Report No.1073-IN

Economic Situationand Prospects of IndiaMarch 29, 1976South Asia Region

FOR OFFICIAL USE ONLY

Document of the World Bank

This document has a restricted distribution and may be used by recipientsonly in the performance of their offical duties. Its contents nay nototherwise be discbsed without World Bank authorization.

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CURRENCY AND OTHER EQUIVALENTS

Currency

Prior to June 6, 1966 US$1.00 = Rs. 4.7619Rs. 1.00 = US$0.21

From June 6, 1966 to : US$1.00 = Rs. 7.50mid-December 1971 Rs. 1.00 = US$0.13333

Mid-December 1971 to US$1.00 = Rs. 7.27927end June 1972 Rs. 1.00 = US$0.1374

After end-June 1972 : Floating rate

Spot rate (December 31, 1975) US$1.00 = Rs.8.937

Rupee trade figures have been converted into dollars by usingthe prevailing exchange rate up to 1970/71. For subsequentyears average IMF conversion rates have been used. These areRs. 7.444, Rs. 7.706, Rs. 7.791 and Rs. 7.976 per US dollar forthe periods 1971/72, 1972/73, 1973/74 and 1974/75. For 1975/76,the average conversion factor for the first half was Rs. 8.385.For the year as a whole the rate of Rs. 8.65 has been used.

Weights

Unless otherwise specified all weight measures are metric.

Years

The Indian fiscal year runs from April 1 through March 31.

Abbreviations Used

n.a. = not available

n.s. = not significant

(blank) = not applicable

= nil

FOR OFFICIAL USE ONLY

This report was prepared in New Delhi by members of the World Bank ResidentMission in India and of the India Division at World Bank Headquarters underthe guidance of J. Kraske (Resident Mission Chief) and 0. Yenal (PrincipalEconomist). Those contributing from the Resident Mission were: J. Harrison,M. Karcher, P. Naylor, P. Pohland, S. Sengupta and A. Van Nimmen. Those fromthe India Division were: M. Baird, R. Grawe, C. Taylor, J. Wall and M. Wolf.Y. Satyanarayana assisted in the statistical work.

This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be discosed without World Bank authorization.

ECONOMIC SITUATION AND PROSPECTS OF INDIA

Table of Contents

Page No.

BASIC DATA

MAP

SUMMARY OF,CONCLUSIONS . .......................... . . . . .. . i - iii

PART I - CURRENT DEVELOPMENTS ............................. 1

A. GENERAL ECONOMIC SCENE 1........... ..... I1. Supply and Demand 1........... o ............. I2. Stabilization Policies and Prices .... ....... 33. Savings and Investment - Past Trends

and Outlook .......................... 00 ............. 0...... 84. Balance of Payments ...... .................. 12

B. SECTORAL DEVELOPMENTS .......................... 151. Agriculture .... o .................. .... ... 15

2. Industry and Mining ........................ 183. Transport .... 6....... ..... 0*.... .......................... 22

4. The Social Sectors ..... .................. 23

PART II MEDIUM-TERM PROSPECTS ....................... . .. 26

A. FOODGRAINS .......... . . .. ........... ................... .... 26

1. Trends in Foodgrain Production:Past and Future . ......................... 26

2. Input-Output Prospects in theMedium Term ... o......o.... . . . . . ........ .... .... o 30

B. ENERGY ...... ... o*..................... o................... 43

1. Power ...... * .............. ... 0. ...... 44

2. Coal .......... . o............. ....... .... o.............. 46

3. Petroleum and Natural Gas ...... ............ 47C. EXPORTS .... so............ .. 51

1. The Role of Exports ...................... *. . 51

2. Past Developments and Problems ...... ....... 51

3. Recent Policy Changes and the Medium-Term Targets .... .... . .... O.. . ................ . . 60

4. Longer-Term Prospects and Policy Issues .... 67

D. AID ............................................ 70

1. Medium-Term Perspectives ............ o....... 70

2. Aid Requirements in 1976/77 ......... 00 ..... 75

STATISTICAL APPENDIX (including List of Tables)

I

I

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ODDNTRY DATA - INDIA

a"IL POPULiTION DENSITY

3,280,483 b1 577.0 million (mid-1973) Per ie2ef arable land

SOCIAL INDICATORS

Reference CnontriesIndia Inoeia. Phei.i.i U. K.*

ly960 19 170 1970 1970

ON? FSR GAPI USS (ATIAS BASIS) 110 .O /a 90 /a 220 /a 2,600 /a

DEOGRAPHICCrud birth rat (per thousand) 38 f 38 a 48 L 45 ft1 13.9

Crude death rate (per thousand) 13 16 od 19 1/e 12 . 120 fInfent mortality rate (per thoausnd live births) 139 120-140 c d 80 17.5 LLif. expectaney at birth (years) 41 LI 5 148 58 72

Groes reproduction rate f 2.7 /hi 2.9 3.2 3.3 1.3

Poplatio growth rate 2. 3 2.3 20 30 5Population growth rate - urban 3h 4 5k 40 5

Age structure (percent)0-114 41 40 /44 f 43 ft 23.7 ft

15-64 56 57 f 53 f 54 ft 62.7 a

65 and ver 3 3 f 3/c 3 a 13.6 a

Age dependency retio f 0.8 0.8 9 0.9 ft 0.6

-oencnri depende-cy ntio & 1.0 1.7 Li 1 5 t 1.5 0 8 Ic

Urban population as percent of total 18 /k 20 /ak 18 /1 32 /c.n 78 /a..

Family planning: No. of accaptore romolative (thouse 1,000 5 175 409No. of users (% of eared wen) 8

LOPIDENTTotal laber force (thousands) 189,000 ft 221,000 4fl 40,100 ft 13,200 ft 25,700 oo

Percentage employed in agriculture 73 ft 71 /c1 62 L 56 ZL 3Percentage unemployed . 3Jn 2 2 7f 3.6 /an

INOOME DISTRIBUTIONPerccnt of national income received by highest 5% 27 ft 25 /ro 25 A.r 15 /r.t

Percent of oatioal inore received by highest 20% 52 ft 53 /- . 54 c:r 39 /r

Percent of national income received by lowest 20S 4 Li 5 4 7t7 6 i

Percent of national incoes received by lowest 40% 14 f 13 .. 12cr 19

DISTERIBUTION OF LAND *RRRHlI?S owned by top iOS of ownersS owned by salist 10% of ownere

HEAITH AND NUTRITIONPopulation per physician 5,800 /u 4,600 27,311 /c 2,712 f 790 ;e

Pepulation per nursing person 5,1L0 L 5,11o 8,320 77 1,970ft 370 Z_v

Pepulation per hospital bad 2,600 ft 1,620 /x. 1, 450 7 850 L nO /c.c

Per capita calorie supply as S of requirementi /5 95 93 93 85 125Per capita protein supply, total (grono per dayV/ 55 53 53 go 90

Of which, aninal and pulse 19 f 16 lob 14 ft 22 57

Death rate 1-4 years /7 44 70.7

DIOCATIONd.justed /8 primary school enrollment ratio 42 79 /ac 71 112 /cad 110

Adjusted Lg secondary school enrollment ratio 10 28 a 12 45 ~a7 72

Years of schooling provided, first and asond level 12 12 12 10 13

Vocational enrollment as 5 of sec. school enrollment 4 6 28 10 4Z, 5

Adult literacy rats % 24ftg 36 ah 56

/c.i 72 /dft 97 x

re No. of persons per room (urban) 2.6 /Lj.±k 2.8 /c.ai,k .. .. 0.8 /.l

Percent of occupied ouits without piped water .. .. .. 66 ad.a .

Access te electricity (as S of total population) .. .. .da

Peroent of tural population cornected th electricity .. .. .. 6 /adaJ

OOIISIIIPTICNRadio receivers per 1000 population 5 23 t 114 46 /a 672 faPassenger Care per 1000 population 0.8 1/ 2/a i / 231 /a

llectric pwear congumuption (kch p.c.) 46 i08 23 255 1 725 ftNewsprint consumpticn p.c. kg per year 0.2 °-4i 0.2. 1.7 g.e 28-5 Li

Notes: Figures refer either to the lotest periode or to aonount of anviromental temperature, body weightas, and

the latest yearn. inteat periods refer do prinoipie to distribution by age and eo of national populations.the yaeast y96-0or1867; h late ntprid fri yearninpprim- /6 protein standards (reqirmeent.) for all noontries en estab-

ciple in 1960 anod 1970. / i ehotei yer i -by MD ERoio Researoh Service pr-vide for a minium

/I The Per Capita G9P netimate is at market pricon for allowance of 60 grema of total protein per day, andO grams of

years bth-r than 1960,calculated by the mae converaion animal and plae protein, of which 10 gra=m should be animal

technique 0s the 1972 World flk Atla.e protein, Thes standarda are so=ewhat lower then those of 75

fL Averoge number of daughters per woman of reproductive graom of total protein and 23 gra s of aninl protein as an

age . averge for the world, proposed icy FAO in the Third World FOudft Ppopletion growth rete are fo the decades ending in Survey.

1960 and 1970. /7 Sose studieo hive suggested that crds death rates of children

ft Patic of population under 15 end 65 and over to ppoula- ages 1 through 4 ay be used as a first appronimation index of

tion of ages 15-64 for age dependency ratio and to labor malnutrition.force of ages 15-64 for ec.o.omic dependency tio. /8 Perentage enrolled of sorreaponding population of ehool ag

/5 FAO reference standards represent phyeielogioal re- as defined for such enuntry.

qurets for nor-al activity and health, taking

4 1972; /b Estiate annual avenrge for 1963-64 based an results of the national s9aple surrey; /c 1971; /d Entimate;

1965-70; I 1973; & Estimated annual average for 1951-61 bhsed on analysis of decennial census; fh 1951-60;

Rate is estimate based on births obtained by application of -revere survivals method to results of 1951 and 1961

censuses; /.i 1960-72; fk For the definition of urban see UN Demo tic Yearhook 192, P. 154; ,t bmniclpalities,regencY capitals and other places with urban oharacteristics, excluding West Oriaon; For the definition of urban

see UN Demographic Yearbook 1973. p. 127; ft Area clenasfied an urban for local government purposes, i.e. county

boroughs, municipal boroughs and urban districts; ft 1964; At Includes all individualn who participate in any

type of economic activity; ft AID estimate of labor force it age group 15-59. I0R8 report gives a figure of 180.4

million based on the 1971 population census. The differences is due to changes in the definition of a,worker. In the

1971 census, persons were clasnified only o0 the basis of their main mctivities. Thie led to the eoclusion of several

rategunien, such as housewives; r households; Is 1967-68; ft 1968; ft 1962; ft Personnel in government

cervices only; ft 1957; ft 1969; 7 Inh dindesg rurael hspitals; f Gverment honpital eetablishmenta only;Ian 1960-62; /ab 1969-70; /ac Estimate which includes evenge ntdents; lad 1967; /ao Not including voctional

short-term courees; 12f 1965; 1961 4 Population of 10 yrar -ad ove-r based on one percent sa.pIe datas 272; ~14'2 .roar and crr - ens refer to Iahod; 4 Dota ba..ed on earpl tabulation of cnsus

returno; s Deta refer to huo.eholds in conventionel dwellings; as Imports only; /an Regiitered applicantsfor sork.

lSice and population make Indonesia arslvInt reference ccuntry, although it in in the per capita incone group belowIndia.

co The Uoitnd Ringdoo h.a been selected because of the important role of public sector enterprises and the highly

developed system of social welfare.

I

ECONOMIC 1MEULOPY!XT DATA

GNP PME CAPITA If 1973a/ US$120

GROSS IATIONAL PRODUCT IN 1Q74/75 AMNUAL DMP C1 GEOVN (A. constant Pri° )

US$ Bin. 1 2961/62-1964/61 1965/66-1969/70 1970/71-1973174

GNP at Market Prioes 87.4 100.0 3.4 3.7 1.9Gross Domestic Investment 14.8 16.9Gross National Saving 12.8 14.6Current Account Balance -2.0 -2.3Resource Gap -1.8 -2.1

OUTPUT, LABOR PORCE AND PRODUCTIVITY IN 1971

Value Added (at factor cost) Labor Force V.A. Per WorkerUS_ Bln. % Yin. -_S$ b of National Average

Agriculture 24-5 46.6 130.0 72.1 188 64Industry 11.8 22.3 20.2 11.2 582 199Services 16.3 3.1 30.2 16.7 542 186Total/average 52.6 100.0 180.4 100.0 292 100

GOVERNMENT FINANCE General Government Central Gover ent

(Rv. Bln) +A of GDP (Rs. Bln) % of GDP1974/75 1974/75 1972/73-1974/75 1974/75 1974/75 1972/73-1974775

Current Receipts 107.63 15.4 15-7 64.02 9.1 9.2Current Expenditures 98.99 14.2 15.2 57.7B 8.2 8.7Current Surplus/Deficit 8.64 1.2 0-5 6.24 0.9 0.5Capital Expenditures e/ 40.40 5.8 5.4 30.17 4.3 4.1

External Assistance (net) 10.1t 1.4 1t0 10.17 1.4 1.0

MONEY, CREDIT AND PRICES 1965/66 1970t71 971/72 1972/743 1973ZI 1974L7 August 1974 August 1975

(Billion Re outstanding at end of period)

Money and Quasi Money 61.4 105.7 122.4 142.2 169.1 187.4 176.8 198.2Bank Credit to Public Sector 40.8 56.9 69.0 82.5 92.9 102.0 98.8 115.3Bank Credit to Private Sector 28.1 56.7 64.4 76.o 90.1 100.5 90.0 104.7

(Percentage or Index Numbers) J January 1976

Money and Quasi Money as % of GDP 24.0 24.4 26.3 27-9 27.2 25.5Wholesale Price Index

(1961/62 = 100) 131.6 181.1 188.4 207.1 254.2 313.0 316.0 290.5

Annual percentage changes in:

Wholesale Price Index 7.7 5.5 4-0 9.9 22.7 23.1 -8.1Bank Credit to Public Sector 12.9 8.6 21.3 19.6 12.6 9.8 4.8 /Bank Credit to Private Sector 12.8 17.4 13.6 18.0 18.5 11.5 22.9 g

a/ The per capita GNP estimate is at 1973 market prices, calculated by the conversion-technique used in the 1975World Atlas. All other conversions to dollars in this table are at the average exchange rate prevailing during

the period covered.2/ Quick Estimates.c/ Computed from trend line of GNP at factor cost series, including one observation before first year and one observation

after last year of listed period./ Transfers between Center and States have been netted out.

e/ All loans and advances to third parties have been netted out.* Credit to Govrnrment.* Credit to Commercial Sector.

BAIACNE OF PAYDEITS 1972173 MN l927475 i975/76 MOl0RŽISE MORT$ (AVERAGE 1972/73-i974/75)Tu-3i Million) US$ lln.

Exports of Goods 2,558 3,239 4,143 4,300 Jute Manufacturers 329 10Imports of Goode -2,682 -3,971 -5,739 -5,920 Tea 220 7Trade Balance - 124 - 732 -1,51K 1,620 Cotton Textiles. 217 7MES (net) / - 146 n.a. n.a. n.a. Iron Ore 171 5

Engineering Goods 295 9Resource Gao - 270 n.a. n.a. n.a. Others 2.081 63Interest Payments (net) - 237 - 233 - 260 _ 261 Total 3,313 100Other Factor Payments (net) - 8 n,a. n.a. n.a.Net Transfers i/ - 50 n.a. n.a. n.a.

Balance on Current Account - 565 n.a. n.a. n.a. EXTERNAL DEBT, MARCE 31, 1975

Official id US$ Mln,

Disbursements 955 1,249 1,766 2,210 Repayable in foreign currency 11,056Amortization -445 -459 -519 -522 Repayable through export of goods 714

Transactions with IMF 75 530 130 Total Outstanding and Disbursed 11,770All Other Items 89 205 41 500

DEBT SERVICE RATIO FOR 1975/76 19.0 percentIncrease in Reserves (-) - 34 -105 38 -435Gross Reserves (end year) 1,311 1,416 1,378 1,813 IBBD/IDA LENDING, December 31. 1975 (US$ Mm.)Net Reserves (end year) 1,311 1,341 773 1,073 I A_3tJ

Fuel and Related Materials IBD IDA

Imports 265 720 1,451 1,450 Outstanding and Disbursed 445 2,827of which: Petroleum 265 719 1,451 1,450 Undisbursed 284 1,157

Outstanding including 729 3,984Exports 41 20 26 n.a. Undisbursed

of which: Petroleum 37 16 17 n.a.

RATE OF EXORANGE i/

Prior to mid-December 1971 : US$1.00 = Rs 7.5 After end June 1972 t loating RateRs 1.00 = USSO.133333 Spot Rate December 31, 1975

Mid-December 1971 to : US$1.00 = Rs 7.27927 approx. US$1.00 = R. 8.937end June 1972 Rs 1.00 = US0o,137376 approx. Rs 1.00 = uS$ 0.112

h/ Estimated.

i/ For 1973j74 to 1975/76, included with 'All other Items'.

J kid and trade figures converted to US dollars using exchange rates and IEF trade conversion factors as indicated in inside frontcover of this report or notes to individual tables.

8/ Excluding garments.

jJ Amortization and interest payments (excluding IMF transactions) as a percentage of merchandise exports.

IBRD 10483Ri

'0D ! *t S_ I ; r90 MACH 1976

AFGHANISTAN

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SUMMARY OF CONCLUSIONS

i. The recent past has been one of the most difficult periods for theIndian economy since Independence, but economic conditions were improvedgreatly in 1975. Until the favorable turn of economic events in 1975, pro-gress in dealing with long-term development problems was limited because ofpoor crops, the dramatic shifts against India in the terms of trade, and in-flation. Adjustment to the difficulties thus became the principal preoccupa-tion of the last two years. With effective government measures supported byfavorable weather and additional foreign support, the adjustment effort hasbeen successful. Conditions are once again ripe for an upturn in the growthrate of the economy.

ii. Most important among the favorable factors in 1975/76 was a bumperharvest which followed years of poor or modest increases in agricultural out-put. Foodgrain production, expected at around 114 million tons, will exceedthe previous record of 1970/71 by 6%. Oilseeds, sugarcane and cotton willalso reach new production peaks, and will provide ample input supplies forthe agro-industries. Second, the high rates of inflation of the previousyears was brought under control through vigorous government action. Pricestability was achieved in 1975/76. Third, deficiencies in the supply ofelectricity and transport which had been prevalent in the past, eased sig-nificantly. Fourth, the production of such basic commodities as cement, coaland steel increased more than 10% over the previous year. Finally, man-hourslost by strikes were considerably reduced, and the public sector as awhole--both administrative services and public enterprises--reached higherlevels of efficiency and productivity.

iii. The improved economic environment has highlighted a number of con-straints to the sustained growth of the economy which had been over-shadowedby the overwhelming shortages and the balance of payments problems of 1973and 1974. The first constraint is the unsatisfactory long-term growth ofagriculture. A higher agricultural growth rate is an essential condition formore rapid development. This is crucial, not only because of the necessityto meet food requirements without unmanageable consequences for the balanceof payments but also because of the strong influence of agriculture on thelevels of activity in the other parts of the economy. While the foodgraincrop of 1975/76 is a record, there is no evidence that this represents asignificant upward shift in the long-term growth rate of food grain produc-tion in India, which, over the last 15 years, has grown only about as fastas population. Starting from a situation of deficit, this has meant thateven in normal years it has been necessary to rely on stocks or imports tomeet demand, and only in good years has there been a significant margin ofproduction to provide for any per capita growth in consumption. However,with a major effeet to expand the irrigated area and provide the complemen-tary inputs, it should be possible to achieve an annual growth trend in food-grain production of 3.7%. This would represent an additional 21 million tonsby 1978/79. Nevertheless, allowing for population and some per capita incomegrowth, imports of 5 to 6 million tons per year will probably continue to beneeded.

- ii -

iv. A second constraint is the sluggish pattern of industrial activity.This has been a problem of both supplies of industrial inputs and demand forindustrial production. Supply conditions have been greatly improved in thepast year. Yet in the midst of this currently favorable supply environment,the use of manufacturing capacity--especially for consumer durables--remainedlow. Production slowed down or inventories accumulated. This reflects alack of buoyancy in demand for manufactured products which has been a peren-nial problem in India. In previous years input bottlenecks, especially in rawmaterials and energy had been the more obvious cause of stagnation. Owing tothe measures taken by the Government over the past two years as well as thefavorable effect of the good monsoon on hydel generation, the energy situationhas greatly improved. It will be a crucial essential of a successful develop-ment effort that the energy capability of the country is increased in stepwith the requirements of agriculture and industry, and that disruptions fromenergy scarcities of the kind that emerged in the course of the Fourth Planare not allowed to recur. To this end, power programs are being revampedwith emphasis on centrally administered "super" thermal plants in the coalfields, coal production has already been greatly accelerated and has highrank among investment priorities, and the prospects for increased oil andnatural gas production over the medium term are encouraging indeed. At pres-ent, the supply of energy and most other inputs, both domestic and imported,is adequate. Although these improvements do not rule out the reappearanceof supply shortages in future, it appears that the growth of the market, animportant prerequisite for a sustained growth in industry, is not adequate.

V. Given the growth in agriculture, the two most promising and bene-ficial ways of stimulating industrial demand would be: (a) a boosting ofinvestments; and (b) expansion of exports. Both avenues are being pursuedby the Government. Public investment had lagged in the few years preceding1975/76 because of an erosion in financial savings and because of the under-standable desire to limit deficit financing in a period of rapid inilation.Consequently, public plan outlay in constant prices declined in both 1973/74and 1974/75. This trend was reversed last year, when real plan outlay wentup by about 20%. The 1976/77 budget indicates a further increase of centralplan spending by 16%. The total plan outlay, including the States, in1976/77 may show an even larger increase.

vi. The large trade deficits of recent years, the severe balance ofpayments constraints this created, as well as the realization of the import-ance of exports for industrial growth have led the Government to focus onexports and to develop an active promotion program. As a result, althoughthe fundamental orientation of India's industrial and trade policy and thespecific instruments of the export regime have, by and large, remained thesame, a significant shift in emphasis and in the way these policies areoperated have occurred. These are important both because they are likely tolead to bettrr utilization of current export potential and as an indicationof the willini,ness to ma'ke policy adjustments, when necessary, to expand ex-ports. Theje changes have contributed to recent export gains and shouldpromote tiu t9sr gains in medium-term export periormance. Veal e-port growth

- iii -

of 7%, as compared to the past trend of 5%, seems a reasonable expectation,especially since good prospects exist for immediate increases in the ex-ports of iron ore and steel. However, to sustain a higher export growthover the long run, more far reaching policy measures will be required, in-cluding the introduction of a more uniform and more stable system of exportincentives.

vii. Over the medium-term, the prospects for continued export growth

and import substitution in major commodities provide the Government of Indiaand the aid community with the opportunity to move the Indian economy to ahigher and more dynamic growth path by raising the level of capital accumu-lation. On the part of aid donors, this would require maintaining or in-creasing aid commitment levels on a sustained basis in good years and bad.But it also requires a conscious policy by the Government of India to raise

the level of investments and liberalize imports so that a higher volume ofexternal resource transfer for productive purposes can be achieved. Thebudget for 1976/77 which provides a substantial increase in investments andin plan expenditures is a significant step in the direction of using exter-nal capital not only as a means to import a minimum level of vital inputsbut as a means of increasing investments and stimulating growth.

I

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PART I - CURRENT DEVELOPMENTS

A. GENERAL ECONOMIC SCENE

1. Supply and Demand

1.1 Economic growth in 1975/76 has been better than for a long time.Because of a favorable monsoon, and given satisfactory climatic conditionsfor the rabi season, total foodgrain production could easily reach 114 milliontons or about 13 million tons more than in the previous year. Prospects forother agricultural crops are also by and large good, and in the case ofoil-seeds, excellent. Consequently, total value added in the agriculturalsector may have increased by 9% over 1974/75.

1.2 Output in most basic industries and infrastructure services alsorose significantly above 1974/75 levels. For example steel, cement, fertil-izers, coal and power are all expected to achieve production levels at least10% higher than in the previous year. In contrast with this performance,production in a number of consumer and capital goods manufacturing activitieseither increased very modestly or declined compared to 1974/75. Neverthelessthe growth in this sector as a whole is still expected to be 4 to 5%.

1.3 On the basis of these production estimates, the real growth innational income is estimated at 5-6% in 1975/76. This would be a significantimprovement since in three out of five past years the rate of increase innational income was lower than population growth, and in one year, nationalincome actually declined.

TABLE 1.1

National Income Growth Rates

1970/71 5.2%1971/72 1.7%1972/73 -1.5%1973/74 5.0%1974/75 0.2%1975/76 5-6%

Source: Statistical Appendix Table 2.3.

1.4 Whilst the good harvest and much of the improvement in the powersituation were due to the favorable rains, credit for the improvements in thebasic industries and infrastructure is also due to the Government policieswhich established price stability since September 1974 and effected a remarkableincrease in the efficiency of the public sector enterprises over the past two

-2-

years. CaDacity utilization in most of these enterprises increased substan-tially and there was a steep fall in industrial disputes and in man-days lostthrough strikes. The numbers of man-days lost had reached a peak of 36.6million in 1974/75, compared to roughly 19 million on average in the fivepreceding years. Even before the state of emergency was declared at the endof June 1975, the situation had improved and the number of man-days lost hadfallen to a yearly average level of about 15 million in the first quarter of1975/76. The alleviation of foreign exchange shortages, thanks to increasedforeign aid in the last two years helped considerably in easing the domesticsupply situation and was therefore also important in stabilizing prices andbringing about the improved overall performance of the basic industries andinfrastructure services.

1.5 With such favorable weather conditions and the improved supply ofbasic raw materials, power, transportation, labor and other inputs, theeconomy might have reached a higher growth rate had it not been for the lowgrowth in industry. Sluggish demand was most evident in the consumer goodsindustries, particularly among those producing consumer durables and other"luxury items", although some industries in the capital and intermediategoods sectors also suffered from lack of buoyancy. Some of this way havebeen due to a rundown of inventories as the restrictive credit policiespursued by the Government and the Reserve Bank increased the cost of maintain-ing stocks, and as the Government's enforcement of laws and regulationsagainst black-marketeers and hoarders reduced speculative inventories.Other short-term factors of possibly some dampening influence on industrialgrowth include increases in excise duties, bans on certain constructionactivities, curtailing consumer income through limitations on dearness allow-ances and bonus and dividend payments, as well as intensified tax collectionefforts.

1.6 Important as these restrictive policies may have been in specificinstances, as well as in dampening the aggregate demand, this year's experi-ence in the industrial sector provides yet further evidence of what wastermed an "outworn industrial strategy" in the last economic report -- astrategy which is not responsive even to a boom in agriculture. This isbecause of imbalances between an advanced industrial pattern weighted towardheavy industry on the one hand and a demand pattern on the other hand reflect-ing only limited consumer linkages to industry and capital goods requirementswhich have been slow growing because of public and private investment con-straints. These imbalances combined with the absence of any sizable foreigntrade as the adjustment factor, have become more visible as a result of thedisappearance of the supply bottlenecks. The experience of 1975/76 seems toindicate that forces which could act as engines of growth for industry didnot emerge even in the absence of supply restrictions. It also broughtinto sharper focus the importance of investments and exports, not only intheir respective contributions to productive capacity and external payments,but also as outlets for a growing industrial capability. These basic im-balances in tle economy were compounded in 1975/76 by supply-demand com-plications resulting from a stabilization policy that rapidly changed a highrate of iyxflatiotx to p1rce stabIlity.

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2. Stabilization Policy and Prices

1.7 The inflationary trend which set in around June 1972, fueled by theworld inflation in oil and raw material prices as well as crop failures inIndia and elsewhere, had been quite severe: it reached an annual rate of 23%in 1973/74 and spurted further to about 30% in the first half of 1974. Atthat point the Government decided to attach high priority to the fight againstinflation, by an effort to increase supplies in the shortage sectors on theone hand, and by severe steps to curb demand on the other. The foreignexchange reserves, augmented by rapidly rising foreign aid disbursements andborrowing from the IMF, were allocated on a priority basis to the import ofsuch urgently needed goods as food, fertilizer and POL products. Immediateattention also went to a more rigorous management of demand through incomespolicy, monetary controls, fiscal and budgetary policies and administrativemeasures.

1.8 The main ingredients of the incomes policy were the mandatorydeposit of all increases in wages and half of all additional cost-of-livingallowances for specified periods of time as well as the imposition of aceiling on the distribution of company profits. Later the Central Governmentreached an agreement with its employees whereby the remaining half of somecost-of-living entitlements was to be deposited as well. 1/ Keeping cost-of-living adjustments for State Government employees considerably below original-ly anticipated levels also curtailed consumers' purchasing power.

1.9 Strengthened monetary controls applied since 1973 tightenedthe allocation of credit to the commercial sector by: (a) reducingthe banks' lendable resources through an increase in their cash and li-quidity requirements; (b) raising the banks' minimum lending rate as well asthe cost of rediscounting and refinancing from the Reserve Bank; (c) decreas-ing the maximum percentage of bank advances against commodity purchases; and(d) defining certain limits for the financing of inventories. Reserve Bankguidelines for the 1975/76 busy season (November-April) pursued this policyof restraint, although with some discretionary relaxation based on the banks'compliance with lending to priority sectors. 2/ Special refinancing limitswere also established both to meet the anticipated needs for financing foodprocurement following a bumper crop, and to enable banks to provide exportcredit.

1/ However, this second half of the cost-of-living allowance is depositedin the employees' provident fund account rather than with the ReserveBank, as is the case under the stipulations of the earlier incomes policymeasures. It is also deposited for a much shorter period of time.

2/ A major change in the system of Reserve Bank assistance is the factthat the net liquidity ratio has been abolished as a benchmark indetermining a commercial bank's eligibility to receive assistance.Refinance and rediscount facilities are now made available auto-matically up to a certain percentage of total liabilities or of billsdiscounted. Thereafter, they become discretionary.

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1.10 With regard to fiscal and budgetary policy, the emphasis during thelast two years has been on limiting the size of the deficit and, consequently,on restraining the expansionary impact of Government activities on money sup-ply. In order to achieve this during a period of rapid inflation, whenrevenues did not keep pace with price increases, a number of drastic, oftenpainful, measures had to be resorted to. These included the levy of addi-tional taxes by both the Centre and the States, the curtailment of revenueexpenditures and a severe cutback in public investment. As a result thegrowth in net bank credit to the Government, which had been as high as 23% in1971/72 and 21% in 1972/73, was brought down to 12% in 1973/74 and 8% in1974/75. By February 1976 net bank credit to the Government in 1975/76 hadincreased by 9%, slightly less than the expansion in the corresponding periodlast year. 1/ Although expenditures for the year as a whole exceeded thebudget forecast by 17%, including a considerable increase in plan expendi-ture, the Government has been able to contain its recourse to banking credit,mainly because of a larger than anticipated buoyancy in tax revenue and thewindfall from a voluntary disclosure scheme of previously undeclared income. 2/

1.11 The combined effect on the expansion of money supply of the anti-inflationary measures described above is illustrated in the following table.These data indicate that with time deposits rising at about the same rate asin the previous year, money supply expansion in 1975/76 will probably be about9%. This rate of expansion is slightly higher than in the previous year (6%),but in 1974/75 national income was stagnant while in 1975/76 it is estimatedto have increased by about 6%.

1/ Because of an unusual and short-lived fall in credit to Governmentoutstanding during the latter half of March 1975, the measurement of theexpansion of net bank credit to Government is understated in 1974/75 andoverstated in 1975/76. From Rs. 99.5 billion on March 14 total netcredit fell to Rs. 94.3 billion on March 28, but by April 11 it hadclimbed back up to Rs 100.0 billion. As measured over the latter date,the expansion in 1975/76 on February 20 was only Rs. 2.5 billion, or lessthan 3%.

2/ The additional tax revenue to accrue from this scheme has been estimatedat Rs. 2.5 billion.

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TABLE 1.2

Money Supply, Credits and Foreign Reserves(annual percentage changes)

1970/71 1971/72 1972/73 1973/74 1974/75 1975/76 /a

Net bank credit toGovernment 11% 23% 21% 12% 8% 9%

Bank credit to commer-cial sector 19% 15% 17% 23% 16% 19%

Net foreign exchangeassets - 5% 11% -7% 19% -42% 49%

Money supply 12% 14% 16% 15% 6% 8%

/a As at February 20, 1976.

Source: Reserve Bank of India, Monthly Bulletin and Weekly Supplement.

1.12 These measures helped by other factors such as the bumper crop,made India's anti-inflation program one of the most successful and the infla-tion now is under control. As at the end of January 1976, wholesale priceswere 8% below the level of a year earlier and still declining. This pricedecrease was primarily due to a sharp fall in agricultural prices (20% intwelve months). Prices of non-agricultural commodities were marginallyabove the level at which they stood a year earlier, although they had beendeclining for a few months as well. For the year 1975/76 as a whole theaverage wholesale price index is not expected to increase at all. Thiscompares to an increase of 23% in both 1973/74 and 1974/75. Similar trendswere noticeable, although with some time-lag, in consumer prices.

