Many of the inefficiencies created by existing licensing controls could be reduced, if not entirely eliminated, if imports of these things could be more easily obtained. Larger steel imports would also make it easier for the Government to remove the remaining controls over prices and distribution by reducing the risks of excessive price increases. External Assistance 85. The position with regard to commitments (or pledges) and disburse- ments of foreign aid, as estimated by the Indian Government in January, is summarised in the table on the following page. As this table shows, aid of just under $5,000 million has been promised to India from all sources for financing the Third Plan, including a carry-over of about Z800 million from commitments made during the Second Plan. Not far short of $3,000 million of this was still to be disbursed at the end of March, but practically the whole of this undisbursed amount has been committed to specific projects and programs. Nearly $750 million of the aid pledged or committed to date is expected to be carried over into the Fourth Plan. Whereas the proportion of consortium aid assumed to be carried over is just over one tenth, the corresponding proportion for non-consortium aid is nearly one third (line 12 as a proportion of line 3). This reflects the comparatively slow disbursement of credits from Eastern Europe which are mostly tied -o industrial projects with long gestation periods. - 26 - Third Plan Aid Pledges and Disbursements ($ million equivalent b/ Consortium Non-Cons ortium Total 1. Carry-over to Third Plan of aid pledged during Second Plan 560 (265) (825) 2, Third Plan pledges to date 3,417 (750) (4,167) 3. Total aid available so far 3,977 1,015 L,992 of which: 4. Disbursed in 1961/62 422 95 517 5. Disbursed in 1962/63 573 101 674 6. Disbursed in 1963/64 (estimate) 766 151 918 7. Total disbursements in first three years of Third Plan 1,761 347 2,108 8e Still to be disbursed after March 31, 1964 (3-7) 2,216 668 2,884 of which: 9. Expected disbursements in 196b/65 891 172 1,063 10. Expected disbursements in 1965/66 906 175 1,082 11. Total expected disbursements in Third Plan of aid listed above .3,558 694 h,252 12. Assumed carry-over to Fourth Plan of aid listed above 419 321 740 Source: Government of India, Ministry of Finance a/ The table relates only to aid pledged up to the end of December 1963. Aid under PL 480 is excluded. b/Non-consortium aid is taken here to include all loans from the Soviet Union, Czechoslovakia, Poland, Yugoslavia, Switzerland and Denmark; grants from Australia, New Zealand, Norway and the United Kingdom under the Colombo Plan; grants from Germany, the Ford Foundation andthe Rockefeller Foundation; wheat grants from Canada; assistance from the United States and Japan for the mining of iron ore in Orissa; loans for Air India International from private banks in the United States; and grants extended by the U.S. Government prior to the formation of the consortium. The amounts of aid pledged or committed by countries which are not members of the consortium are as follows (in million dollars): Soviet Union 648, Czechoslovakia 99, Poland 60, Yugoslavia 40, Switzerland 32, Australia 8, Denmark 2, Norway 2 and New Zealand 2. The breakdown of non-consortium aid between lines 1 and 2 is uncertain* - 27 - 86. Against the aid so far pledged or committed from all sources, the Indian Government is assuming that disbursements during the Third Plan will amount to $4,252 million. It estimates that an additional $617 million might be disbursed within the Plan period from aid to be pledged during the next two years. Even then, total aid disbursements during the Third Plan at $4,869 million would be lower than the aid requirement as originally stated, which was $5,160 million. 1/ However, the rate of disbursement would be rising rapidly towards the end of the Plan, largely because of the bunching of deliveries of equipment for aid-financed projects. The Indian estimates also provide for the repayment o.f $200 million to the International Monetary Fund during the last two years of the Plan. The drawings made by India from the Fund in the first two years of the Plan ($147 million net) helped to bridge over the gap between the commitment and disbursement of consortium aid. 87. If the consortium continues to pledge aid to India during the next two years at approximately the same level as during the last three, the carry-over of aid from the Third to the Fourth Plans will probably be over $2,300 million or nearly three times the carry-over from the Second Plan to the Third. This would not necessarily be an abnormal amount to have in the "pipeline" in relation to a steady flow of aid commitments averaging about $1,250 million a year, which is approximately the rate at which aid has been committed during the past few years (including aid from outside the consortium). The relationship between the pipeline and the rate of commitment depends, of course, on the average period of disbursement. Generally speaking, the larger the proportion of project aid to the total, the longer the period of disbursement and the larger the amount of aid in the pipeline at any given time. A pipeline of $2,300 million related to level annual commitments of $1,250 million would imply that on average aid was being disbursed over a period of between 4 and 5 years from the time of commitment (assuming for purposes of illustration that disbursements start in the year of commitments and that the amount disbursed in each year is the same). IV. CONCLUSIONS 88. India needs all the aid she can get, and on the easiest possible terms, if she is to succeed in carrying on with the development of her economy along the course charted in the Second and Third Plans. The policies which the Government has followed so far have not proved adequate to produce the results expected from the foreign capital invested. A new approach must be adopted if the great talents of the Indian people are to be effectively deployed in a single-minded drive to increase production. 1/ This was after allowing for private foreign investment which was assumed by the Indian Government to contribute $300 million during the Plan. - 28 - 89. The starting point has to be an all-out effort to raise agricul- tural production and to capture a larger proportion of the additional income generated in the agricultural sector for reinvestment in industry* Simultaneously, both agricultural and industrial development must be geared more closely to the promotion of exports. And the growth of population must be checked somehow. 90. A consideration of the policy action required to achieve this re- direction of effort, while economising as much as possible in the use of capital and foreign exchange, should be a major preoccupation of the planning authorities in working out the Fourth Plan. Difficult choices will have to be made if aggregate domestic savings are to be raised progressively to the point where they match the investment needed to reach and maintain a satisfactory rate of economic growth. 91. During the present period of adjustment, the most valuable form of aid which India can receive is aid which can be used quickly to finance additional imports of materials and components for agriculture and industry. The more aid that is available in this forn, the easier it will be for the Government to liberalise maintenance imports and relax controls over internal prices and distribution. 