1.13 These pronounced swings in price trends have had significant effectson the economy. First they must have affected the pattern of income distribu-tion. There are no detailed estimates available on the erosion in purchasingpower during the period of steep price increases among those social classeswith fixed incomes. Nevertheless, it is obvious that agricultural laborers,of which there are about 50 million in the country, as well as the urban andrural unemployed, of which there are tens of millions, were among the sectionsof the population hardest hit by the increase in prices. On the other handinflation seems to have benefited the corporate sector 1/ and, presumably, all

1/ For instance, the performance of a sample of 1,650 medium and large non-financial enterprises studied by the Reserve Bank (see RBI Bulletin,September 1975) shows that total after-tax profits of the enterprisesincluded in the sample rose from Rs. 3.1 billion in 1972/73 to Rs. 3.9billion in 1973/74, an increase of 25%. Although profits deflated bythe index of non-food prices increased by only 8%, this increase in realterms is undoubtedly higher than for many other variables in the economy.

forms of economic activity based on stock-building and speculation as well.The recent decline in prices and in the cost-of-living must have reversed thisprevious trend.

1.14 Sharp changes in price relatives must also have affected income dis-tribution as well as demand patterns and production incentives. The changesin some price relatives are shown below:

TABLE 1.3

Price Relatives(base: 1961/62 = 100)

Foodgrains Petroleum FertilizerNon-Foodgrains Manufactures Foodgrains

1970/71 117.1 105.1 65.61971/72 116.9 106.9 63.11972/73 123.7 106.5 57.81973/74 119.8 124.6 51.11974/75 134.6 160.3 68.61975/76 /a 125.6 164.6 77.4

/a Average of first 9 months.

Source: Index Number of Wholesale Prices in India, Office of the EconomicAdviser, Ministry of Industrial Development.

The consequences of changing price relatives between fertilizers and food-grains are discussed in Part II. Petroleum price changes had most directeffect on the demand for automobiles although the indirect repercussionsthroughout the economy must have also been quite significant. The effectof relative price and output changes in the agricultural sector on incomedistribution is likely to have been different between different income brack-ets. Since consumers in higher income brackets spend a much smaller propor-tion of their income on food compared to low income consumers, and sincelarge farmers market a higher proportion of their produce, a sharp rise infood prices following a poor crop -- such as happened during 1972-74 -- willtend to reduce real incomes of consumers and small producers, while thelarge producers are likely to end up with higher real incomes -- given theinelastic market demand for food. Low income consumers tend to become worseoff because they have no compensating income increase, and the small farmerslose because the benefit they get from price rises is less than their loss dueto a reduction in their marketable surplus. A priori, a decrease in prices,

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and larger production such as happened this year, could thus be expected toreverse the direction of income changes -- in favor of consumers and smallfarmers and against bigger producers. 1/

1.15 Thirdly, the period of inflation has clearly demonstrated that asystem of price controls -- difficult to administer under any circumstances --is put under particular stress when prices get out of line and. evolve atdifferent rates. Whereas industrial activity seems to have been able, byand large, to benefit from the inflationary trend, this was obviously notthe case for industrial sectors which were producing items regulated byprice controls. These sectors, on the contrary, found themselves squeezedbetween increasing costs and fixed output prices. And, because of the lack ofbuoyancy in the economy as a whole, their sharp fall in profit margins couldnot be mitigated by an expansion in the volume of sales. This situation hasled the authorities to reappraise the levels of controlled prices and, insome instances, of the raison d'etre of the controls themselves. Conse-quently some items have been de-controlled altogether, others have seenprice control removed but replaced by a production or distribution control.In many cases, however, such as in the electricity and aluminum sectors,the adjustment process has taken time.

1.16 Finally, the price which probably underwent the largest rela-tive variation in the last three years is the real cost of borrowing capital.This cost which fluctuated between 4.5% and zero in the period 1968/69 to1972/73, suddenly dropped to a negative level of about 7% in 1973/74 and 20%in 1974/75. 2/ In the course of last year, however, as inflation declinedand because long-term lending rates were revised slightly upwards, the finan-cial cost of capital has again turned positive. Partly because of policydecisions, partly as a result of fortuitous circumstances, the real financialcost of long-term borrowing is now more in line with the real cost of capitalthan it has been in a very long time.

1/ See John W. Mellor, Agricultural Price Policy and Income Distribution inLow Income Nations, A World Bank Staff Working Paper (No. 214, September

1975) based on Indian household income and expenditure data. Two furtherimplications of this analysis are: (a) good crop years are not neces-sarily the years of higher taxable capacity in agriculture; (b) effortsto stabilize food prices will be stabilizing for the real incomes ofconsumers and large producers, but destabilizing for the real incomesof small farmers.

2/ For the purpose of this exercise the unweighted average of the long-termlending rates on rupee loans from the major financial institutions (Sta-tistical Appendix Table 6.6), minus 1% for prompt repayment, has been

taken as a benchmark of the nominal cost of capital. The non-food whole-sale price index (see Statistical Appendix Table 6.12) has been used asthe deflator.

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3. Savings and Investment - Past Trends and Outlook

1.17 Data on the level and composition of domestic savings and investmentare notoriously weak and are released only with a considerable time-lag;nevertheless, from CSO figures and from recent indications published by theReserve Bank, it appears that the domestic savings rate have declined between1972/73 and 1974/75.

TABLE 1.4/a

Savings and Investment Ratios

Savings InvestmentDomestic Foreign

1970/71 13.1 1.2 14.31971/72 12.8 1.3 14.11972/73 14.8 0.7 15.51973/74 13.6 0.9 14.51974/75 12.2 2.0 /b 14.2

/a Net savings and investment over net national product, both at currentprices.

/b For the year 1974/75, foreign savings have been estimated independentlyby IBRD in order to bring them in line with balance of payments data.Domestic savings have been adjusted accordingly.

Source: Central Statistical Organization.

According to the RBI data this decline in the domestic savings ratio is en-tirely due to a sharp fall in the rate of household savings 1/ compensated,though not fully, by an increase in the savings rate of both private corporateand public sectors. As far as private corporate savings are concerned the

1/ These figures should be interpreted with some caution. RBI estimates arebased on the changes in the household sector's financial assets and lia-bilities, assuming that "the proportion of savings in the form of physical

assets to national income has remained constant.tt Report on Currencyand Finance 1974/75, Vol. I, p. 5. It appears quite evident from thedata, however, that household savings in the form of financial assetsnot only did not keep pace with the increase in nominal income, but mayin fact have fallen in absolute amount. This could be explained by adrop in the household sector's demand for real monetary balances (risein velocity) -- a phenomenon quite likely to occur under inflationarycircumstances.

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rapid price increases in 1973/74 and 194/75 seem to have boosted theprofits of a number of industrial enterprises, especially those whoseprice!s were not controlled. Corporate retained earnings also increasedin 1974/75 because of the restrictions on profit distribution.

1.18 On the other hand the increase in the total public sector savingsratio that took place in 1974/75 was a most remarkable achievement. Asindicated in the table below, public sector savings increased between 1973/74and 1.974/75 from 2.7% to 3.5% of national income. While Central Governmentand public sector enterprise savings have improved steadily over the lastthree years, State Government savings increased only in 1974/75 after ayear of considerable deterioration. The good performance in 1974/75 was theresult of a multiplicity of measures, including the introduction of a largenumber of new or enhanced taxes, the raising of water and electricity rates,and a curb on the expansion of current expenditures. Public enterpriseprofits were boosted by the same factors which boosted private corporateprofits, and by an improvement in management and capacity utilization.

TABLE 1.5

Public Sector Savings(net savings as percent of net national product)

1970/71 1971/72 1972/73 1973/74 1974/75

Central Government 0.9 0.5 0.8 0.9 1.1

State Governments and 1.2 1.3 1.7 1.4 1.9and Local Authorities

Public Sector Enterprises 0.1 0.2 0.3 0.4 0.5

2.2 2.0 2.8 2.7 3.5

/a The data for 1970/71 and 1971/72 are not exactly comparable with thosefor succeeding years - particularly with regard to state governmentsavings - due to change in methodoly.

Source: RBI, Report on Currency and Finance 1973/74 and 1974/75.

1.19 Finally, the net foreign balance, which was largely financed byincreased aid rose from 0.7% of net national product in 1972/73 to 2.0% in1974/75, and was probably about as high in 1975/76.

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1.20 The increase in public sector savings and the inflow of foreignsavings were enough to offset the reduction in household financial savingsavailable for transfer to the public sector. Because of the desire to limitdeficit financing public investment as measured by plan spending also had tobe curtailed. Expressed in 1960/61 prices, plan spending in 1974/75 was 6%below the level reached two years earlier. In 1975/76, however, real planspending went up significantly over the level of the previous year and thiswould mean that, for the first time, real plan spending would have exceededthe previous peak level of 1972/73.

1.21 In the context of reduced real plan spending in the years 1973/74and 1974/75 the Government concentrated on maintaining investments in sectorswhich were either perceived as bottlenecks or where import substitutionbecame more urgent cause of the sharp increase in international prices. Thishas meant that the share of public plan resources being channeled into sectorssuch as power and fertilizer has gone up. The share of power, for example,rose to 18% in 1974/75 and 1975/76 compared to 16% in 1973/74. Investment infertilizer was stepped up from Rs. 2.0 billion in 1974/75 to Rs. 3.0 billionlast year; while the allocation for oil exploration was raised from Rs 1.1billion to Rs 2.0 billion. The result of these priorities has been that theshare of social sectors, such as health, family planning, education and watersupply, was reduced from about 12.5% in 1972/73 to 8% in both 1974/75 and1975/76. In real terms, outlay on those sectors has been 35 or 40% below thelevel reached in 1972/73.

TABLE 1.6

Sectoral Allocation of Plan Spending(in percentages)

1971/72 1972/73 1973/74 1974/75/b 1975/76(actuals)

Agriculture & Irrigation 21.9 23.4 22.2 19.8 19.4Industry & Minerals 19.2 17.0 17.7 23,9 27.5Power 19.7 17.7 16.5 18.3 18.4Transport & Communications 20.6 20.1 18.8 21.2 17.4Main Social Sectors /a 11.9 13.1 11.9 8.4 8.1Other 6.7 8.7 12.9 8.4 9.2

Total 100.0 100.0 100.0 100.0 100.0

/a I.e. health, family planning, education and water supply.

/b Revised budget estimate.

/c Budget estimate.

Source: Statistical Appendix Table 5.10.

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1.22 The main question now before the policy-makers is how to con-solidate the improvement in the economic environment and get the econo-my on a more satisfactory long-term development path. With regard to thefirst question, there is an urgent need to step up public investment demand.Together with exports, increased investment and in consequence the relatedcapital goods demand seems to be the major instrument through which, in theshort-run, capacity utilization in industry could be improved and economicgrowth boosted. In this respect it is encouraging to see that the 1976/77budget envisages an increase of about 16% in plan expenditures over the re-vised estimates for 1975/76. This would mean that for the second year in arow real plan expenditures would have increased at a significant rate. Thebudget has also introduced fiscal measures to encourage the investments inthe corporate sector and in housing 1/.

1.23 In the longer-run, growth in the economy will depend crucially onan increase in domestic resources available for investment. Whether it willbe possible or not to raise the savings rate substantially will mainly dependon two factors. First, any increase in overall savings will be contingent onthe continued mobilization of additional household savings in the form offinancial assets. The latter trend has been spurred in the past by theincreased monetization of the economy, as well as by the rapid expansion ofcommercial bank branches in the rural areas. It may be further stimulated inthe future by the recent increase in real interest rates. This also seems tobe one of the politically feasible ways of transferring resources from largeagricultural incomes to the industrial sector. Secondly, and probably moreimportantly, an increase in overall savings will continue to depend on theperformance of public savings. The basic determinants of both will be thegrowth in economic activity.

1.24 The Indian tax system is not very responsive to price increasesand, despite the measures of additional taxation introduced by the Centreand the States, the ratio of tax revenue to national income had declinedfrom 16.3% in 1972/73 to 15.0% in 1974/75. That it was possible under thosecircumstances to improve the performance of public savings was largely dueto the fact that the paucity of public resources led to a policy of re-straint with regard to current expenditures. The onset of a period of rela-tively more plentiful public resources offers a good opportunity to in-crease budgetary savings still further.

1/ Under a modified version of the development rebate abolished some yearsago, an "investment allowance" will be allowed to priority industries atthe rate of 25% of the cost of acquisition of new machinery and plant.The 5% surcharge on corporate income tax has been changed to a five-year deposit at the IDBI; and the rates on capital gains tax havebeen lowered. Tax allowances have also been introduced for specifiedtypes of dwellings and for the investments of non-resident Indians.

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1.25 Even so, a sizable increase in public sector savings will onlybe possible if public sector enterprises can improve their savings per-formance as well. In the last three years some improvement on that scorehas already been registered. Gross earnings 1/ of the non-financial enter-prises owned by the Central Government increased from Rs 1.50 billion in1970/71 to an estimated Rs. 4.65 billion in 1974/75, and a possible Rs. 8.00billion in 1975/76. 2/ Nevertheless, this increase in gross earnings innominal terms is partly the result of an increase in the number of runningenterprises (from 88 in 1970/71 to 163 in 1974/75), and partly the reflectionof price inflation. Deflated by the wholesale price index of non-foodstuffsthese earnings have increased from Rs. 1.5 billion to Rs. 3.0 billion only.And expressed as a percentage of capital employed, even without adjustmentfor replacement value of the assets, the increase in gross earnings is notall that spectacular: from 4.0% in 1970/71 the ratio has gone up to hardly5.5% in 1974/75. There is thus still plenty of room for further improve-ment in that respect, especially through increases in capacity utilization.

4. Balance of Payments

1.26 The estimated balance of payments position for 1975/76 is sum-marized in Table 2.7 (page 76). Export volume growth is estimated to havebeen about 8% during 1975/76, but more than half of this gain was offset bydecline in the dollar price for India's exports, leaving export earnings atabout US$4,300 million, 4% above the 1974/75 level. The major contributionsto the real growth have come from sugar, for which most of the increase inexports was facilitated by a diversion from the domestic market, and from ironand steel, for which increased production and stagnant domestic demand produceda sizable exportable surplus during 1975/76. Other significant contributionsto the overall real growth in exports came from garments, leather and leathergoods, marine products, and handicrafts. 3/ Among the traditional agricultural

1/ I.e. profits before tax and interest on long-term loans.

2/ See Dr. Raj Nigam, "Public Sector Performance Pre-View for 1975/76",Lok Udyog, December 1975.

3/ An important factor in the increase of recorded exports during both1974/75 an 1975/76 has been the legalization of silver exports inFebruary/March 1974. From a total ban in 1972/73, and a negligiblelevel of exports in 1973/74, silver exports earned US$100 million in1974/75 and are expected to bring US$115 million in 1975/76. Becausethese exports are made possible only by reducing silver stocks withinIndia, the level of silver exports cannot be sustained indefinitely.

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products the export performance of jute manufactures, tea, and tobacco havebeen creditable given the difficult world market conditions. Exports of jutemanufactures, for instance, suffered from a stagnant world market in the firsthalf of the year combined with severe competitive pressures generated by theBangladesh devaluation. Cashew kernel exports fell drastically during 1975/76due to the lack of progress in increasing the domestic production of rawcashew nuts to replace the dwindling supplies from East African producers. Ingeneral, the major manufactured exports suffered from adverse world marketconditions. Exports of cotton piece goods fell due to inadequate demand, andexporlts of engineering goods grew less rapidly than in recent years, due inpart to India's position as a supplier of last resort.

1.27 The value of imports during 1975/76 is estimated to have been aboutUS$5,920 million, which is only 3% higher than during 1974/75. Because ofstock rebuilding, foodgrain imports totalled over 7 million tons, as com-pared to about 6 million tons in 1974/75. The value of petroleum importswas approximately the same as in 1974/75 with the price increase during theyear being offset by a reduction in volume. The volume of finished fertil-izer imports rose about 7% during 1975/76 to 1.6 million tons. Many of thesedeliveries were against contracts negotiated during 1974 when prices reachedvery high levels. Therefore, although some of the contracts were subsequentlyrenegotiated, the average price of fertilizer imports during 1975/76 wassubstantially higher than in 1974/75, and the total value of fertilizer andfertilizer raw material imports. rose over 30% to an estimated US$950 million.Because of improved domestic production, the high level of stocks on hand atthe beginning of the year, and a restrained level of demand within India,imports of steel and non-ferrous metals fell substantially during 1975/76.This, together with lower world prices, reduced the value of "canalized"steel and non-ferrous metal imports from US$630 million in 1974/75 to anestimated US$210 million in 1975/76. 1/ On the basis of data available forthe first eight months of the year, the value of "other imports" is roughlyestimated at about US$2,100 million during 1975/76, 10% higher than in1974/,75.

1.28 As a result of these trends in exports and imports, the estimatedtrade deficit is essentially unchanged from last year at US$1,620 million.Given the US$785 million of debt service payments, plus US$35 million ofservice charges to the IMF and the repurchase of the US$75 million drawingfrom the Compensatory Facility, the total gross financing requirement wasabout US$2.5 billion. To help meet this requirement, aid disbursements rose25% to US$2,210 million. Of this, the Consortium contributed US$1,560 million,

IAJ&% higher than in 1974/75. This was made possible by a large rise in dis-bursemlents from the aid pipeline, especially by the Bank Group, following the

1/ Imports of steel and non-ferrous metals channeled through Hindustan SteelLtd, the Steel Authority of India (SAIL), and Minerals and Metals TradingCorporation (MMTC). Direct imports by actual users are included in the"other imports" category.

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sizable increase in commitments during 1974/75 1/. Disbursements from OPECcountries more than doubled to US$475 million, including oil credits fromIran, Iraq, and the United Arab Emirates, and additional assistance from Iranfor the Kudremukh Iran Ore Project and general economic development. Incontrast, gross disbursements from Eastern Europe fell sharply from the higherlevels of the previous two years (during which time the USSR wheat loan wasdisbursed) and resulted in a negative net transfer during the year.

1.29 The remainder of the financing requirement was more than offset bya US$240 million drawing from the IMF Oil Facility, and a large inflow ofprivate remittances from abroad. The reasons for the large increase inremittances are still uncertain. One possible explanation, is that they arein response to the clamp-down on black market operations, the improved in-centives to attract remittances from Indians abroad and the improved value ofthe rupee in free markets. Increasing remittances from service exports toOPEC countries may also be an important component. There is no preciseknowledge of the actual level of these inflows. However, given that the endof fiscal year level of foreign exchange reserves is expected to be more thanUS$400 million higher than last year, the net inflow of miscellaneous capitaland invisibles (which includes private remittances) would have been aroundUS$500 million, nearly US$450 million higher than in 1974/75.

1.30 As can be seen readily from this brief description of the 1975176balance of payments situation some of the problems of the previous two yearsremained. The terms of trade, which had deteriorated significantly over theprevious two years, did not improve and most probably moved even furtheragainst India. Higher foodgrain imports were still required, despite therecord domestic crop, to return stocks to an adequate level. While the realincrease in exports was significant, it was based on a few items (such assugar) for which there is little prospect for sustained growth in the nearfuture. On the other hand, there have been a number of encouraging develop-ments which suggest the possibility of some easing of the foreign exchangeconstraint which has dominated balance of payments considerations over thepast three years. Firstly, the build-up of foodgrain stocks during the yearwill provide a buffer against the impact of future domestic crop failures onthe balance of payments. Secondly, the value of petroleum imports was stabil-ized despite price increases during the year, and with increased domesticsteel production (and the generally stagnant level of economic activity in theindustrial sector) steel imports were substantially reduced. Finally, althoughthe trade deficit remained at about the same level as in 1974/75, India wasable to add over $400 million to foreign exchange reserves due to increasedaid disbursements and inflows of private remittances from abroad.

1/ In the case of the Bank Group, commitments during 1974/75 were unusu-ally high due to a change in the timing of the Industrial Imports Credit.As a result, disbursements out of new commitments by the Bank Groupfell by over US$120 million during 1975/76.

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B. SECTORAL DEVELOPMENTS

1. Agriculture

1.31 Foodgrains. The South-West monsoon of 1975 provided the sort ofhighly favorable rainfall pattern for crop production with which India isblessed only about once in five years. The last comparable year was 1970.The monsoon arrived on time, was not interrupted by those prolonged breakswhich in a normal year do so much damage to crop yields; and it withdrew late,leaving behind exceptionally good sowing conditions for winter crops. Largelyas a result of this the country is expected to harvest a record crop in thecurrent agricultural year (July 1975 to June 1976) of around 114 million tons.This will be an increase of 13 million tons over the official 1974/75 estimateof 101 million tons and will exceed the previous record crop of 1970/71 bysome 5-6 million tons.

TABLE 1.7

Foodgrain Production(in million tons)

Kharif Rabi Total

1970/71 68.9 39.5 108.41971/72 63.0 42.2 105.21972/73 58.6 38.4 97.01973/74 67.9 36.8 104.71974/75 60.3 40.8 101.11975/76 (IBRD estimate) 70-71 43-44 113-115

Source: Office of the Economic and Statistical Adviser, Ministryof Agriculture and Irrigation.

1.32 Compared with 1974/75 the main increase (IQ-11 million tons) hascome from a better kharif crop, indicating clearly the domninant influenceof weather. However, compared with the previous record year 1970/71 thekharif crop is only 1-2 million tons better while the rabi crop is up byabout 4 million tons indicating that the spread of irrigation, the greater useof certified seeds and the increased consumption of fertilizer over this wholeperiod are also contributing to the growth of output. But this contributionhas been at a slower pace than in the late sixties and early seventies whenthe new wheat varieties spread so rapidly in the irrigated wheat areas. Therecan be little doubt that production would have been higher in the present yearbut for the fall in the rate of fertilizer consumption. The increase of about

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12% in foodgrain production has been accompanied by an increase in actualfoodgrain marketings of about 20-25. 1/ This has had a marked deflationaryeffect on the level of foodgrain prices, which had risen rapidly in deficitareas since 1972.

1.33 The improvement in foodgrain production and the fall in foodgrainprices have both greatly eased the Government's problems in maintainingan adequate supply of foodgrains to the public distribution system i.e. fairprice shops selling at controlled prices. Free market wheat prices are nowmuch closer to the controlled prices, and the prices of coarse grains havefallen below the controlled rate for wheat. This has caused a sharp fall inthe level of offtake (especially for wheat), because the low income consumersturn to the cheaper coarse grains while the middle income consumers prefer thebetter quality free market wheat if the price differential is not too great.Secondly, the internal procurement system functions better since in many areasthe procurement price is acting as a support price, particularly for rice, andGovernment purchasing agencies are buying up a greater part of the marketedsurplus than in previous years. The combination of falling offtake, risingprocurement and imports has led to a rapid build-up of stocks. This rise iscontinuing and it seems probable that by the end of June 1976 stocks willexceed 11 million tons, a record figure and one that leaves the Government ina more comfortable position to face the 1976 monsoon.

1.34 In order to be able to maintain this comfortable position, however,the Government has to have adequate storage capacity. Without adequatestorage the Government cannot procure all that farmers have to offer, andsustain the credibility of the support price system. Investment in increasedstorage capacity will be necessary if the support system is to remain effectivewhile production expands. The Government's policy of maintaining a 5 millionton foodgrain buffer stock, has recently been revised to a 7 million tonbuffer stock. Since about 4 million tons of operational stocks are needed,required storage capacity is 11 million tons. The previous record peakstorage in 1971 was almost 9 million tons, which was accommodated in approxi-mately 5 million tons of Government-owned storage and 4 million tons of hiredstorage. The subsequent rundown of stocks resulted both in a slowdown in theconstruction of new storage facilities and a handing back of hired storage.Today, Central and State Governments together own only about 7 million tons ofstorage capacity and are unlikely to be able to hire more than another 2million tons. The Central Government has thus embarked on a major program ofshort-term "cover and plinth" storage to cater to the coming peak and hopes toconstruct 1 million tons of such storage by the end of the wheat marketingseason. Even with this, however, some temporary embarrassment of excessstocks may result in mid-1976. A longer-term program of additional storageis also being undertaken. Thus far, the Government seems to have purchasedall available supplies, except in some isolated pockets where the purchasingarrangements were weak because the area did not normally produce a marketablesurplus.

1/ The marketed surplus in an average year is about 30% of total productionbut in good years the proportion of the increase which is marketed ismuch higher. On the basis of market arrivals between October throughDecember the estimated increase is 56% in 1975 over 1974.

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1.35 Commercial Crops. The good growing conditions extended to mostof the important commercial crops, in particular sugarcane, oilseeds andcotton, the production of which are likely to be at record levels. Teaproduction may approach the record 1974/75 level. Only two important com-mercial crops seem to have done badly in 1975/76, jute and tobacco, productionof which fell for the second consecutive year.

1.36 Since sugarcane is grown on land also suitable for other crops,its production is rather sensitive to relative price levels of competingcrops as well as to weather conditions. This, together with market imper-fections arising from differentiated controls on the various end-productsof sugarcane (gur, khandsari and sugar) led to a cyclical production patternin the past; but in 1974-76 this pattern was broken by the sudden -- andpossibly temporary -- competitiveness of Indian sugar on world markets.

TABLE 1.8

Production of Commercial Crops

Sugarcane Oilseeds /b Cotton Jute & Mesta Tea Tobacco(m. tons) /a (m. tons) (m. bales) /c (m. bales) /c (m. tons) (m. tons)

1970/71 13.0 9.26 4.50 6.2 0.42 0.361971/72 11.6 8.75 6.56 6.8 0.44 0.421972/73 12.8 6.71 5.42 6.1 0.46 0.371973/74 14.4 8.85 5.96 7.7 0.47 0.441974/75 14.3 8.36 6.69 5.8 0.49 0.381975/76 14.8 10.08 6.8-7.0 5.0-5.3 0.48 0.40

/a Expressed in terms of gur.

/b Groundnut, rapeseed & mustard, linseed, castorseed & sesame.

Ic Expressed in bales of 180 kg.

Source: 1970-1975: Estimates of Area and Production of Principal Cropsin India, 1974/75, GOI.

1975/1976: IBRD estimates.

1.37 Oilseeds have always tended to be the most susceptible of all thecommercial crops to variations in the monsoon, largely because of the highproportion of rainfed groundnuts in the drought-prone parts of Gujarat. Thelast two or three years have continued this pattern, with wide fluctuations

- 1¼ -

in the groundnut crop, but with a slight tendency towards more stability asrabi groundnut production in South India and of rapeseed and mustard in NorthIndia increases. With the substantial increase in the availability of edibleoils that a crop of the 1975/76 size implies there has been a crash in theprice of groundnut oil, which fell over 50% between the peak of September 1974amd December 1975.

1.38 The cotton crop is estimated to be about 6.8-7.0 million bales(of 180 kg) in 1975/76, slightly higher than the previous record of 6.7million bales in 1974/75. The increase cannot be attributed in the main toweather. The last three years have seen a striking increase in the productionof long and extra-long staple cottons entirely as a result of the spread of arange of new high-yielding varieties and hybrids, so much so that India hasalready changed from an importer of such staple lengths to a potential exporter.On the other hand production of medium staple cottons, which used to accountfor the greater proportion of output, has remained static. A realization thatthese staple lengths have been neglected in research has led to a reorientationof research priorities, but it may be some years before a similar breakthroughin medium staple cotton.

2. Industry and Minina

1.39 Shortages of energy and raw materials, as well as transport bottle-necks and industrial unrest, had dominated the industrial scene in 1973/74and 1974/75, and were held mainly responsible for the slow growth of about1% and 2.5% in these two years. In the current year, the constraints havebeen greatly mitigated, and an upsurge in industrial output might have beenexpected. Provisional estimates of production and off-take of industrialgoods indicate some definite bright spots, but the industrial sector has stillto regain the vitality it lost in the mid-1960s. While commendable, a 4-5%expected growth rate in industrial production in 1975/76, coming on the heelsof an extended period of semi-stagnation, is not sufficient to herald a defi-nite break with recent trends.

1.40 In relative terms, 1975/76 can be described as a year of plenty asregards the availability of inputs and services to the industrial sector. Theimproved performance of the power and transport sectors have had a direct,beneficial impact on industries. Compared to the previous year, there was asignificant reduction in the number of States where power cuts were in effectand in the severity of these cuts. Similarly, for the first time in years,the railways have actually had surplus freight cars after meeting all theoutstanding demand. The supply position of industrial raw materials --outputs of metals, basic industries and agricultural raw materials -- also wasbetter, leading in some cases to cuts in imports and/or intensified exportdrives, or making distribution controls practically redundant. Anotherfavorable element was the steep fall in industrial disputes and in man-dayslost through strikes.

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TABLE 1.9

Selected Metals - Production and Imports

1972 1973 1974 1975Prod. Imp. Prod. Imp. Prod. Imp. Prod. Imp.

Steel Million tons /a 4.6 1.1 4.5 0.9 5.0 1.1 6.2 /b n.a. /c

Aluminum Th. tons 179.1 - 154.3 - 128.9 - 150.3 n.a. /d

Copper Th. tons 9.9 43.4 12.0 46.7 11.8 38.1 21.9 16.0

Lead Th. tons 2.7 20.2 2.7 32.5 4.0 36.3 4.8 19.0

Zinc Th. tons 25.2 69.7 20.7 58.4 21.1 66.0 27.1 48.0

/a On a fiscal year basis.

lb Estimate.

Ic The target for canalized steel for the entire fiscal year 1975/76 is233,000 tons. However actual import data published by the Departmentof Commercial Intelligence and Statistics show that in the first sixmonths (April-September 1975) total steel imports, both canalized andother, amounted to approx. 306,000 tons.

/d Approximately 3.6 thousand tons were imported in the period January-September 1975.

Source: CSO, Monthly Abstract of Statistics and Information supplied bythe Government.

1.41 After years of stagnation the production of both extracted ores andrefined metals has shown substantial improvement during 1975. The officialindex for mineral ore production for the January-September period of 1975increased by 11.5% over the previous year. This was the result of increasedmining operations in coal and iron ore, impressive increases in the productionof non-ferrous ores and concentrates -- copper, lead and zinc -- and risingoutputs of crude petroleum and natural gas products. Steel production hasincreased after almost a decade of stagnation, and aluminum after two suc-cessive years of declining production. Impressive output increases were alsoachieved in the cement industry. Although, by and large, basic industries haveperformed significantly better in 1975/76 than in the preceding two years,this should not obscure the fact that production levels in some instances arenot much higher than those reached in previous peak production years. Infact, aluminum output is about 4% short of the previous record of 182,000 tonsin 1971/72, cement production is only about 6.5% higher than in 1972/73, and

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steel production only about 20% higher than it had been 9 years ago. More-over, with the addition of new capacity, capacity utilization remains atgenerally unsatisfactory levels.

1.42 With regard to agro-based industries, the supply of major agricul-tural raw materials has also been relatively ample, except in the case ofjute, for which production was below 1974/75 levels. Contrary to price trendsof industrial raw materials, the prices of agricultural raw materials havetended to fall, sometimes substantially, as a result of the increased availa-bility. Only the sugar and the vanaspati (hydrogenated oil) industry, how-ever, is showing a significant increase in output over 1974/75, and in thecase of vanaspati this is explained by the depressed production levels of1974/75, rather than by a genuine increase in long-term production trends.

1.43 Despite this convergence of positive factors on the input side,during the first half of the fiscal year a number of important industriesoutside those producing basic materials did not respond with any appreciableincrease in output. On the contrary, compared to 1974 which was not a highproduction year, sharp output declines occurred in a number of industriesmanufacturing consumer durables or capital goods. Output of cars, jeeps,radio receivers, sewing machines and cement machinery fell more than 20%, andthose of bicycles and electric motors by more than 10%. Production of tires,paper, electric lamps and electric fans were also below last year's levels.Preliminary data indicates that prQduction was picking up in some of theseindustries in the third quarter of the year. It is interesting to note thata number of industries which showed high growth rates, such as machine tools,stationary diesel engines, and finished steel were also the industries whichdid well in exports.

1.44 For some of the depressed industries, however, stagnant demLndwas not a new phenomenon. The crisis in the automotive industry had itsorigin in price adjustments that followed the quadrupling of petroleum pricesin 1973. Steep increases in petroleum prices plus the heavy excises whichwere imposed on automobiles, accessories and spare parts led to a sharpdecline in the automotive industry.

1.45 The crisis in the textile industry is much more deep-rooted andagain related, in addition to the general demand weakness, to the conditionsof demand and of production peculiar to this industry. The volume ofdomestic textile consumption last year was lower than in 1968, per capitaconsumption declining over this period from 16.5 square meters to 14.5 squaremeters. The combined increase in consumption of the richer segments of thepopulation and exports has in quantitative terms merely offset the declinein demand from the poorer segments not leaving any real stimulus to growth.A recent World Bank Report 1/ has drawn attention to the impeding effects ofpoor quality cotton and the lack of specialization on the efficiency of thisindustry. It also highlights the problems that arise from the efforts ofthe Government to protect the handloom sector, which employs roughly

1/ Survey of the Textile Machinery Industry (with a note on the Indian Tex-tile Industry).

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7 million people, against the expansion of the modern sector. The effortsof the Government to reconcile social objectives with productivity con-siderat:ions, including the nationalization of 103 "sick" mills last year,continued this year as well, in the form of modifications introduced to thecontrolled cloth scheme. There were some encouraging signs on the exportfront, but the industry as a whole as well as the textile machinery industry-- which is closely tied to the domestic markets -- continued to be depressed.

1.46 The demand stagnation in consumer goods industries has brought intosharpe: focus some of the structural problems facing these industries. Theslump in consumer durables has exposed the narrow base and brittleness of amarket constituted chiefly by the high income groups in the country, whichrepresents a small minority. Not only are excise duties on "luxury items"high, but production costs are also high. Creation of too many firms, basedon exaggerated demand projections, partly accounts for these high costs.Under the circumstances, the Indian consumer must be able to afford a pricethat is sometimes several-fold the international price for a product that maybe inferior in quality. Obviously this limits the market, particularly whentax evasion and conspicuous consumption are being checked. As for exports ofconsumer durables, the small scale of operation, high production costs anduneven quality militate against their competitiveness in international mar-kets. With regard to the textile industry, still the most important consumerindustry, the above-mentioned Bank report has drawn attention to the fact thatit again serves the upper spectrum of the consumer market. Coarse and lowermedium varieties of cloth account for only about 30% of total cloth output.