92. Project aid will be needed during the coming year to enable a start to be made on a number of new power schemes, including improved facilities for transmission and distribution, to provide continuing support for such programs as railways and telecommunications and to finance selected projects for industrial expansion. None of the major Fourth Plan steel expansion schemes will be ready for the placing of orders until 1965/66 - except for additional blast furnaces at Durgapur and Bhilai, on which work could be started in 196L/65. Efforts should be made to see whether any new and well-planned fertiliser projects can be got ready in 1964/65; if so, they may be particularly deserving of consortium support. 93. An assessment of India's aid requirements for the coming year makes sense only as part of a continuous exercise in cooperation between India and the members of the consortium. India"s population in three yearst time will pass the 500 million mark - an increase of 160 million during the twenty years that will have elapsed since Independence. The fact that, in spite of this increase, the Government has succeeded in bringing about a significant improvement in average living standards without sacrifice of essential political freedoms is perhaps more remarkable than all the short- comings to which attention has been drawn in this report. 94. India must be given time to reassess her problems and policies and to effect the improvements in the planning and execution of economic development without which no amount of external aid can see the country through. As the Indian Government put it in a memorandum to the consortium, "It is now necessary to conceive of further development in terms of an efficient and economic choice between a number of complicated alternatives", and this choice can only be made "after the most careful consideration of the costs and benefits of different alternatives". If this approach is adopted, there will be every justification for continued support from the consortium at the levels established in recent years. - 29 - STATISTICAL APPENDIX LIST OF TABLES (A) Production 1. Net Domestic Product by Industry of Origin 2. Growth of Per Capita Output 3. Index Numbers of Agricultural Production Area Planted to Principal Crops Production of Principal Crops 6. erage Yield per Acre of Principal Crops 7i Industrial Production 8. Production in Selected Industries (B) Money and Prices 9. Wholesale Prices 10. Working Class Consumer Prices 11. Wholesale Prices of Selected Agricultural Commodities 12* Seccrity Pieces 13. Security Yields 1L. Money Supply and Allied Data 15. Causes of Variations in Money Sunply (C) Public Finance 16. Credit Extension to Government 17. Net Absorption of Government Securities by the Public since 1951/52 18. Current Budget of Central Government 19. Capital Budget of Central Government 20. Current Budget of States (Consolidated) 21, Capital Budget of States (Consolidated) 22. Debt Position of Government of India 23. Debt Position of States. (D) External Trade and Payments 24. India's Balance of Payments 25. Selected Invisible Transactions 26. India's Foreign Exchange Reserves 27. Import and Export Indices 28. Payments for Imports 29. Imports by Source 30. Receipts from Merchandise Exports 31. Exports of Selected Commodities by Quantity 32. Exports by Destination 33. Utilisation of External Assistance 34. Composition of India's External Public Debt 35. Projected External Debt Service Table 1 Net Domestic Product by Industry of Origin (Rs. crores: currenE prices) 1955/56 1959/60 1960/61 1961/62 1962/63 Agriculture h,520(h5%) 6,250(485) 6,890(49%) 6,960(47%) 6,970(45%) (nc. fishery & forestry) Mining 100( 1%) 140( 1%) 160( 1%) 170( 1%) 200( 1%) Factory establishments 780( 8%) 1,110( 9%) 1,320( 9%) 1,540(10%) 1,690(11%) Small enterprises 970(100%) 1,070( 8%) 1,120( 8%) 1,170( 8%) 1,210( 8%) Commerce, transport and communications 1,880(19%) 2,230(17%) 2,340(17%) 2,480(17%) 2,620(17%) Professions and liberal arts 560( 6%) 690( 5%) 740( 5%) 790( 5%) 840( 6%) Government administration 570( 6%) 790( 6%) 900( 6%) 1,000( 7%) 1,170( 8%) House property 460( 5%) 520( 4%) 530( 4%) 550( 4%) 560( 4%) Domestic service 140( 1%) 180( 1%) 190( 1%) 210( 1%) 220( 1%) Net domestic product at factor cost 9,980 12,980 14,190 10,870 15,480 Source: Central Statistical Organisation a,/ Preliminary estimates. Table 2 Growth of Per Capita Output a/ 1955/56 1959/60 1960/61 1961/62 1962/63- Net national output at current prices 9,980 12,950 14,140 14,800 15,400 (Rs.crores) Net national output at 1948/49 prices 10,480 11,860 12,730 13,060 13,370 (Rs.crores) Per capita output at current prices (Rs) 255 305 326 334 339 Per capita output at 1948/49 prices (Rs) 268 279 293 294 295 Percentage change in real per capita out- - +4% +5% negl. negl. put over previous year quoted Source: Central Statistical Organisation a/ Preliminary estimates Table 3 a/ Index Numbers of Agricultural Production (Agricultural years beginning July: 1949/50=1o0) Weight 1950/51 1955/56 1960/61 1961/62 1962/63 FOODGRAINS Rice 35.3 88 114 136 139 128 Wheat 8.5 101 131 163 178 165 Barley 2.0 106 110 120 134 105 Jowar 5.0 90 97 135 111 134 Bfajra 2.7 84 108 101 111 121 1aize 2.1 8h 112 144 153 162 Ragi 1.2 88 120 111 122 124 Small millets 1.5 89 105 102 101 94 Total cereals 77. 90 TT1 137 130 133 Gram 3.7 98 139 162 150 147 Tur 1.1 92 99 107 69 79 Other pulses 3.8 86 104 102 107 105 Total pulses 92 11 129 120 120 Total foodgrains 66.9 91 115 136 138 131 NON-FOODGRAINS Groundnut 5.7 101 112 132 138 136 Sesamum 1.2 102 105 78 92 110 Rape and mustard 2.0 95 106 167 165 160 Linseed 0.8 83 97 95 110 103 Castorseed 0.2 81 96 70 77 79 Total oilseeds 9.9 99 109 127 131 134 Cotton 2.8 111 154 203 170 200 Jute 1.4 1o6 136 122 194 164 Iesta 0.3 100 175 170 255 229 Total fibres l .og 15_ _17 17_ 191 Tea 3.3 104 107 121 134 130 Coffee 0.2 112 196 355 240 279 Rubber 0.1 94 146 165 176 205 Total plantation crops 3.o 113 113 I11 110 Sugarcane (in terms of gur) 8.7 114 120 174 164 151 Tobacco 1.9 97 113 116 130 137 Potato 1.0 107 120 171 158 193 Pepper (black) 1.2 97 133 134 135 123 Chillies (dry) 2.0 119 123 127 127 131 Ginger (dry) 0.3 94 106 112 111 117 Total miscellaneous 1.1 110 120 156 151 T57 Total non-foodgrains 33.1 10 120 146 17 -1 ALL COIL ODITIES 100.0 96 117 140 141 137 Source: Irinistry of Food and Agriculture The indices for 1960/61, 1961/62 and 1962/63 are all subject to revision. Table h a/ Area Planted to Principal Crops 1950/51 1955/56 1960/61 1961/62 1962/63 (million acres) Rice 76.1 77.9 82.9 84.7 86.0 Wheat 24.1 30.6 32.0 33.4 :33.3 Coarse grains 93.1 107.3 106.8 108.2 1o6.4 Total cereals 193.3 215.8 222.5 226.3 225.7 Pulses 47.2 57.4 57.3 58.5 57.4 Total foodgrains 240.5 273.2 279.8 284.8 283.1 Groundnuts 11.1 12.7 15.5 15.8 16.4 Castor 1.4 1.4 1.0 1.1 1.1 Sesamum 5.4 5.7 5.4 5.6 6.0 Rape and mustard 5.1 6.3 7.1 7.8 7.7 Linseed 3.5 3.8 4.4 4.8 4.7 Total oilseeds 26.5 29.9 33.4 35.1 35.9 Sugarcane 4.2 4.6 5.8 6.o 5.7 Cotton 14.5 20.0 18.9 19.1 19.7 Jute 1.4 1.7 1.5 2.3 2.1 Miesta . . .6 .7 1.0 0.9 Tobacco .9 1.0 1.0 1.0 1.1 Chillies 1.5 1.5 1.5 1.5 1.5 (thcusand acres) Tea 777 780 819 . . Coffee 22 2o9 281 . . Rubber 144 174 318 34. Coconut 1,536 1,598 1,771 1,786 Source: Hinistry of Food and Agriculture a/ The indices for 1960/61, 1961/62 and 1962/63 are all subject to revision. Table 5 Production of Principal Cropsa Unit 1950/51 1955/56 1960/61 1961/62 1962/63 Foodgrains, total million tons 50.0 65.8 79.7 79.7 78.7 Cereals, subtotal million tons 41.7 54.9 67.2 68.3 66.0 Rice million tons 20.2 27.1 33.7 31. Wheat million tons 6.4 8.6 10.8 11.8 11.0 Coarse grains million tons 15.1 19.2 22,7 22.2 23.5 Pulses million tons 8.3 10.9 12.5 114. 