1.47 This naturally calls into question the future expansion of the"luxury" consumer goods industries in a society where hopefully and as re-flected in Government pronouncements the benefits of growth will not beconcentrated in high income groups. Some steps have already been taken inthat direction, but much more conscious effort would be required to bringabout a reorientation of consumer goods industries towards greater respons-iveness to the essential needs of the masses and to exports.

1.48 Capital goods industries have been the most affected by the eco-nomic slowdown since the mid-1960s, and for them a lasting recovery wouldrequire much more careful and realistic planning than in the past. Froma narrow base, they grew extremely rapidly up until 1965, when their out-put was nearly 150% higher than in 1960; but thereafter production fell sharp-ly, then recovered gradually and it is now hovering at only about 10% abovethe 1965 peak level. In the meantime, capacity continued to expand, andthis had led to the lowest capacity utilization ratio among all the indus-try groups. This is strikingly illustrated by a recent Reserve Bank ofIndia study, 1/ which shows that capacity utilization in capital goods in-dustries is about 20 percentage points lower than for basic, intermediateand consumer goods industries. The poor performance of the capital goods

1/ See, Trends in the Index of Potential Production of Manufacturing Indus-tries During 1973, RBI Bulletin, September 1975.

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industry is closely related to the Government's inability to maintain asteady growth in plan outlays, particularly in the core industrial and servicesectors, after 1965/66. The step-up in development expenditures initiatedin 1975/76 and pursued in 1976/77 -- especially in power, mining, industry,transport and telecommunications -- and increased emphasis on exports willcertainly help this industry to recover from its present stagnation.

3. Transport

1.49 After years of staff unrest, declining operating efficiency andfrustrated hopes of achieving traffic targets, 1975/76 was to be "the yearof promise, stabilization and steady growth all round" 1/ for the railways.The Minister of Railways' forecast appears to have come true, with freighttraffic set to exceed the target of 210 million tons, up by about 9% over the1974/75 level of 196.6 million tons. Although this new record level is only3% higher than the previous peak of 207.9 million tons reached six yearsearlier, its achievement signals that the railways are on the path to re-covery. With over 70% of the railways traffic in bulk industrial productsand raw materials, the railways' performance is intimately linked to that ofindustry, particularly of basic industries. Had it not been for the slumpin iron ore markets abroad, the railways might have exceeded their target.

1.50 The railways have been able to meet the demand for freight carspromptly. For the first time, the railways are faced with a problem ofsurplus wagons, as between 10,000 and 20,000 wagons have reportedly beenidle during the last three months of 1975. This surplus capacity in roll-ing stock reflects substantial improvements in operating efficiency 2/ largelythanks to the improved labor discipline.

1.51 The railways' financial results for 1975/76 reflect the highertraffic levels axnd improved staff productivity. Although the budgeted Rs.230 million surplus revenue over operating expenditures and dividends will notmaterialize, this is largely because the budget had not made any provision forthe payment of dearness allowances that had already fallen due at the time ofthe budget. The deficit, however, is likely to be about Rs. 630 million,compared to Rs. 1,138 million in 1974/75. This is commendable since the budgetonly provided for small upward revisions in tariff and the improvement isthus due to increased productivity. Thanks to improved productivity also,investment needs of the railways may be smaller than had been forecast in theDraft Fifth Plan, as the railways are now in a position to reap the benefitsof excess capacity built up during the Fourth Plan period, when freighttraffic was semi-stagnant. Moreover, the railways' foreign exchange needs mayalso be less than forecast.

1/ Speech of Shri Kamalapati Tripathi, introducing the Railway Budgetfor 1975/76 on February 20, 1975.

2/ An ordinance, promulgated in September 1975, enpowering the railwayauthorities to dispose of uncleared goods if the consignees fail tolift the stock within a week of arrival also contributed to the avail-ability of freight cars. Average turn-around time was cut from 15 daysto about 13 days in 1975/76.

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1.52 As in the case of the railways, the major Indian ports have bene-fited from the lull in labor unrest, but they are unlikely to record a sub-stantial traffic increase over 1974/75, as iron ore exports are lagging be-hind targets. Greater operating efficiency has come as a much needed boonto Indian exporters, who have also found it easier to book shipping space,as a result of both the re-opening of the Suez Canal and world-wide reces-sionary trends. This applies particularly to overseas trade with majormarkets in the UK, USA and Japan. Infrequent services and long detentiontimes are still problems with regard to destinations in Africa, Latin Ameri-ca, and the Persian Gulf countries, and high port charges and ocean freightrates constitute serious obstacles to the expansion of exports. Freightrates from Indian ports are often substantially higher than comparable ratesout of European or US ports, even for shorter distances. While this maybe at least partly justified by differences in traffic volumes and direc-tional imbalances in traffic flows, the feeling that international shippingconferences have been charging excessive rates, had led the two major Indianshipping lines to resign from the membership in the India-Pakistan-US(East Coast) Shipping Conference. This will allow the two companies toact as nonconference lines with freedom to quote independent rates.

1.53 With regard to bulk cargo traffic, particularly iron ore and coal,a number of important port development schemes that were scheduled for com-pletion in 1974/75, have been further delayed, but should become operationalin 1976/77. These include the Haldia Dock, the Vishakhapatnam Outer Harborand the Madras Iron Ore Berth Projects. Work on the Mormugao Port Develop-ment Program is also proceeding, and together with the other projects, willlead to a significant expansion in port capacity and provide the infra-structure necessary to achieve the export targets, which are fixed at 35million tons of iron ore and 2 million tons of coal by 1978/79.

1.54 After years of rapid expansion, road transport appears to have gonethrough a difficult year, as indicated by the decline in the off-take oftires, the slackening in demand for new trucks and buses, affd the decline infreight rates charged by road transporters on important routes. No doubtthe improvement in rail services has blunted the competitive edge of roadtransport, particularly at a time of demand recession, when shippers arelikely to become more cost conscious. The cost of road transport continues tobe affected by high excise duties, the relatively small size of vehicles,deficiencies in the road system and other impediments, such as the limitationson interstate transport and numerous octroi and checkposts. Developmentexpenditures on the road system have remained at the 1973/74 level which inreal terms amounts to a gradual cut-back.

4. The Social Sectors

1.55 The cut-back in plan resources in 1973/74 and 1974/75, coupled witha rather drastic shift in investment priorities, has meant that the allocationof funds to the social sectors has been cut back severely both in absoluteand relative terms (see para 1.21). These cuts are likely to affect the

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weaker sections of the population most. With regard to education, for in-stance, the cuts have been implemented by a slowdown in the expansion ofprimary school enrolments and a further set-back to the long-standing policyof universal primary education instead of reducing expenditures on highereducation. According to the Indian Constitution, the goal of providing freeeducation to all children up to the age of 16 ought to have been reached by1960. Yet, provisional statistics for 1974/75 indicate that the enrollmentthe children in the 6 to 11 years age-group was 83% and that of the chil-dren in the 11 to 14 years age-group was 36%, thus pointing to the wide gapbetween target and achievements. But even these figures give an exaggeratedimpression of the achievements, since many of the school-going children falloutside the relevant age-groups.

1.56 Similarly, with regard to health care, the reduction in plan outlaysis making it very difficult to tackle the problem of "extremely inadequate"health services for the population living in rural areas. This problem hadbeen highlighted in the Draft Fifth Five-Year Plan, which further noted that"the endeavor in health planning is to remove this rural-urban imbalance andextend health care facilities to the peripheral areas and backward classes." 1/Under the so-called "Minimum Needs Program" about 100 additional primaryhealth centers and 11,000 sub-centers were to be built during the Fifth Planperiod, so that each community development block had a primary health centerand so that there would be one sub-center for every 10,000 people. Even thisprogram which is but a bare minimum, 2/ has been affected by the budget cuts;the 1975/76 plan allocation for the program (Rs. 173 million) is only about onethird of the annual average allocation in the Draft Fifth Plan.

1.57 In 1975, a notable success was achieved in the fight against small-pox, which is reported to have been eradicated. However, the control pro-grams of other communicable diseases are not making much headway. In fact,the malaria eradication program has suffered repeated set-backs since 1965,with the incidence of positive cases increasing from 100,000 in 1965 to2,500,000 in 1974 as DDT resistant mosquitoes spread, and the program issuffering from lack of funds. Leprosy is still one of the major healthproblems in India, with an estimated 3.1 million cases, of which 25% are ofthe infectious type. Not only are the funds allocated to combat leprosyinsufficient, but the stigma attached to the disease is such that some ofthese funds get diverted to other programs. The incidence of veneral diseaseis on the increase. In a recent workshop on the subject, the Union DeputyMinister for Health and Family Planning noted that every tenth person inIndia was possibly suffering from a venereal disease.

1/ Draft Fifth Five-Year Plan, 1974-79, Volume II, page 232.

2/ Each primary health center is serving a population of roughly 100,000,normally with the help of two doctors, but as of December 1974, 2,182out of 5,2bB primary health centers were functioning with one doctoronly. Each sub-center, with one trained nurse is responsible for apopulation of about 10,000, and should receive a yearly allocation ofdrugs of only about Rs. 2,000 under the minimum needs programs, i.e.about Rs. 0.20 per head.

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1.58 Family planning programs have also suffered from reductions inplan outlays, particularly after 1972/73, when plan expenditures reacheda peak of Rs. 800 million. Subsequently, expenditures dropped to aboutRs. 540 million in 1973/74 and 1974/75; in 1975/76 expenditures are likelyto reach Rs. 750 million, which in real terms is still far below the 1972/73 level. Concomitantly with the decline in expenditures, the performanceunder the family planning program also suffered, particularly with re-spect to male sterilizations, which fell from 2.6 million in 1972/73 to

400,000 in 1973/74. This was due to the discontinuation of mass vasec-tomy camps which had led to abuses in the selection and treatment of ac-ceptors. According to preliminary results for the first six months of 1975/76, there has been an overall improvement in performance over the previoustwo years, but the results are still far short of what would be needed inorder to bring down the birth rate to the target level of 30 per 1,000 popu-lation by 1978/79. According to the Draft Fifth Plan, this would requirethat about 40-42 million couples in the reproductive age-group be protectedagainst conception, compared to about 17 million couples presently protected.Given the stagnation in the number of condom users (about 2.4 million since1971/72), and the current yearly numbers of IUD insertions and steriliza-tions; of about 450,000 and 1.5 million, it is unlikely that the target of40-42 million protected couples can be reached. To accelerate progress,some State Governments and the Centre are reportedly preparing legislationproviding for incentives to family planning acceptors and disincentives tononacceptors, and possibly even introducing an element of compulsion to limitfamily size.

1.59 Parallel to the need for raising the level of expenditures insocial sectors, there is also the important question of improving theefficiency of the programs. Informal and adult education could perhaps bemore cost effective than the present system of formal, single-point entryeducation. Similarly, health and family planning services could be spreadmore widely by training health workers recruited in the rural areas andinvolving the traditional health practitioners and midwives, rather thaninsisting on formal training of doctors, who often stay in the cities, swellthe ranks of educated unemployed, or migrate abroad. Progress in the socialsectors largely depends on a more effective utilization of these resourcesas well as on the allocation of larger budgets.

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PART II - MEDIUM-TERM PROSPECTS

A. FOODGRAINS

1. Trends in Foodgrain Production: Past and Future

2.1 Despite the record foodgrain crop of 1975/76 there is no evidencethat the long-term growth rate of foodgrain production in India is anythingbut unacceptably below national needs. While three or four years ago, whenIndia seemed poised on the verge of self-sufficiency, it appeared as if therehad been an upward shift in the long-term trend, subsequent events tend toindicate that this was a temporary phenomenon helped by a sequence of aboveaverage monsoons. Different assumptions about the level of 1975/76 productiondo not alter the value of the long-term trend significantly. One can argueabout the precise growth rate, which will vary depending upon the sequence ofyears for which it is calculated as well as on the methodology used to cal-culate it, but most methods of calculation indicate that for the past 15 yearsthe growth rate of foodgrain production has been around 2.2-2.3 per year. 1/In Figure 1 the growth of foodgrain production is shown diagrammetically forthe period since 1958/59. This diagram indicates that while there have beenfluctuations (downward as a result of the 1965-67 drought; upwards with theintroduction of the new wheat varieties) the growth rate has adhered closelyto the 2.3% trend line. This Figure also shows how in recent years the maingrowth (averaging 4.1% per annum from 1960/61 onwards) has come during therabi of winter season, with its greater degree of control over environmentalfactors than in the monsoon season with its greatly fluctuating weatherconditions, where the growth rate has been only 1.5% per annum.

2.2 The growth rate of food production over this whole period hasbeen at about the same level as the rate of population increase. Startingfrom a situation of deficit this has meant that, only in good years hasthere been a sufficient margin of production to cater to any per capitagrowth in consumption and even in normal years it has been necessary torely on stocks or imports to cater to any potential growth in demand. Inbad years demand is cut back by rising prices.

2.3 While saying this it is important not to over-emphasize the mag-nitude of the gap. On average over the years foodgrain production in India

1/ Assuming a 1975/76 production of 114 million tons the compound growthrate for total foodgrains (on a tonnage basis) is 2.3% per annum from1958/59. Calculating from 1964/65 it is higher at nearly 3.0%, re-flecting the influence of the 1965-67 drought. Calculated from 1967/68 it is only 1.5%, which is perhaps a truer measure of recent trends.All these values become higher by 0.2-0.4% if one uses index numbersbecause of the unit weights used.

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FIGURE I

FOODGRAINS PRODUCTION TREND & ACTUAL PRODUCTION

HE-rFr1'AL ODGRAINS

8' -i - ,' - _ _ r

KHARIF FOODGRAINS

0

z

50

45

RABI FOODGRAINS

25 B

World B-ok-1 5763

- 28 -

has been adequate to meet 95-97% of national demand, ranging from 90% orperhaps slightly less in years of poor monsoon, to nearly 100% in goodyears. If this gap could be closed and the trend growth rate maintainedthereafter, India's foodgrain problems would be eased considerably. 1/ Interms of the national resource position the gap is significant. The need toimport something like 4-5 million tons per year of foodgrains 2/ is equivalentat present prices, to some 20% of total export earnings. This is as much astotal debt service and a significant proportion in an economy where foreignexchange availability is a critical element in the national growth strategy.

2.4 The Draft Fifth Plan estimated foodgrain production to reach 140million tons by 1978/79, an increase of 26 million tons over the assumedbase year figure. A reassessment of trends in the light of later data in-dicates that the base year figure of 114 million was an overestimate and that104 million tons is a more realistic base. Given the growth rate of about2.3% per annum in the past 15 years, a considerable portion of which came froman increase in the area under cultivation, and in view of the feasible inputprojections, a target increase of 26 million tons, implying an annual rate ofgrowth of 4.6%, does not appear to be realistic. Our estimate is an increaseof about 21 million tons, reaching an output of 125 million tons in 1978/79(3.75% per annum) provided a major effort is made to expand the irrigated areaand to increase the complementary inputs. Of this 21 million tons increase,14 million tons are expected to come from additional irrigation -- givenadequate availability of fertilizers and seeds -- and 4.7 million tons fromadditional use of fertilizers on lands other than the new irrigated areas.The basis for these assumptions is set out later in this section. A further1.8 million tons is assumed to come from the additional area put under rain-fed cultivation 3/ and 0.8 million tons from soil conservation. 4/ Thisprojection is predicated on the assumption that the Indian Government willcontinue to attach high priority to foodgrain production and that majorefforts will be made implement the necessary programs.

2.5 An attempt to indicate what this production level would mean toper capita foodgrain consumption and the need for foodgrain imports up to

I/ This is not meant to imply that those with below subsistence incomeswould have enought to eat, only that effective demand would be metat current prices.

2/ In the years 1968 through 1975 net imports of foodgrains actuallyaveraged around 3.9 million tons. Only in the last two years hasthe average increased to 6 million tons and about half of this hasgone to increasing stocks.

3/ 4.5 million ha of additional rainfed cultivation @ 0.4 tons/ha.

4/ The Draft Fifth Plan assumption.

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1980 is made in the Statistical Appendix Table 7.6. Allowing for populationgrowth and assuming a 6% annual growth in total GNP, and consequently a ris-ing per capita consumption of foodgrains, this table indicates that importswould continue to be needed throughout this period, rising to some 7 milliontons in 1980. Naturally enough, by slightly varying the assumption, eitherby assuming a lower growth of GNP, or some increase in the relative price offoodgrains, one can show a declining trend in the need for imports. This isnot the point; clearly the country could get by with a lower level of im-ports; the significant fact is that even with a 3.75% growth rate in food-grain production it would not be possible to sustain a 6% growth in GNP with-out some pressure on prices.

2.6 The level of foodgrain imports in actual practice is determinedmore by the demands of the public distribution system than by the need tosatisfy some aggregate level of per capita availability (a figure which inany case is subject to a large margin of error due to unrecorded changes inprivate stocks). The Government's network of fair price shops through whichit distributes foodgrains at controlled rates is its main instrument forcontrolling the national foodgrain supply system. Although on average itonly accounts for about 10% of foodgrain consumption, it represents a muchhigher proportion of actual foodgrain marketings, probably about one-third.This proportion varies inversely with the level of production. In a good yearlike 1975/76 consumers purchase a greater proportion of their requirementson the open market and monthly sales through fair price shops may fall toless than 600,000 tons. In a bad year the Government is usually unable tosatisfy the demand and has to ration supplies to what it has available. Po-tentially demand could be as much as 1.5 million tons a month or more if thefair price shop network was expanded in rural areas. In recent years thepeak monthly distribution has in fact been kept down to 1.0-1.2 million tons.It is this varying demand which creates the need for imports since the Gov-ernment is only able to procure locally what it needs to satisfy the publicdistribution system in very good monsoon years. In all other years procure-ment has to be supplemented by imports.

2.7 Since this variation in the level of demand occurs unpredictablythe Government has attempted to maintain a sufficient buffer stock from whichsudden increases can be met without having to rely on imports. Between aboutthe end of 1972, when the previous buffer stock was exhausted, and late 1975,all imports were needed for the public distribution system and it was notpossible to rebuild the buffer stock. However, with the recent favorableharvests this period is now over. It seems probable that total stocks willbe at least 11 million tons by the middle of 1976. Approximately 7 milliontons of this can be considered as a buffer stock. This means that whenthe next bad monsoon occurs, and it is probable that at least two bad monsoonswill occur between now and 1980, it should be possible to cater to any suddenincrease in demand without additional imports.

2.8 If imports are thus not required for stock building over the nextfive years their level will be determined by the gap between internal procure-ment and issues through the public distribution system. To some extent thelevel of public distribution is a policy variable within Government controlsince it can impose rationing or increase the number of fair price shops to

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facilitate distribution (together with anything it may choose to doas regards the level of controlled prices). Nevertheless, in conditions ofless than adequate supplies any restrictions it may impose tend to force upfree market prices and are thus inflationary in effect. On average one canexpect public issues up to 1980 to range between 1.0 and 1.2 million tonsper month, or 12-14 million tons per year. Procurement has varied in recentyears from about 6 million to 9 million tons and, without radical changesin the system of procurement, is likely to remain at about this level to 1980.To meet the balance and to maintain foodgrain price stability during thisperiod, would thus seem to imply the need to import, and supply through thepublic distribution system, some 5-7 million tons per year for the next fewyears. If not carefully planned, a basic conflict may arise between the needsof price stability and the needs of increased agricultural production. Ifpast evidence is anything to go by, a sustained inflow of imports of thismagnitude, unless needed to replenish stocks in the face of one or more badmonsoons, could have a disincentive effect on agricultural production. Themagnitude of this effect would depend upon the price at which these importswere released into the public distribution system. If they were released atprices appreciably below prevailing market prices they would depress thegeneral level of foodgrain prices, thus discouraging foodgrain production evenfurther than the recent deterioration in the agricultural terms of trade willhave done. In the interests of domestic foodgrain production it is importantthat internal price policy bears the interests of farmers as well as of thepoorer urban consumers in mind and that issue prices are related to indigenousproduction costs rather than to import price levels.

2. Input-Output Prospects in the Medium-Term

2.9 During the fifties and the early part of the sixties a substantialif declining part of the increase in production, up to 60% or more in theearly years, came from an increase in the area under cultivation, while onlyone-third to two-fifths came from higher productivity. This former sourceof added production has rapidly diminished in importance since the earlysixties and for the last decade or so less than one-third of production in-creases have been derived from additional crop area. The Draft Fifth Planestimated that there would be 6.5 million ha of additional foodgrain areaproducing 0.4 tons/ha. This seems on the high side even including additionalirrigated area. It seems more realistic to assume that production increasesof around 0.5-1.0% per year resulting from extra crop area, principallythrough more double cropping, will continue in future years. This is expectedto add about 1.8 million tons by 1978/79.

2.10 The major factor responsible for keeping the overall rate of produc-tion increase more or less constant is the approximate doubling in the rateof productivity growth. And it is this increased rate of productivity growththat indicates the extent to which Indian agriculture entered a period oftechnological change in the mid-sixties different from anything experiencedearlier. While the pace of change may falter from time to time, it hasclearly come to stay. The main determinants of productivity growth in futurewill be, as in the recent past, the rate at which additional land is broughtunder irrigation, the rate of growth of fertilizer use and the rate ofspread of new high yielding cereal varieties. Other sources of growth,

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though of comparatively lesser importance, are the growth in pesticide use,the better use of rainfall through soil conservation and some improvementin farming standards resulting from better use of other existing resources.

2.11 Irrigation. There is a large measure of interdependency betweenthese various factors except for the growth of public investment expenditureson irrigation. Much of the growth in privately financed groundwater usesince the late sixties has been spurred by the greater profitability of thenew fertilizer-seed technology. Seeds of high yielding varieties are usedalmost exclusively on irrigated land; though much of the irrigated area suit-able for their use has now been covered, their rate of spread is now probablyrather closely related to the rate of irrigation development. The only ex-ception to this which could accelerate their rate of spread would be theavailability of new rice varieties suitable for monsoon conditions.Similarly the major factors determining the rate of growth in fertilizeruise during the late sixties and early seventies were the spread of highyielding varieties, with their much greater responsiveness to fertilizersthan varieties available hitherto, and the growth of new irrigated area.Available data indicate that about three quarters of all fertilizer con-sumption is concentrated on the 23% of the crop area that is irrigated. I/

2.12 The prospects for increasing foodgrain production during thenext few years will be determined therefore, in large measure, by the rateof growth of irrigated area. This will substantially influence both therate of growth of fertilizer consumption, especially on foodgrains, as wellas the spread of high yielding varieties. While other factors will alsoinfluence these -- e.g. fertilizer: foodgrain price ratios, new ricevarieties -- and are considered later, irrigation will be the major

1/ The data collected by the Fertilizer Association of India for theirpublication "Fertilizer Use on Selected Crops in India" (September1974) can be used to obtain the following approximate distributionof fertilizer use:

Percentage Distribution of Totai Fertilizers

Irrigated Non-Irrigated TotalFoodgrains 47.6 18.1 65.7Non-Foodgrains 25.9 8.4 34.3

Total 73.5 26.5 100.0

These data can also be used to estimate the approximate levels offertilizer use by type of crop.

Fertilizer Use in Kg/HaIrrigated Non-Irrigated Total

Foodgrains 36.0 4.5 12.3Non-Foodgrains 77.9 5.5 18.4

Total 44.1 4.8 13.8

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influence. Indeed it seems reasonable to assume that a reliable figurewhich measures the effect of additional irrigated area can substitute forseparate figures measuring the impact of fertilizers or high yieldingvarieties on their own. On the basis of past input output relationships,we have estimated 1/ that the effect on foodgrain production of the additionof one hectare of irrigated land is a net increase of 1.4 tons. 2/ Thistakes into account the proportion of irrigated land which is likely to beused for crops other than foodgrains.

2.13 The Draft Fifth Plan proposed a total increase in irrigated cropsof 11.2 million ha. This was to come from 5.2 million ha of public sectormajor and medium surface irrigation projects, 3/ 1.5 million ha of publicsector minor surface irrigation projects and 4.5 million ha of groundwaterdevelopment, mostly private. 4/ At 2.2 million ha per year this representeda major step-up in the pace of irrigation development. Between 1964/65 and1971/72 the gross irrigated area grew at about 1.5 million ha per year, ofwhich about 0.5 million ha per year was from surface irrigation (about thesame annual rate of increase as in the previous 15 years) and 1.0 million ha

1/ Regression analyses relating wheat, rice and total foodgrains produc-tion to their respective irrigated and non-irrigated areas, using datafor 14 states, for the period 1964/65 to 1971/72 were carried out. Theresulting equation for total foodgrains was:

P = 1.364 IA + 0.389 RA + 0.079 T x !Awhere P = Production in thousand tons

IA = Irrigated Area in thousand hectaresRA = Rainfed Area in thousand hectaresT = Time in years with 1964/65 equal to 1

This means that the average irrigated yield was 1.364 tons/ha and theaverage rainfed yield 0.389 tons/ha in 1964/65 and that the averageirrigated yield was increasing at 0.079 tons per year. The relation-ship between time and rainfed yields showed no such positive increase.

2/ By 1971/72 the yield differential is assumed to be 1.6 tons/ha (2.0 tonsirrigated and 0.4 tons unirrigated). Out of every 100 ha of extra irri-gation 85 ha will be in foodgrains, producing 2.0 tons/ha. This willdisplace 68 ha of rainfed foodgrains producing on average 0.4 tons/ha.The net increase is 143 tons per 100 ha or 1.4 tons/ha.

31 A major project is one that is estimated to cost more than Rs 50 mil-lion, a medium project is one costing between Rs 2.5 and 50 million.Below this projects are classified as minor.

4/ To get 5.2 million ha of additional major and medium irrigation inuse it was estimated that 6.2 million ha of "potential" would needto be created. To get 4.5 million ha of additional area irrigatedfrom groundwater it was estimated that 7.5 million ha of additionalgroundwater area would need to be developed as 3 million ha ofexisting area would become obsolete.

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was from groundwater (a vastly more rapid increase than ever before). Sub-sequent to 1971/72 no firm data are available but all indications 1/ are thatthere was a marked slackening off in the rate of groundwater development atthe tail end of the Fourth Plan, which is only now starting to accelerateagain. Although the pace of surface water development is also increasing, theannual rate of total irrigation development is only just getting back to itslevel of the early seventies and is still below the Draft Plan target rate.

2.14 In the case of surface irrigation the key factor to an increase inthe pace of development is finance. There are few, if any, physical shortageswhich now hinder a faster rate of irrigation development. Most State Irriga-tion Departments are staffed to handle a larger program. Traditional planningpolicy has been to start more projects than could be completed in a reasonabletime with available finances. For instance, at the start of the Fifth Plan itwould have taken nearly 20 years to complete the projects under constructionat the rate of progress experienced in the Fourth Plan. In addition the areawith completed but unutilized irrigation facilities has been rising over time;by the start of the Fifth Plan the unutilized area represented no less thanthree years investment. Despite frequent policy statements to the effectthat future efforts will be concentrated on project completion the pressureto start new projects has usually inhibited any improvement. The Draft FifthPlan reflected these same pressures.

2.15 It was obvious within a few months of the start of the Fifth Plan,however, that the proposed Rs. 24 billion outlay for major and medium projectswould be inadequate to create the 6.2 million ha potential that was targetted.While this was largely the result of the rapid inflation of 1973/74 anotherfactor was that, for many projects, the cost estimates used as a basis forestimating the plan outlay had not been revised for several years and becauseof changes in design and project scope as well as inflation, were no longerrealistic. Cost estimates were revised early in 1975. These revisions indi-cated that, to achieve the Draft Plan physical targets, financial outlayswould need to be raised by 50-60% over the Draft Plan level (the exact ex-tent depending upon the rate of inflation to 1978/79). As a result of theserevisions, and a policy decision that it was essential to achieve the physicaltargets, plan allocations were substantially raised over the original estimatesin 1975/76 and 1976/77. While they are still somewhat below the level neededto meet the 6.2 million ha target of new major and medium irrigation potentialcreated, it should still be possible to approach the target of 5 million ha ofnew irrigated area actually under crop if two conditions are met: (a) thenecessary increase in plan outlays is sustained in the last two years of theplan period; (b) there is some diversion of funds from starting new projectsto completing on-going ones.

2.16 One new factor which should assist towards a better utilization ofirrigation potential, and thus increase the new crop area relative to newlycreated potential, is the greatly expanded program of "Command Area Develop-ment," undertaken in the Fifth Plan. The term "Command Area Development,"

1/ E.g., the falling amount of long-term credit utilized for groundwaterdevelopment.

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originally coined to cover only such investments as roads and markets, hascome to be used to comprehend a package of investments which covers not onlythese but also public infrastructure needed to increase the efficiency ofwater delivery systems on existing projects (e.g. canal lining, cross regu-lators, drainage) as well as private development expenditure needed to im-prove the level of water use efficiency at the farm level (e.g. water courselining, farm drains, land shaping, boundary realignment). This is a new con-cept which has only been properly formulated in the last 2-3 years. The FifthPlan proposes to undertake such work in the commands of 51 projects with anexisting irrigated area of over 5 million ha. While this work is difficultto implement on a large scale it should start to show some impact by the endof the Fifth Plan. It is thus an additional reason for optimism about achiev-ing an extra 5 million ha of irrigated crop from major and medium surface irri-gation projects since it should help to reduce the lag between the creation ofirrigation potential and its utilization.

2.17 In examining the prospects for achieving the 1.5 million ha targetfrom minor surface irrigation one is greatly hampered by lack of data, bothabout the area irrigated by minor surface projects as well as about expendi-tures on them. Plan expenditure data do not distinguish surface and ground-water investments although, since the greater proportion is for surface devel-opment, this is probably a fair indicator of achievement. By this standardabout 45% of the financial target should have been achieved by the end of thethird year of the Plan, perhaps indicating an 80-90% achievement in financialterms by the end of the Plan. Given the inflation of costs since the Planwas drawn up, however, a lower level of physical achievement is inevitable.The official estimate of an increase of 1.0 million ha against the target of1.5 million ha thus does not seem unreasonable, if perhaps on the high sidesince it represents a doubling of the growth rate in the Fourth Plan withoutmuch improvement in the low standard of minor irrigation planning at the Statelevel.

2.18 In the case of groundwater mere availability of finance is not suf-ficient to induce a predetermined rate of development; development dependsessentially on the willingness of individuals to invest. 1/ According to thedata on the use of institutional finance through which most groundwater devel-opment is financed, the investments in groundwater today are no larger thanthey were 5-6 years ago in real terms. To some extent this is a reflectionof the inadequacies of the long-term agricultural financing structure, parti-cularly the rising level of overdues that has prevented many Cooperative LandDevelopment Banks in the last few years from increasing their volume of lending.To some extent also it is a reflection of the electricity shortages of 1973/74and 1974/75 that held back the pace of rural electrification. Whatever thecause, the result was a 40% fall in the number of pumpsets electrified in thelast two years compared with the peak of 1972/73. Fortunately, such is thedemand for farmers for additional groundwater that this fall is being partly

1/ Although public tubewells provide opportunities for public investment,the scope of such experiments have so far been limited.

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offset by a rather substantial, if largely unquantifiable, increase in thenumber of diesel pumpsets. Nevertheless the main cause for the continued lowlevel of groundwater development now seems to be the financial constraints ofState Electricity Boards and the Rural Electrification Corporation. A moregenerous allocation of financial resources for rural electrification there-fore becomes a main key to a more rapid development of groundwater in thenext few years.

2.19 Another reason for the slowdown in the pace of groundwater develop-ment is that in those States where the major groundwater development occurredin the late sixties and early seventies (Punjab, Haryana, Gujarat, Tamil Nadu)and which in addition possess a well-established institutional finance struc-ture, the pace of groundwater exploitation has slackened off because a criticalstage in groundwater availability has been reached and further exploitationneeds more careful scrutiny. On the other hand, in a number of other Stateswhere it is known that ample groundwater is available, particularly in north-eastern India (Bihar, West Bengal, Orissa) the pace of development is ham-pered by a number of other difficulties. Until the pace of development inthe northeast can rise to compensate for the developments elsewhere therewill not be as rapid an increase as is required to meet the plan target.There are nevertheless many indications that those responsible for finan-cial allocations are aware of these problems and that the importance ofgroundwater to the rate of agricultural development is understood. Pro-vided adequate allocations are made it should be possible to increase thearea irrigated by groundwater by 3.75-4.0 million ha during the Fifth Plan.

2.20 This examination of the various elements of the Draft Fifth Planirrigation target leads to the conclusion that the most likely increase inthe total irrigated crop area during the plan period is between 9.5 and 10.0million ha (5.0 million ha from major and medium surface projects, 0.75-1.0million ha from minor surface projects, and 3.75 to 4.0 million from ground-water) against the plan target of 11.2 million ha. At the rate of 1.4 tons/hathis would represent an increase of between 13.3 and 14.0 million tons overthe five year period.

2.21 Fertilizers: Fertilizer use in India has grown rapidly over thepast 15 years (see Statistical Appendix Table 8.10). The compound rates ofgrowth of nutrient consumption between 1960/61 and 1974/75 were about 17.1%for all nutrients combined, 16.9% for N, 18.5% for P205 and 20.2% for K20.

These substantial growth rates for the whole period, however, mask the stag-nation of fertilizer consumption since about 1971/72. The slowdown in fertil-izer consumption after 1971/72 began as a supply problem: effective demandexceeded available supply, fertilizer sales were brisk, stocks low and blackmarkets emerged in many areas. This situation prevailed roughly up to mid-1974, when the huge increase in the prices of imported fertilizers and fer-tilizer raw materials forced the Government to raise the price to farmersin order to reduce what was rapidly developing into an intolerable subsidysituation. Accordingly, prices of the most widely-used fertilizers wereroughly doubled in June 1974. Because of the high demand internally it was

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hoped that the increase would not have any substantial impact on demand. Inretrospect, the impact of the price increase is fairly clear: for the firsttime in many years fertilizer demand dropped, stocks began to build up at anunprecedented rate, and a buyers' market emerged. Fertilizer consumptionfell from over 2.8 million tons in 1973/74 to less than 2.6 million tons in1974/75.

2.22 It was not until well into the kharif fertilizer season, in July1975, during which offtake continued to fall despite ideal weather, that sig-nificant action was taken. The fertilizer allocation systems were dismantledin most States, fertilizer import contracts were renegotiated and arrivaldates postponed to lessen the buildup of stocks. Dealer's margins were in-creased for the first time in many years. Finally, taking advantage of thesharp fall in world market prices, retail prices of nitrogenous fertilizerswere reduced by about 8% in July 1975. Prices of certain other fertilizerswere also reduced. Effective December 1, prices of most phosphate fertilizerswere reduced. Although these measures were too late to affect consumption inkharif, during the rabi season it picked up rapidly. Nutrient consumption inthe first four months of rabi 1975/76 was up about 35% above the same periodfor the rabi 1974/75 season. Projecting these figures for the rest of theseason suggests about 1.9 million tons of nutrient may be consumed in rabithis year compared with 1.4 million tons last year and with the previousrecord of 1.65 million tons achieved in rabi 1972/73; but consumption forthe year 1975/76 as a whole is unlikely to exceed 2.9 million tons which isonly marginally above the 2.8 million tons consumed in 1973/74.

2.23 The implications of these recent developments for future growthare unclear at present. Obviously the slowdown of the last few years meansthat the absolute amounts in any projections will be lower than earlierprojections. For our present purposes, however, we are mainly interestedin the annual rate of increase, although it is really misleading to use asingle growth rate for all fertilizers. The recent recovery in demand forexample has been confined to nitrogenous fertilizers. Use of P205 and K20 has

declined, making the already unbalanced use of fertilizers much worse andleading to unknown distortions of future demand growth. Nevertheless, thebasic factor common to the demand for all types of fertilizer is its pricerelative to the price of various foodgrains. A resumption of growth at pastlevels will require a restoration of fertilizer and foodgrain price ratiostowards their lower levels of recent years. At the same time demand can alsobe influenced by Government programs such as research, effective extensionservices, the timely provision of credit, better marketing facilities andabove all by the pace of irrigation development -- fertilizer consumption onirrigated land being nine times the level of consumption on rainfed land.There is also great need for strengthening the distribution systems and thepromotion programs in areas where water development is taking place. However,given our ignorance about the shape of the demand function for fertilizers andthe uncertainties surrounding the future relative prices and the rates ofimplementation of various agricultural programs, projecting fertilizer con-sumption is beset with difficulties. Similar reasons account for the factthat past fertilizer consumption projections in India have been notoriouslyinaccurate, usually substantially overestimating consumption. In part,

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however, there has not been a sustained effort to maintain a periodicallyupdated projection of fertilizer consumption which could inform the govern-mental decision makers involved in fertilizer policy. The recent decision bythe Government to commission the NCAER to undertake such a study could be awelcome step in this direction. In the absence of a thorough, systematicallydesigned projection of fertilizer consumption, three different projectionshave been presented in Statistical Appendix Table 8.10 and are summarizedbelow.

TABLE 2.1a/

Total Nutrient Consumption

FAI Revised Plan Historical Trend

1973/74 (Actual) 2.8 2.8 2.8

1974175 (Actual) 2.6 2.6 2.6

1975/76 (Estimated) 2.8 2.9 2.9

1978/79 (Projected) 4.2 4.8 3.7

a/ The figures represent the sum of the individual nutrient tonnagesderived by converting different types of fertilizer to a commonbase of either nitrogen, phosphate or potash.

Source: Statistical Appendix Table 8.10.

The projection prepared by the Fertilizer Association of India is based on ananalysis of past trends, tempered by the qualitative judgment of the FAI's mar-keting staff. This projection assumes no change in major parameters affectinggrowth of fertilizer demand and assumes a margin of error of +10%. For theperiod 1975/76 to 1978/79 it represents an annual growth of 14.5%. The re-vised plan projection is an estimate of the fertilizer required to achieverevised plan production targets and represents an annual growth rate of 18.3%which is high by recent trends. The historical trend is simply a linear pro-jection of the past data and represents an annual rate of increase of 8.5% to1978/79. It is difficult to assess which projection is more likely to mate-rialize. The revised plan projection, however, appears to be on the op-timistic side without a more substantial reduction in the fertilizer: food-grain price ratio than seems likely or a speed up in parallel developmentalprograms, particularly irrigation, at an unprecedented rate. As a workinghypothesis, the FAI projection seems more reasonable at the present time.

2.24 Taking the FAI estimate of 1.4 million tons increase in nutrientconsumption over the Five Year Plan period and assuming that the proportionof fertilizers applied to foodgrain crops will be about 66%, 1/ we project

1/ Based on NCAER estimate for 1971/72.

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an additional application of 0.92 million tons of nutrients on foodgrains.In our calculation of the impact of additional irrigation, we had taken intoaccount the additional fertilizer likely to be used on newly irrigated land;this totals 0.275 million tons, 1/ leaving 0.645 million tons of nutrientsfor use on existing irrigated or rainfed foodgrains or on new rainfed food-grains. Estimates of the increased foodgrain output that can be obtainedfrom one kg of nutrient range from 6.5 kg to 13.0 kg depending on crop,variety and growing conditions. The weighted average of the ratio used byGOI is 7.33 kg and this is accepted here. At this rate the 0.645 milliontons of nutrients would result in an additional production of 4.73 milliontons of foodgrains during the Five-Year Plan period.

2.25 Seeds: The availability of new high yielding cereal varieties withthe ability to respond to much higher levels of fertilizer application thantraditional varieties, given adequate irrigation, was the factor that sparkedoff the rapid growth of foodgrain production in the mid-sixties. The failureof production to grow at the same rate since 1971/72 is in no small measuredue to the failure of farmers to change their seeds more frequently togetherwith the sudden susceptibility of the main wheat variety to rust attack. Thepast two years, however, have seen a remarkable turn-round in the seed situa-tion and, particularly as the result of a number of policy changes adopted in1975, the factors that have inhibited more widespread use of better seeds --especially poor quality and high prices -- seem likely to be things of thepast.

2.26 In the first place, largely as a result of a determined effort onthe part of the National Seeds Corporation, there has been a rapid growth inthe availability and consumption of certified seeds (i.e. seeds that are trueto variety, grown under careful control, and tested to meet specific qualitystandards). Between 1970/71 and 1974/75 consumption has increased almosttenfold, much of this representing replacement of low quality seed producedby State Departments of Agriculture or of foodgrains being marketed throughofficial channels as seed. Nevertheless seed consumption remains low; pres-ent use is only enough to sow about 4% of the crop area annually, comparedwith desired levels of replacement several times as high. Secondly, thefirst steps were taken towards a more economic pricing policy for seedswhich should help to stimulate demand. As a start NSC's own much largerturnover has enabled it to reduce its overheads enough to allow a 10% acrossthe board reduction in seed prices. This will be followed by a similar re-duction in 1976. This change is being reinforced by the adoption of a dualpricing policy as part of the new National Seeds Program. Up to now seedhas been sold at a uniform national price. This has meant that, while seedhas been little more expensive than foodgrains in deficit areas, in surplusareas where most foodgrains are sold at procurement prices, the seed priceof self-pollinated crops (i.e. paddy and wheat) has been about three timesthe market price. As a result, the major seed consuming areas in recent

1/ Based on the use of 2.75 tons of nutrient per 100 ha of new irrigatedarea (85 ha of foodgrains per 100 ha of new irrigation @ 36 kg/ha less68 ha of rainfed foodgrains @ 4.5 kg/ha).

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years have been the deficit foodgrain States while in the surplus States,with their much larger potential for increasing the marketable surplus, con-sumption of new seed has been minimal. The new policy of selling seeds ascheaply as possible in producing States but charging full transport costsfor sale outside, should change all that and from 1976 wheat and paddy seedshould be available in the surplus States at prices which are not more than50-80% above procurement prices.

2.27 The other policy changes made in 1975 are largely aimed at improv-ing the quality of certified seed production. The major change is the decen-tralization of responsibility for certified seed production from a singlecentral agency, the National Seeds Corporation, to a number of newly consti-tuted State Seeds Corporations in the main seed producing States. Five ofthese should be in operation by mid-1976 and eight by the end of 1976. Themain emphasis in these new corporations, other than to reduce seed prices forsales within the State, is on quality control. Each State will be establish-ing iits own independent state seed certification agency together with improvedfacilities for control over seed production from the research station onwards.The combined result of all these changes should be the availability of muchlarger quantities of good quality seed at lower prices than in the past, lead-ing to more rapid rates of change of seed by farmers with all the consequentimprovements in crop yields which fresh seed can induce.

2.28 This should have a major impact on wheat production, since wheataccounts for about half the seed produced. The changeover from the rustsusceptible varieties, Kalyansona and PV18, has gone a long way since 1973and most seed now produced is of rust-resistant varieties. In the case ofrice the seed demand in surplus States is still very low and, with no newvarieties yet available for about 50% of the rice area, the impact of thesenew policies may still be small. As regards maize, seed demand has pickedup strongly in the last two years, particularly in Bihar and this should bereflected in increased maize output in the current year. There is also somesign that the new jowar varieties, after having made almost no impact sincethey were introduced in 1964, are at last beginning to help in stabilizingoutput. In 1974/75, for instance, despite the bad monsoon and despite thefact that jowar production normally is highly vulnerable to a bad monsoon,jowar output actually rose. On the other hand the prospects for bajra arerather poor. The entire range of hybrid varieties available up to 1975 havedeveloped a susceptibility to downy mildew and seed production of these hasfallen to negligible proportions. Some new lines have now become availablebut it is too early to say how widely they will become adopted.

2.29 Extension: The preceding paragraphs have concentrated on the useof more and better inputs as the main source of a faster growth rate in food-grain production. However, this is not the only source. There is ampleevidence to prove that much higher crop yields can be achieved with littleor no increase in inputs other than labor, simply by better farming, e.g.more timely operations, more careful use of inputs, greater care of thegrowing crop, etc. The prerequisites to obtaining higher yields by betterfarm management, other than the willingness of the farmers themselves tochange, are two: the existence of a research system which can continuously

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devise better farming methods; and an extension system which can help farmersto make best use of their available resources. India is relatively well-served by its research system, although the type of adaptive research neededto feed extension workers with appropriate and location-specific recommend-ations is probably its weakest link. The extension system, however, has neverbeen an effective bridge between the research worker and the farmer, exceptperhaps in Punjab and Haryana. The root cause of this ineffectiveness hasbeen the separation of the Village Level Worker (VLW), the contact pointbetween the Agricultural Department and the farmer, from the administrativecontrol of the Department, his inadequate training in agriculture and hisoverburdening with multifarious non-agricultural duties.

2.30 Developments during the past two years in Rajasthan and MadhyaPradesh and in the past one year in West Bengal, hold out good hope that,with some organizational adjustments, the VLW can be turned into a powerfulforce for rural improvement. In a number of trial irrigated areas in thefirst two States and over the whole of West Bengal the VLW has been relievedof his non-agricultural duties and made part of a direct line of command withinthe State agricultural department. He has been given intensive and regulartraining at frequent intervals, with concentration on a limited number oftopics at a time, and supported by direct contact with subject matter spe-cialists and research workers. Finally, his contacts with farmers have beencarefully structured into a regular program. The results of this have beenremarkably effective in bringing about large production increases, coveringnot just a few farmers but complete villages, within a matter of two seasons.Admittedly the main impact has begun in irrigated areas where farmers hadnever been taught to use water properly and where therefore a large and im-mediate increase could be achieved, but this type of reorganized extension

system is now spreading to other areas where it appears also to be capableof bringing about rapid increases in agricultural production without manyadditional inputs except better management.

2.31 The importance of these developments in extension organizationlies especially in the hope they offer of increasing production in thoseareas where inherent difficulties of climate, social structure or farmingsystems are inhibiting any rapid growth in input use but where a potentialdoes exist for higher production through improved farming methods. Somescope for such increases for instance does exist in the lower rainfallsorghum/millet farming areas of the Deccan and northwestern India, butthe biggest area which can benefit is the higher rainfall monsoon riceareas of northeastern India where most rice is grown without irrigation.Out of the 26 million ton target increase in foodgrains of the Draft FifthPlan, 10 million tons was expected to come from rice. Since 60% of therice area is rainfed a good deal of this increase will have to come fromrainfed rice; and this essentially means from the northeastern part ofIndia that contains about two-thirds of the country's rice area.

2.32 Three of the States in this area, Assam, Orissa and West Bengal,have embarked or are about to embark on a complete statewide reorganizationof their extension systems and related research activities on the lines out-lined earlier. This reorganization seems to hold out the best promise forincreasing productivity in monsoon rice where the growth rate of productivity

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is virtually zero and where the stagnation in production is a major cause ofthe low average growth rate for foodgrains for India as a whole. Other ap-proaches to increased production are beset by difficulties which are inherentin local situation. Some of the difficulties spring from the region's highrural population density, with 4.6 persons per hectare of farmland against2.4 for the rest of the country. Partly this means a smaller average farmsize. For instance the average size of holding in the four main Statesinvolved 1/ is only 1.5 ha while for the rest of India it is 2.6 ha. Moreimportant than this is that the proportion of farm area in economic holdingsizes is much smaller than elsewhere; in these same four States only 40% ofthe area is in holdings of over 4 hectares compared with 65% in the rest ofIndia. In other parts of India it has usually been the larger farmers whofirst adopt innovations; the smaller farmers follow their example with atime-lag. To the extent that there are fewer innovative farmers in thisregion the pace of agricultural change will thus tend to be slower thanelsewhere. However, this must remain hypothesis. Conversely, though, thisregion has a higher proportion of the area in subsistence or sub-marginalholding than elsewhere; over one-third of the land is in holdings of lessthan 2 ha compared with one-fifth or less in most of the rest of India.Farmers with such holdings are not readily reached by the conventionalmeans which have hitherto been tried. In particular their eligibility forinstitutional credit is more limited because of greater difficulties in pro-viding security and lack of cash surplus for loan repayments. This diffi-culty is even more pronounced in the case of share croppers and tenants;and this area has a higher proporLion of (mostly unrecorded) tenancy thanother parts of India.

2.33 This size problem has more impact on the development of groundwaterthan anything else. Traditional approaches to groundwater development do notseem to work in a situation of small and fragmented farms. While variousapproaches to group use of wells are being tried, as yet no single workableapproach which can be replicated on a large scale (as was the case in Punjabwith individually-owned tubewells and pumpsets) has been established. Thisdifficulty is a major reason why one cannot rely on any substantial accelera-tion in the pace of at least this critical input - though the efforts in thisdirection should continue - and why it is important to develop an extensionsystem to teach farmers how to use what resources they do have in a betterway. To some extent also the very poorly developed structure through whichinstitutional credit is channelled may be an inhibiting factor. Intensivesteps to develop it have recently started and may help but it is at leastpossible that the poor structure is itself a reflection of the low demandinherent in the pattern of land distribution.

2.34 Another major constraint, created by the very abundance of the rain-fall itself, is the difficulty of persuading farmers to raise their level ofinput use, which is now well below corresponding levels in most other partsof India for all inputs, or even to use tubewell water if it is available,under the prevailing high-risk climatic conditions. This region has to copenot only with the same risks as the drier parts of India -- long gaps in the

1J Assam, Bihar, Orissa and West Bengal.

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monsoon damaging crops by drought -- but also with over-abundance of rain andconsequent damage to crops by flooding. Both factors combine to inhibit cashoutlays on additional inputs and are of course compounded by the higher pro-portion of small farms. The low use of high yielding rice varieties is alsopartly explained by the same factors, but is compounded by the difficulty ofindividual control of water under conditions of small and fragmented holdings,and the fact that the new varieties are very sensitive to flooding. Admittedlythis slow rate of spread has been aggravated by the fact that till very recentlythere were no varieties really suitable for monsoon conditions.

2.35 Although there are some high yielding varieties suitable for monsoonconditions, the main hope for a short-run production increase in rice thereforestill depends upon the traditional varieties. There is considerable scope foryield improvement in these through simple changes in agricultural practices.Persuading farmers to adopt such changes requires an effective extension ser-vice and does not basically involve the use of additional inputs other thanbetter management of the crop. A time should rapidly come when this willcease to be true since successful extension will lead to the demand for moresophisticated advice and encourage the use of inputs with all this impliesfor increased adaptive research and the expansion of input supply systems.Looking further ahead this will in turn generate a demand for new irrigationand drainage works, roads, markets and processing facilities, all needed tomaintain the rate of progress. But for the time being there is much to bedone with the known technology. Thus recent successful developments in reor-ganizing the extension service to make it an effective instrument for thetransfer of technology hold out hope for increased production without in-creased input use.

2.36 Perhaps the major significance of this new development is not somuch its impact on the level of foodgrain production per se but in the hopewhich it holds out for bringing about a more balanced regional pattern ofagricultural growth. Most of the growth expected in the Fifth Plan will beconcentrated on the 5% of the cultivable area that will receive irrigationsupplies or by more intensive use of inputs mostly on the existing irri-gated area. Little is expected from the remaining 70% or so of the ordi-nary rainfed area. Effective extension in these areas, however, backed byan intensified adaptive research effort, could provide the farmers therewith a comparatively riskless means of increasing their production and join-ing in with rather than being left behind by the hoped-for acceleration inthe growth rate of agricultural production; extension is also one of the fewmethods of development, which, properly supervised, does not benefit thelarge farmer more than the small. The type of better farming propagatedby good extension basically depends on more effective use of available in-puts, which means above all larger inputs of labor, the one resource whichthe smaller farmer has in greater abundance than the large. In this sensethe smaller farmer has as much opportunity to benefit from a reorganizedextension service; the improvements he can obtain do not depend upon influ-ence or wealth, merely upon the willingness to listen and work harder. Itis thus a potential means of reducing income disparities within an area aswell as between areas.

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B. ENERGY

2.37 Before the international oil crisis in late 1973, the Indian energysector was having its own crisis. From 1965/66 the growth rate in coal outputsettled down to an annual average of less than 2%, compared with about 5.5%during the previous decade. The growth rate of power generation had fallenoff to about 7% in 1968-73, as against 12.5% in the early 1960s. This wascaused in part by low coal availabilities for thermal power generation, andit resulted in widespread and frequent power shortages. 4Qmestic crudeproduction increased only very modestly, by about 4.2% annually, causing POLimports to take up a growing proportion of total merchandise imports. Thedramatic hike in oil prices and its severe balance of payments impact coin-ciding as it did with a worsened power supply position exacerbated by lowhydel generation due to poor monsoons, added urgency to a re-examination ofIndia's performance in the energy sector and to the speeding up of remedialmeasures and medium-term development programs.

2.38 The Government initiated a series of short-term measures, whileincreasing plan allocations to the energy sector. These measures resulted ina substantial growth in coal production in the last 24 months, and someincrease in petroleum production from existing fields. Price increases forpetroleum products maintained demand at the 1973/74 level. While measureswere also taken in the power sector to increase efficiency, the improvedperformance in 1975/76 is largely due to the good monsoon and its impact onhydro generation. At the same time the medium-term prospects have improved asa result of the promising finds of oil and natural gas. Nevertheless, withdue credit to the Government's efforts, the question remains to what extentthe energy sector will continue to be a constraining factor in the country'seconomic development.

2.39 The effect that petroleum price increases and other concurrentadverse events had on overall economic prospects, and the effect of increasedinvestment costs on the financial requirements for energy sector develop-ment made all quantitative projections and planning obsolete at one stroke.The need for a new energy plan is now acute. The coal sector has developedinstitutions for overall perspective planning which are beginning to dealeffectively with that sector's long-term priorities. Investments in theoil and natural gas sector are certain to be very large in the next threeyears, but planning for this expansion is as yet in very preliminary stagessince new oil deposits have only recently been confirmed. The planningprocess in the power sector is probably the least developed in terms of theframework of analysis and the weakness of its institutional set-up. Giventhe enormous commitment of resources involved, and the far-reaching implica-tions for the rest of the economy, careful planning of overall energy develop-ment will be important.

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1. Power

2.40 Power generation in 1975 was about 12% higher than in 1974, and theprospects for 1976 are also favorable. Thanks to abundant monsoon rains in1975, the hydel generation position is now very satisfactory. In late October1975, about 7 billion KWh of energy had been generated since the beginningof the hydel year on July 1, and about 16 billion KWh of available potentialenergy was already stored in the reservoirs. Given that the designed annualenergy potential of the hydro-electric system in India is about 20.5 billionKWh, generation this year will exceed this potential by 10% or more.

2.41 The performance of thermal plants continues to be generally poor.The average utilization rate in the first six months of 1975/76 was only48%, about the same as 1974/75. A satisfactory level of performance would beabout 65%. However, this may overstate the seriousness of the operationalproblems, because, until very recently, no attempt was made to derate oldplants. Furthermore, capacity utilization might have been higher but forthe fact that because of the good monsoon and therefore increased hydelgeneration, the opportunity was taken to remove a larger than usual proportionof thermal plants from service to undertake much needed maintenance. Coalsupply, which was formerly a constraint, has been adequate in terms of quan-tity, though the high ash content continues to cause some breakdowns. Thecentral monitoring of planned and unplanned outages has so far identifiedsome of the major causes of failures, but has only just begun to influencepreventive maintenance procedures. The supply of spares has for some timebeen relatively well organized. The most serious problems seem to be: thequality of the fuel, the preventive maintenance procedures, and the managementof the thermal power stations. These are all receiving serious attention bythe Central Government and the State Electricity Boards (SEBs).

2.42 As a result of the increased power supply, restrictions on powerconsumption have eased considerably. Before the 1975 monsoon, the extent ofshortages was truly alarming. Thirteen of the 17 important SEBs had imposedmajor restrictions on consumption sometimes limiting power and energy avail-ability by as much as 50% or 60% of normal requirements. By December 1975, thenumber of affected States had fallen to four largely because of the monsoonrains -- hydel energy generation increased by 60% over this period -- but

also because of continued efforts to maximize energy availability from thermalgeneration.

2.43 About 1,700 MW of new generating capacity was commissioned in 1974/75, which represented an increase of about 9.3%. So far, the installation ofnew capacity in 1975/76 has proceeded more slowly, and of the Annual Plantarget of 2,600 MW 1/ additional capacity of only 1,800 MW is likely to beachieved. One reason for slippage seems to be a shortage of certain types ofconstruction equipment, and in some instances low construction expertise;heavy electrical equipment supplies are reportedly not causing any delays.However, far more important has been the financial constraints faced by the

1/ Based on the Fifth Plan target of 33,000 MW by 1978/79. This figure hassince been sealed down to about 29,000 MW.

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majority of the electricity boards. 1/ At the mid-year, the Government ofIndia decided to provide an additional Rs. 850 million to the States to helpwith the remainder of their 1975/76 power and irrigation investment programs.A policy of completing on-going projects rather than starting new ones hasbeen adopted, and while this may be the best way to use the limited financialresources available, there is some concern about the prospect of a very lowcommissioning rate at the start of the Sixth Plan period.

2.44 A major problem has been the low level of electricity tariffs,and the resultant poor financial performance of the SEBs. In recent years,these tariffs have been kept down in an attempt to help limit inflation, andas a result of pressure by major consuming groups. In 1975, there is evidenceof some new willingness to raise tariffs, but this new realism is not goingsufficiently far as yet, and the benefits will, of course, take time toaccrue. The Andhra Pradesh State Electricity Board, for example, increasedmost tariffs by as much as 50%, and some by almost 100% in October 1975. Atthe same time, the tariff structure was simplified. Ten other electricityboards revised tariffs in 1975, but by and large to a far less impressivedegree than Andhra Pradesh.

2.45 For some time, power development has also been hampered by themanner in which the Central and State Governments share control of the powersector. However, significant institutional changes are due to take placeunder proposed new legislation which supports the growing importance ofthe Central Electricity Authority (CEA) in a number of ways, including givingthe CEA an effective veto over new investments by the SEBs where they conflictwith national plans. In addition, this legislation should help the SEBsto set tariffs appropriately. Another important development will be theestablishment of two central generating companies, which will be responsiblefor construction and operation of the proposed very large (1,000-2,000 MW)hydro and thermal stations which are expected to be developed in the remainderof the Fifth and the Sixth Plan periods.

2.46 In 1976 work will begin on a National Plan for Power Development.The need for such a plan to replace the Draft Fifth Plan is considerable forthree interconnected reasons. Firstly, national income has not grown asrapidly as planned. Secondly, the international energy crisis has put apremium on developing the power sector, a fact which is reflected in increasedproportion of plan outlays going to power. Thirdly, the installation ofnew generating capacity has proceeded much more slowly than expected. In-deed, the original target of 16500 MW of new capacity during the Fifth Planperiod has already been lowered to 12000 MW, which will represent an averageannual growth in capacity of only 10.5%. This compares with 11.6% growthduring the 1960s. Whether or not this will be sufficient to meet requirementswill depend upon other supply factors such as the utilization rates achievedin thermal power stations and the reduction of transmission and distributionlosses, and on the speed of the upturn in agriculture and industry.

1/ As evidence of this, delays in payment and order postponement have beenreported by a number of heavy electrical manufacturers.

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2.47 A realistic assessment of future demand and a phased program forincreasing generation and transmission facilities are needed. But even if itturns out that it is possible to meet the demand with smaller additions togenerating capacity than forecast in the Draft Fifth Plan, the financialrequirements of the power sector are likely to remain extremely large. In theDraft Fifth Plan, they were estimated to be over three times higher than thecombined requirements of the coal and petroleum sectors, which underlinesthe need for sophisticated planning. The proposed large generating stations inparticular will constitute such large increments in supply that their effi-cient investment programming and operation in the beneficiary States, willrequire careful planning and advance coordination.

2. Coal

2.48 In sharp contrast to eight years of semi-stagnation up to 1973/74,coal production increased by 13.5% in 1974/75, from 78.2 to 88.4 million tons.The momentum has been maintained in 1975/76, the first six months showingan 11.5% increase over the same period last year. The target for 1975/76of 97.9 million tons production seems quite likely to be attained.

2.49 The reasons for this increase include: A reorganization in a numberof mines so that less time is lost changing shifts at the face; the improvedavailability of power, especially in the DVC system in the Eastern Region; andthe most efficient operations of the railways. Average daily loadings in July1975 were 8,982 compared with 8,115 in the same month the year before. Thesemeasures were supplemented by an investment program which emphasized "balancingequipment" to make existing mines more efficient and open-cast development ofnew mines (open-cast has roughly half the gestation period of deep mines).

2.50 Despite this improvement in performance, the financial positionof the three major coal companies has been cause for concern. 1/ Operatingcosts increased by about Rs. 22 per ton in 1974/75. Rs. 12 per ton wasaccounted for by increased wages, following the wage settlement of January 1,1975. The increase in the cost of stores and spares -- mainly explosives,timber and rails -- accounts for most of the remainder. In early 1975,the Chakravarti Committee recommended an average price increase to coverthis. Prices were finally revised upward in August but only by Rs. 17.50,-reflecting the Government's concern with inflation. The typical pithead priceof non-coking coal now stands at about Rs. 67 per ton. 2/

1/ By 1973, the coal sector had been largely nationalized, with only two

captive mines of steel producers remaining outside the public seetor.Three major public sector companies operate in the coal sector: theCoal Mines Authority Ltd. (CMAL), Bharat Coking Coal Ltd. (BCCL), andthe Singareni Collieries Co. Ltd. (SCC). In 1975, they joined togetherto form Coal India Limited.

2/ This is the price for Grade II Steam Coal.

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2.51 The effect of this low price (relative to costs) was a loss of Rs.27crores in 1973/74 and a provisionally estimated Rs.42 crores in 1974/75, inthe three major coal mining companies. Even SCC, which had made profits forthe past five years, incurred a loss of Rs.5 crores. These deficits representabout 20% of the plan outlay in 1974/75 and 1% of sales. They have beencovered by borrowing from Central and State Governments. 1975/76 is expectedto be equally unsatisfactory from this point of view.

2.52 The impact of inflation on the costs of new investments has alsobeen considerable: the annual plan outlays for 1974/75 were revised upwardsby about 40%, largely to accommodate the effects of unforeseen inflation in1973/74 and 1974/75. Applying the same increase to the proposed outlay forthe Draft Fifth Five-Year Plan of Rs.747 crores, would imply an extra Rs.300crores will be needed, simply to achieve this level of real investment.

2.53 At the same time, continued efforts are being made to substitutecoal for oil as a source of energy. The main areas where substitution ispossible are: fuel oil used for heat in industry and in power stations; 1/fertilizer feedstock where naphtha can be replaced by non-coking coal; anddomestic heating and lighting where kerosene can be substituted by eithersoft coke or indirectly by coal where this is used to generate electricitywhich is used domestically. Some progress has already been made: in 1974/75about 1.1 million tons of coal replaced about half a million tons of fur-nace oil in three power stations. 2/ Roughly another half million tons offurnace oil was saved in other industries in a similar manner. The technologyfor uLsing coal as a fertilizer feedstock is unfortunately not very welldeveloped, and it will be some time before significant substitutions will bepossible in this area. Low temperature carbonization plants have been pro-posed to provide soft coke and gas economically, which would be part substi-tute for domestically used kerosene.

3. Petroleum and Natural Gas

2.54 In the petroleum sector also, the Government has reacted promptlyand decisively by taking measures both to limit consumption of petroleumproducts and to step up oil exploration and domestic production. Alreadythe policy is paying off, and the combined effect of reduced consumptionand increased production has made it possible to limit the growth in crudeand distillates' imports. Moreover, off-shore explorations have led to thefind of an important oil and natural gas structure at Bombay High (BH), 100miles off Bombay. The find is of major significance to the Indian economy, asthe recoverable crude reserves at Bombay High are estimated at about 200million tons, which is 170% of proven on-shore reserves. Production ofnatural gas is expected to be more than twice that currently available in

1/ The Standing Committee on Furnace Oils (Ministry of Petroleum andChemicals) has set up a sub-committee to suggest a phased program ofchangeovers of various industrial consumers from oil to coal.

2/ Ahmedabad (C), Barauni and Trombay.

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western India. By contrast, on-shore explorations have failed to add sig-nificantly to proven reserves, which had been slowly declining prior to theBombay High discovery.

2.55 Production of crude in 1975/76 is estimated at 8.3 million tonsup 10.7% from the previous year. All of this increase comes from the publicsector Oil and Natural Gas Commission's (ONGC) on-shore fields. Of thetotal crude produced, 5.2 million tons is from ONGC (1.1 million tons in theeastern region, 4.1 in Gujarat), 3.05 million tons from the other main crudeproducer, Oil India Limited (OIL), a joint sector company, and 0.07 milliontons from Assam Oil Company (AOC), a subsidiary of Burmah Oil Co. Refinerycrude throughput will be about 22 million tons in 1975/76 (8.3 million tons ofdomestic crude production and 14 million tons of imports) and production ofdistillates will be 20.7 million tons. This is 7% higher than last year. Forthe medium-term the prospect is for a significant increase in production. In1976/77, crude production should rise by 1 million tons from the Bombay Highfield to reach 9,3 million tons. By 1978/79, production on-shore in theeastern region would rise by I million tons and Bombay High should produce asmuch as 6 million tons for a total of about 15 million tons of domesticproduction. ONGC had decided to produce from Bombay High before finalassessment of the field is made and the optimum rate of flow is completelydetermined, because domestic crude is obviously needed urgently.

2.56 Consumption of petroleum-products reversed its decline of lastyear and grew 2.7% in 1975/76 to a level of 22.3 million tons, just under thelevel of 1973/74. Consumption of naphtha and liquid petroleum gas rose 14%;kerosene and high speed diesel rose 5-6%; light diesel oil, bitumen andvarious lubricants fell modestly; and the remaining, mainly motor spirit(petrol) and fuel oil stayed virtually constant. Following the 10% pricerise in crude announced by OPEC in September, 1975, the Government of Indiaincreased prices of kerosene, high speed diesel and furnace oil by Rs.120 perkiloliter and liquid petroleum gas by Rs.2.50 per 15 kg cylinder. Prices ofother products, some of which like gasoline were raised considerably in 1974,were left unchanged. These price increases were calculated to offset theincreased price of crude, The price increased in 1974 and 1975 of such basiccommodities as kerosene and diesel fuel demonstrate the Government's deter-mination to use prices as a means of controlling demand. Despite the pricingof domestic crude considerably below its import price, the excise duties onmost products are high enough at present to make the price to consumers abovethe equivalent import price. This relation should be continued as the situa-tion does not warrant a relaxation of the Government's deterrent pricingpolicies, In the medium-term, consumption estimates are uncertain given theprice hikes and the Government efforts to curb demand. Assuming an 8% rise inconsumption 4n 1976/77 over 1975/76 and a 5% growth rate thereafter, productdemand will be 24 million tons in 1976/77 and 27 million tons in 1978/79.