11.5 Oilseeds, total '000 tons 5,076 52643 6,520 6,848 6,766 Groundnuts 1000 tons 3,426 3,801 4,391 4,611 4,520 Castor '000 tons 101 123 89 99 101 Sesamu '000 tone 438 460 316 373 446 Rape and mustard '000 tons 750 846 1,335 1,316 1,279 Linseed '000 tons 361 413 389 h9 420 Sugarcane /000 tons 5,615 5,979 10,h7 9,984 9,223 Cotton '000 tons 518 712 960 804 946 Jute '000 tons 597 763 724 1,154 976 Mesta '000 tons n.a. 210 206 308 277 Tobacco '000 tons 257 298 307 343 361 Chillies (dry) t000 tons 345 355 366 370 383 Tea million lbs. 607 628 708 n.a. n.a. Coffee million lbs. Sh 76 95 n.a. n.a. Rubber million lbs. 32 50 56 60 n.a. Coconuts million nuts 3,582 3,370 4,593 4,545 n.a. Source: Ministry of Food and Agriculture a/ Data for 1960/61 - 1962/63 are provisional estimates. b/ Yield expressed in terms of gur. Table 6 Average Yield per Acre of Principal Crops (1bs) 1950/51 1955/56 1960/61 1961/62 1962/63 Rice 596 780 909 907 821 Wheat 592 632 756 79h 738 Coarse grains 364 hCo 474 458 Total cereals 484 570 677 676 655 Pulses 393 424 486 438 hb7 Total foodgrains 466 539 638 627 613 Groundnut (nuts in shell) 691 671 636 651 617 Castorseed 165 194 192 202 206 Sesanmn 180 182 132 151 167 Rape and mustard 328 300 422 380 371 Linseed 233 245 197 207 202 Total oilseeds 429 423 437 437 422 Sugarcane (Gur) 2,983 2,934 4,042 3,735 3,649 Cotton (Lint) 78 78 112 93 106 Jute 931 966 1,055 1,11 1,025 Tobacco 652 659 695 741 Chillies (dry) 528 533 536 547 557 Tea 782 805 . Coffee 243 30. Source: 1,inistry of Food and Agriculture a/ The indices for 1960/61 and 1961/62 are all subject to revision. Estimates for 1962/63 are highly provisional. Table 7 Industrial Production (Index numbers: 1956=100) October Industry group Weight 1951 1955 1960 1961 1962 1963 Mining and quarrying 7.47 87 97 137 147 161 171 Food manufacturing 13.99 80 93 117 129 127 141 Beverages and tobacco: cirarettes 1.49 82 87 1[1 150 156 151 Cotton textiles 32.10 79 95 103 109 110 113 Wocllen textiles 1.10 71 83 101 107 138 172 Silk and synthetic fibres 2.94 58 82 147 16$ 156 236 Jute manufactures 5.62 79 94 99 90 110 109 Footwear (including leather) 0.28 92 86 144 166 180 195 Wood (except furniture) 0.24 55 86 148 150 162 173 Paper products 1.39 67 96 173 182 191 237 Leather and fur products 0.18 110 93 167 116 12$ 142 Rubber products 3.04 75 92 141 157 169 175 Chemicals and products 3.58 73 96 149 171 184 223 Petroleum products 3.79 6 78 148 157 169 211 Ncn-metallic minerals 2.47 64 88 168 181 191 196 Basic metals 9.25 84 97 181 183 227 260 Metal groducts .99 .5 97 106 152 179 196 iachinerv (non-electrical) 1.10 45 83 237 269 291 340 Electrical machinery 2.81 k4h 72 176 183 211 221 Transport equipment 2.86 46 73 119 131 145 158 Electricity 3.68 61 88 171 199 223 259 ALL INDUSTRIES 100.00 73 92 130 139 10 166 Source: Central Statistical Organization Table 8 Production in Selected Industries First 9 months Product Unit 1951 1956 1961 1962 :962 1963a/ MINING Coal mn.tons 34 39 55 62 45 50 Iron ore I 3.7 4.2 11.9 13.1 9.7 11.1 METALS Pig iron '000 tons 1,719 1,807 4,888 5,700 1,100 5,100 Finished steel 1,082 1,338 2,807 3,800 2,700 3,200 Aluminium 3.8 6.5 18.0 35.4 22.3 39.2 Copper " 7.1 7.6 8.6 9.8 7.3 7.0 MECHANICAL GINDJEEING Machine tools mn.rupees 4.7 12.0 76.1 108 78 109 Sugar machinery "1 - 3.4 45.2 63.5 n.a. n.a. Power-driven pumps '000s 41 47 126 128 97 112 Automobiles " 22 32 54 58 44 36 Bicycles 114 664 1,0149 1,117 850 871 Sewing machines " 41 130 317 344 283 262 Railway wagons " - 16 11 14 10 14 Motor cycles " - 1.6 4.7 22,6W' 16 ! 17/ Typewriters - 13.L 31.1 37.2 n.a. n.a. ELECTRICEL ENGINEERING Power transformers '000 KVA 195 919 1,775 2,360 1,780 1,960 Electric motors ooo HP 143 359 824 980 723 878 Radio receivers tOOs 83 151 326 351 248 309 House service meters " - 230 623 878 n.a. n.a. Electric lamps millions- 15 30 45 59 42 53 Electric fans 'coos 213 339 1,07L 1,1141 860 930 Bare copper wire 1000 tons 3 10 8 5 4 3 Aluminium conductors 'COO tons - 11 22 27 19 24 CHEMICALS Ammonium sulphate 000 tons 52 389 389 419 304 330 Superphosphate i 61 81 365 445 305 415 Sulphuric acid " 107 165 407 468 333 407 Soda ash t 47 84 174 222 159 197 Caustic soda nt 15 39 118 127 93 109 Cement mn.tons 3.2 L.9 8.1 8.6 6.2 6.9 Refractories 1000 tons 239 318 589 650 473 513 Paper and paper board n 132 193 358 388 285 338 Auto tyres and tubes millions 1.7 1.8 3.1 3.3) Bicycle tyres and tubes " 8.8 12.7 24.2 23.5) 3- Footwear (rubber and leather) mn.pairs 28.7 42.6 55.7 61.6 45.6 45.9 Soap '000 tons 74 101 147 150 113 118 Petroleum products 245 3,829 6,004 6,600 4,800 5,600 Table 8 Cont1d Sept. Jan. Product Unit 1951 1956 1961 1962 1962 1963 TEXTILES Cotton yarn mn.pounds 1,303 1,671 1,901 1,894 1,422 1,050 Rayon yarn e/ 1000 tons 2.0 17.3 48.7 60.1 440 47.8 Cotton cloth (mill sector) mn.yards 0,077 5,307 5,142 4,9o 3,775 3,607 Cotton cloth (decentralised) 1,006 1,819 2,589 2,635 n.a n.a. Jute products 'OO tons 876 1,093 954 1,187" 891T 9291 Woollen fabrics mn.yards 12.1 16.3 13.3 20.1 n.aa n.a. FOOD PRODUCTS Sugar '000 tons 1,210 1,854 2,981 2,280 2,670 2,115 Tea mn.pounds 628 668 767 756 549 536 Coffee 1000 tons 18.1 3.4 65.6 46.7 n.a. n.a. Vanaspati " 172 256 334 369 278 285 ELECTRICITY Power generated nn.XWH 5,858 9,611 19,111 21,500 16,000 18,300 a/ Provisional. Source: Central Statistical Organization / Including scooters. c/ Excluding flourescent lamps. j/ All rubber tyres (excluding tubes). / Staple fibre, viscose yarn and acetate yarn. f1 Jute textiles. n.a, not available. Table 9 Wholesale Prices (Index numbers: 1952/53=100) Weight 1955/56 1960/61 1961/62 1962/63 Feb.1964 Cereals 192 76 104 102 106 122 Pulses 43 62 93 92 105 129 Fruit and vegetables 23 101 119 138 136 157 Milk and ghee 84 90 116 116 124 128 Edible oils 47 85 150 157 152 155 Fish, eggs and meat 17 96 124 135 1414 153 Sugar and gur 48 89 133 120 114 177 Other foods 50 134 168 172 172 180 Total food 504 87 120 120 126 140 Liquor and tobacco 21 81 110 100 101 122 Industrial raw materials 155 99 145 143 137 143 Manufactures 290 100 124 127 129 132 Fuel, power, light, etc. 30 95 120 122 1214 139 All commodities 100 93 125 125 128 138 Source: Office of the Economic Adviser to the Government of India Table 10 Working Class Consumer Prices V(Index numbers: 1949=100) 1951/52 1955/56 1960/61 1961/62 1962/63 Jan.1964 All India 105 96 124 127 13L 140 Calcutta 106 93 113 115 121 n.a. Bombay 107 110 137 142 14'5 158 Delhi 108 100 121 128 130 140 Madras 104 100 146 149 150 157 Hyderabad 109 100 133 138 142 n.a. Bangalore 115 104 147 151 1514 n.a. Kanpur 94 79 100 103 106 n.a. Ahmedabad 104 89 120 121 121 n.a. Source: Labour Bureau, Government of India Table 11 Wholesale Prices of Selected Agricultural Commodities (Index numbers: 1952/53100) 1950 1955 1960 1961 1962 1963 Rice 91 76 109 105 109 122 Wheat 94 70 91 89 92 91 Coarse Grains 97 65 118 114 117 110 Pulses 86 56 93 91 lo 109 Groundnuts 127 71 11 157 145 10 Sugarcane 106 92 102 102 102 105 Tea 172 206 202 202 173 193 Coffee 75 80 87 88 91 97 Tobacco (raw) 97 78 107 100 93 108 