2.57 ;mports of crude petroleum in 1975/76 are scheduled to be 14 milliontons, Thc3e e rports are all from the Persian Gulf countries, Iran, Iraq,Saudi kArabŽa and United Arab Emirates. The import of products is likely tobe lc-er than the 3 million tons expected earlier. The USSR will supply 1.2

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million tons of middle distillates under a bilateral agreement. The balanceof imports is mainly fuel oil purchased on the open market. The total importof products should be 2.0 million tons. The value of both crude and productsimports will be US$1.45 billion, which is about the same as last year. Giventhe above assumptions on growth of demand, imports in 1976/77 are likely tobe 14.5 million tons of crude and 2 million tons of products. The projectedvalue of POL imports is US$1.62 billion. The price projections includethe 1975 price increase announced last September, but assume that priceincreases in 1976 would be small. On this basis, the POL import bill isestimated to be US$1.51 billion in 1978/79, the first year in which it woulddecline, as increased crude production and expanded refinery output would morethan offset increases in demand and international prices.

2.58 In order to minimize POL imports in the future, the Governmentis giving high priority to exploration activities. ONGC has been givenfull support both in terms of domestic resources and in quick foreign exchangereleases. In 1976 ONGC is completing the drilling of 12 exploratory wellsand the required development wells in the Bombay High area. ONGC is alsoexploring in several other off-shore areas with its own ships and ships undercontract. Three private foreign firms are exploring off-shore as well, in theBay of Bengal, along the Coromandel coast and in the Kutch basin. On-shoreONGC has a very active program at many places throughout the country. Petro-leum reserves on-shore at the end of 1975/76 will be 116 million tons, withno additions during the year. At anticipated ultimate production levels,BR crude would substitute for about 10 million tons of crude imports whosecurrent f.o.b. value at Persian Gulf ports is about US$850 million per annum;associLated natural gas production is expected to be at least 3 million cubicmeters per day or 230% more than is produced currently in Western India,and should lead to increased production of various gas-based products.

2.59 Overall investments in the oil and natural gas sector are certainto be very large in the next three years. However, neither the technicalnor the economic modes of development of Bombay High are fully worked out yet.Much more will be known by the end of 1976 after 6-8 months experience ofproducing from the wells. Utilizing the crude from Bombay High is relativelystraightforward as it simply substitutes for imported crude, although certainspecial provisions will have to be made to handle the high pour point, waxynature and other properties of Bombay High crude. The associated natural gasis a different matter as it will require investment not only to produce andtransport but also to utilize. It will require proper phasing of investmentto minimize natural gas losses in the early years of development. Plans aresketchy but current thinking is to pipe the gas ashore near Bombay, fraction-ate it into various products and transport the products to users. Investmentfor this stage is put roughly at US$200-300 million. Further investment isenvisioned for fertilizer, liquidifying and petrochemical plants to utilizethe gas components. No estimate of the investment cost of these facilities ispossible at the moment.

2.60 ONGC's total expenditure in 1975/76 was Rs. 2.88 billion of whichRs. 620 million was spent on BH development. In 1976/77, ONGC expenditure on

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BH will virtually double to Rs. 1.2 billion. Fifth Plan outlay on explorationand development during the five years is projected to be Rs. 5.4 billion forBH and Rs. 17.3 billion for total ONGC outlays, both in 1975 prices. OilIndia Ltd.'s (OIL) Fifth Plan outlays on exploration and development will beRs. 1.7 billion. Included in this is Rs. 270 million OIL will spend in thenext year-and-a-half to expand their crude pipeline from Assam to Barauni tocarry ONGC's increased crude output from its eastern fields. Total outlayfor exploration and development is planned to be Rs. 4.0 billion in 1976/77,Rs. 4.8 billion in 1977/78, and Rs. 19 billion over the Fifth Plan period.

2.61 Plans to expand refinery capacity include four major refinery proj-ects (one of which is yet to be approved) and one major pipeline project. Thefour refinery projects would add 12.5 million tons of throughput capacity at acost of Rs. 2.43 billion, to give a total capacity of about 39 million tons bythe start of 1980. This is more refinery capacity in the aggregate than isrequired by 1980/81 unless demand regains its 8-9% growth rate. Nevertheless,aside from possible slippages, the additions to capacity planned are thoughtnecessary to handle the Bombay High crude on the schedule it is to be produced,because of the crude's special properties, patterns and location of demand,and the complementary processing facilities at each refinery. Furthermore,the expansion in capacity planned by 1980 will give considerable flexibilityin refining and should provide enough capacity to maintain virtual self-suffi-ciency in refined products throughout the end of the Sixth Plan period. Apipeline with a coastal terminal at Salaya in Gujarat to the new Mathurarefinery with a branch to Koyali is planned for completion in phase with theKoyali expansion and the Mathura refinery. The cost will be Rs. 1.88 billion.The pipeline can carry either BH or imported crude to either Koyali or Mathurafor processing. Total outlay for refining transporting and distributingproducts is planned to be Rs. 1.3 billion in 1976/77, Rs. 1.7 billion in1977/78 and Rs. 5.9 billion in the Fifth Plan period. Total investment outlayin the petroleum sector is expected to be Rs. 5.3 billion and Rs. 6.3 billionin 1976/77 and 1977/78 respectively and a total of Rs. 25 billion for theFifth Plan. Of this total, about 70% is for ONGC's program.

2.62 The price ONGC will receive for Bombay High crude is not determinedyet but it is likely to be considerably higher than the current price toon-shore producer, although still lower than the price of imports from thePersian Gulf. Other countries price domestic crude below its import cost andbase product prices on a weighted average of the two. It is important thatdomestic product prices do not fall relative to their import cost and otherenergy prices in the economy as not only will the resources raised throughtaxation be needed to finance the heavy investment program in the sector butoil consumption must continue to be kept in check to limit import requirements.

2.63 Aside from working out the financial implications of individualschemes, industry-wide planning is also necessary. Here a promising develop-ment has been the formation of several working groups with representativesfrom the ministries of Petroleum and Finance, and from public and joint sectorcorporations. ln addition to the Oil Prices Committee, a petroleum IndustryOptimization Working Group and a working group on the Optimum Utilization ofBombay High Crude/Gas have been formed. These working groups are served bysecretariats with highly qualified professionals.

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C. EXPORTS

1. The Role of Exports

2.64 The ratio of gross exports to GNP was 5.8% in,1950/51, fell to 3.7%in 1965/66, and subsequently rose to 4.8% in 1973/74. The direct contributionof exports to GNP is, therefore, low. 1/ For the period 1969/70 to 1974/75export growth, at between 5% and 6% per annum in real terms, has exceededthat of GNP, which has been about 2%. Nevertheless, the proportion of GNPgrowth directly contributed by production for exports has been only about atenth, or 0.2% of GNP per annum on average, during this period.

2.65 The major importance of exports for the economy arises in thecontext of the balance of payments. The slow growth of exports plus therelative inflexibility of such items as debt service, food and POL imports hasmeant a succession of severe balance of payments crises which have affectedthe economy adversely by repeatedly forcing a stop-go process in foreignexchange availability. Thus, improved export performance is important, aboveall, in order to reduce the constraints imposed by foreign exchange scarcityand eventually, to reduce India's dependence on external finance.

2.66 But an increased emphasis on exports is also important to promotingindustrial growth. Given the stagnation in levels of investment, the slowgrowth of agriculture, and the diminishing opportunities for import subsitution,industrial growth, is restricted, in part, by inadequate demand. Exportsoffer an alternative outlet. Although the scale of the potential effect inthe medium-term, should not be exaggerated -- since the proportion of exportsin total sales of most industrial products is still low -- if export growthcontinues to exceed that of total production by a wide margin -- as is thecase, for example, in engineering goods -- it will become an increasinglysignificant positive factor. Moreover, those structural weaknesses ofIndian industry, such as inadequate exploitation of economies of scale andpoor quality, which result in part from protection from foreign and domesticcompetition, will be reduced by an increased orientation towards exports.

2. Past Developments and Problems

2.67 Trends: Although the rate of growth of exports in real terms hasbeen rising over time, overall performance since India's Independence has beenpoor. Between 1950/51 and 1968/69 the average compound growth of exports invalue terms was 2% per annum. Thereafter, the rate of value growth has risenappreciably. However, most of the value growth of the past three years hasbeen the result of inflation, and the rate of growth in real terms has been

1/ With few exceptions, such as gems, cashew nuts, and, to a lesser extent,chemicals and engineering goods, domestic value added in India's exportsis very high. Rough calculations indicate that, in India's total exports,domestic value added must be at least 85% of the gross amount.

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modest, considering India's low base. Export volume during the past fiveyears grew by 5% per annum. 1/

TABLE 2.2

Export Growth(1968/69 base)

1960/61 1968/69 1969/70 1970/71 1971/72 1972/73 1973/74 1974/75a/

Value 70 100 104 112 119 141 179 229

VolumeIBRD n.a. 100 98 105 107 118 122 125DCIS 70 b/ 100 100 106 107 120 125 133

a! Converted into US dollars.

b/ 1958/59 base.

Source: Department of Commercial Intelligence and Statistics.

2.68 A feature of India's past export performance has been the growth inbarter trade with Eastern European countries. From 1955/56 to 1967/68, of atotal increase in exports of US$346 million, 84% was accounted for by thegrowth of this trade. Since 1967/68 the average growth in barter trade hasbeen about the same as that in convertible currency earnings. Barter trade,which now accounts for about one-fifth of India's export, limits to someextent India's flexibility in balance of payments management since India doesnot have a free choice in what it can purchase. However, the range of choicehas been improving over time, and the system possibly also allows India theadvantage of exporting some commodities which cannot be sold in the convert-ible currency markets.

2.69 India is also taking advantage of new opportunities in MiddleEastern countries. 2/ This effort was reviewed briefly in last year's Econo-mic Report. Exports to these countries since 1974 rose rapidly reachingUS$561 million in 1974/75. Engineering exports to the Middle East rose fromUS$38 million in 1972/73 to US$132 million in 1974/75. Thus, these countries'share of India's total exports rose from 4.2% in 1972/73 to 14% in 1974/75,and of India's engineering exports, rose from 20.6% to 29.9%. This is asuccessful area of recent performance.

1/ The preliminary official estimate for 1974/75 is appreciably higher thanour estimates and would bring the growth rate to 5.8%. We were unableto account for this difference.

2/ Includes Iran, Iraq, Saudi Arabia, Kuwait, Qatar, Bahrain, UAE, Libya,and Algeria.

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TABLE 2.3

The Direction of India's Exports(US$ million)

1955/56 1960/61 1967/68 1969/70 1971/72 1972/73 1973/74 1974/75

EasternEurope 11.1 104.1 301.3 410.2 461.6 609.6 626.2 854.0

Middle )Eastern ) 61.7 108.4 91.9 108.2 209.4 560.9OPEC )

) 1,241.2 1,282.4Rest of )World ) 1,235.3 1,365.8 1,607.0 1,839.7 2,403.3 2,727.7

TOTAL 1,252.3 1,386.5 1,598.3 1,884.4 2,160.5 2,557.5 3,238.9 4,142.6

Source: Department of Commercial Intelligence and Statistics.

2.70 Explanatory Factors: Part of the explanation for India's generallypoor overall performance has been the initial dominance of subsequentlystagnant items like jute, cotton textiles, and tea, which accounted for 52%of India's exports in 1950/51. But this dominance has long since faded; by1974/75 these commodities accounted for only 20.5%. To some extent, giventheir low rate of growth and steady decline in importance, the overall rate ofgrowth would tend to rise as other, and slightly more dynamic items gain agreater weight. However, although there have been many items that have grownsignificantly over the past 25 years, characteristically the growth of indivi-dual items has been spasmodic, rather than sustained. What is disturbing isthat the level of sustained growth of such items has not been adequate toraise the overall growth rate significantly. For example, oilcakes and ironore, both of which showed great dynamism in some years between 1960 and1970, also periodically stagnated, and have recently grown at somewhat lowerrates. Three major categories to show growth of more than 15% per annumin volume terms since 1968/69, namely sugar, many engineering goods, andgarments, now face problems, which imply lower rates of growth in the future,thus repeating the pattern. One result of India's relative failure to finditems with sustained rapid growth is its declining share of overall worldtrade and of world trade in all major categories.

2.71 The factors that explain the poor performance of individualitems are many and varied, since the composition of India's exports is

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heterogeneous. 1/ A distinction can be made, however, between the problemsof exporting the commodities for which incentives are crucial, the situationof homogeneous commodities which face an inelastic world demand, and thosefor which the volume of exportable surpluses is the main bottleneck. Regard-ing tiLe latter category of goods such as iron ore, steel and coal, the basicproblem has been one of inadequate production, and in the case of iron ore,a lack of internal transportation facilities and ports. The lack of priorityand unwillingness to make commitments to exports of raw materials also has anegative effect. For most manufactured items, the most important reason forslow export growth has been the disincentives inherent in a policy of importsubstitution and the reliance on detailed controls as the main policyinstruments.

TABLE 2.4

India's Share in World Exports(US$ million and percentages)

1951/52 1960/61 1965/66 1968/69 1971/72 1972/73 1973/74

India's Exports 1,261 1,387 1,692 1,811 2,160 2,558 3,187

World Exports 61,100 128,000 186,000 239,300 348,000 413,900 569,700

India's Exports/World Trade (%) 2.06 1.08 0.91 0.76 0.62 0.62 0.55

Sources: IBRD Report No. 691a-IN, "Economic Situation and Prospects ofIndia," May 1, 1975, Statistical Appendix Table 3.1; UNCTADHandbook of International Trade and Development Statistics;UN Statistical Office, Monthly Bulletin of Statistics,June 1975.

11 The variety of Indlan exports can be illustrated by the following classi-fication of major exports of 1974/75: 34% were agricultural commoditieswhich undergo little further processing, namely sugar (10.3% of totalexports), tea (6.8%), cashew kernels (3.6%), oilcakes (3.1%), tobacco(2.4%), fish (2.0%), spices (1.9%), coffee (1.6%), vegetable oils (1.0%),raw cotton (0.5%) and essential oils (0.3%); 6% were minerals, namelyiron ore (4.9%), mica (0.6%), and manganese (0.5%); 23% were manufac-tures whose primary raw material is agricultural, namely jute textiles(8.9%), leather and leather manufactures (5.0%), cotton piece goods(4.8%), clothing (2.9%), coir manufactures (0.6%), and cotton yarn andthread (0.6%); 15% were manufactures whose primary input is mineral,namely engineering goods (10.7%), chemicals (2.8%), iron and steel(0.6%), and mineral fuels (0.6%); and 6% were handicraft items (ex-cluding textiles), namely gems (2.9%) and other handicrafts (2.6%).Even with this lengthy list, more than 16% of India's exports are un-accounted for.

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2.72 An import substitution oriented strategy, whatever its benefits forindustrialization at certain stages of development may be, will have the ef-fect of discouraging exports. The domestic prices of import substitutes vis-a-vis those of exports will rise thereby reducing the profitability of exportsthat use import substitutes. Because of the very great difficulty in calcu-lating effective rate of export subsidy, which is a result of the complexityof the incentive system, and the lack of sufficiently disaggregated data, com-prehensive studies of the relative profitability of sales in export and domes-tic markets do not, to our knowledge, exist. 1/ For most industrial exportsthis is the relevant question, but one that can best be answered at presentonly from partial and impressionistic information.

2.73 Examples can easily be given of exports whose profitability is re-duced by the high cost of inputs. Raw cotton has usually tended to be moreexpensive in India than in world markets, which penalizes textile exports.Synthetic filament yarn is also expensive in India, which makes export offabrics that use it almost impossible. 2/ The problems of the textile indus-try in turn affect the garment industry, which is restricted to Indian mill-made cotton fabrics. Garment exports are currently successful only thanksto a strong, but somewhat unpredictable, international fashion for handloommaterials, which account for 75% of India's garment exports. The leather fin-ishing industry is also penalized by high input costs -- in this case of dyesand of machinery, on which a high protective duty is imposed. Other indus-tries where import substitution policy had led to high output prices, conse-quent penalization of their users, and direct uncompetitiveness, are chemicals,certain automobile ancillaries, and electronic components.

2.74 Problems are also created either because of the non-availabilityof domestic inputs and delays in obtaining them, or their frequent poorquality. This is a problem for many engineering goods, and for garments.Exports of garments, that use production of Indian textile mills, will amountto a trifling US$35 million at most in 1975/76, largely because of inappro-priate quality, and high prices in the case of synthetic and blended fabrics.Another important effect of import controls is that price cycles for majorcommodities in India are out of rhythm with those of the world. Steel is amajor case, but cotton fabrics are another. At present, raw cotton is avail-able at international prices, but it would, on past performance, be very riskyfor an industrialist to make investments for exports that assume that thisrelationship will be maintained.

2.75 Adequate expansion by the dynamic and successful firms, which arebe the potential backbone of an export drive, has been important it the papt,and will be vital in determining long-run prospects especially of engineering

1/ A study currently being undertaken by the Industrial Credit and Invest-ment Corporation of India will analyze this question for a range ofindustrial goods.

2/ In February 1975, the Indian cost of production was 70% above the worldprice.

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goods. The World Bank's detailed analysis of several engineering industries,such as commercial vehicles, tractors, foundries and forgings, and textilemachinery, indicate that firms with good export potential, in terms of prod-uct quality generally do not suffer from excess capacity, unlike many weakerfirms in their industries. 1/ However, expansion of capacity is not alwayseasy. In cases where expansion in the domestic market is not officiallyrestricted, problems arise where the subsidization of failing firms restrictsthe ability of the best firms to increase their market share rapidly. Theallocation of actual user import licenses on the basis of past use also tendsto protect the weaker firms. Thus, for the firms which cannot expand in thedomestic market, either as a result of policy or of characteristics of theindividual industry, rapid expansion of exports inevitably means an increasedreliance on exports for long-term profitability. Many firms appear unwillingto expand predominantly on the export side of their business. This point hasbeen recognized and recent policy changes have introduced some flexibility inthis area.

2.76 A high export orientation is, of course, always risky, but it ismuch more tolerable in countries where firms can be reasonably sure that theprices they pay for inputs will be no higher than those facing their competi-tors, where the basic infrastructure of transportation and power is reliable,and where their speed of response and flexibility is not affected appreciablyby bureaucratic delay. In India, the problem of predicting over the life ofan investment the value of the-incentives that are designed to offset some ofthe problems faced by exporters, makes export-oriented investment especiallyrisky. Of course, where profitability is large, and flexibility in useof capital considerable, the risks may be taken. Hand-tools appear to be agood example. In general, an increasingly export-oriented development doesnot appear to be considered worthwhile by Indian firms within the presentpolicy framework. The high protection afforded industry has weakened internalcompetition and has not encouraged a risk-taking, entrepreneurial attitude.Of course a restrictive policy on licensing of industry has the general effectof losing the benefit of economies of scale, which are important for costreduction and competitiveness of engineering products in world markets.

2.77 Agricultural and processed agricultural commodities are affected bythe trade policy regime as well as by other pricing policies that reduce prof-

itability. Generally, these commodities have had export taxes imposed on them,which add to problems already created by the trade policy regime in their com-petition with non-traded agricultural goods. These export duties do not appearto have been designed to exploit monopoly power optimally, as the uncompeti-tiveness of important jute manufactures has shown.

1/ The difficulty a really good firm has in expanding its exports is illus-trated by the case of textile machinery where the best firm has up to aseven year domestic backlog, and is under great pressure to supply theseorders.

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2.78 The combination of policy aims and instruments reviewed verybriefly above is a major factor in creating a series of problems for ex-porters, which have been described as "structural" in the World Bank's reportson sieveral of India's industries. 1/ Thus, in many industries there are alarge number of firms, of very varied quality, often producing a wide range ofproducts on an uneconomic scale. Poor firms that produce inputs for firms ata higher stage of production, penalize the latter's export efforts. Poorfirms compelled, or encouraged, to export their products damage India'sreputation. Good firms, on the other hand, facing a buoyant domestic market,have no great incentive to export. Finally, inadequate "R & D", partly aninevitable result of the small size of most Indian firms by internationalstandards combined with restrictions on import of technology has meant thatIndian products are often outmoded. Finally, because of industrial licensing,there are few strong competitive forces in the Indian economy to eliminatethese problems.

2.79 Quite apart from problems created by such basic features of thepolicy environment, there have been other significant difficulties, Overseasdemand is, of course, an important factor in explaining the low growth or evendecline of major items like tea and jute manufactures. Other serious problemsfacing private firms are those of sea freight, which is expensive and, becauseof congestion in many ports, both slow and unreliable; and the inadequacy ofexport credit facilities.

2.80 Export Incentives: The Government has tried to reduce the effectof constraints on exports by introducing various incentives. Some of theseare designed to increase the attractiveness of exports, while others aremainly intended to make exports possible through mitigation of the negativeeffects of qualitative controls. The most general action taken to encourageexports was the 57.5% devaluation of the rupee in June 1966. However, at thesame time many export subsidies were reduced and export duties imposed onsome ittraditional items" over which India was thought to have monopoly power.(This belief was sometime erroneous, as the subsequent history of jute car-pet-backing exports to the USA bears witness.) The resulting net devalua-tion on trade account has been estimated at 21.6% for exports and 42.3% forimports. 2/ Thus, in a somewhat perverse development, although the devaluationincreased the profitability of tradeables vis-a-vis non-tradeables, it alsoraised the rupee price of imports by more than that of exports! That is, im-port substitutes were encouraged more than exports. Subsequently, the inade-quacy of this devaluation was revealed. Since then, the Government has intro-duced a series of further measures for promoting the exports.

1/ iE.g. commercial vehicles, foundries and forgings, textile machinery andtextiles, and tractors.

2/ T.N. Srinivasan, Foreign Trade Regime and Economic Development of India,ISI Discussion Paper No. 105, Mimeo. p. 86.

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2.81 In August, 1966, cash assistance was introduced. It is the mostimportant positive incentive, but its rationale, and basis of the calcula-tions are not explicit. Sometimes, it appears to be aimed at offsettingthose taxes and imports which do not come within the range of the duty draw-back system. At other times, it is said to offset the differences betweendomestic short-run marginal costs of production and the f.o.b. realization.To the extent that the latter is the case, and high marginal costs reflecthigh transformation costs in the subsidized activities, the incentive wouldtend to be concentrated on industries with the least comparative advantage.In practice, it is a highly variable, and somewhat arbitrary, incentive withthe highest incidence on the engineering industry, which still accounts foronly about 10% of total exports. 1/ Less fashionable industries, which appearon the basis of the performance of other LDCs, to have great promise (such asleather goods, garments, and textiles, as well as agricultural commodities)have received lesser amounts of assistance. An additional problem has beenthe short periods for which cash assistance used to be announced -- usuallyone year -- which limited the willingness of firms to plan investments withan export orientation. Furthermore, to the extent that cash assistance isnot designed to cover long-run costs, it provides no incentive for such in-vestment.

2.82 Another important incentive, or rather offset to existing disincen-tives, is the duty drawback. It is designed to repay to the exporter almostall excise and import duties. 2/ Difficulties have been created by the com-plex procedures involved in agreeing on the initial rate of drawback, a proc-ess which has sometimes required appreciably over a year. This is especiallyimportant for those firms that have a constantly changing input-mix. It isalso argued by many firms that drawbacks do not give adequate allowance forwastage.

2.83 Import replenishment licenses (REPs) are, in practice, given to ex-porters, both as an incentive, since inputs command a scarcity premium, and asa necessary condition for increased export activity, since additional importedinputs are thus made available to exporters. 3/ A limited transferability ofREPs has always been permitted. Thus, the possibility that REPs might be in

1/ It should be noted that the use of cash assistance on low value addeditems can lead, and has led, to very high effective subsidy rates. Seeon this "Report of the Comptroller and Auditor General of India for theyear 1972-73," p. 39 et seq. In certain cases, negative value addedexports have resulted (e.g. galvanized pipes and black pipes at thattime).

2/ The existence of a high level of excise duties on intermediate inputs isa deeply entrenched part of India's tax structure. Since such taxes arehigh, duty drawbacks are vital for international competitiveness.

3/ The REP license was introduced in August 1966. O5n the development ofthe various incentives after the devaluation, see J. Bhagwati and T.N.Srinivasan, Foreign Trade Regimes and Economic Development: India,mimeo., Ch. 9, p. 1 seq.

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excess of the needs of the firms has been implicitly admitted. In theory, how-ever, the REP is supposed only to supply necessary inputs for the exporter him-self. A serious problem with the REP is the strong relationship between theincentive to export and the import intensity of the activity. In the past,the application of restrictions on transferability, on import of items pro-duced domestically, and on the proportion of the license permitted to beused for specific items, has severely reduced both its value, and the flexi-bility it provides to exporters.

2.84 A measure taken by the Government to offset the attractiveness ofthe domestic market has been the imposition of general and specific exportobligations. However, failing adequate profitability, tiere appears to beunwillingness on the part of firms to invest when high export obligations,sometimes of 60% of output or more, are imposed. 1/ Indeed, for many engi-neering goods, such an extreme export orientation is difficult to sustain,since it provides firms with a very small domestic base for production.

2.85 There are several schemes to provide raw materials at interna-tional prices to exporters. The most important of these is for steel, whichdates back to 1967. This is also the most successful. The various schemesthat cover other items do not, on the basis of discussions with a limitednumber of firms, work very well. In addition, there is a host of other in-centives, including subsidies on freight, and some tax relief on exportearnings.

2.86 Two additional problems have in the past weakened the usefulnessof the incentives. First, they have not been predictable for long periods --itd6d they have usually been known for one fiscal year and announced atthe beginning of the year. Secondly, the payment of money, and receipt oflicenses were delayed for long periods, while all the papers were being pro-cessed.

2.87 It must be stressed that the analysis of the problems and of theincentive system involves very substantial simplifications. Not only is therange of commodities large, but the ruling principle of Indian policy is theelaboration of very detailed and specific rules and exceptions, as well aspreservation of a wide area of "ad hoc" discretion. Therefore, the broadstatemento that have to be made in a summary report are of necessity generali-zations which may not fit every case. Nevertheless, we believe it is reasona-ble to describe the major problems that have affected India's export perform-ance, and have not been removed by the plethora of ad hoc incentives, as:(1) inadequate profitability, which is largely the result of the strategy of

1/ As of October 27, 1975, while 2,020 specific export obligations had beenimposed, only 1,221 had been accepted. In addition, there are firms whohave, no doubt, not applied for licenses at all.

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import substitution; 1/ (2) lack of access to imported inputs, which is aconsequence of the use of import controls as the main weapon of trade policy;(3) the poor quality of much that is produced, which is largely a result oflack of competition; (4) instability of the policy environment and vulnera-bility to ad hoc decisions. These problems all affect the industrial sectorin varying degrees. In addition, for agricultural commodities, export taxesare significant. For homogeneous commodities, production itself has been aproblem. For the country as a whole, the question of the variability of in-centives and of the efficient use of trade is important.

3. Recent Policy Changes and the Medium-Term Targets

2.88 Export Policy: Mainly because of the large trade deficit theGovernment has increased its emphasis on exports. As a result, although thefundamental orientation of India's industrial and trade policy and the specific

ingtrumentg of export regime have, by and large, remained the same, a 5igni-ficant shift in emphasis and in the way these policies are operated, haveoccurred. These are important both because they are likely to lead to betterutilization of current export potential and as an indication of willingness tomake policy adjustments when necessary to expand exports. The changes madeso far are focused in four important areas, namely, industrial licensing,import licensing, bureaucratic procedures, and the level and extent of cashincentives. 2/

2.89 The most significant changes in industrial licensing policy, atleast for exporters of engineering goods, resulted from the recommendations ofthe Sondhi Committee on engineering exports. Of particular interest is theautomatic approval for production beyond authorized capacity, when earmarkedfor exports, 3/ and improved arrangements for the supply of inputs for exportproduction. A second major policy change of relevance to one of the problems

1/ Of course, some items are profitable. However, on the basis of WorldBank studies it appears that rather few industrial products offer reallyinviting returns. At the same time, it should be recognized that export-ing, especially initially, entails considerable costs.

2/ The list of policy changes given below is very simplified. As is in-dicated for one or two items, there are numerous qualifications andrestrictions, which we do not have the space to examine here.

3/ In a press note of November 4, 1975, it is explained that such approvalis not automatically given to firms coming under the Mopolies and Re-strictive Trade Practices Act or the Foreign Exchange Regulation Act, buta simplified procedure for disposing of these cases is in operation.

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considered above is the permission to all firms of automatic capacity expan-sion of 25% over a five year period. 1/ Other important recommendations ofthis committee, not strictly limited to industrial licensing, were (i) expan-sion of the period for which cash assistance is guaranteed; (ii) exemption ofimport duty on raw materials imported under Advance Licenses; (iii) focusingthe right to impose export obligations in the Licensing Committee; and (iv)various changes in export credit. All these recommendations have been ac-cepted. One important recommendation, perhaps the most crucial, concerns thebasis for the computation of cash assistance, and is still under discussion.

2.90 The second major area in which changes have occurred, is that ofimport licensing. Under the 1975/76 import policy any actual user is guaran-teed an automatic license for import of raw materials equal to the quantityused or the quantity of import licenses obtained in the previous year, which-ever is the less. However, for those who exported more than 20% of their pro-duction, the automatic license is available for the greater of the two. Inaddition, replenishment licenses are available, as before, and imprest licensesequa:L to last year's replenishment licenses are available on acceptance of anequivalent export obligation. Replenishment licenses have been increased by10% for all exporters, and by an additional 10% for those whose replenishmentlicenses are less than 50%. Finally, both the transferability of replenish-ment licenses, and the flexibility with which they can be used, have beensignificantly increased, partly through de jure and de facto reductions in re-strictions on import of goods which are also domestically produced. 2/ Thus,problems with the availability of imports are significantly reduced. Further-more, since exporters can get all of last year s imports through actual userlicenses, the replenishment license must presumably now be regarded as pre-dominantly an incentive.

2.91 In October 1975, the Government announced a temporary extension ofcash assistance to some marine products, coir products, processed food, handi-crafts, leather products, some chemicals, and jute products. This announce-ment, when considered along with reductions in various export duties, indi-cates that GOI is considering increasing the incentives for export of a widerange of products. However, with the announcement effective only until theend of March 1976, incentives to expand capacity for export have clearly notbeen affected.

2.92 The final area of improvement has been in procedures. The detailsare complex, but it is clear that over the past two years there has been a

1/ In a press note of August 21, 1975, it is explained, however, thatexpansion is automatic only if there are no imports of capital goods,there is no recourse to financial institutions and the firms are not"dominant" in their line of manufacture.

2/ :[t is of only limited value to firms for Government to waive indigenousangle clearance informally, since firms cannot plan on that basis. Itremains true that a firm cannot be sure that, at some future date, anIndian firm will not produce a vital input, which the exporter will haveto use.

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continuing acceleration in the speed with which the various industrial andimport license applications and incentive payments are being processed. Thisis expected to go further with implementation of the present proposal to in-troduce automatic payments of duty drawbacks and cash assistance, on receiptof claims, through the commercial banks.

2.93 Recent Exchange Rate Policy: Policy towards the exchange rate isnot determined solely by considerations of export promotion, and cannot, there-fore, be reviewed simply in the context of the export policy. Nevertheless, itis clearly important. During the period of exchange instability which beganin August, 1971, the rupee remained tied to the pound sterling. This hasmeant a fairly steady devaluation against most currencies. Since, untilrecently, India's inflation rate has been relatively high, the effect of thedevaluation has been to offset, and, in most cases, more than offset thediminished competitiveness that inflation would otherwise have brought about.Only in the past year because of the impressive performance in reducinginflation have the two worked together in the direction of increasing thecompetitiveness of India's exports. In fact, the rupee's nominal devaluationwas 19.5% between 1971 and 1974 on a trade weighted basis, vis-a-vis thedollar, deutsche mark, yen and pound sterling but 15.6% in real terms, afterallowing for relative rates of inflation. However, between 1971 and 1975 itwas 25.1% and 27.4% respectively. K

2.94 In September 1975, the rupee was officially delinked from sterlingand subsequently tied to a basket of currencies:; the US Dol ar, the GermanMark, the Japanese Yen, and the Pound Sterling. Thfei\wetts-were not announced.Assuming the pound will continue to be weak, this move will tend to raise therupee over what its level would have been, if it had remained tied to sterling.To illustrate its significance, we have calculated that, if the rupee had beentied to the basket in proportion to these four countries' weights in India's1974 exports, instead of a 4.7% devaluation vis-a-vis the dollar in 1973/74,and 3.0% in 1974/75, the devaluations would have been only 3.3% and 1.2%respectively.

2.95 Monitoring Export Progress: A Cabinet Committee consisting of the

Ministers of Finance, Commerce, and Industry has been established. It pos-

sesses the delegated power of the Cabinet. Ite establighment has clearlyspeeded up decision-making, has cut through inter-ministerial conflicts, andfocused attention on the importance of exports. Several examples can becited of its effectiveness: the speed with which the recommendations of theSondhi Committee on engineering exports were accepted; the ease with whichquite a significant increase in the automaticity and flexibility of importlicensing was introduced; the speed with which the decision to expand thescope of cash assistance was taken in October; and the willingness to pushthrough and organize the politically and administratively complex task ofexporting a quarter of the available sugar. The Cabinet Committee isprincipally serviced by the Ministry of Commerce, with the support ofthe other two ministries, and appears to be receiving fairly regular infor-mation on short-term progress from these sources. Information on specificindustries comes largely from the export promotion councils, which meet regu-larly with their sponsoring ministries. Perhaps the most important suchmeeting is a monthly one between the Engineering Export Promotion Council

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FIGURE II

RUPEE EXCHANGE RATE MOVEMENTS AGAINST MAJOR CURRENCIES, 1966-1975

U.S.

011% _

PAR-_

-10% _

-20% - , ,,,,,, .............. ''''''''''''............................. ''''''''"'*......................... .U..S_

U'S-30%-

U.K.

PAR- -

-70% - .................

-20%

PAR

-20% -* JAPAN

-o JAPAN *..........\

GERMANY

-40% -

-50%

-60% * JAPAN-

-70% _

-80%

-90%- ............. .NOMINAL EXCHANGE RATES

-100% _ EXCHANGE RATES ADJUSTED FORWHOLESALE PRICE INFLATION

-110%GERMANY

II I I IIII1966 1967 1968 1969 1970 1971 1972 1973 1974 1975

PAR BASED ON AVERAGE RUPPEE/DOLLAR RATE FOR 1966

SOURCE. IMF INTERNATIONAL FINANCIAL STATISTICS World B9ak-15512

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and the Secretary of the Ministry of Heavy Industry. Although DCIS 1/ sta-tistics on exports are usually about four months out of date, the TradeDevelopment Authority prepares quarterly forecasts, which are of high qual-ity. Thus, the primary inflow of information into the Government is good, andthe Cabfiet Committee at the other end is able to make decisions quite rapidly.

2.96 Medium-Term Targets: GOI has prepared some export targets for1978/79, which have been analyzed specifically in the light of the policychanges reviewed above. It is virtually impossible to assess, even in arough and ready manner, the impact of a host of new measures in an areawhere policy is already baroque in its complexity. While these changes arelikely to achieve some improvement in medium-term performance, especiallysince good prospects exist for immediate increases in the exports of iron ore,steel and coal, they do not appear to affect those structural problems thatwill determine the ability of India to sustain higher export growth over thelong term. Although the changes may affect the willingness of private firmsto use existing capacity for export, they are not likely to induce muchinvestment in production oriented towards export markets.

2.97 As shown in Table 2.5 the Government's 1975/76 constant pricetarget for 1978/79 is Rs. 48.4 billion (US$5.3 billion), which implies 8.5%average annual compound growth over the 1975/76 target of Rs. 37.9 billion,7.9% compound growth when GOI's estimated relative price changes are allowedfor in a constant price framework, and 9.5% average compound growth over1974/75. The items expected to contribute the greater part of the growth overthe 1975/76 target (with percentage contributions to total increment inparentheses) are: engineering goods (14.3%); cotton textiles (10.7%); leatherand leather goods (10.1%); handicrafts (9.6%); iron ore (8.4%); sugar (7.1%);coal (4.1%); oilcakes (3.9%); iron and steel (3.1%); chemicals (2.8%); tobacco(2.7%); and marine products (2.6%). Smaller positive contributions areexpected from cashews, tea, jute manufactures, spices, rice and coffee. Whenaccount is taken of probable relative price changes, the positive contributionof cotton textile and iron ore increases significantly while those of sugar,coal, oil-cakes and tea fall.

2.98 Our own estimates of the prospects for 1978/79 indicate thatRs. 43-45 billion in constant 1975/76 prices is a more likely figure. Thisimplies growth over the 1974/75 level of about 7% per annum in volume terms,or when relative price changes are taken into account, of about 6% per annum.Achievement of these rates would imply significant, if hardly dramatic, im-provements over those achieved in the recent past. Although we have some con-cern about many items, the discussion deals with four -- cotton and synthetictextiles, leather goods, sugar, and jute manufactures -- for which concern isparticularly great.

2.99 In thle case of cotton and synthetic textiles, the Government is pro-jecting mili.-made piecegoods exports in 1978/79 at 600 million square meters.

I/ fl°-eorat:e of Commercial Intelligence and Statistics.

65 -

SEP= TANG(Value in Res. -Ellion)

1975i/76 197S/79 1 978/79 Etimatoo (rProjoetion A) -7ProJection B )

Unlit unit Unit hiComcoditie UnirVt Val O t Valu* j VA1eU Value Q value Velui

Tea . Kg 210 2.31 11 225 2.48 11 225 2.25 10Coffee 000 T 54 0.59 11,000 62 0.68 11,000 65 0.65 10,000Sugar 000 T 1,200 4.50 59750 1,400 5.25 5,750 1,500 4.50 3,000Rice 000 T 25.5 0.09 3,850 50 0.19 5,830 50 0.18 3.500Oil Cakes 000 T 1,100 0.91 830 1,600 1.33 850 1,600 1.33 830Spicess 000 T 50 o.60 12,000 60 0.72 12,000 60 0.72 12,000Cashew Kernel 000 T 50 0.95 19,000 60 1.14 19,000 60 1.08 18,000Fish & Fish Preparations 000 T 56 0.98 17,500 72 1.26 17,500 72 1.26 17,500Tobacco lJrnanufactured 000 T 71 1.07 15,000 90 1.55 15,000 90 1.26 14,000Coal & Coke 000 T 750 0.26 350 2,000 0.70 350 2,000 0.50 250Iron Ore M. T 24-5 1.96 8D 35.5 2.84 80 35.5 2.84 80

Jute Manufactures 000 T 520 2.49 - 555 2.65 555 2.SDHessian 000 T (250) (1.27) (5,080) (260) (1.52) (5,080) (260) (1.43) (5,500)Sacking 000 T ( 60) (0.24) (4,000) ( 70) (0.28) (4 000] ( 70) (0.28) (4,000)Carpet Backiig 000 T (150) (0.80) 5(s35) (160) (o.86) (5,350 (160) (o.90) (5s,6oo)Others 000 T (60) (0.18) (3,000) 65) (0.19) (3,000) (65) (0.19 (3,000)

Cotton Textiles and Manufactures 3-34 4.47 4.67Cotton piecegoods(Mi1l-a) M. Sq. Yts. (430) (1.29) (3) (600 (1.80) (5) (600S (1.80) (3)Cotton piecegoods(Handloo.)y. Sq. Mts. ( 50) (0.35) (7 ( 54 (o.38) (7) ( 54 (0.58) (7)Yarn M. K:g. (10) (°-t52 (t5 (12.6) (0.19) (t) (12.6) (0.19) (15)Apparel (1.00) (1.50) (1.70)Others (0.55) (0.60) (0.60)

Leather & Leather.anufactures includingFootwear 2.12 3.18 3.18

East India Tanned Leather K. Kg. (25.4 (1.10 (43.5 (15.0 (0.65 (43.35 15-0) (o.65) (43.s)Chrome Tanned Leather M. Kg. (11.4 (0.40) (35.1 ( 7.1 (0.25 35 ( 7.t 0.25) (35.51Finished leather (0.30) (0.75 (O075Footwear (O.18) (0.75) (.75JOthers (0.14) (0.78) (0.78e

Handicrafts 2.24 3.25 3.25

Gems & Jewelery (1.20 (1-752 (1.75)Woollen Carpets (0.42) (0.60) (0.60)Others (0.62 (0.90) (0.90)

Chemicals & Allied Products 1.20 1.50 1.50excluding Essential Oils

Tron & Stel 1.17 1.50 1.50Engineering Goods 4.00 5.50 5.50

Sub-Total 3Jf }9.9 38.96

Others 7.11 8.41 8.42

GRAND TOTAL 37.90 48.40 47.58

Note: The totals mUa not add up due to rounding.

g Rs. per unit.

/ On the basis of constant 1975/76 price.

c/ Assuming overall price stability, but allowing for relative price ohanges.

Sour"e: Ministry of Comrce.

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Since 1968/69 India's exports of these items have exceeded 450 million squaremeters only in the international boom year of 1973/74. There seems to be onlya slight chance of achieving 600 million square meters in a normal year withoutthe successful establishment of an export-oriented textile industry producinghigh-potential items such as broad width cloths, canvas, denim, towelling anda variety of synthetic blends. This would require substantial investment,which the industry may have neither the willingness nor the ability to make,unless incentives are offered that are both large and secure for a four tofive year period. The other major question mark is against exports of gar-ments. Growth here has recently been very dramatic, but because of the highprices, limited varieties, and poor quality of mill-made fabrics, the bulk ofit has been in garments made of handloom cloth, which now account for 74% ofthe total. These exports depend on the continuation of a specific fashion,especially in the USA, and are now increasingly constrained by quotas.

2.100 The targets for leather goods and footwear will be difficult toachieve since they imply volume growth of 300% and 450% respectively. Thiswill require a very well developed organization to control design, market andquality. Although the potential exists, we have seen no evidence that suchan organization is likely to develop fast enough to achieve so much in sucha short period.

2.101 Jute manufactures are another major problem. The Government hastaken the positive step of abolishing the export duty on hessian and carpetbacking, and announced, in October, 10% cash assistance for carpet backingand specialty manufactures, effective for the remainder of this fiscal year.It should be noted that this cash assistance does not have any effect oncarpet backing's international competitiveness since it is already at theofficial floor price but, by increasing profitability, it may lead to a de-sirable increase in the industry's rate of investment and marketing efforts,although being so short-term, this is far from probable. The overall worldjute market is likely to continue to be under pressure from synthetic substi-tutes, although jute's price disadvantage was definitely diminished sharplyin 1975. Furthermore, competition in sacking, hessian, and even carpetbacking from Bangladesh, following its devaluation, may be serious ifBangladesh can meet the demand for its exports. Raw jute supply is alsolikely to be a problem, because of its continued poor profitability forfarmers. A shortfall from GOI's target for 1978/79 is quite possible, largelyon account of erosion in hessian.

2.102 The Government expects sugar exports to rise to 1,500,000 tons by1978/79 which is about 20% above the level expected in 1975/76. Our own analy-sis, however, indicates that, with increased pressure of domestic demand, evensustaining the present level may require both a reduction in per capita con-sumption of sweeteners; and a shift of cane to the sugar mills. This willrequire very positive efforts, especially in pricing policy.

2.103 Apart from these four major categories, shortfalls are also quitelikely in cashew, largely because of a serious and worsening problem of supplyof raw nuts from East Africa; in chemicals because of the unprofitability ofmost export items and the consequent likelihood of diversion of production to

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the domestic market following any upsurge in the domestic industrial activity;in tobacco, for which the projected increase in light low-nicotine tobaccodoes not yet appear solidly based in well-developed production program; andin iron ore for which the stagnation of the past bodes ill for the immediatefuture. (On paper, however, India's increases in port capacity should makethe large planned increases possible.) Engineering goods will, in the pres-ent very competitive world environment, face enormous difficulties in achiev-ing anything like the growth of the past four years.

2.104 Considering the medium-term prospects as a whole it appears, notsurprisingly, that a major effort further to improve export profitability andcompetitiveness might achieve the target, partly through increased exports ofsome presently doubtful commodities like jute manufactures, sugar, and tex-tiles and garments. Given the low proportion of the production of severalmajor industries that is now exported, strong incentives designed to raisethe share of exports could have a good medium-term effect.

4. Longer-Term Prospects and Policy Issues

2.105 Only a very rough judgment can be made of the likelihood of thetarget of 8%-10% real growth being achieved in the long run. For this pur-pose, it is useful to divide India's current major exports into three broadcategories: firstly, those whose long-term prospects are poor, and which areunlikely to show a sustained growth of more than about 3% per annum -- largelybecause of demand constraints, or difficulties in increasing supply (e.g. tea,spices, cashew kernels, essential oils, tobacco, semi-finished leather, mostjute manufactures, coir manufactures, and fuels). These items now accountfor about 30% of India's total exports. A second group consists of thosewith intermediate prospects, which could, with more or less effort, achievesustained growth of up to 8% in terms of volume (e.g. oilseed products, cof-fee, raw cotton, sugar, iron ore, handloom and mill-made cotton piece goods,iron and steel, and chemicals). These items also account for about 30% ofIndia's total exports. The final group consists of items with really goodpotential, whose sustained rate of volume needs to be 12% or more if theoverall target is to be achieved. In order of importance they are engineer-ing goods, apparel, gems, other handicrafts, marine products, and finishedleather and leather goods. There may be others still unidentified, butthese are the ones most likely to figure prominently. They are all items,in which India should have a comparative advantage, and for which the prob-lem of profitability will be particularly important.

2.106 Achieving a better performance in the long run will undoubtedlyinvolve going further in tackling the many problems that have been consideredabove. Mention should also be made of two problems, which will be increasintly important in the future.

2.107 If the great opportunitv for expansion of exports from traditiona-industries like handicrafts, carpet weaving, hand weaving of cotton and sil'fabrics, and leather manufactures is to be realized, organizations must be

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created to coordinate marketing, develop design, organize training, and ensurequality. In the leather goods industry, for example, the cobblers of Agramust be organized to produce shoes to meet the demands of Western fashion.Further development of the export of handloom fabrics is thought to requireestablishment of factories especially for export production. The problemsare far from insuperable, and have been tackled successfully so far, sincethese items, along with gem-polishing, have been sources of dynamic exportgrowth. Nevertheless, as they grow, both the number of people involved andtheir geographic dispersion will create a significant burden for organiza-tions like the Leather Development Corporation, the Handloom and HandicraftsExport Corporation, and the All India Handloom Fabrics Marketing CooperativeSociety Limited.

2.108 A far more significant and disturbing problem is that of protectivecontrols in developed markets. These appear to affect garment exports espe-.cially severely. One problem is that the USA has ruled that garments of hand-woven material, made on powered sewing-machines, are not excluded from thequota as handicrafts. Although recent negotiations on this ruling have im-proved the overall quota position, it is expected that the entire allotmentwill be filled well before the end of the USA quota year. Subsequent growthis restricted to 7% per annum in volume terms. In the EEC there are also quotarestrictions, except on items like utility and industrial garments. But suchexports depend on the availability in India of cheap, high-quality, interna-tionally acceptable textiles, which it lacks. Fortunately, garments made ofhandwoven fabrics are outside the EEC quota. The textile industry, if signi-ficantly modernized and improved, will face the same marketing difficulties.The U.S. Tariff Commission is now reviewing a case against imports of shrimpsto the USA, India's major market, and diamonds have been left outside the GSPstructure, as recently announced by the United States. Thus, several of India'smost promising exports are affected.

2.109 A long-term strategy for exports has also to be based on an apprecia-tion of an "efficient" trade policy, not only in a static sense of making useof comparative advantage, but as stressed above, by functioning as an engineof growth for the economy and industry, particularly after import substitutionceases to perform this role. The basic features of an efficient exportpolicy system, namely fairly uniform effective subsidization, free expansionby the most efficient firms, and free access to all desired imports, have beenfrequently discussed in the literature. For many complex reasons, includingthe multiplicity of other policy aims, and a preference for selective controls,a comprehensive reform in the policy environment does not seem likely in the'oreseeable future. However, there are a number of alternative policy-ystems which would improve on the present one.

110 Such a second-best approach to export policy has to start from'e realistic postulate that the Indian trade policy regime has been biasedainst exports and that measures to encourage exports offers substantial netiefits to the economy, particularly given the present high value attachedforeign exchange. This does not mean, of course, that exports should

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be encouraged at any cost, but that the exports should be encouraged in themost efficient possible manner. The principal components of such a policycan be indicated. First, given the foreign trade and exchange rate regimes,most exports do require long-term incentives. Secondly, given the complexityof defining the optimum subsidy for each item, even in theory, the bureaucraticdifficulties of finely differentiating between incentives and the insecuritycreated by frequent policy changes make it imperative that the incentivesystem should be as uniform, simple, and stable as possible. If the exportsubsidy is differentiated, this must be limited to only a few general cate-gories. From a long-term point of view, basing the differentiation on laborintensity of industries would make most economic sense. Thirdly, exportersmust have free access to inputs of international quality through relaxationof the process of indigenous angle clearance. And, finally, the expansionof the most competitive firms on the export side must be encouraged bysecure and attractive incentives.

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D. AID

2.113 In previous reports we had based our discussions of aid require-ments for India almost exclusively on annual balance of payments consid-erations. This approach was realistic particularly during 1973-1975 whenthere was a dramatic rise in imports caused by the re-emergence of sizeablefood import needs due to monsoon failures, and spiralling world commodityprices, especially for petroleum, food, and fertilizer. Although India'sexports also benefitted from the world inflation, its terms of trade deteri-orated almost 30% between 1972/73 and 1974/75. As a result, the trade def-icit increased by US$1.5 billion during these two years. In this situation,the basic emergency need for additional aid was evident and there wasno doubt, with skyrocketing import prices, that India would be able to absorbadditional aid even with a restrained volume of basic imports. Fortunately,India's aid receipts did rise sharply in response to these needs, thanks to

a US$450 million increase between 1972/73 and 1974/75 in net aid transfersfrom the traditional donors and an additional US$230 million from deferredoil payment arrangements with Iran and Iraq in 1974/75. Even so, India hadto draw US$545 million from IMF facilities in 1974/75 and reduce imports otherthan food, fertilizer and petroleum by 20% in real terms.

2.114 Although the trade gap in 1975/76 remained at almost the same levelof the previous year there were signs of some easing of the foreign exchangeconstraint which has dominated balance of payments considerations in recentpast. Adequate foodgrain stocks on hand at the end of 1975/76, the potentialfor continued export growth, the rising pipeline of aid and the expectationsfor increased production in petroleum, fertilizers and steel provide a settingand an opportunity to look at India's aid requirements in a somewhat longertime perspective.

1. Medium-Term Perspectives

2.115 The basic justification for providing development aid to Indiais the obvious need to augment domestic resources, stimulate investment, andincrease economic growth. A higher rate of growth will also promote domesticresource mobilization thus contributing further to economic development andthe reduction of poverty. Over the last three years, large additional dosesof aid have been required merely to offset the drastic shift in the telms oftrade without providing sufficient foreign exchange to increase imports ofneeded raw materials and capital goods. The basic issues over the medium-termare the extent to which exports and aid will provide sufficient foreignexchange to permit a more rapid increase in non-food imports in the future,the impact of investment needs on the structure of non-food imports, and theimplications of these for Government policy and the quantity and compositionof aid. To provide a general framework in which to discuss these issues, wehave projected export growth and import substitution possibilities and madeillustrative assumptions on the level of net aid transfer, over the next three

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years., Of course, these are not intended to be precise indicators of futuredevelopments. Indeed, the whole purpose of such an exercise is to demonstratethe extent to which the actual balance of payments position will depend on thegeneral development strategies adopted by the GOI and the response to these bythe aid donors.

2.116 The medium-term balance of payments projections are summarizedin Table 2.6. As described in section II C of the Report, a 6% to 7% realgrowth in exports should be possible over the next three years. Although nosignificant increase in export prices can be expected next year, due mainly tothe projected decline in sugar prices, it is assumed that some improvementwill occur over the following two years, and that export earnings will grow onaverage by about 15% per annum between 1976/77 and 1978/79. On the aid side,

TABLE 2.6

Balance of Payments

Medium-Term Projections(US$ million)

1975/76 1976/77 1977/78 1978/79

Merchandise Exports 4,300 4,550 5,250 6,000a/

Aid Flows

Disbursements 2,210 2,330 2,540 2,900Debt Service 785 875 930 980Net Transfer 1,425 1,455 1,610 1,920

b/IMF Transactions (net) 130 - 45 -170 -240

Miscellaneous capital and invisibles (net) 500 350 350 350c/

Use of Reserves (- 3 increase in reserves) -435 -110 - -100d/

Import Capability 5,920 6,200 7,040 7,930

a/ Assuming 1975/76 aid commitments by the Consortium and Eastern Europe,and the estimated 1976/77 aid disbursements by OPEC countries, aremaintained in real terms.

b/ Assuming no additional drawings from the IMF after 1975/76.

c/ Assuming that, after 1976/77, sufficient reserves are held to coverat least three months imports.

d/ Estimate of actual imports for 1975/76 and projected requirementsfor 1976/77.

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we have assumed that commitments by the Consortium and Eastern Europe 1/will rise in line with expected world inflation. The 1976/77 Budget estimatesthat OPEC aid disbursements will be about US$370 million in 1976/77, Forsubsequent years, we assume that these will rise in line with expected worldinflation. 2/ Given the projected disbursements from the aid pipeline andthe stream of debt service payments, this implies an increase in the net aidtransfer from about US$1.4 billion in 1975/76 to about USS$1.9 billion in1978/79 in nominal terms. Assuming no additional IMF drawings, a net inflowof miscellaneous capital and invisibles of around US$350 million per annum,and a build-up of reserves to cover three months of imports, 3/ the totalforeign exchange availability in 1978/79 would be around US$7.9 billion. Thiswould permit the value of imports to increase on average by about 10% per annumover the 1975/76 level.

2.117 Taking into account likely increases in import prices, this wouldappear to be a very modest import growth rate. However, as discussed earlierin the Report, given the adequate level of stocks on hand at the end of1975/76 and assuming normal weather conditions, annual foodgrain importscould be kept to between 5 to 6 million tons during the next three years. Ofcourse, as the experience of the last few years has demonstrated, weather inIndia is rarely normal, and the actual foodgrain import requirements in anyparticular year will continue to be dependent upon the success or failure ofthe monsoon. But, on average, the volume of foodgrain imports will not need tobe as high as during 1975/76. Taking this into account, and assuming noincrease in foodgrain import prices, the value of non-food imports couldincrease at about 14% per annum.

2.118 Within the general category of non-food imports, India has substan-tial medium-term import substitution opportunities for three major items --petroleum, fertilizer, and steel. With the dvelopment of Bombay High, thevolume of petroleum imports is expected to be less in 1978/79 than in 1975/76.Assuming prices simply rise in line with general world inflation (i.e. no realincrease) the value of petroleum imports would be only about 5% higher than in1975/76. By 1978/79, India should be almost self-sufficient in nitrogenousand phosphatic fertilizers, with sizeable imports being required for onlypotash and various fertilizer raw materials. Provided prices do not increase

i/ Because of the use of frame agreements, Eastern European aid is assumedto be committed when disbursed.

2/ Based on Bank projections, this would involve a nominal increase of 9%during 1976/77, 8% during 1977/78, and 7.5% in 1978/79. This analysisis presented in current prices to show the real burden of future debtand the impact of changes in the terms of trade.

3/ Although initially India will have more than enough reserves to coverthree months of imports, additional reserve accumulation is required by1978/79 due to the projected increase in imports.

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significantly over the next three years (in the short-term, some price fallsare expected) the fertilizer import bill is likely to be significantly lowerin 1978/79 than in 1975/76. Finally, with steel, domestic production in-creased last year after a decade of stagnation. This, together with a re-strained level of steel demand in India, generated a sizeable surplus forexport. Given that imports will still be required to provide special sizes,sections, and qualities of steel not made domestically, and allowing for in-creases in prices in line with world inflation, the steel import bill willalmost certainly be higher in 1978/79 than in 1975/76. However, becausedomestic production is expected to meet the bulk of requirements, importsof steel are unlikely to return to the high levels of 1971/72 to 1974/75.

2.119 Provided these import substitution opportunities can be realizedefficiently as seems likely, India should be able to sustain a reasonable rateof real economic growth (say, around 6% per annum) without requiring substan-tial additional allocations of foreign exchange for petroleum, fertilizer, andsteel imports. Indeed, given our general price assumptions, the total expendi-ture on these three import items in 1978/79 need not be any higher than in1975/76, and could quite conceivably be less. The implications of thisconclusion are quite clear -- to absorb the additional foreign exchangeprovided by export growth and increases in aid commitments in line withinflation, India must be able and prepared to substantially increase importsof other manufactured goods.

2.120 The prospects for continued export growth and import substitu-tion in major commodities provide the Government of India and the aid com-munity with the opportunity to move the Indian economy to a higher and moredynamic growth path. On the part of aid donors this would require main-taining or increasing aid commitment levels. But it also requires a consciouspolicy by the Government of India to raise investment and liberalize imports.Without an all-out program to increase capital expenditures in the prioritysectors, the need for foreign aid -- as a contributing factor to growth --would decline. In the absence of import liberalization, the transfer offoreign resources cannot be affected and the investments would remain sup-pressed. Within this scenario, export promotion has the triple function ofproviding the necessary base for debt servicing (creditworthiness), helpingthe country move towards a more competitive trading pattern, and providing thedynamic demand needed to stimulate domestic industrial production.

2.121 Given the need of the Indian economy for additional investible re-sources and the suppressed and low level of industrial imports, the economyshould be able to absorb productively much higher volumes of intermediate andcapital goods. There is little doubt that, from the mid-1960s until 1974/75,the growth of the industrial sector was constrained by a severe shortage ofraw materials, components and spare parts. Over the period 1965/66 to 1972/73expenditures on imports of intermediate goods (other than petroleum, fertil-izers and steel) fell on trend by 0.2% per annum, and imports of machineryand equipment fell by 7% per annum. From 1972/73 to 1974/75, with the gen-eral shortage of foreign exchange and rapid increases in world prices, the

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real level of these imports fell another 20%. Even with the policy emphasison import substitution, domestic production was unable to provide the multi-tude of inputs, at competitive prices, required to fuel faster expansionof the industrial sector. Although this year the constraint to the growthin the industrial sector appeared to come from the demand side, a revival --both from higher utilization and the expansion of capacity -- during thenext few years would be expected to increase substantially the demand forthe imports of intermediate and capital goods. Indeed, if the economy wereto get on a sustained growth path, even our assumptions with respect topetroleum, fertilizer and steel imports may prove too conservative.

2.122 With the Budget for 1976/77, the Government of India has taken anan important step towards using the opportunity outlined above to boost therate of economic development. The proposed increase in plan outlay for1976/77 should provide the basis for increased investment throughout theeconomy, especially in the priority sectors of agriculture, energy andindustry. In addition, the Government continues to recognize the importance ofexports, mainly as a source of foreign exchange, but also as an outlet forindustrial production. At the time of writing, the details of the Government'simport policy for 1976/77 are unknown, but it is to be hoped that liberaliza-tion will be permitted to support the higher level of planned investments.

2.123 Provided the Government of India adopts this course of action,the need and justification, at least over the medium-term, for maintainingaid commitments in real terms (rising in nominal terms) is clear. Of coursethe actual foreign exchange requirements of India will continue to fluctuatefrom year to year depending on the need for foodgrain imports. However, it isessential that a high level of aid disbursements be maintained even in goodyears to provide a buffer (either in the form of foodgrain and raw materialstocks, or foreign exchange reserves) against the impact of subsequent, andinevitable crop failures.

2.124 The flow of net aid to India will depend, in addition to the levelof aid commitments, on the speed with which committed funds are disbursedon the one hand, and on the profile of debt service obligations on the other.In the recent past, the need for quick disbursements often became acuteand was perhaps the most compelling reason for the annual debt reschedulingoperations. In future the stability in the flow of disbursements will beno less important, and if resort to frequent debt reschedulings are to beavoided, the disbursement coefficients of various types of aid commitmentsmust be taken into account in setting the commitment targets. The requirementfor quick disbursing assistance is not likely to be less in the near future.

2.125 A sustained increase in the net transfer of foreign resources willalso require a continued effort to restrain the impact of the future debt bur-den on India, both through the softening of aid terms and a smoothing of thedebt service profile. Provided the real growth of exports remains at around6% to 7% per annum, and the world inflation does not completely subside, thedebt service ratio, 1/ will not return to the high levels of 1972/73 and 1973/74, even with increasing commitments of aid. However, there is a bunching in

1/ Debt service payments divided by merchandise exports.

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India's debt obligations towards the end of the decade due to the repayment ofshort-term oil credits and IMF drawings, contracted over the past two years.

2.126 Finally, as long as there is a need for additional foreign exchange,there is a need to ensure that the conditions of aid are such that the nettransfer is as useful as possible. In particular, it is important that Indiareceives sufficient quantities of free foreign exchange (either in the form ofuntied program loans, local cost financing, or debt relief) to ensure that thecomposition of imports can be adjusted to meet the requirements of the economy.For those loans and grants which are tied to specific imports it is importantthat the goods provided are in short supply and of a high priority within thethe Government of India's development policy. Faiure to do this would slow therate of disbursements from the aid pipeline. In the medium-term, given theimportance of reviving the industrial sector, there will be a need for sub-stantial imports of raw materials, components, spare parts, and various itemsof machinery and equipment.

2. Aid Requirements in 1976/77

2.127 The projected balance of payments position for 1976/77 (summarizedin Table 2.7), reflects the general trends outlined in the medium-term analy-sis -- continued export growth, reduced foodgrain imports, the realizationof import substitution opportunities for major import items, and an increasedlevel of disbursements from the aid pipeline. In addition, India will beentering the year with high foreign exchange reserves. Therefore, providedthat the Government of India adopts a conscious policy to raise investment andliberalize imports, and the aid donors respond with increased aid commitments,there will be an opportunity to import the items required to stimulate growthin the industrial sector.

2.128 With the commencement of production from Bombay High, crude petroleumimports are expected to rise by only 500,000 tons during 1976/77 -- no increaseis expected in the imports of petroleum products. Petroleum prices are assumedto simply rise in line with general world inflation. 1/ For steel, domesticproduction should be able to supply all of the increase in domestic consump-tion, with imports being required for only special sizes, sections, and qual-ities of steel. With a pickup in industrial activity, a moderate increase inimports of most nonferrous metals (including copper and lead) is expected.Allowing for price increases, the total expenditure on canalized imports ofsteel and nonferrous metals is expected to rise to about US$240 million in

1/ Using the Bank's price projections, this assumes that petroleum pricesare 9% higher in 1976/77 than in 1975/76. Given the price increase oflast September, this implies that any further price increases during1976/77 would be small.

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Table 2.7

Balance of Payments(US$ million)

PreliminaryEstimates Projected

1973/74 1974/75 1975/76 1976/77/a

Merchandise Exports 3,239 4,143 4,300 4,550

Merchandise Imports 3,971 5,739 5,920 6,200of whichFoodgrains 635 1,028 1,210 1,000POL 719 1,451 1,450 1,620Fertilizer & Fertilizer Raw

Materials 291 725 950 650Steel and Non-ferrous

Metals /b 382 630 210 240Other Imports 1,944 1,905 2,100 2,690

Trade Balance -732 -1,596 -1,620 -1,650

Debt Service 692 779 785 860of whichConsortium 601 669 680 690Eastern Europe 79 97 85 145Other 12 13 20 25

Gross Aid Disbursements 1,249 1,766 2,210 1,510of whichConsortium_ 1,074 1,289 1,560 1,2551astern Europe 172 199 75 40OPEC - 230 475 200Other 3 48 100 15

IMF Transactions (net) 75 530 130 -45

Miscellaneous Capital and Invisibles(net) 205 41 500 350

Use of Reserves or Unfinanced Gap(- = increase in reserves) -105 38 -435 695

/a Excluding disbursements, and any additional debt service, from newcommitments.

/b Canalized imports only.

Source: Statistical Appendix Table 3.9 and IBRD estimates.

- 77 -

1976/77. Expenditures on fertilizer imports are expected to fall substan-tially this year due to the large stocks on hand, increased domestic produc-tion of nitrogenous and phosphatic fertilizers, and a reduction in worldpriceS. Finally, we have provided US$2,690 million for other imports.Of thiLs, US$140 million relates to imports for the Kudremukh Iron Ore Projectfinanced by aid disbursed by Iran in 1975/76 and to be disbursed in 1976/77.The remaining US$2,550 million for other imports is an increase of 21% overthe 1975/76 level, or, assuming an 8% increase in prices, a 12% growth in realterms. Of course, this is such a diverse category that it is impossible to bevery specific. However, as outlined above, a large increase in imports of rawmaterfials, components, spare parts, and various items of machinery and equip-ment is necessary to provide a basis for a revival of the industrial sector.In particular next year, other imports will be increased due to invest-ments in the energy sector, and as a result of higher disbursements fromthe project aid pipeline.

2.129 With a 6% increase in export earnings, the trade deficit will beabout US$1,650 million, marginally higher than during 1975/76. Debt serviceobligations (excluding the IMF) will be about US$65 million higher next year,due in large part to the first instalment of the repayment of the USSR wheatloan. Including payments to the IMF 1/ the gross financing gap will thereforebe about US$2.55 billion,slightly higher than in 1975/76. Offsetting this,disbursements out of the aid pipeline are expected to be US$370 million higherduring 1976/77, at US$1,510 million. Assuming the net inflow of miscellaneouscapitaLl and invisibles will be about $350 million, lower than in 1975/76 butstill well above the level of previous years, the net financing requirementfrom new aid commitments and foreign exchange reserves will be in the range ofUS$700 million.

2.130 Even with a liberalized import policy for 1976/77, there will besome time lag before this is fully reflected in actual import levels; forthis reason, the projected net financing gap for 1976/77 is US$170 millionlower than in 1975/76. However, the gap is still sizeable, especially whenthe various uncertainties are taken into account. Foreign exchange avail-ability could be significantly reduced by slower than expected exportgrowth and a fall in the inflow of private remittances to a level more inline with trends before 19J5/76. On the other hand, foreign exchange re-quirements could be increased by the need for higher foodgrain imports incase of monsoon failure and a slower than expected realisation of the im-port substitution opportunities for petroleum, fertilizer, and steel. Giventhis general outlook and the uncertainties in the picture, it is importantthat the Indian economy has flexibility on the balance of payments side torespond to an economic revival in 1976/77. The high level of foreign

1/ Because of the complex formulae involved and the possibility for re-scheduling, it is impossible to accurately project the future level ofrepayments to the IMF. For 1976/77, we have included only interest andservice charges.

- 78 -

exchange reserves available at the beginning of the year as well as pos-sibility of further recourse to the IMF will provide some of this flexibility.However, reserve use and short-term borrowing cannot support a sustainedexpansion of imports over the long-term. To achieve this, and to support theGovernment's efforts to accelerate the rate of economic development, the aidcommunity must continue to respond to India's needs with no less vigor thanwas displayed during the recent crises years.