Cotton 105 95 113 108 112 117 Jute 128 122 179 208 146 147 Source: Office of the Economic Advisor to the Government of India Table 12 Security Prices (Index numbers: 1952/53=100) 1960/61 1961/62 1962/63 Jan 1964 Government securities 101 101 99 100 Industrial debentures 101 101 98 98 Preference shares 86 83 80 81 Variable dividend industrial securities 183 193 160 169 Table 13 Security Yields 1960/61 1961/62 1962/63 Feb. 1964 Government 3K Conversion 1986 or later L.06 4.16 4.49 4.70 Industrial debentures (tax-free rates) l.11 .15 4.35 4.71 Preference shares (tax-free rates) 5.32 5.64 5.87 5.95 Variable dividend industrial securities b.88 4.67 4.85 4.89 (tax-free rates) Source: Reserve Bank of India Table 1 Money Supply and Allied Data a/ (Rs. crores) 1950/51 1955/56 1960/61 1961/62 1962/63 1963/64 Money supply with public, total 2,022 2,220 2,868 3,045 3,317 3,735 Currency with the public b/ 1405 1,571 2,C98 2,201 2,379 2,60 Deposit money with the public c/ 617 649 770 844 938 1,130 Index d/ 100 110 144 154 168 188 Rupee securities held by RBI e/ 595 738 1,852 1,957 2,194 2,383 Advances to Governments by RBI 2 - 39 81 55 71 Banks' investments in government securities 347 398 591 634 629 674 Central Government's deposits with RBI 162 67 76 71 56 91 Foreign assets held by RBI 884 746 136 130 116 135 Bank credit to private sector 587 823 1,494 1,631 1,842 2,089 Time liabilities of banks c/ 331 466 1,095 1,196 1,244 1,298 of which PL 480/665 deposits fl - - (189) (135) ( 68) ( 30) Source: Reserve Bank of India and information received by Mission. a/ Revised series. Figures are with reference to the last Friday of each fiscal year except for 1963-64, when figures are as of March 20, 1964. b/ Data on currency have been revised to include circulation of small coin. c/ Data on (i) deposit money and (ii) time deposits with banks have been revised so as to exclude inter-bank deposits of scheduled banks for the entire period and non-bank "other" deposit liabilities from 1960/61. d/ Index numbers of total money supply with the public have been calculated after making adjustments in the money supply figures for (i) non-bank "other" deposit liabilities and (ii) withdrawal of currency (Rs. 34.2 crores) from Kuwait during 1961/62. e/ Including rediscounts of Treasury Bills by RBI. T/ This represents time deposits made to the Special Account held by the U.S. authorities with the State Bank of India. Table 15 Causes of Variations in ioney Supply-a/ (Rs. crores: expansionist effect +, contractionist effect -) 1951-56 1956-61 1960/61 1961/62 1962/63 1963/64 Total increase in money supply with public +198 +7C6 +194 +212- +271 +418 Credit extension to GovernmentS/ +245 +1,211 +114 +313 +277 +286d/ Credit extension to others +2140 +674 +238 +138 +2,14 +247- Effect of changes in time liabilities of banks c/ -136 -462 -106 -156 -115 - 92 Effects of external transactions e/ - 96 -674 - 52 - 66 - :27 + 41 Other causes (residual item) - 55 - 43 - - 17 - '78 - 64 Source: Reserve Bank of India and information received by M1ission a/ Variations are as between the last Fridays of each fiscal year except for 1963-64 when data for March 20, 1964, were Used. b/ Adjusted for the return of currency (Rs. 34.2 crores) from Kuwait during 1961-62. c/ Adjusted for the net changes in PL 480/665 deposits with the State Bank of India; also inclusive of Government's currency liability to the public arising from issue of one rupee notes and small change. d/ Excludes Reserve Bank credit to private Sector. a! Equal to changes in (net) foreign assets of Reserve Bank. Table 16 Credit Extension to Government (Rs. crores) a/ 1960/61 1961/62 1962/63 1963/6LC' I. Increase in RBI's rupee securities (inc. Treasury Bills) 124 105 186 194 II. Loans and advances to Government by RBI 17 h2 -26 16 III.Decline (+) in Central Government deposits with RBI -13 5 15 -35 IV. Decline (+) in State Government deposits with RBI l 13 -16 5 V. One rupee notes b/ 5 5 5; 5 Total deficit financing, according to GOI definition c/ 147 170 164 185 VI. Commercial banks investment in government securities (inc. Treasury Bills) -154 43 - 5 45 VII.Increase (-) or decrease (+) of PL48C/665 deposits with State Bank d/ +121 +54 +67 +38 Total deficit financing, according to IBRD definition 114 267 226 268 Source: Reserve Bank of India a/ Up to March 20, 1964 S/ Notes printed by Government and sold to RBI. c/ The IBRD (such as used in the IBRD 1960 report) ard the Indian definitions differ with respect to the treatment of credit extended to the Government by the commercial banking system. d/ These figures reflect, among other things, changes in PL 480 arrangements. PL 480 counterpart funds were previously deposited with the State Bank, which invested them mainly in government securities. Since May 12, 1960, they are deposited directly with the RBI which invests them in non-negotiable Special Securities. The gradual transfer of past accumulations of PL 480 funds from the SBI to RBI leads to depletion of the State Bark's portfolio of government securities. Table 17 Net Absorption of Government Securities by the Public Since 1951/52 a/ (Rs. crores) Net market borrowings by Central Open Market and State Governments Cash Receipts purchases (-) Net absorption (+) Cash Cash Net (net from the from/sales (+) by the public c/ Receipts Payments Receipts public) to the public b (4+5) (1-2) _ 1 2 3 6 First Plan 1951/52 24.3 49.2 - 24.9 + 1.7 - 11.3 - 9.6 1952/53 15.8 2.9 + 12.9 + 12.9 + 20.5 + 33.4 1953/54 60.4 63.9 - 3.5 + 46.3 + 34.2 + 80.5 1954/55 160.7 50.0 +110.7 + 67.2 + 25.3 + 92.5 1955/56 98.6 16.6 + 82.0 + 64.2 + 28.9 + 93.1 Total 359.8 182.6 +177.2 +192.3 + 97.6 +289.9 Second Plan 1956/57 143.7 3.0 +140.7 + 89.7 19.1 + 70.6 1957/58 99.7 29.0 + 70.7 + 28.1 + 85.2 +113.3 1958/59 241.6 14.8 +226.8 +105.6 + 89.0 +194.6 1959/60 208.3 33.6 +174.7 + 82.5 + 60.6 +143.1 190UU/6. L7.4 45.4 + +4 61.4 -125.1 - Total 872.7 125.8 +746.2 +t4_7.3 +90.6 +457.9 Third Plan 1961/62 187.2 50.4 +136.8 + 72.6 - 37.0 + 35.6 1962/63 225.6 41.2 +184.4 +134.1 - 24.1 +110.0 1963/64_6/ 208.7 63.7 +145.0 +110.5 + 50.1 +160.7 Source: Reserve Bank of India ./ Figures from 1956/57 onwards are inclusive of investment of PL 480 funds. Those for 1960/61 through 1963/64 are not strictly comparable to the figures for the earlier years consequent on the change in the arrange- ments in regard to PL 480 funds from May 12, 1960. (See Table 16, footnote d/.) b/ On the Reserve Bank's Investment Account and the Central Government's Casn balance Investment Account. s/ Figures do not take into account transactions on the State Government's Cash Balance Investment Accounts, the Bank's operations in State Government loans and repayment of State Loans held by State Governmbnts. d/ Up to February 29, 1964 and based on partial data. Table 18 Current Budrget of Central Government (RT . crores) 1950751 1955/56 1960/61 1961/62 1962/63 1963/64 1964/65 jAccounts)_ (Accounts) _Aco aunts)__(Accounts) {Accounts)R( Revenue, total 406 481 877 1 037 1430 1755 1 92 Tax revenue, subtotal 405 485 909 1,053 1 85 1_570 1.706 Share of States (48) (74) (179) (178) (224) (260) (257) Tax revenue retained by Centre 357 411 730 875 1,061 1,310 1,449 Non-tax revenue 49 70 147 162 369 445 523 Expenditure, total 347 L 826 912 1,317 1,667 1±878 Defence 164 172 248 290 425 693 718 Debt service 2/ 37 43 77 83 245 282 318 Grants in aid to States 16 b/ 36 &/ 49 b/ 199 