S TA T I S T I C A L A P P E N D I X

ECONOMIC SITUATION AND PROSPECTS OF INDIA - 1976

Statistical Appendix

Table No. Table of Contents

HUMAN RESOURCES

1.1 Annual Population Estimates for the years 1961-81

1.2 All India Family Planning Performance - by Method

1.3 Education - Progress of Enrolment

1.4 Workers According to Sex and Activity

1.5 Employment in the Organised Sector - by Industry

1.6 Employment Exchange Statistics

1.7 Number of Industrial Disputes, Workers Involved and MandaysLost - by Public and Private Sectors

NATIONAL ACCOUNTS

2.1 Net Domestic Product-at Factor Cost - by Industry ot Origin

2.2 National Income and Some Related Aggregates (at current prices)

2.3 National Income and Some Related Aggregates (at 1960/61 constant prices)

2.4 Savings and Investment (at current prices)

2.5 Savings and Investment (as % of NNP at factor cost)

FOREIGN TRADE & BALANCE OF PAYMENTS

3.1 Principal Exports

3.2 Selected Imports

3.3 Import Summary

3.4 Destination of Exports

3.5 Origin of Imports

3.6 Unit Values of Selected Import Items

3.7 Unit Values of Selected Expert Items

Table No.

3.8 Gold and Foreign Exchange Reserves

3.9 Balance of Payments

AID & DEBT

4.1 Aid and Debt Statistics

4.2 Estimated Gross and Net Aid Flows - 1975/76

4.3 Project and Non-Project Aid Pipeline - 1975/76

4.4 Debt Service Payments on External Public Debt

PUBLIC FINANCE

5.1 Consolidated Finances of Central and State Governments

5.2 Central Government Finances

5.3 State Government Finances

5.4 Tax Revenue - Centre and States

5.5 Current Expenditures - Centre and States

5.6 Transfers between Centre and States

5.7 Economic Classification of the Central Government Finances

5.8 Plan Expenditures by Major Sectors (at current prices)

5.9 Plan Expenditures by Major Sectors (at 1960/61 constant prices)

5.10 Plan Expenditures by Major Sectors (in percentages)

MONEY CREDIT & PRICES

6.1 Money Supply

6.2 Monetary Resources

6.3 Deficit and Change in Monetary Resources

6.4 Government Market Borrowing - (Net)

6.5 Selected Monetary Policy Instruments

6.6 Selected Borrowing and Lending Rates - Gross Yields

Table No.

6.7 Commercial Banks Savings and Time Deposits and Small Savings

6.8 Scheduled Commercial Bank Advances - Priority Sectors andFood Procurement

6.9 Assistance by Term Lending Institutions to the Industrial Sector

6.10 Index Numbers of Wholesale Prices - by Years

6.11 Index Numbers of Wholesale Prices - by Months

6.12 Adjusted Wholesale Price Index

6.13 Some Domestic Price Ratios

6.14 Consumer Price Index Numbers for Industrial Workers & UrbanNon-Manual Employees

AGRICULTURE

7.1 Production of Principal Crops

7.2 Public Distribution of Foodgrains

7.3 Availability of Cereals & Pulses

7.4 All India Index Numbers of Foodgrains, Non Foodgrains & All Crops

7.5 Foodgrains Production by Major States

7.6 Foodgrains Consumption and Supply (1970-80) - Actual, Estimatedand Projected

7.7 Land Utilization Statistics 1972/73

7.8 Area under Crops 1972/73

INDUSTRY AND TRANSPORT

General

8.1 Percent Change in the Index of Industrial Production

8.2 Production of Selected Industries

8.3 Installed Capacity and Capacity Utilization Ratios of SelectedIndustries

8.4 Gross and Net Fixed Assets in the Corporate Sector

8.5 Profitability Ratios of Medium & Large Public Limited CompaniesAccording to Industrial Classification

8.6 Investment in Public Sector Enterprises

Table No.

8.7 Capital Employed, Gross Profit and Net Profit of SelectedPublic Sector Enterprises

Steel & Fertilizer

8.8 Production and Consumption of Finished Steel

8.9 Production of Saleable Steel - by Main Producers

8.10 Production, Imports, Distribution and Consumption of Fertilizers

Transport

8.11 Indian Railways - Freight & Passenger Traffic

8.12 Finances of the Indian Railways

8.13 Port Traffic

Table 1.1

ANNUAL POPULUTION ESTIMATES FOR THE YEARS 1961 - 1981

Annual AnnualYear Total Population Growth Year Total Population Growth

(March 1) (o000) Rate (March 1) ('000) Rate

1961 442,147 _ 1971 555,496 -a 2.35

1962 4529095 2.25 1972 5689550 2.35

1963 462,312 2.26 1973 581,911 2.35

1964 472,853 2.28 1974 595,586 2.35

1965 483,729 2.30 1975 609,582 2.35

1966 494,903 2.31 1976 623,907 2.35

1967 506,385 2.32 1977 638,506 2.34

1968 518,184 .2.33 1978 653,383 2.33

1969 530,310 2.34 1979 668t541 2e32

1970 542,719 2.34 1980 683,984 2.31

1981 699,716 2.30

a The Census population total for 1961 and the March 1, 197t figure were439,073,000 and 546,372,000 respectively. On the basis of sample surveysconducted subsequently by the office of the Registrar General, it was estimatedthat the final population figures were subject to under-enumeration errors of0.7 % in 1961 and of 1.67 % in 1971. The figures used above have been correctedfor such under-enumeration and provide the base figures from which the populationtotals for other years were calculated.

Source: IBRD, New Delhi Office.

Table 1. 2

ALL-INDIA FAMILY PLANNING PERFORMAICE _ BY METHOD(in numbers)

Conventional Contraceptives MedicalSterilization Government Commercial Termination of

Year Male Female Total IUD Distribution Distribution Total Pregnancy (MTP)

1966/67 785,378 101,990 887,368 909,726 464,605 464,6051967/68 1,648,152 191,659 1,839,811 668,979 475,236 475,2361968/69 1,383,053 281,764 1,664,817 478,731 742,373 218,523 960,896

1969/70 1,055,860 366,258 1,422,118 458,726 1,098,406 410,972 1,509,3781970/71 878,800 451,114 1,329,914 475,848 1,230,317 732,083 1,962,4001971/72 1,620,076 567,260 2,187,336 488,368 1,429,885 924,306 2,354,191

1972/73 2,612,744 508,682 3,121,426 353,149 1,295,127 1,092,778 2,387,905 24,1381973/74 403,107 539,295 942,402 b/ 371,594 1,386,597 1,614,306 3,000,903 44,1571974/75 608,203 719,656 1,327,930 -'417,751 887,639 1,541,373 2,429,012

Apr-Oct.

1974/75 248,523 356,440 604,963_,, 207,710 1,402,624 901,905 2,304,529 36,2231975/76 446,393 467,813 928,100 250,794 1,621,844 830,952 2,452,796 75,8 93 cl

Cumulative 12,584,668 4,600,076 17,198,709 1/5,698,572 241,746 J0since inception

a/ Refers to equivalent contraceptive users determined by dividing the total number of contraceptivesdistributed by the estimated average number of times the given contraceptive is used during theperiod under consideration, eg., 72 condoms over a year period.

/ Total exceeds addition of male and female sterilizations, because in a number of cases breakdownis not available.

c/ Data are incomplete.

Source: MinistrY of Health and Family Planning.

Table 1.3

EDlCATION - PROGRESS OF ENROLMENT

Enrolment in millions Percentage of the corres onding age grorns1950/51 1965/66 1968/69 1973/74 1974/75 1978/79 1950/51 1965/66 1968/69 1973/74 1974/75 1978/79

(target) (target)Pr mYLevel(Classes I _ V)

Boys 1308 32o2 34.2 39.2 39.2 59 94 95 100 98Girls 5e4 18.7 20.2 2400 24.6 24 57 57 66 66 82

Total 19.2 50 15 d4^4 Llz 63.8 MA3 A. 77 76 8 5 31Middle Level

(Classes Vl - VIII)

Borys 2,6 7,7 8.8 10.2 10,5 21 44 45 48 48 60

Gitls 6,5 2.9 3.3 4-5 4.7 5 17 19 22 23 33

To-tali 3. 1 10.5 laLl 14.7 15@2 2t*6 351 _U l6 56

SecondArj.Leve~l

Boys 1.0 4,1 5.1 5.4 6.0 8.0 9 26 29 31 30 36

Girls 0.2 1.2 1.7 2.1 2.3 3.2 2 8 10 12 12 15

Total 1.2 do 6.8 id7. 8 17 20 22 22 6

University .2/ 0.3 1.72 7 32 2.9 All

. Refers to population in following age groupsS

6 11 years - Classes I - V11 - 14 years - Classes VI- VIII14 - 17 years - Secondary

Enflolment as percentage of corresponding age group exceeds 100 in some instances because of the presence of children both younger andOlder than indicated in the age group for these classers

p Flus 7.8 million proposed part-time students.

_q/ Refers to general education in commerce, arts & science courses in the universities. Excludes engineering, medicine and technical coursesCOnducted in autonomous institutions.

Sour2ps Ministry of Education.

Table 1.4

WORKERS ACCORDING TO SEX AND ACTIVITY(in millions)

1961 1As T °f As offTotal Total

Male Female Total Workers Male Female Total Workerc,

'.otal lWorkers 129.11 5 MUM 100A00 i401 z i 7 100

i-tivators 66.41 33,11 99.53 52.8 68.91 9.27 78,18 43.3Agri ultural Labourers 17.32 14,20 31052 16.7 31.7( 15,79 47.49 26.3Other Allied Agr. Activities 4.03? 1.20) 5.22) 2.8 3.51 0.78 4.29 2.4Mining and Quarrying ) ) ) 0.830 0.12 0.92 05

Household Industry 7.37 4.67 12.05 6.4 5.02 1.33 6.35 3,5mainufaoturing (other than

household) 7.19 0.79 7.98 4.2 9.85 0.87 10.72 5,9ConstrLuction 1,82 024 2.06 1.1 2.01 0.20 2.22 1.2Trade aid Commerce 6.83 0.82 7.65 4.1 9,48 0.56 10,04 5.6Transport and Communications 2.95 0.07 3.02 1.6 4.26 0015 4.40 2.4

Other Services 15.20 4.37 19.57 10X4 13.54 2.23 15.77 8.7

Note: The data for the two Censuses are not comparable on account of changes in the definition of a tworkertin the 1971 Census. In 1961, any participation in economic activity by an individual, led to hisinclusion in the Census. In 1971, persons have been categorised as workers on the basis of theirmain activity; data on secondary work have been presented separately. The changed definition there-fore explains the fall in absolute number of workers in the recent Census,

Sources: Census of India 1961, General Economic Tables, Vol. I (Part IIB).Census of India 1971, Economic Characteristics of Population, Paper 3 of 1972,

Table 1.5

EkIflYENT IN THE ORGANISED SECTOR - BY INDUSThY(in thoueandnJ

g/ Average Compound Grow-tb Rate1961 1966 1969 1975 (peroerrt ar annum)Public Private Total Public Private Total Public Private Total P Private Total 1962-66 1967-69 1970-1975

Plantations=, orestry etc. 180 670 850 227 903 1,130 261 813 1,074 313 820 1,133 5.9 -1.7 0.9Mining and Quarrying 129 550 679 160 507 667 174 422 596 681 120 801 -0.3 _3.8 5.0Manufacturi.ng 369 3,020 3,389 670 3,858 4,528 757 3,772 4,530 1,101 4,130 5,231 6.o n.e. 2.4Construction 602 240 842 766 254 1,020 788 154 942 983 130 1,113 3.9 -2e7 2.8Public Utilities 224 40 264 303 42 345 369 44 413 553 42 595 5.5 3.8 6.3Trade & Goumerce 94 160 254 155 330 485 184 369 555 478 350 828 13.8 3.7 6.9Transport & Coomunioations 1,725 80 1,805 2,094 123 2,217 29159 108 2,267 2,394 77 2,471 4.2 0-7 1,5Services 3,427 280 4,007 5,004 796 5,800 5,334 922 6,256 6,356 1,130 7,486 7.7 2.5 3.0

TOTAL 7.0S0 5.040 12.090 9,379 6.813 16.192 1.027 6604 16.60 2, 79 168 .2

a/ As of 31 MDarch of each yeax.

1/ Establishments of 25 workers and over. Reporting is cispulsory.O/ Includes employment in establishments of 10 workers and over. Reporting for the category of 10-24 workers is on a voluntary basis, and the extent of coverage is not known.3/ Provisional.

Source: Ministry of Labour, Director General of Employment and Training.

Table 1.6

WLOYMENT EXCHANGE STATISTICS(in numbers)

(At end of year) (Monthly average in thousands)Applicants Employers Vacancies

Exchanges on register using notified by(000s) Registrants exchanges emnloyers Placements

1951 126 329 115 6 41 35

1956 143 759 139 5 25 16

1961 325 1,833 269 10 59 34

1966 396 2,622 323 13 71 42

1967 399 2,740 326 11 58 36

1968 405 3,012 337 12 60 35

1969 416 3,424 350 12 60 36

1970 426 3,726 376 13 62 37

1971 434 4,602 428 13 68 42

1972 446 5,928 486 13 72 42

1973 461 7,714 512 13 73 43

1974 475 8,378 431 11 56 33

1975 491 9,137 443 11 53 31(Jan-Aug)

Source: Labour Bureau Simla, Indian Labour Journal0

Table 1.7

NTURBER OF INDUSTRIAL DISPUTES, WORKERS INVOLVED AND MANDAYS LOST - BY PUBLIC & PRIVATE SECTORS

Disputes Workers Involved Mand&ys Lost(in thousands)

Year Public Private Total Public Private Total Public Private Total

1961 - - 1,357 - - 512 212 4,707 4,919

1962 177 1,314 1,491 128 577 705 532 5,588 6,121

1963 117 1,354 1,471 68 495 563 277 2,991 3,269

1964 254 1,897 2,151 154 849 1,003 747 6,977 7,725

1965 198 1,637 1,835 102 889 991 704 5,766 6,470

1966 345 2,211 2,556 240 1,170 1,410 1,277 12,570 13,846

1967 441 2,374 2,815 368 1,123 1,490 2,540 14,608 17,1481968 386 2,390 2,776 434 1,236 1,669 1,972 15,272 17,244

1969 389 2,238 2,627 337 1,490 1,827 1,424 17,624 19,048

1970 446 2,443 2,889 439 1,389 1,828 2,062 18,501 20,563

1971 385 2,367 2,752 364 1,252 1,615 2,253 14,292 16,546

1972 538 2,705 3,243 416 1,321 1,738 3,346 17,198 20,544

1973 714 2,656 3,370 789 1,757 2,546 3,392 17,234 20,626

1974 597 2,341 2,938 1,369 1,485 2,855 13,088 27,174 40,262

1975-a/ 329 1,236 1,565 282 621 903 1,473 17,772 19,245

ai Provisional. )

Source: Ministry of Labour, Indian Labour Statistics, 1974. Data for the years 1974 and 1975 were

obtained separately from Labour Bureau, Simla.

Table 2.1

NET DOMESTIC PRODUCT AT FACTOR COST - BY INDUSTRY OF ORIGIN

NDP at 1960/61 prices (in Rs. billion) NDP Growth Rates

Prinarya Secondary Tertiary Primary Secondary Tertiary

Year Sector _ Sector Sector Total Sector Sector Sector Total

1960/61 69.65 25.49 38.21 133.35 - -_

1961/62 70.32 27.44 40.49 138.25 0.96 7.65 5.96 3.67

1962/63 68.69 29.30 43.04 141.03 -2.32 6.77 6.29 2.01

1963/64 70.61 32.23 45.98 148.82 2.79 10.00 6.83 5.52

1°64/65 76.82 34.67 48.79 160.28 8.79 7,57 6.11 7.70

1965/66 66.67 35.53 50.34 152.34 -13.22 2.48 2,7' -4.97

1966/67 66.17 35.88 51.83 153.88 - 0.75 0.99 2.96 1.01

1967/68 76.07 37.01 53.67 166.75 14,96 3-15 3.55 8,36

1968/69 76.91 38.41 56.32 171.64 1.10 3.78 4.94 2.93

1969/70 81.71 41.79 59.28 182.78 6.24 8.80 5.26 6.49

1970/71 87.26 42.96 61.97 192.19 6.79 2.80 4.54 5X15

1971/72 85.98 44.34 64.83 195.1'j - 1.47 3.21 4.62 1.54

1972/73 79.19 46.43 67.08 192.70 - 7.90 4-71 3.47 -1.26

1973/74 i 85.87 46.71 69.21 201.79 8.44 o.60 3,18 4.72

1974/75 is 82.77 47.69 71.40 201.86 - 3.61 2.10 3.16 0.03

ij Including mining and quarrying.bj Provisional.i/ Quick estimate.

Source: Central Statistical Organization.

Table 2.2

NATIONAL INCOME AND SOME RELATED AGGREGATES(at current prices in Rs. billion)

NNP at Factor Depreciation GNP at Factor Factor GD? at Factor Indirect GDP atCost Allowance Cost Income Cost Taxes less MarketYear Payments _ Subsidies Prices

1960/61 132.63 7.36 139.99 0.72 140.71 9.47 150.181961/62 139.87 8.12 147.99 0.98 148.97 10.80 159.771962/63 147.95 9.32 157.27 1.08 158.35 12.64 17(.991963/64 169.77 10.01 179.78 1.12 180.90 15.66 196.561964/65 200.01 11.12 211.13 1.47 212.60 17884 230.44

1965/66 206.37 12.29 218.66 1.64 220.30 20.82 241.121966/67 238*83 13.96 252.79 2.30 255.09 21.82 276.911967/68 281.02 15.50 296.52 2.58 299.10 24.24 323.341968/69 287.29 16.88 304.17 2.55 306.72 27.31 334.031969/70 317.70 18.99 336.69 2.71 339.40 30.59 369.99

1970/71 344.76 20.82 365.58 2.84 368.42 35.23 403.651971/72 365.35 22.79 388.14 2.91 391.05 40.72 431.771972/73 a/ 395.73 25.04 420.77 3.11 423.88 45.99 469.871973/74 491.48 27.54 519.02 3.32 522.34 51.57 573.911974/75 601.20 32.55 633.75 3.55 637.30 63.05 700.35

a/ Provisional.:/ Quick estimate.

Source: Central Statistical Organization.

Table 2.3

NATIONAL INCOME AND SOME RELATED AGGREGATES(at 1960/61 constant prices in Rs. billion)

NNP at Factor Depreciation GNP at Factor Factor GDP atCost Allowance Cost Income Factor

Year Payments Cost

1960/61 132.63 7-36 139.99 0.72 140.71

1961/62 137.29 7.8At 145.13 0.96 146.09

1962/63 139.93 8.87 148.80 1.10 149.90

1963/64 147.71 9.15 156.86 1011 157.97

1964/65 158.85 9.85 168.70 1.43 170.13

1965/66 150.82 10.31 161.13 1.52 162.65

1966/67 152.40 10.84 163.24 1.48 164.72

1967/68 164.94 11.46 176.40 1.81 178.21

1968/69 169.91 11.93 181-84 1.73 183.57

1969/70 180.92 12.58 193-50 1.86 195-36

1970/71 190.33 13.01 203.34 1.86 205.20

1971/72 -a 193.67 13.41 207.08 1t88 208.96

1972/73 1 190.77 13.83 204.60 1.93 206.53

1973/74 a/ 200.34 13.69 214.03 1.45 215-48

1974/75 .h 200.75 14.03 214.78 1.11 215.89

a/ Provisional.

h/ Quick estimate.

Source: Central Statistical Organization.

Table :' 4

SAVINGS ANTD 1NVESTSENNT(at current prices in Rs. billion)

1960/61 1961/62 1962/63 1963/64 1964/65 1965/66 t966/67 1967/68 1968/69 1969/70 1T70/71 1971/72 1972/73 1973/74 14/75

Public Sector Savirngs 3,09 3.63 4.08 5,39 6.11 5.92 4.07 3.55 5.22 6.45 3.32 8.01 7.91 11.90

of whijh:

GOV5rnnent Administration-a/ (2.98) (3.66) (4.08) (5-13) (5.98) (5.42) (4.08) (3.60) (5.43) (6.26) (7.49) (7.40) (6.85) (9.90)

GOverp,ment Companies andStatutory Corporations (0.11) (-0.03) n.s. (0.26) (0.13) (0,50) (-o.Oi) (-0o05) (-0,21) (0.19) ((083) (0.61) (1.06) (2.00)

Private Corporate Sector Savings 1t17 1.35 1.41 1.49 1.05 0.9, 1.07 0.70 0.77 1.47 2.10 2.71 2.65 4-32

of whiCh.

NOn-Government Corporate Sector-b/ (1.09) (1,28) (1.31) (1.36) (0.93) (0.83) (0.90) (0,50) (0.59) (1.21) (1.89) (2.47) (2.30) (3,94)

CooPerative Banks and Societies (0.08) (0,07) (0.10) (0,13) (0.12) (0.1E) (0,17) (0.20) (0,18) (0.26) (0.21) (0.24) (0.35) (0.38)

household Sector Savings 9.01 7.33 9.95 11t37 13.07 18.71 26.04 26.02 25.35 32.30 34.82 35.99 47.96 50.38

of which.

Fio4noial Assets (4.56) (4-89) (4.99) (7-43) (7.14) (10.f72) ( 8.64) ( 9.43) ( 8.59) ( 9.16) (13.63) (15.30) (20.61) (30.01)

PhYsical Assets (4.45) (2.94) (4,96) (3.94) (5.93) ( 7.99) (17.40) (16.59) (16.76) (23.14) (21,19) (20.69) (27.35) (20.37)

Total Net Domestic Savings 13.27 12.81 15.44 18.25 20.23 25.62 31.18 30.27 31-3 4 0.22 45.24 46.71 58*52 66.60 79.13

Foreign Oavings 408t 3.45 4.40 4.40 6.00 5.99 9.23 8.37 4.16 2.41 3.94 4-79 2.97 4.37 6.43

NLet Domestic CapitalFormation 18.08 16.26 19.84 22.65 26.23 1.61 4041 .4 550 420 6 49.18 j1.1-0 61.49 7 07 q5.56

Depreciation 7.36 8.12 9.32 10.01 11.12 12029 13,96 15.50 16.88 18.99 20.82 22.79 25.04 27.54 32.55

25,44 24Ai8 29.16 32.66 37355 43.90 54.3 A 54.14 52.38 61.62 70.00 o 74.2 B653 98.51 118.11

a/ Including departmental commercial enterprises.

Y/ 1Ooluding retained earnings of branches of foreign companies.

Source: Cerltral Statistical Organization.

Table 2.5

SAVINGS AIID INVESTMENT

(as per cent of Net National Product - at factor cost)

1960/6 1961/62 1962/63 196 3/ 94/65 1965/66 1966/61 1967/68 1968/69 1969/70 t970/7t 1971/ 2 _Q72/75 2975|

Public Sectoi Savings 2.3 2.6 2.7 3.2 3.1 2.08 -7 1.3 1.8 2.0 2.4 2.2 2.0 2.4 n.a.

of whion.:

Govervaent Adaiiniotration (2.2) (2.6) (2.7) (3.0) (3.0) (2.6) (1.7) (1.3) (1.9) (1-9) (2.2) (2.0) (1-7) (2.0) n.a.Gove:r-nment Companies and

St;tutory Corporations (0,1) n.s. n.s. (0.2) (o.1) (0.2) n.e. n.s. (-0.1) (0.1) (0.2) (0.2) (0-3) (0.4) t.a.

Pri-v,ate Corporate Sector Savings 0.9 1.0 1.0 0.9 0.5 0.5 0.5 0.3 0.3 0.5 0.6 0.8 0.7 0.9 n.a.

of which:

Non-Government Corporate Sector / (0.8) (0.9) (o.9) (0.8) (o 4) (0.4) (0.4) (0.2) (0.2) (0.4) (0.5) (0.) 0o.6 (0.8) na..Cooperative Barks and Societies (0.1) (0.1) (0.t1 (0.1) (0,1) (0.1 (0.1) (o.i) (0.1) (0.1) (0.1) ( (. (o.1) n.a.

Household Sector Savings 6.8 5.6 6.7 6.7 6.5 9.1 10.9 9.2 8.8 10.2 10.1 9.8 12.1 10.3 n.a.

of which:

Financial Aasats (3.4) (3.5) (3.4) (4.4) (3.5) (5.2) (3.6) (3.3) (3-0) (2.9) (4.0) (4.2) (5,2) (6.1) n.a.Physical Assets (3.4) (2.1) (3 4) (2.5) (3 0j (3.9) (7.3) (5.9) (5,8) (7.3) (6,1) (5.6) (6.9) (4.2) n.a.

Total Net Domestic SavifE -t o 9-2 10.4 t o.8 t O. Q t 2. 4 15. 10.8 tO.9 _1W MJ.t J& 1j4. j6 13r2

Foreign Savings 3.6 2.4 3.0 2.6 3.0 209 3.8 3.0 1.4 0-7 1.2 1.3 0.7 0.9 1.0

Net Domestic Caoital Formation lJ 11.6 .A 5. 14.1 15j3 J6.9 1j38 5 LA. 14.3 14.1 ti.s 14.5 14. 2

Depreciation 5.6 5.8 6.3 5.9 5.6 6.o 5.8 5.5 5.9 6.0 6.o 6.2 6.3 5.6 5-4

Gross Domestio Capital Formation tJ42 17.4 ilEl 1.3 18.7 2.3 2z.7 .12A 18.2 19.4 2±13 202 2 1 I2 20t 1t9.6

a/ Inclulding departmsntal commercial enterprises.

b/ Including retained earnings of branches of foreign companies.

Source: Central Statistical Organization.

Table 5.1

PRINCIPAL EXPORTS

(Value US$ million)

Average CompoundApril - September Growth Rate in ValucUnit t950/51 t960/61 1965/66 968/69 t972/723L _ 1974/75 _ 1914 1'375 - (2er Gent Der auValue Quan- Value Quan- Value Quar. Value Quan.. Value quan. Valuno Quan Value Quan- Value Quan.. Value 195/5t- 1968/69..

tity tity tity tity tity tity tity tity 1973/74 1974/?5IQaIooorUBAL PRODUCTS

Ve. 000 tons 168.9 199 259.6 197 241.2 201 208.6 193 191.1 192 187.4 225 280.8 93 110.2 95 129.3 0-5 f 5-1Siloakes 000 tomn 0.1 433 30.0 829 72.8 832 66.o 1,001 97.0 1,282 228.7 832 120.0 377 54.5 335 3S.2 169 _ 10.5Coffee 000 tons 2.8 20 15.2 27 27.2 28 24.0 51 42.7 53 59.1 50 64.4 28 41.0 39 40.0 14.2 17.9Sugar 000 tons 0.8 56 5.1 311 22.0 99 13,5 102 17.2 253 55.0 696 425,4 241 128.1 431 233.3 20.0 fl 77.5Spices 000 tons 53.4 34.9 48.5 33.5 44 37.8 61 70-7 52 76.9 22 28.5 22 27.5 1.2 14.9Pish 000 torn 5.2 20 9.7 15 14.3 25 30,3 34 69.8 48 114.5 39 83.0 17 39.8 25 62.4 14.4 18.3Cashew 000 tons 18.0 44 39.7 51 57°5 64 81.2 66 88.9 52 95.5 65 148,1 36 82.7 29 62.9 7.6 10t5Vegetable Oils 000 tone 53.0 61 17.9 24 8.6 49 15.6 53 32.0 40 39.6 48 42.2 37 34.4 20 28.1 -1.3 18.1Mesential Oils 26.6 8.6 4.9 5.8 5.3 8.1 11.7 7.2 2.8 -5.0 12.4

II Cl D LEIL

Raw Cotton 000 tons 10.4 33 18.2 36 20.4 28 14.8 38 28.0 55 41.6 20 19.1 16 15.3 16 14.2 6.2 4,3Unmanufactured Tobacco 000 tons 29.6 n.a. 30.7 n.a. 41.1 n.a. 44.2 94 79.2 78 87.8 75 100.8 49 69.6 56 91.7 4-9 r/ 14-7Iron Ore million tone 0,5 3 35.8 12 88.4 16 117.0 21 142.5 24 170.5 22 201.1 8 61.7 8 96.7 12.8 9.3Vioa 000 tons 21.0 28 21.2 43 23.7 21 18.0 27 21.6 26 16.7 34 22.8 14 11,5 13 9.2 -1.0 4.0Manganese million tons 16.8 1.2 29.5 1.4 23,2 1,3 13.0 0.8 11.3 0.8 12.1 1,0 21.6 0.5 8.6 0.3 7.6 -1.4 3.1

AL MN fACTURED ITElli

Jute Manufactures 000 tons 239.0 799 283.8 900 384.0 653 290.6 580 324.4 563 292.0 586 370.7 355 211.9 250 147.5 0.9 4.1Cotton Textile

i) Kill Made million sq. metres 225.1 602 110.8 513 98,5 447 87,3 449 109.5 653 208,8 370 162.5 217 96.7 1.32 47.4 -0.3 10.9ii) Handloos million metres 22.8 26 1O.0 40 17-5 20 6.7 47 21t5 68 41.6 49 36.5 30 20.4 21 16.5 2.7 33.0Coir Manufactures 000 tons 22.8 71 18.2 70 22.5 59 18.4 47 18.6 46 19.7 43 22.7 20 10.2 16 9.9 -0.6 3.6Clothing 0.8 d/ 1.8 13-4 19.6 72.2 127.9 170.8 88.7 98.2 39.0 f/ 43.0Cotton Yarn and Thread 000 tons 4.2 7 9.3 15 14.6 20 19.1 22 32.0 10 14.6 10 22,9 5 10.1 1 2.0 5.4 3.1Leather and Leather Manufactures 54.5 56.6 72.6 1o6.5 242.0 239.5 203.9 107.4 112.3 91.7 t1.5Gems n.a. 0.3 31.0 59.7 t01.1 137.2 119.0 61.7 61.o 20.0 12,2Other Handicrafts n.a. n.a. 21.4 32.4 54.2 85,6 109.3 52.2 55.5 18.9 23.0

Iron & Steel / A' 20.3 26.5 105.2 30.8 33.6 25,8 4.4 28.8 4.0 4 -20.9EDngineering 1.2 / 37.8 41.6 89.8 184.9 258.9 442.3 176.3 219.6 16.0 30-5Chemioal3 S/ 17A9 7.2 19.2 25.8 45.8 64.6 115.9 54.5 50.9 18.4 28.5Mineral Fuels n.a. 15.6 19.6 16.1 41,5 19.7 25.6 10.6 19.5 1,8 8.0Sub-total 998T. 1.127.8 1,462 1,568.5 2,142.9 2.731.0 3.445.8 1,598.2 1.710.0 7.0 T 14.1

ELTAl EXPOTS (including others) l1261.3 1,386.5 1.69.18 t1.8to.5 2.S57.S 1.2I8.9 4.142.6 1.896.0 2.061.2 4.2 14.8

Note, Total export earning figures for the years 1971/72, 1972/73 and 1973/74 include grants to Bangladeshi of US$36.1 million and US$145.5 million and US34.5 million respectively.S/ Edible oils, ercluding vanaspati.

In accordance with the classification followed by the Ministry of Commerce. In 1972 several manufaoeured items formerly included under 'Iron & Steel' were reclassified as 'Engineering Goode'. Datafrom 1971/72 onwards follow the new classification and hence are not comparable with data for earlier years.A' Excluding ecsential oils and plastics.A Relates to year 1951/52,

E/ Hxcludes footwear.Relatec to period 1960/61-1973/74.EI Relates to period 1965/66-1973/74.

/ Provisional.

SO6, Department of Commercial lntelligence and Statistics, Monthly Statistica of the Foreign Trade of India,

Table 3.2

SELCTED DIMORTs(in US$ million)

Average CompoundGrowth Rate

April . Sept (per cent Per annum)

- Items _ 1950/51 1955/56 1960/61 1965166 1968/69 j1972Z/ 19l7ZI_ 2.2145 *974 Septa/ 19570L54 1964/75

Cereal and cereal Preparations 209.1 37.1 380.8 676.5 44808 104.8 607.3 957.6 315.4 718.4 4.7 13.5

Animal & Vegetable Oils and Fats n.a n.a 9.7 32.3 25.7 32.4 83.3 43.7 31.2 10.2 18.0 9.2

Raw Cotton 211.6 120.4 171.7 97.0 120.2 117.9 66.8 33.4 17.6 19.7 -2.2 -19.3

Cashewnuts Unprocessed 6.o 10.2 20.2 31.6 41.8 41.3 37.0 45.9 26.7 26.3 8,2 1.6

Petroleum Oil & Lubricants 11506 116.7 146.o 143.7 177.6 264.8 719.1 1,450.5 733.8 674.5 8.3 42.0

Drugs & Medicines 22.7 31.7 22.1 18.4 2303 30.1 33.9 42.8 20.3 18.8 1.8 10.7

Chemical Elements & Compounds ,na n.a 81.6 5700 70.2 84.3 107.0 153.4 63.5 59.6 2.1 13-9

Fertilizer & Fertilizer Materials 5 n.a n.a 31.2 108.5 264.1 189.1 291.0 724.6 242.7 349.1 18.8 18.3

Paper & Paper Boasrd 21.3 32.2 25.4 28.1 24.4 40.7 37.5 73.8 30.1 40.2 2.5 20.0

Dyeing, Tanning & Coloring Materials 30.7 38.4 28.1 1308 11.9 11.9 13.3 14.3 7.6 7.3 -3.6 3.1

Iron & Steel 42.0 118.8 257.3 205.8 114.9 293.0 320.2 523.2 204.6 188.2 9.2 29.0

Non-ferrous MetalS 59.4 51.6 99.4 144.4 118.7 141.6 1eo.1 223.3 105.3 52.9 5.0 11.1

Non Electrical Machinery 142.1 194.3 427.1 701.0 487.8 386.6 547.6 497.4 257.2 299.6 6.1 0.3

Electrical Machinery & ApParatus 49.9 78.9 120.2 184.5 109.0 173.9 166.8 188.2 83.1 95.6 5.4 9.5

Transport Equipmellt 88.5 133,4 152.0 148,2 88.5 129.9 121.9 154.1 58.5 64.5 1.4 907

Sub-total 928.9 d/ 263_. / 12728 2.59.8Q 2,126.9 2.Q42.3 3.2.SZQ 5s126.2 2,197.6 2.624.9 As2 15.8

TOTAL IMPORTS (including others) 1,365.4 1,425.6 2,393.4 1,034.1 3 2,522,2 A 2 62i I 5971.0 = ___8__ e/2 _18.0 2,869o4 48 14.7

a/ Provisional.

b/ Excluding urea with more than 45 % nitrogenous content.