c/ 195 S/ 236 c/ 289 c/ Civil administration 21 34 59 59 75 80 82 Social and development services 40 b/ 82 236 176 187 178 200 Miscellaneous 69 b/ 74 157 105 190 198 271 Net surplus 59 40 51 125 113 88 94 Source: Reserve Bank of India Reports on Currency and Finance, and information received by the Mission. .W/ A reform of the budgetary accounting structure has been carried out recently. The main change relates to debt accounting: whereas formerly debt/servicing of the Central Government were recorded on a net basis, the dis- bursements and receipts on this account are now shown separately. This accounts for the rise in the figures from 1962/63 onwards. This change also renders the figures for those recent years non-comparable with pre- vious years. b/ Part of grants to States included in items "Civil Administrations", "Social and Development services" and "Miscellaneous". L/ Includes non-statutory grants from 1961/62. Table 19 Capital_Ludget of Central Government (Rs. crores) 195051 1955/56 1960/61 1961/62-1962/63 1963/64 1964/65 (Ac_ounts___c Lcitks__Accounts) -ccountjs1Account s {RE B (BE) Receipts, total a/ 5 183 905 15 1038 1,39 1_608 Disbursements, total 129 373 778 1_,2 1308 1,630 1.788 Developmental, subtotal 57 120 257 327 4Z5 582 590 Railways 25 68 89 145 215 237 253 Post and telegraph 7 9 11 11 21 30 21 Civil-works 9 25 39 42 48 82 80 Indstrialdevelopment 9 11 91 111 171 209 217 Other 7 7 27 18 20 24 19 Non-develo)mental, subtotal 14 -9 136 -93 121 226 352 Defence 4 18 33 23 49 116 136 State trading -2 -30 34 2 -22 30 31 Other 12 3 69 68 94 80 185 Grants to States - 16 13 16 16 22 28 Loans to States (Net) 53 216 233 310 366 433 372 Other / 5 30 139 283 330 367 446 * Surplus (+) or deficit (-) -78 -190 +127 -214 -270 -241 -180 Source: Reserve Bank of India, Reports on Currency and Finance and information received by Mission. a/ Some receipts have been netted out against disbursements; excludes receipts from Treasury Bills. Excludes items which have been netted out against receipts. b/ Mainly various loans and advances. Table 20 Current Bud et of States (Consolidated) a/ (Rs. crores) 1951/52 1955/56 1960/61 1961/62 1962/63 1963/61 b (Accounts) (RE) (Accounts) (Accounts) (RE) (BE) Revenue, total 396 546 1,012 1,0 12 1354 Tax revenue, subtotal 281 350 625 663 764 826 Transferred from Centre c/ 5 74 152 179 222 229 Collected by States d/ 228 276 443 484 512 597 Non-tax revenue, subtotal 115 197 387 410 196 528 Administrative receipts e/ 37 10 _8 (78 95 Net contributions of Public enterprises f/ 25 30 47 46 50 62 Other revenue f/ 27 39 78 84 135 135 Grants in aid E/ 25 68 122 195 223 236 Expenditure, total 393 625 988 1,121 1, 294 1365 DeveloDment Expenditure, subtotal h/ 196 357 570 660 731 774 Education 6 10 235 7 26 Health 29 49 81 94 107 111 Agriculture, Community development 27 73 118 133 1!2 164 Irrigation, Electricity 22 32 37 39 h2 44 Civil works 41 71 67 84 88 87 Other i/ 17 27 72 75 89 102 Non-Development expenditure, subtotal h/ 197 268 418 461 563 591 Collection of Taxes and other revenue 27 49 66 62 63 66 Debt services j/ 9 19 84 100 165 179 Civil administration 107 125 167 185 202 203 Other non-development k/ 54 75 101 114 133 143 Source: Reserve Bpnk of India, Report on Currency and Finance, and infor- mation received by Mission. a! Figures for 1951/52 do not include Part C States. For 1955/56 revised figures are used since actuals are not available, due to reorganization of States. Figures from 1958/59 onwards relate to the reorganized States. Figures for Jammu and Kashmir have been included since 1957/58 only. b/ The budget estimates for 1963/64 are before tax changes except in the case of Orissa, Kerala, Janmu and Kashmir. /continued .... Table 20, continued c/ Estate Duty, part of Income Tax and Union Excise Duties. d/ Until 1961/62 receipts from tax on railway fares are included in Tax Revenue; since 1961/62 the Rs. 12.5 crores grant in lieu of such taxes are included Grants in Aid. e/ Includes receipts from civil works, receipts from various departments and until 1961/62 certain grants from the Central Government. f/ Forests, irrigation, electricity schemes, road and water transport, etc. g/ Comprises receipts on account of debt services, which from 1962/63 also include recoveries of interest from commercial departments hitherto adjusted in reduc- tion of expenditure, stationery and printing and miscellaneous receipts; exclud transfers from reserve funds. h/ Classification of development and non-development expenditure has been done on the basis of broad budget heads. i/ Scientific and miscellaneous departments, aviation, ports and pilotage. / Includes appropriation for reduction or avoidance of debt, figure from 1962/63 onwards includes interest charges on capital advanced to commercial departments. hitherto booked in the accounts as reduction of expenditure. k/ Expenditure on displaced persons, grants to local bodies, famine, stationery and printing, etc. Table 21 Capital Budget of States (Consolidated) a/ (Rs. crores) 1951/52 1955/6- 1960/61 1961/62 1962/63 1963/64 (Accounts) (Revised) (Accounts) (Accounts) (RE) (BE) Receipts, total 98 320 397 477 499 469 Expenditure on capital account, total b/ 152 310 450 446 519 _30 Developmental, subtotal 100 243 294 315 31_4 3142 Multi-purpose river valley schemes 27 67 46 56 55 48 Irrigation and navigation 24 72 81 84 95 102 Electricity 20 48 25 26 31 37 Public works 21 39 115 116 129 107 Industrial developments 6 8 15 23 27 34 Others 2 9 12 10 17 14 Non-developmental c/ 28 -11 24 5 15 17 Loans and advances by States (net) 24 78 132 126 150 171 Surplus (+) or deficit (-) -54 +10 -53 +31 -20 -61 Source: Reserve Bank of India, Reports on Currency and Finance, and infor- mation received by Mission. a/ Figures for 1951/52 do not include Part C States. For 1955/56 revised estimates are used since later figures are not available due to reorganization of States. Figures from 1957/58 onwards relate to the reorganized States. Figures for State of Jarnu and Kashmir have been included since 1957/58 only. b/ Excludes some items which have be6en netted out against receipts. c/ Mainly state trading and compensation to landholders. Table 22 Debt Position of Government of India (Rs. crores% end of fiscal years) 1950/51 1955/56 1960/61P. 1961/62&/ 1962/6327 Total Debt 2,524 3,209 6,324 6,95 ,65 Internal debt, subtotal 2,47h 3 070 5,478 5,848 6,306 Undated 2 257 Over 10 years 519 241 690 b/ 806 b/ 870 b/ Between 5 and 10 years 343 617 756 b/ 699 b/ 712 b Under 5 years 319 393 867 b/ 925 b/ 1,002 by Treasury bills 365 c/ 595 1,106 1,175 1,300 Small savings 327 - 576 975 1,053 1,128 Other obligations 343 390 826 d/ 932 d/ 1,036 External debt 50 139 846 1,111 e/ 1,379 e/ Source: Reserve Bank of India, Reports on Currency and Finance, and infor- mation received by Mission. a/ Including Prize Bonds issued from April 1260. b/ In July 1958 Treasury Bills to the amount of Rs. 3 billion were converted into special long-term debt. This debt is held by the Reserve Bank of India as cover against note issue. In December 1959 Treasury Bills to the amount of Rs. 1.5 billion were converted into long-term debt (of which Rs. 1.3 billion between 5 and 10 years and Rs. 0.2 billion under 5 years). Again in January 1961 and in February 1962 Rs. 50 crores of Treasury bills converted into long term securities respectively. c/ Including Treasury Deposit receipts. d/ Includes investment of Rs. 240 crores and Rs. 300 crores (estimated) of U.S. Government Counterpart Deposit Funds in 'Special Securities'. e/ The external debt of the Government of India, as shown here, is quite different in scope from the data on external debt given in Tables 34 and 35. Among other things, the latter include government-guaranteed debts which are excluded here. Table 23 Debt Position of States a/ (Rs. crores: end of fiscal years)- 195/2 195/56 1960/61 1961/52 1962/63 (RE) Total debt 445 1,232 2,737 3,117 3,599 Permanent debt 134 265 493 b/ 59 b/ 643 b/ Floating debt 16 8 42 50 13 Loans from Central Government 238 876 2,016 2,315 2,703 Unfunded debt c/ 57 83 135 149 162 Other debt d/ - - 51 64 78 Source: Reserve Bank of India, Reports on Currency and Finance, and information received by Mission. a/ The figures for the years 195/2 and 195!/56 are based on actual returns furnished by the States except in the case of certain States where they had to be estimated on the basis of budget data. b/ Excludes the amounts provisionally allocated to Kerala on the population ratio. c/ Non-public debt and provident funds, etc. d/ Includes loans fran National Agricultural Credit (Long-Term Operations) Fund of the Reserve Bank of India, loans from National Cooperative Development and Warehousing Board, loans from Khadi and Village Industries Board, Employees' State Insurance Corporation, etc. Table 24 India's Balance f Payments (Rs. crores) 1950/1 1955/56 1960/61 1961/62 1962/63 Imports, c.i.f. Commerci4 650 773 921 915 968 PL 480 a/ - - 185 87 121 Total 650 773 1,106 1,002 1,089 Exports and re-exports, f.o.b, 647 60 631 668 682 Trade balance -3 -133 -475 -334 -407 Invisible net (excluding official grants) o0 88 25 -21 -17 Current balance (excluding official grants) 37 -45 -450 -355 -424 Capital transactions net (includ- ing errors and omissions) -8 15 -16 -55 -50 Total surplus or deficit of above 29 -30 -466 -10 -474 Financed by: Pi 480 - 185 87 121 Disbursement of other foreign assistanceV 10 61 2O 259 378 Transactions with IF (drawings +) - -7 -11 58 12 Use of foreign exchange reserves (decrease +)/ -39 -24 52 7 13 a/Includes that portion of the PL 480 freight charges (50%) which is financed out of India's own resources. b/FiZures based on Reserve Bank copilations, which differ slightly from the estimates of the Ninistry of Finance. c/Reserve Bank of India's gold and foreign assats only; excludes changes in government balances abroad which are included under "Capital transactions not (including errors and omissions)". Table 25 Selected Invisible Transactions (Rs. crores) -a/ 1950/51 1955/56 1960/61 1961/62 1962/63 Transport: Receipts 30.1 38.3 h.6 47.5 47.8 Payments 6.6 15.0 24.6 26.9 24.4 Net 21,5 23.3 20.0 20.6 23.4 Insurance: Receipts 8.3 9.5 8.1 7.6 8.0 Payments 2.9 5.1 5.8 5.6 4.8 Net 5. 2.3 2.0 3.2 Foreign Travel: Receipts 4.6 11.8 15.3 12.4 b/ 3.2 b/ Payments 17.0 12.1 12.1 11.4 11.7 Net -12. -0.3 3.2 1.0 -.3 Investment income: Receipts 7.2 29.8 14.2 11.9 11.0 Payments 31.3 29.9 61.9 79.2 90.3 Net -2T.1 -0.1 -E7.7 -T7-. -79.3 Private donations: Receipts 40.8 $7.6 44.9 41.5 41.5 Payments 5.8 20.5 16.8 16.2 14.1 Net 370 77 -2T F__1 2 271 Source: Reserve Bank of India a/ Provisional. 5/ Data regarding foreign travel receipts are incomplete. Table 26 Indiats Foreign Exchange Reserves (Rs. crores: end of period) 1950/51 1955/56 1960/61 1961/62 1962/63 1963/61/ Gold held by RBI 118 118 118 118 118 118 Foreign assets of RBI 884 76 136 129 116 122 Total RBI holdings of gold and foreign exchange 1,002 86h 254 247 234 240 Government balances abroad 27 38 L9 50 61 67 Total foreign exchange reserves 1,029 902 303 297 295 307 Change over previous period - -127 -599 -6 -2 +12 Source: Reserve Bank of India and Ministry of Finance Table 27 Import and Export Indices (1952/53=100) Index Number of Average Terms of Years Unit Declared Values Trade Volume Index Exports Imports (2)v(3)xl00 Exports Imports 1 2 3 4 5 6 1950a/ 92 80 115.0 112 106 L9 55 93 88 105.7 113 109 1958 93 92 101.1 108 140 1959 91 90 101.1 119 18 (1958=100) 1960 109 98 111 101 107 1961 111 99 112 105 111 L962 106 94 113 112 120 Source: Office of the Economic Advisor to the Government of India I Figures are for fiscal year 1950/51. Table 28 Payments for Imprts (Rs. crores) Actuals Estimates 1959/60 1960/61 1961/62 1962/63 7963/64 Cereals: PL 480 87 150 67 106 154 Others 68 64 [3 30 27 Total 155 214 110 136 181 Fruits, nuts and vegetables 18 20 15 18 20 Milk, fish, spices 12 10 15 17 16 Tobacco 1 neg. 1 1 1 Vegetable oils 4 4 5 4 5 Copra 11 12 9 10 10 Gums, lacs, resins 2 2 1 1 1 Hides and skins 2 3 2 3 3 Rubber 7 11 10 10 9 wood and cork 6 1 2 3 3 Pulp 7 7 6 10 9 Newsprint, paper and board 11 12 16 13 14 Textile yarn and thread 13 14 13 13 10 Raw cotton a/ 39 82 63 57 60 Raw jute 3 8 5 3 2 Raw wool and wool to:ps 8 10 11 11 15 Fertilisers (manufactured) 16 12 14 30 31 Dyes and colours 10 13 14 12 b Drugs and medicines 10 10 11 9 10 Other chemicals 53 60 51 52 53 Petroleum and products 86 77 87 83 102 Iron and steel 47 76 88c/ 102 c/ 98 c/ Non-ferrous metals 39 47 50 55 52 Metal manufactures 25 20 18 18 18 Machinery d/ 214 225 283 309 380 Transport equipment: - Road transport 32 35 33 32 33 Railways 16 28 13 27 46 Shipping 11 6 2 4 5 Other imports e/ 65 66 65 71 90 Total 924 1,088 1,012 1,111 1,277 Source: Government of India, Ministry of Finance a/ Includes PL 80 imports of Rs. 6 crores in 1959/60, Rs. 35 crores in 1960/61, Rs. 17 crores in 1961/62, Rs. 14 crores in 1562/63 and Rs. 22 crores in 1963/64. b/ Included in "Other chemicals". c/ The figures for 1961/62 and subsequent years include some items previously included under other categories and therefore are not strictly comparable with figures relating to previous years. d/ Excludes aircraft. t/ Includes defence equipment and civil aircraft. Table 29 Imports by Source (Rs. million) 1951/52 1955/56 1959 1960 1961 1962 1963 United Kingdom 1,623(19%) 1727(25%) 1 8L2(20%) 2,115(19%) 2,003(20%) 1,865(16%) 1,698(15%) United States 2,938(34%) 893(13%) 2,179(23%) 2,920(27%) 2LI0(24%) 3L31(31%) 3,696(31%) Canada 193 (2%) 68 (1%) 279 (3%) 152 (1f) 175 (21) 155 (1%) 251 (2%) European Economic Community 787 (9%) 1 189(18%) 1,958(21%) 1 931(18%) 1 856(16H) 1 6C5'1%) 1 383(12%) of which: Germany 2T61,203 179 1f225 1,026 890 France 109 155 217 213 161 123 125 Italy 180 165 267 255 240 232 170 Belgium-Luxembourg 103 12h 139 177 110 82 89 Netherlands 110 151 132 131 117 1L2 110 Rest of OECD and Finland 299 (3%) 336 (5%) 281 (3%) 33c (3%) 386 (LK) 30L (2%) 313 (3%) of which: Ireland 0 0 - - - - Sweden 75 79 108 112 1L2 92 108 Switzerland 100 121 80 99 107 108 121 Soviet Bloc 59 (1%) 107 (2%) 330 (3%) 328 (3%) 622 (6%) 1 06 (9%) 036 (9%) of which: U.S.S.R. 1E 762 179 17 T2W 013 Poland 3 L 51 30 75 8L 85 Czechoslovakia 28 29 37 71 1L3 19L 163 East Germany 1 4 32 26 51 73 88 Japan 255 (3%) 335 (5%) L17 (L%) 567 (2%) 607 (6%) 583 (5%) 617 (6%) Mainland China 159 (2%) h (1%) b9(0.5%) 33(0.3%) 17(0.12) 12(0.1%) neg. South Asia and Far East 805 (9%) 728(11%) 582 (6%) 1 110(10%) 860 (9%) 1 11(10%) 1,00 (9%) of which: Burma 27t i9 -73 2 _1 92 Ceylon 56 9L 61 40 U5 73 56 Indonesia 32 15 38 39 19 18 81 Malaya 221 183 106 137 126 113 125 Pakistan 105 271 55 152 115 179 113 Thailand 116 5 6 6 20 11 8 Africa and Middle East 1,391(16%) 1,18(17%) 904(10%) 1 089(10%) 932 (9%) 820 (7%) 798 (7%) of which: Aden 9 21 13 16 '2 2i T2 Bahrain 109 82 52 7 L8 L8 L9 Iran 289 155 356 3L3 315 515 50L Kenya 186 219 116 11 101 71 LO Kuwait 1 0 52 1 5 2 5 Mozambique 35 L5 59 55 67 50 65 Nigeria 0 5 3 5 1L 5 L Rhodesia and Nyasaland 6 6 111 158 128 50 33 Saudi Arabia 100 152 201 190 179 138 171 Sudan 13 127 107 96 85 175 92 U.A.R. (Egypt)l' L05 231 81 228 103 89 138 Australia 176 (2%) 135 (2%) 135 (1%) 231 (2%) 176 (2%) 253 (2%) 177 (2%) New Zealand 21 25 11 15(0.2%) 13(0.17 15(0.1%) 18(0.1%) Rest of World 53 (1%) 60 (1%) L37 (5%) 98(0.9%) 99(0.9%) 333 (3%) 101(0.9%) of which: Argentina 9 1 1 1 - 1 1 Cuba 0 7 neg. 1 neg. - - Yugoslavia 1 3 29 LL 58 81 88 TOTAL 8,7 9 6,790 9,40 10,919 1.t6 1256 10,916 Source: Monthly Trade Statistics a/ Coverage of the monthly trade statistics is incomplete, since certain government imports are omitted. 1951/52 figures exclude trade by land with Pakistan, Burma, Afghanistan and Iran. Malaya includes Singapore. b/ Including Syria in 1959 and 1960. Table 30 Receipts from Merchandise Exports (Ra. crores) Actuals Estimates 1959/60 1960/61 1961/62 1962/63 13/6 Fish and fish preparations 6 5 L 4 6 Cashew nuts 16 19 18 19 22 Other fruits and vegetables 6 7 7 8 9 Spices lb 17 18 lb 13 Sugar 2 3 15 17 25 Coffee 6 7 9 8 9 Tea 129 123 123 129 125 Tobacco a/ 15 16 15 19 25 Total food, drink and tobacco I 19T97 _0_ R7 T7 Oilcakes 21 lb 17 32 33 Vegetable oils' 15 13 11 17 22 Hides and skins 11 9 8 11 11 Raw cotton and waste 15 12 20 17 16 Raw wool and hair 12 8 9 7 5 Other textile fibres 6 2 4 6 7 Gums, resins and lac a/ 8 9 7 7 8 Total other agricultural productsa -- 67 97 102 Mica 10 10 10 10 8 Iron ore 15 17 17 36 38 Manganese ore 12 lb 10 8 8 Other ores and scrap 9 8 9 b 9 Coal and coke 5 3 2 3 3 Petroleum products 3 L 4 h 6 Total minerals 54 56 52 65 72 Leather and manufactures 31 25 25 23 25 Footwear 3 3 2 3 b Yarns 11 11 lb 15 16 Cotton fabrics 63 58 8 7 L8 Artsilk fabrics 2 3 6 8 9 Woollen manufactures 6 5 5 5 7 Jute anufactures 109 13h lhh 155 165 Coir manufactures / 3 3 3 4 L Total leather and fibre manufactures2' 228 2L2 27 260 278 Iron and steel 1 5 5 1 2 Ferro-manganese neg. 4 5 1 2 Metal manufactures 1 2 2 3 3 Machinery and transport equipment 3 h h 4 6 Other exports 61 56 57 5b 60 Re-exports 10 10 5 7 6 Total other exports and re-exports 76 81 78 70 79 Total exports and re-exports (customs data) 6ho 63 662 710 765 Adjustments to bring into line with balance of payments figures -13 -12 +5 -28 - Total exports and re-exports (payments data) 627 631 667 682 765 Source: Government of India, Ministry o 'Finance a Excludes certain items which are not identified separately and are included in "other exports". Includes *essential oils. Table 31 Exports of Selected Commodities by Quantity (TOCO long tons) 1958 1959 1960 1961 1962 1963 Tea (man. lbs.) 506 473 395 415 466 493 Jute goods 655 842 801 762 854 896 Cotton piece goods (mn. yards) 617 819 724 602 536 564 Manganese ore 960 970 1,140 952 783 909 Iron ore 1s866 2,71 3,373 3,054 8,560 9,250 Mica 19 23 30 26 31 34 Raw cotton 72 57 33 52 56 61 Sugar 119 78 43 379 h2 584 Tobacco (mn. 1bs) 111 87 93 121 113 154 Lac 26 27 22 26 21 20 Linseed oil 22 19 8 neg. neg. neg. Castor oil 20 19 58 24 26 39 Groundnut oil 1 141 2 1.5 34 78 Oilcakes 235 521 454 475 752 907 Coffee 15 lb 17 31 19 17 Coir manufactures 72 76 71 75 77 76 Raw hides and skins 12 13 12 11 14 14 Source: Monthly Trade Statistics Table 32 a/ Exports by Destinatior- kRa. mil-lion) 1951/52 1955/56 1959 1960 1961 1962 1963 United Kingdom 1,879(27%) 1,644(28%) 1672(27)) 1,701(27%) 1,629(25%) 1,599(23%) 1,71(22%) United States 1,301(19%) 858(15%) 949(15%) 985(16%) 1,414(17%) 1,128(17%) 1,277(16%) Canada 162 (2%) 140 (2%) 152 (2%) 170 (3%) 174 (3%) 219 (3%) 228 (3%) European Economic Community 415 (6%) 553 (9%) 471 (8%) 463 (7%) 548 (8%) 196 (7%) 562 (7%) of which: Germany TV -14 T9 in 73 T TF2 France 105 70 81 74 82 80 90 Italy 69 95 56 83 96 91 114 Belgium-Luxembourg 77 88 51 49 65 46 61 Netherlands 77 152 89 71 91 84 102 Rest of OECD and Finland 207 (3%) 156 (3%) 177 (3%) 166 (3%) 159 (2%) 75 (1%) 85 (1%) of which: Ireland 7[i _ 71 SE -a .7 18 Sweden 24 15 lb 15 15 17 18 Switzerland 21 9 9 15 18 15 12 Soviet Bloc 80 (1%) 51 (1%) 403 (79) 452 (7%) 533 (8%) 918(13%) 77(10%) of which: U.S.S.R. 30 73 T 9 310 TM3 Poland 1 3 36 33 41 112 90 Czechoslovakia 12 13 1 58 91 100 111 East Germany 0 0 25 39 33 86 90 Japan 143 (2%) 302 (5%) 312 (6%) 336 (5%) 403 (6%) 320 (5%) 5142 (7%) Mainland China 68 (1%) 65 (1%) 75 (1%) 56(0.9%) 2 2 - South Asia and Far East 949(14%) 795(13%) 710(12%) 650(10%) 693(10%) 688(10%) 856(11%) of which: Burma 19T Ceylon 165 203 222 19 17 19 170 Indonesia 15 116 38 10 61 47 24 Malaya 157 123 149 47 77 59 132 Pakistan 190 83 63 94 98 92 73 Thailand 87 32 24 23 31 26 10 Africa and Middle East 710(11%) 798(14%) 727(12%) 722(12%) 852(13%) 729(11%) 733 (9%) of whichs Aden r 7 7 7 7 Bahrain 13 22 22 19 21 18 20 Iran 41 52 4L 46 50 60 L9 Kenya 88 60 48 46 55 50 56 Kuwait 38 35 38 33 39 38 38 Mozambique 9 8 6 9 10 10 7 Nigeria 71 82 40 50 78 61 38 Rhodesia and Nyasaland 36 30 15 125 201 27 17 Saudi Arabia 19 60 37 43 31 28 32 Sudan 77 56 1L5 80 111 98 77 J.A.R. (Egy-t) b/ 6h 95 89 19 121 131 117 Australia 166 (7%) 2L8 (L%) 191 (3%) 214 (3%) 166 (2%) 186 (3%) 177 (2%) New Zealand 79 (1%) 16 (1%) 17 (1%) 78 (1%) 70 (1%) 69 (1%) 68(0.8% Rest of World 532 (8%) 255 (4%) 223 (4%) 226 (4%) 226 (4%) 37 (6%) 852(11%) of which: Argentina 177 7 7T 7 90 Cuba 11 L5 25 52 75 34 1l Yugoslavia 3 2 17 3L 45 105 107 TOTAL 7,018 5,909 6,138 616 6599 6793 7,868 Source: Monthly Trade Statistics a/ 1951/52 figures exclude trade by land with Pakistan, Burma, Afghanistan and Iran. Malaya includes Singapore. b/ Includes Syria in 1959 and 1960. Table 33 Utilisation of External Assistance a/ (U.S. $ million) Estimated Total, spillover Actuals Estimates Third to Fourth 1961/62 1962/63 1963/64 1964/65 1965/66 Plan Plan Grand Total 701.7 931.2 1,302.2 1,322.5 1,080.8 5,338.4 740.3 Loans, subtotal 472.2 640.3 885.2 12 029.3 1,062.6 4,089.6 740.3 Austria -- -- 1.0 7.7 3.3 12.0 -- Belgium -- -- -- 2.1 8.4 10.5 9.5 Canada -- -- -- 5.3 14.7 20.0 14.7 France -- -- 1.1 19.9 32.7 53.7 26.3 Germany b/ 125.0 46.2 56.8 75.9 104.2 408.1 55.1 Italy -- 0.4 4.0 16.8 33.9 55.1 43.7 Japan 17.8 24.1 37.7 56.2 47.4 163.2 27.2 Netherlands -- -- 1.0 6.3 10.6 17.9 4.2 United Kingdom 48.3 62.5 92.5 51.8 90.3 345,4 6.3 United States, subtotal 151.9 347.9 399.4 462.1 347.6 1,708.9 126.9 DLF/AID 76.8 277.1 340.4 397.3 29b.5 1,390.4 104.4 ExLm Bank 68.5 62.8 50.6 55.5 48.8 286.2 22.5 Other U.S. Govt. 4.2 8.0 3.7 3.0 -- 18.9 -- Private banks 2.4 -- 4.7 6.3 -- 13.4 -- IBRD and IDA 78.0 89.5 164.8 174.4 205.0 711.7 105.9 Denmark -- -- 0.2 1.9 -- 2.1 -- Switzerland -- 0.5 4.2 8.4 12.1 25.2 6.8 Yugoslavia -- -- 1.0 6.3 10.5 17.8 22.2 Czechoslovakia -- -- 2.1 8.8 18.9 29.8 68.7 Poland -- 1.2 5.2 11.6 9.5 27.5 35.1 U.S.S.R. 51.2 68.0 114.2 113.8 113.5 460.7 187.7 PL480, subtotal 184.3 257.7 384.7 259.6 --- 1,08.3 -- Grants, subtotal 45.2 33.2 32.5 33.6 18.2 162.5 -- Canada 19.9 11.7 aL.5 21.9 7.8 82.8 -- United States, subtotal 22.0 19.9 7.8 7.3 7.2 64.2 -- U.S. Govt. (TCA) 18.0 17.2 6.3 4.2 4.1 -- Ford & Rockefeller 4.0 2.7 1.5 3.1 3.1 14.4 -- Foundations Others 3.3 1.6 3.0 4.4 3.2 15.5 -- a/ Including all aid committed up to December 31, 1963 and also the uncommitted balance of 1963 pledges from Consortium members. b/ Not including German credits extended for the Rourkela Steel plant before April 1, 1961. Table 34 Comnosition of India's External Public Debt Estimated Amounts Cutstanding, including Undisbursed, as of April 1, 1964 in Respect of Debt Incurred up to December 31, 1963 a/ ($ million equivalent) Debt Outstanding as of April 1, 1964 TOTAL EXTERNAL PUBLIC DEBT 4,316b/ Consortium members, subtotal 3,573 Austria 9 Belgium 2 Canada 30 France 36 Germany h68 Italy 32 Japan 173 Netherlands 20 United Kingdom 540 United States Agency for International Development 835c/ Export-Import Bank d/ 286 Wheat loan 166 U. S. Bank's loans to Air India 13 IBRD loans 641 IDA credits 300 Non-consortium countries, subtotal 62L Czechoslovakia 25 Kuwait 54 Switzerland 32 Poland 27 Union of Soviet Socialist Republics 470 Yugoslavia 16 Other debt, subtotal 119 Suplies credits to the public sector e 119 Source: Government of India, Ministry of Finance a/ Figures derived from report of January 27, 1964, Ministry of Finance, India, entitled "Estimated Payments in Foreign Currencies of Interest Charges and Capital Repayments in Respect of Foreign Loans and Supliers' Credits Authorized/Comitted up to Deceber 31, 1963," except for publicly-issued bonds. b/ Substantial amounts are estimated to be as yet undisbursed. c/ Not including a non-project" loan of $22" million, contracted in February 1964. d/ Figure includes loans to the private sector. Inclusive of interest payable in the future. Table 35 al Projected Service on External Public Debt Outstanding at April 1, 196h - (U.S. $ million) Total Debt Debt outstanding Payments Year April 1 Amortization Interest Total 1964/65 4,316 158 116 274 1965/66 4,158 211 131 342 1966/67 3,947 246 132 378 1967/68 3,701 233 121 354 1968/69 3,468 258 113 371 1969/70 3,210 239 101 340 1970/71 2,971 232 92 324 1971/72 2,739 218 83 301 1972/73 2,521 222 72 29h 1973/74 2,299 210 62 272 197h/75 2,089 192 53 245 1975/76 1,897 179 47 226 Austria 1964/65 9 -- b/ b/ 1965/66 9/ / b/ 1966/67 9 1 b/ 1 1967/68 8 1 B/ 1 1968/69 7 1 b/ 1 1969/70 6 i b/ i 1970/71 5 1 b/ 1 1971/72 h 1 b/ 1 1972/73 3 1 B/ 1 1973/74 2 1 B/ 1 1974/75 1 1 bl 1 1975/76 b/ b B/ b/ Belgium 1964/65 2 b/ b/ b/ 1965/66 2 1 b/ 1 1966/67 1 b/ b/ 1967/68 1 b/ B/ B/ 1968/69 1 B/ / Bl 1969/70 1 b/ b/ b/ 1970/71 1 B/ B/ B/ 1971/72 B/ Bl B/ 1972/73 B/ B/ B/ 1973/74 1 1 / 1 Table 35, Page 2. Debt outstanding Payments Year April 1 Amortization Interest Total Canada 1964/65 30 4 1 5 1965/66 26 4 1 5 1966/67 22 5 1 6 1967/68 17 2 1 3 1968/69 15 2 1 3 1969/70 13 2 1 3 1970/71 11 1 1 2 1971/72 10 1 1 2 1972/73 9 1 1 2 1973/74 8 1 b/ 1 1974/75 7 1 b/ 1 1975/76 6 1 b/ 1 France 1964/65 36 1 b/ 1 1965/66 35 1 -1 2 1966/67 34 3 1 4 1967/68 31 4 2 6 1968/69 27 4 2 6 1969/70 23 4 2 6 1970/71 19 4 2 6 1971/72 15 4 2 6 1972/73 11 4 2 6 1973/74 7 4 2 6 1974/75 3 2 2 4 1975/76 1 1 1 2 Table 35, Page 3. Debt Outstanding Payments Year April 1 Amortization Interest Total Germany 1964/65 468 2 19 21 1965/66 466 33 21 54 1966/67 433 22 21 43 1967/68 411 21 20 h1 1968/69 390 30 18 48 1969/70 360 30 17 47 1970/71 330 34 15 49 1971/72 296 36 14 50 1972/73 260 36 12 48 1973/74 224 36 10 46 1974/75 188 32 8 40 1975/76 156 29 7 36 Italy 1964/65 32 1 b/ 1 1965/66 31 2 1 3 1966/67 29 3 2 5 1967/68 26 3 2 5 1968/69 23 3 2 5 1969/70 20 4 1 5 1970/71 16 3 1 4 1971/72 13 3 1 4 1972/73 10 3 1 4 1973/74 7 4 1 5 1974/75 3 2 b/ 2 1975/76 1 1 b/ 1 Jal5an 1964/65 173 8 7 15 1965/66 165 12 9 21 1966/67 153 16 9 25 1967/68 137 20 8 28 1968/69 117 20 7 27 1969/70 97 20 5 25 1970/71 77 17 4 21 1971/72 60 13 3 16 1972/73 47 11 2 13 1973/74 36 10 2 12 1974/75 26 10 1 11 1975/76 16 10 1 11 Table 35, Page 4. Debt outstanding Payments Year April 1 Amortization Interest Total Netherlands 1964/65 20 -- b/ b/ 1965/66 20 b/ 1 1 1966/67 20 b/ 1 1 1967/68 20 b/ 1 1 1968/69 19 1 1 1969/70 19 1 1 1970/71 19 / 1 1 1971/72 19 1 1 2 1972/73 18 1 1 2 1973/74 17 1 1 2 1974/75 16 1 1 2 1975/76 15 1 1 2 United Kingdom 1964/65 540 12 24 36 1965/66 528 28 27 55 1966/67 500 33 28 61 1967/68 467 31 26 57 1968/69 436 36 24 60 1969/70 400 26 22 48 1970/71 374 26 22 48 1971/72 348 25 21 46 1972/73 323 25 19 44 1973/74 298 25 18 43 1974/75 273 25 16 41 1975/76 248 25 15 40 A. . D. 1964/65 835 -- 4 4 1965/66 835 -- 5 5 1966/67 835 -- 6 6 1967/68 835 -- 6 6 1968/69 835 -- 6 6 1969/70 835 -- 6 6 1970/71 835 -- 6 6 1971/72 835 -- 6 6 1972/73 835 10 6 16 1973/74 825 22 6 28 1974/75 803 27 6 33 1975/76 776 27 6 33 Table 35, Page 5. Debt outstanding Payments Year April 1 Amortization Interest Total U.S. Export Inport Bank 1964/65 288 19 13 32 1965/66 269 22 14 36 1966/67 247 29 13 42 1967/68 218 30 11 41 1968/69 188 29 10 39 1969/70 159 28 8 36 1970/71 131 28 7 35 1971/72 103 28 5 33 1972/73 75 28 4 32 1973/74 47 20 2 22 1974/75 27 11 1 12 1975/76 16 9 1 10 U.S. Wheat Loan 1964/65 186 -- -- -- 1965/66 186 -- -- -- 1966/67 186 -- -- -- 1967/68 186 3 2 5 1968/69 183 6 4 10 1969/70 177 6 4 10 1970/71 171 6 4 10 1971/72 165 6 4 10 1972/73 159 7 3 10 1973/74 152 7 3 10 1974/75 145 7 3 10 1975/76 138 7 3 10 U.S. Banks to Air ndia 1964/65 13 10 1 11 1965/66 3 2 b/ 2 1966/67 1 1 E/ 1 1967/68 b/ b/ /b/ Table 35, Page 6. Debt outstanding Payments Year April 1 Amortization Interest Total I.B.R.D. c/ 1964/65 641 h 34 79 1965/66 597 65 34 78 1966/67 552 49 33 83 1967/68 503 53 28 81 1968/69 650 49 25 74 1969/70 401 51 22 73 1970/71 350 51 20 70 1971/72 299 44 17 61 1972/73 255 36 14 50 1973/74 219 32 12 44 1974/75 187 31 11 42 1975/76 156 31 9 40 I.D.A. 1964/65 300 -- 1 1 1965/66 300 -- 2 2 1966/67 300 -- 2 2 1967/68 300 -- 2 2 1968/69 300 -- 2 2 1969/70 300 -- 2 2 1970/71 300 -- 2 2 1971/72 300 1 2 3 1972/73 299 1 2 .3 1973/74 298 3 2 5 1974/75 295 3 2 5 1975/76 292 3 2 5 Czechoslovakia 1964/65 25 -- b/ b/ 1965/66 25 -- b/ b/ 1966/67 25 4 1 5 1967/68 21 3 b/ 3 1968/69 18 3 b/ 3 1969/70 15 3 / 3 1970/71 12 3 b/ 3 1971/72 9 3 b/ 3 1972/73 6 3 b/ 3 1973/74 3 3 / 3 Table 35, Page 7. Debt Outstanding Payments Year April 1 Amtization Interest Total Kuwait 1964/65 5 7 2 9 1965/66 47 7 2 9 1966/67 4o 7 29 1967/68 33 7 1 8 1968/69 26 7 1 8 1969/70 19 7 1 8 1970/71 12 7 b/ 7 1971/72 Switzerland 1964/65 32 - b/ b/ 1965/66 32 1 1 2 1966/67 31 1 1 2 1967/68 30 2 1 3 1968/69 28 4 1 5 1969/70 24 6 1 7 1970/71 18 8 1 9 1971/72 10 6 1 7 1972/73 2 1 3 1973/74 2 2 b/ 2 Poland 1964/65 27 - b/ b/ 1965/66 27 - 1/ 1966/67 27 - b/ 1967/68 27 3 1968/69 24 3 1 4 1969/70 21 3 1 4 1970/71 18 3 b/ 3 1971/72 15 3 b/ 3 1972/73 12 3 5/ 3 1973/74 9 3 S/ 3 1974/75 6 3 S/ 3 1975/76 3 3 1/ 3 Table 35, Page 8. Debt outstanding Payments Year Ap'il 1 Amortization Interest Tct +l I U.S,S.R. 1964/65 470 17 10 27 15"/66 53 27 12 39 1 67 426 47 11 58 DO768 379 47 9 56 332 44 8 52 1969/70 288 44 7 51 1970/71 2hh 37 6 43 1971/72 207 35 5 40 1972/73 172 35 39 1973/74 137 33 3 36 1974/75 104 33 2 35 1975/76 71 29 1 30 Yugoslavia 1964/65 16 -- b/ b/ 1965/66 16 -- // 1966/67 16 -- b/ 1967/68 16 -- b/ 1968/69 16 2 2 1969/70 14 2 E/ 2 1970/71 12 2 b/ 2 1971/72 10 2 2 1972 /73 8 2 2 1973/74 6 2 2 1974/75 4 2 2 1975/76 2 2 E/ 2 Suppliers' Credits to the Public Sector 1964/65 119 33 33 1965/66 86 26 26 1966/67 60 25 25 1967/68 35 3 3 1968/69 32 15 -- 15 1969/70 17 2 2 1970/71 15 1 1 1971/72 l4 1 - 1 1972/73 13 13 13 Source: Government of India, Ministry of Finance a/ Includes all loans listed in Table 3b. b/ Less than $500,000. / Not including Loans No. 312 and 340 to ICICI, for which no amortization schedule has been fixed as yet.