Al Including crude and manufactured fertilizers, urea and sulphur & roasted pyrites.

A/ Excludes animal and vegetable oils and fats, chemical elements and compounds, and fertilizer & fertilizer materials sinee data for these items were not obtainable.

e Adjusted for ujder-recording of imports for these years.

f/ Relates to period 1960/61 - 1974/75.

Source: Departmest of Commercial Intelligence and Statistics, Monthly Statistics of the Foreign Trade of India.

"abl 3-1.

IMPORT SuI8IRY(uSS million)

1960/61 1961/62 1962/63 1963/64 1964/65 1965/66 1966/67 1967/68 1968/69 1969/70 1970/71 1971172 -t975/74 t974/75I Cereal & Cereal Prevaration 5381 247 505. 577 S2 676 868 691 AA4 348 -284 176 10SQ 607 .2

II Xaintenance Imworts n.a. 1.511 1J0' 1.57 1t684 1,726 1,595 1,509 1,612 1t,28 1.512 1.883 1,959 2.689 4..1A;Of which:

Steel (257) (227) (187) (196) (225) (205) (130) (142) (115) (109) (196) (319) (293) (320) 52Non-Ferrous Metals ( 99) (104) (116) (116) (122) (143) (114) (119, (119) ( 99) (159) (138) (14Fertilizer and FertilizerRaw Materials ( 31) (39) (73) (88) ( 81) (108) (165) (273) (264) (157) (133) (150) (189) (291) (7252P.O.L. (146) (201) (185) (219) (144) (144) (84 (100) (78) (183) (181) (261) (2651 (719) (1t451)

Cotton (172) (132) (120) (103) (122) ( 971 5o (1t12 (1201 (1tO (132 152 (118 ( 67 (13 3Chemical Elements and (82) (75) (BO) (67) (72) ( 75 60j 71 70 ( 711 86) ( (1O7 53CompoundsComponents and Spares n.a. (398) (428) (470) (579) (600) (415) (397) (434) (287) (284) (381) (460) (508) (522)Other Maintenance Imports n.a. (335) (314) (320) (339) (354) (345) (296) (312) (321) (356) (396) (388) (497) (513)

III Complete Machinery and Skiuipment n.a 414 415 AS2 -435 -4538 565 286 265 252 260 268 249 5492 J1IV Other / n.am 14 157 489 289 21 196 2S895 245 5 526 325

Sub-total -2/(II+III+IV) 2,012 2,066 2,073 2,520 2,404 2,378 1,922 1,974 2,074 1,800 2,027 2,396 2,577 3,364 4,781Total Imports 2.3593 2,531 2376 2,897 2.996 5.0S4 2.790 2.665 2,523 2t49 2,.11 2,512 2.682 3,971 5,-59

a/ Final estimates for total imports are taken from official source; final adjustment of some individual components is computed by IBS] staff.I/ Inlcluding adjustments for under-recording of imports.l/ Rxcludes cereal and cereal preparationa.

Source: Department of Commercial Intelligence and Statistics, Monthly Statistics of the Foreign Trade of India.

Table 5. 4

IIXTfl(ION OF l)Rlt8(us$ million)

t965/6 ValI6T 1 683 1969lOt9t7 1979Z!5 1973/74 1974/75Val. Val. a. 9Val. Val. Val1.

Africa 129.9 7.6 2.16 519 117.5 6.2 i177A 8.2 131.2 S.1 130.6 4.0 294.7 7.i

UAR 56.8 3.4 28.7 1.8 46.2 2.5 31.0 1.4 41.2 1.6 19.1 o.6 65,8 1,6

Others 73.1 4-5 64.9 4.1 71.3 3.8 t46.4 6.7 90.0 3.5 111.5 3.4 228.9 5.5

America 578. .- Zl 32k.t Z! .S1A t9.z 427.0 t.8& 402.8 1;.8 502.7 S1.S, 555.6 L.

USA 310.4 18.3 276.6 17.3 307.2 16.3 353-4 16.4 357.8 14.0 440.0 13.7 471.2 11t4

Canada 42.6 2.5 39.7 2.5 35.1 1.9 52.9 2.4 36,6 1.5 39.9 1.2 55.2 1.3Others 25-4 1.5 9.8 o.6 19.2 1.0 20.7 t,0 8.4 0.3 18.8 0.6 29.2 0.7

Asia and Oceania 394.6 2 420.6 26.3 60i. 32 6S5.7 iO. 853.0 32.6 1.129.5 54.9 1.498.0 36.2

ECAFE 334.0 19.7 361.1 22.6 504.1 26.8 570.3 26.4 737.2 28.8 947.2 29.3 1,135.7 27.4

Of which:

Japan (119.7) (7-1) (181.2) (11.3) (239.1) (12.7) (244.9) (11.3) (281.3) (11.0) (460.5) (14.2) (370,2) (8,9)

Australia (36.9) (2.2) (37.3) (2.3) (32.6) (1.7) (37.6) (1.7) (33.7) (1.3) (65,2) (2.0) (76.7) (1.9)

Ceylon (27.1) (1.6) (19.9) (1.2) (34.2) (1.8) (28.5) (1.3) (10.4) (0.4) (12.6) (0.4) (33.6) (0.8)

Others 60.7 3.6 59.4 3.7 97.4 5.2 85.4 4-0 95.8 3.8 182.3 5.6 362.3 8.8

Eastern Europe 328,8 19.4 .3Qj 18.8 4tO 2 2t.8 461.6 2t4 609.6 2i. 626.2 19 .854.0 20.6

USSR 195.3 11.5 162.4 10.2 235.2 12.5 280.4 13.0 395.6 15.5 367.1 11.3 524.3 12.7

Czechoslovakia 33.3 2.0 38.8 2.4 40.1 2.1 41.0 1.9 59.8 2.3 56.2 1.7 75.7 1,8

East Germair7 28.8 1.7 27.1 t.7 26.7 1.4 24.1 1.1 19.6 0.8 28.2 0,9 43.1 1.0

Peland 19.1 1.1 29.3 1.8 28.4 1.5 26.8 1.2 57.3 2.2 66.3 2.1 97-1 2,3

Others 52.3 3.1 43,7 2.7 79.8 4.2 89.3 4.1 77.3 3,0 108.4 3,3 113.8 2.8

Western EuroPe 460.6 27 456.727 2. 20.! Da 438.1 M 252.7i 849.9 26.3 940.3 22.7

Belgium 20.0 1.2 27.6 1.7 33-0 1.8 32.7 1.5 39.1 1.5 57.1 1.8 65.0 1.6

France 23.6 1.4 20.7 1.3 29.0 1.5 32.5 1.5 59.6 2.3 63.8 2.0 106.2 2,5

West GermaTz 38.2 2.3 29.7 1.9 39.9 2.1 49.8 2.3 80.8 3.2 111.4 3.4 132.2 3.2

Italy 17-7 1.0 23.8 1t5 17.5 0.9 32.5 1.5 63.4 2.5 89.0 2.8 65.4 1,6

Netherlands 16.6 1.0 17.3 1.1 14.9 0.8 19.8 0.9 45.9 1.8 94.1 2.9 89.0 2.1

U.K 306.1 18.2 305.4 19.1 220.1 11.7 226.6 10.5 223.9 8.7 337.8 10.4 384.9 9.3

Others 38.4 2.3 32.3 2.0 39.5 2.1 44.8 2.1 68.2 2.7 96.7 3.0 97.6 2.4

Grand Total 1,692.0 100.0 1t598.0 100.0 1.884.3 1000. 2,.604 O.O 2. ;57.5 3 100.0 4.142.6 tOO.O

Sourc : Department of Commercial Intelligence and Statistics, Monthly Statistics of the Foreign Trade of India.

Table 3.5

ORIGIN OF IXWRTSCDII4 ujillion)

1965/66 t967/68 1969270 1971/72 19t 97/4174/75,Va %Val. %Val. 3 , Val . ,Q a 6 Val . 97Va1 .4

Africa 117.2 *4AQ 1. Aal 1886 8. 19'i.t 22 212.2 8.8 214.7 t7 188.4 3.4

UAR 41.9 1.4 35.9 1.3 28.9 1.4 44.6 1.8 37.5 1.5 33.2 0,9 28.6 0.5

Others 75.3 2.5 89.7 3.4 159.7 7.5 148.5 6.1 176.7 7.3 181.5 4.8 159.8 2.9

America 1.194.9 40.4 1.188.0 44.4 737.6 5S.0 123.7 29.5 474.8 19.6 860.6 22.1 1 t95.2 21.;

USA 1,123.7 38.0 1,035.5 38.7 625.0 29.5 562.5 22.9 304.8 12.6 639.8 16.9 914.1 16,3

Canada 64.1 2.2 131.0 4.9 99.8 4.7 152.2 6.2 139.6 5.8 148.7 3.9 163.5 2.9

Others 7.1 0.2 21.5 0.8 14.8 0.7 9.0 0.4 30.4 1.2 72.1 1.9 117.6 2.1

Asia and Oceania 494.0 16.7 438.1 16.4 596.9 18.8 568.7 23,2 629.3 26.0 1.225.3 32.3 2,228.1 59-8

ECAFE 460.7 15.6 385.2 14.4 347.5 16.5 485.5 19.8 519.9 21.5 863.9 22.8 1,d13.2 25.2

Of which:

Japan (166.6) (5.6) (144.6) (5.4) (89.9) (4.2) (217.1) (8.9) (231.7) (9.6) (331.1) (8.8) (368.5) (10.1)

Australia (50.8) (1.1) (86.6) (3.2) (41t.7) (2.0) (39.5) (1.6) (43.5) (1.8) (56.2) (1.5) (148.5) (2.7)

Ceylon (8.4) (0.3) (4.4) (0.2) (3.8) (0-2) (1.9) (O.1) (1.2) n.s (1.2) n.s (0.3) n.s

Others 33.3 1.1 52.9 2.0 49.4 2.3 84.3 3.4 109.4 4.5 361.4 9-5 814.9 14.6

Eastern Europe 329.0 tt. 226. t1 378.2 t.9I 28t.4 1

t.S 299.9 t2.4 514.0 13.6 819.1 14.6

USSR 174-7 5-9 148.3 5.5 228.4 10.8 117.3 4.8 148.4 6.1 327.0 8.6 504.6 9.C

Czachoslovakia 44.4 1.5 36.5 1.4 30.7 1.5 13.7 o.6 20.6 0.9 34.3 0.9 41.8 0.8

East Gernsa 27.3 0.9 28.8 1.1 32.6 1-5 27.3 1.1 24.9 1.0 32.1 0.8 41,7 0.7

Poland 28.7 1.0 31.7 1.2 31.4 1.5 67.6 2.7 47.0 1.9 59.3 1.6 116.5 2.1

Others 53.9 1.8 51.0 1.9 55.2 2.6 55.5 2.3 59-0 2.5 61.3 1.6 114-5 2.0

Western Europe 822.8 27.8 628.7 23.5 408.1 19.3 683.2 27,9 805.2 3 ' 178.7 25.8 i.j6z.6 20.8

Belgium 24.2 0.8 23.7 0.9 10.9 0,5 46.1 1.9 66.2 2.7 84,3 2.2 127.8 2.3

Franoe 37.0 1.3 45-9 1-7 31.6 1.5 49.8 2.0 51.7 2.1 90.2 2,4 101.8 1.8

West Germany 288.0 9.7 191.9 7.2 112.6 5.3 170.7 7.0 224.0 9,3 264.1 7.0 384.7 6.9

Italy 41.7 1.4 45.7 1.7 53.1 2.5 32.9 1.3 46.6 1.9 63.4 1.7 98.2 1.7

Netherlands 41.4 1.4 34.2 1.3 21.0 1.0 41.4 1.7 47.6 2.0 72.6 1.9 59.7 1.1

U.K 315.2 10.7 21t7.1 8.1 136.8 6,5 296,6 12.1 507.9 12.7 323.7 8.5 267,6 4,8

Others 74.2 2.5 70.3 2.6 42.0 2.0 45.7 1.9 61.2 2.5 80.4 2.1 122.8 2.2

Grand Total 2.957.9 100.0 2,676.8 100.0 2,109.5 100.0 2.451.0 100.0 2.42354 100.0 3 17935 00.0 5.601.9 3/t1o0.o

Note: The figures shown have not been adJusted for under-recordirg.

.R/ Includes the value of items under reference (Us$8.5 million) whinh has not been shown separately in sub-totals above.

Source: Department of Commercial Intelligence and Statistics, lonthly Statistics of the Foreign Trade of India.

Table 3.6

UNIT T! ALU OF -WDOE= IMPORT ITUU(in S dollars per unit speeifitd)

unit 1971i72 L!Z JZ 1973/74 19i4/t7 197/76 -

Rice per kg. 0.10 0.10 0.23 0.28 0.23Wlheat per kg. 0.80 0.13 0.14 0.18 0.19Cashw per kg. 0.22 0.21 0.25 0.29 0.29Soya Bean Oil per kg. 0.37 0.38 0.45 o.61 0.83

Raw Wool per ton 936.30 1,148.80 2,820.22 2,577.16 1,938.75Raw Cotton per ton 958.00 1,043.70 1,167.94 2,428.86 934.31Asbestos Crud per ton 236.40 245.30 257.75 295.70 326.18Crude Petroleus per ton 15.30 15.60 38.58 82.63 82.97

Phosphatic Fertilisers per ton 48.00 47.90 81.54 96.16 111.24Urea per ton 68.60 70.30 98.42 258.39 309.17Rook Phosphate per ton 17.80 17.90 30.12 57.13 64.02Sulphur and Pyrites per ton 28.20 28.60 39.82 88.31 83.25

Nitrogenoas Fertilizer Material, per ton 58.30 59.60 96.51 210.96 270.36Newsprint per ton 178.70 178.70 202.78 399.86 428.58Copper (wire bars) per ton 1,141.60 1,100.00 1,673.70 2,083.45 1,209.40Nickel (electroplating anodes) per ton 3,647.50 3,353.00 3,730*47 4,246.06 8,121.04

Lead (pig lead) per ton 288.20 316.90 392.20 633.02 516.79Zino (spelter) per ton 338.50 334.50 502.79 1,046.66 677.41Tin (block tin) per ton 3,604.80 3,583.80 5,201.12 7,921.56 6,854.92

Steel

Plates and Sheets Uncoated per ton 265.40 221.00 266,10 409.44 542.93(below 3 mm)

Universal Plates and Sheets per ton 198.00 186.80 243.50 375.71 440.96(above 4 PT 75 m thick)

Medium Plates and Sheets per ton 189.70 200.50 280.90 374.86 485.77(3 m to 4 PT 75 mthick)

Blooms, Billets and Slabs per ton 142.80 119.20 273.47 455.65 435.42Bars, Rods except Wire Rods per ton 314.10 376.80 429.60 551.24 770.89Hoops and Strips per ton 231.60 258,00 371.75 560.87 793.65Tubes and Pipes oxcept Cast Iron per ton 616.70 644.40 609.35 770.61 1,049.99

Seamless

a/ Provisional - relates to period April-September.

Sources Department of Comercial Intelligence and Statistics, Montbly Statistics of the Foreign T1rade of India.

Table 3.7

UNIT VALUES OF SELECTE EXPORT ITEMS(in US dollars per unit specified)

Unit 1960/61 1965/66 1968689 1971/72 1972/L3 1973/74 1974/75 1975/76FOOD & AGRICULTURAL PRODUCTS

Tea per kg. 1.31 1.22 1.00 1.01 0.99 0.98 1.25 1.36Oileakes per ton 69.20 87.80 79°30 72.60 96.90 178.41 144.16 105.04Coffee per kg. 0.76 1.01 0o86 0O82 0.84 1.12 1.30 1.03

Sugar per ton 91.07 70,74 136.36 128.08 169.02 217.46 611-51 540.78Pepper per kg. 1.05 0.90 0.68 1,05 0.98 1.20 1.64 1.59Fish per kg. 0.49 0.95 1,22 1.70 2.03 2e37 2.13 2.47

Cashew per kg. 0.90 1.13 1.27 1.36 1.34 1.83 2.28 2.19Vegetable Oils per kg. 0.29 0.35 0.32 0.41 o.61 1.00 0.88 1.39

CRUDE MATERIALS

Raw Cotton per ton 551,50 566.70 528.60 690.90 736.80 757.70 954.10 915.61Unmanufactured Tobacco per ton n.a. n.a. n.aO 991.30 838.10 1,122,80 1,343.40 1,631.87Iron Ore per ton 11.90 7,40 7.40 7.10 6.90 7.20 9,00 11.66Mica per ton 757.10 551,20 857.10 900.00 800.00 646,20 666.50 721.20Manganese per ton 24,60 16.60 13.90 12.90 14.10 15.30 20.90 26.01

MANUFACTURED ITEMS

Jute Manufactures per ton 355.20 426.70 445,00 531.90 559,30 518.10 632.60 589.96Cotton Textiles - Mill Made per sq. metre 0,18 0.19 0.20 0.23 0.24 0.32 0.44 0.36Handloom per metre 0.38 0.19 0.34 0.46 0.52 0.61 0.74 0.78Coir Manufactures per ton 256.30 321.40 311.80 382.90 395.70 431.80 534.90 622.56Footwear per pair 1.33 1,21 0.95 1.03 1.16 1.21 1.45 1.87

ia Provisional - relates to period April-September.

Source: Department of Commercial Intelligence and Statistics, Monthly Statistics of the Foreign Trade of India,

TABLE L.8

Gold and Foreign Exchange Reserves(US$ million)

End of Foreign Reserve Position Overall 7Tse of NetMarch Gold EchSDR In the Fund Reserves IV Credit Reserves

(1+2+3+4) (5 - 6)

1963 247 372 - _ 619 -298 3091964 247 395 - 642 -154 3441965 280 243 - 523 -287 312

1966 243 532 - 775 -361 2471967 243 395 - 638 -456 2061968 243 475 - 718 -374 3081969 243 526 - 769 -340 429

1970

March 243 729 123# - 1,095 -183 912June 243 794 78 _ 1,116 -106 1,C10September 243 759 79 - 1,081 -106 97December 243 698 44 21 1,006 - 10 996

=12

March 243 584 149 76 1,052 - 1,052June 243 659 148 76 1,126 - 1,126September 243 661 148 76 1,128 - 1,128December 264 669 169 83 1,206 - 1,206

1972

March 264 661 269 83 1,277 - 1,277June 264 639 268 83 1,254 - 1,254September 264 574 268 83 1,189 _ 1,189Decemberd/ 264 566 268 83 1,181 - 1,181

1973

March 293 629 297 92 1,311 - 1,311June 293 722 296 92 1,403 - 1,403September 293 639 296 92 1,320 - 1,320December 293 461 296 92 1,142 - 1,142

1974

March 293 736 296 92 1,417 - 75 1,342June 293 968 293 1,554 -358 1,196September 290 762 288 1,340 -353 987December 298 733 294 -1325 -608 717

1975

March 303 782 293 1,378 -620 758June 300 629 280 _ 1,209 -614 595September 283 909 257 1,449 -813 636Decemberd/ 284 841 248 1,373 -818 555

a/ Allocation of SDRs in January, 1970 was US$126 million (SDR 126 million).b/ Allocation of SDRc in January, 1971 was equivalent to USS100,6 million (SDR 100.6 million).c/ Allocation of SDRs in January, 1972 was equivalent to US$18 million (SDR 99.6 million).

d/ Provisional.

Source: IMF, International Financial Statistics.

Table 3.9

BALANCE OF PAYMNTS(US$ million)

1968/69 1969/70 1970/71 1971/72 1972/73 1973/74 2174/5 197576_(Estimated

Merchandise Exports (fob) 1a t,810 1,884 1,950 2,160 2,558 3,239 4,143 4,300

Merchan&ise Imports (cif) i -2,523 -2,148 -2,311 -2,572 -2,682 -3,971 -5,739 5,920

Of whicht

Foodgrains (449) (348) (284) (176) (105) (635) v (1,028) d (1,210)POL (178) (183) (181) (261) (265) (719) (1,451) (1,450)PFrtilizer and FertilizerMaterials (264) (157) (133) (t50) (189) (291) (725) (950)

Debt Ser-vice -500 -550 -600 -615 -682 -692 -779 -785

Of wliidh:

Consortium - (406 (4343 (4653 (5123 (5613 601) (669) (6Others ( 94 116 (t35 (1o5 121 91 (tio (68)

ITF Transactions (Net) -62 -157 -183 - - 75 530 130

Gross Aid Disbursements 1,310 1,233 1,147 1,203 955 1,249 1,766 2,210

Of which:

Consortium (1,197) (1,113) (1,070) (1,174) (914) (1,074) (1,289) (1,560)Others (114) (120) (77) (29) (41) (175) (477) (650)

Miscellaneous Capital andInvisibles (Net) i/ 16 64 -46 49 -115 205 41 500

Use of Reserves (- = increase) -51 -326 43 -225 -34 -105 38 -435

Reserve Level at end of Period 769 1,095 1,052 1,277 1,311 1,416 1,378 1,813

i/ See notes to Table 3.1h/ See notes to Table 3.2 and 3.3c/ Includes errors and omissions./ Adjusted from DCIS Data (Table 3.2 and 3.3 ) to value USSR wheat imports at US$190 per ton (cif) (Total imports remain the same due tocorresponding change in the adjustment for under-recording of imports).

SOUrcea: Merchandise trade figures derived from rupee trade figures compiled by the Department of Commercial Intelligence and Statisticsin the Monthly Statistics of Foreign Trade (Volumes I & II), converted into US dollars through the conversion factors given inthe inside front cover of the report and adjusted as indicated in the footnotes to Tables 3.1, 3.2 and 3.3.Aid and Debt statistics are from the Ministry of Finance and IBRD Debtor Reporting System (see Appendix Table 4.1)Credit Transactions with the IMF, the use of reserves, and the level of reserves are as published by the IMF in various issuesof the monthly International Financial Statistics.Other items are determined as a residual.

Table 4. 1

a/AID AND DEBT STATISTICS

(0511 mil lion)

1960/61 1961/62 1962/63 1962/64 1964/65 1965/66 i966/67 1967/68 1968/69 1969/70 1970/71 1971/72 1972/75 1973 1974/75 19/7_6

I Consor'tium Members

Grues Disbursemeots 857 685 S 8 1.t67 1. 374 1,523 1.465 1 5t59 1.197 1t113 1,070 1,174

914 1 _284 1.5 60Of ehich:

Project Aid ) ) ) ) ) (422) (301) (303) (204) (247) (325) (358) (422) (394) (570)(449) (468) (611) (748 (873) (968)Non-Project Aid ) ) ) ) ) (428) (689) (549) (584) (573) (579) (497) (592) S/ (807) S/ (718)Food Aid and Non-

Food PL 430 (408) (217) (274) (419) (501) (555) (615) (562) (345) (325) (250) (270) (59) (60) (88) (272)Debt Service 108 175 160 188 232 292 302 333 406 434 465 512 561 601 669 680Net Transfer 7 910 725 479 1.142 1.231 1,163 1.219 71 647 605 662 l55 All 620 S8

Debt Service Ratio-/S 8.5 13b5 12.9 13.2 164 21.4 24.4 25.7 27.8 29.0 30.1 30.5 28.8 23.3 20,3 20.7

II lion-Consortium Countries

Gross Disbursements 25 54 12 115 172 136 98 95 114 120 77 29 41 175 A1 650Of which:

Project Aid ) ) ) ) ) ) (85) (84) (107) (110) (74) (27) (41) (43) (44) (185)25) (54s 72) (115) (172) (126)Non-Project Aid ) ) ) ) ) (3) (1) (1) (1) - - - - (278: (431)Food Aid and Non-

Food FL 480 n.a. n.a. n.a. n.a. n.a. (lo) (1o) (1o) (5) (9) (3) (2) - (132) (165) (34)Debt Service 14 16 23 25 26 23 53 lt 94 116 135 102 121 9I 1t1 105Net Transfer t1 5S A2 90 146 115 15 -16 19 4 15B =73 -80 84 366 545

Debt Service Ratio (4) 12.5 12.1 11.3 10.3 8.6 7.0 20,7 36.9 26.5 28.3 28.0 22.3 19.8 14.8 13.0 12.0

III Total Consortium & NonrCosoCrtiom

Gross Disbursements 882 759 956 1.282 1.546 1.659 .565 1.647 1.310 1.147 51.205 9.S5 1.249 1.766 2 210Of which:

Project Aid (507) (385) (410) (314) (321) (352) (399) (465) (438) (755)(474) (522) 682) (863) (1,045) (1,094)Ion-Project Aid ) ) 9 ) ) ) (431) (690) (550) (585) (573) (579) (497)S/ (592) s-" (1,085) ./ (l,149)Food Aid and Non-

Food PL 480 (408) (217) (274) (419) (501) (565) (627) (572) (350) (334) (253) (272) (59) (192) (253) (306)Debt Service 122 191 182 213 258 315 365 444 500 550 600 615 682 692 779 785Net Transfer 760 548 774 1,5 1.069 15,544 1.198 1.205 810 683 547 588 275 557 987 1,425

Debt Service Ratio I(j5) 8.8 1354 12.7 12.8 15.1 18.6 23.7 27.8 27.6 28,9 29.6 28.8 26,7 21.7 18.8 18.9

a/ Al1 figures include project and non-project loans (with debt relief shown .s a non-project diobursement), faod id, and non-food PL 480. Figures for 1966/67 through 1975/76 also havepartial coverage of project and non-project grants. Coverage of concessional suppliers' credits from East .,urope and food aid statistics may be incomplete.

5/ Debt service divided by nerohanldise export, earnings. For tie Consortium countries, the debt service ratio liam been calculated with respect to total convertible currency export earnings;for the non-Consortilus countries, witi, respect to exports to the rupee paymerits orea.

g/ Includes food aid for which separate data mere not av,ail hl e.

Source: Ministry of Finance, Department of Economic Affoirs; IHRD Debtor ReTortis, System; IDA estimates; and [nformation provided by individuai embassiee.

Table 4.2

ESTIMATED GROSS AND NET AID FLOWS, 1975/76(US$ million)

Disbursements Debt ServiceProject Debt Relief Other Non-Project Total Payments Net Aid Transfer

A. Consortium Member Countries

1. Austria - 2.9 0.1 3.0 4.3 -1.32. Belgium 15.7 4.1 3.6 23.4 7.0 16.4

3, Canada 8.2 - 83.5 91.7 14.8 76.94. Denmark - toO 2,6 3.6 2.5 1.1

5. Francte 32.8 14.4 24.9 72.1 46.1 26,0

6. Germany 53.9 69.0 65.3 188.2 145.6 42.6

7. Italy 8.8 5,4 - 14.2 26.8 -12.6

8. Japan 38,9 41.6 2700 107.5 105.2 2.3

9. Netherlands - 7.2 41.1 48,3 12.8 35.510. Norway - - - 0.3 -0.3

11. Sweden - 1l2 76.9 78,1 5.2 72.9

12. U.K. 51.4 24.5 86.0 161,9 58,6 103.313. U.S.A. 6.2 - 208,0 214.2 135,0 79.2

14. IBRD 49.3 - - 49,3 89.1 -39.815. IDA 306o0 - 200.0 506.0 24.6 481.4

Sub-Total 571.2 171.3 819.0 1,561.5 883.6

B. East European Countries

1. Bulgaria 2,0 - - 2,0 - 2.0

2. Czechoslovakia 4.1 - - 4,1 11.1 -7.0

3. GDR 80- - 8.9 4.0 4.94. Eungary 3,3 - - 3,3 0-5 2.8

5. Poland 0,9 - 0.9 2.4 -1.56. Rumania 7,8 - - 7.8 0.7 7.1

7. USSR 28,1 - - 28,1 59,6 -31.58, Yugoslavia 19.5 - - 19.5 8.7 10.8

Sub-Total 74.6 - - 74.6 87.0 -12.4

C. Others

1. Irani, Iraq and other 100.0 - 375.0 475.0 8.0 467.0OPEC countries

2. Switzerland 8,8 - - 8.8 8.5 0.33, UN & EEC - - 76.8 76.8 - 76.8

4, Others - - 14,7 14.7 2,0 12.7

Sub-Total 108.8 - 466.5 575,3 18.5 556.8

D. GRAND TOTAL 754,6 171,3 1,285.5 2,211.4 7T334 1,428.0

Note: Converted from donor currency data using July 1975 par rates/market rates published in InternationalFinancial Statistics by the International Monetary Fund,

a/ Includes assistance of US10O0 million provided under FL 480 Title II of which approximately USS28 millionfor ocean freight.

Sources: Ministry of Finance, Department of Economic Affairs; IBRD Debtor Reporting System; and individual

donor embassies.

Table_4.3

PROJECT AND NON-pROJECT Aln PIPELINE 197-/76 (ESTIMATES)UtiS m3illion)

Opening¢ Pipeline Disbursements Diobursemento Clot3;-ng Pip6li.,on j.E _I 17 1 23D__ from the PRipline New Commitmente e omtnt. On 8 "1' oProiect Nor.-Froject Project Non.Project Project Non-Project Project Non-Project ProJrj3ct on, - ject

---- 7W t -Ti 7W w~ ~- --- -•2754I1 -,Co;.-z..X_ 0l :9r IrLYAO rise

;4 ,J?fia 100 4.6 - 0.1 2.9 _ 2.9 1,0 A 52. glii 19.3 9.4 15.7 3.3 - 9.5 -4.4 3.6 1,3, Canada 22,9 38,7 8.2 22.3 - 64,0 - 61.2 14.7 19-24. Denmark 41.4 13.7 - 2.6 - 3.5 1.0 41.4 13':5* prcnce 131.8 51.7 32.6 20.6 48.5 44.8 0.2 18.7 147.5 57-26, G'vmarfy 94.9 89.3 53.5 56.3 54.8 100.2 0.4 78,0 95.8 55.27. TtalY 31.4 21.6 8.8 5e4 - - - - 22.6 16.2B. JepmA 94.3 38.9 38.9 27.0 36.8 65.2 - 41.6 92.2 35.59, Netherlfndl - 23.6 - 23.6 3.8 90.0 - 24.7 3.8 65.3

iO. Norway - 0.5 - -_ 11.1 - - 11.611. Sweden _ 124.1 - 42.6 - 106.4 - 35.5 - 152.412. NK 99.0 122.8 29.5 52.4 50.3 233,4 21e9 58.1 97.9 245.713. U.S.A. 6.2 114.3 6.2 108.0 21.0 168,0 - - 100.0 21.0 74.314. IYD 215.9 49.3 - 140.0 _ 306.6 -15, IDA 1,019,9 200,0 258.0 200.0 617.0 200.0 48.0 - 1330,9 200.0

Sub-Total 41,t90 8 2 500. 5642 972.2 1.099.0 70.5 426.1 2,179. 961,9

B. East Europeen Countries

10 Bulgaria 13,9 2.0 - - - 11-.92, C%ece0slova5kia 65.7 33,3 4.1 61.6 33,33, GDR 8.9 - 8.9 - - _ _ 4. Hunga'ry 25.9 - 3.3 - - - 22.6

5. Polald 2-4 - 0.9 - _ _ 1,56. Rumania 7.8 - 7.8 - - - -7- USSR 334.3 - 28.1 _- - 306.2 -8, yugoslavia 19.5 - 19.5 _- - - -

5ub-Total 478-4 74.6 - - - - _ 403.S 13i 3

C. Others

1. Iran, Iraq and other - - 550.0 500.0 100,0 375.0 450.0 125.0ooountries of OPEC

2, Switeerland 35,6 _ 8.8 - - - - 26.83 N & EEC - 29.8 _ 29.8 - 47.0 - 47.0 - -4. Others - 11.3 -1,3 - 3.4 - 3.4 - -

Sub-Total '5.6 41.J 8.8 41.1 550.0 550.4 100.0 425.4 476.8 125.0

D. TOTAL 2.292.0 927L6 584.1 60.1,522.2 1649.4 170,5 851.5 3,059i6 1.120 2

Note: Converted from donor currencies as indicated in Table 4.2

y,/ Inoludes assistanog US$100 million provided under PL 480 Title II of which approximately US$28 million is for ocean freight.

Sources: Ministry of Finance, Department of Economic Affairs; IBRD Debtor Reporting System; and individual donor embassies.

DEBT SRVICE PAfIWS ON EXT}AL PUBLIC DM(US- million)

1975/76 1976/77

Prixipa,1 Intereart Tetal PrLnoipal Interest Total

I. Debt Servioe Ps;'able in Poreian lx&hAe

A. Ccaortium Members

1. Austria 3.1 1t2 4,3 2.9 1.2 4.12. Belgium 4.9 2.1 7.0 4.6 1.8 6.43. Canada 9.6 5,2 14.8 10.0 4.7 14.74. Denmark 2.1 0-4 2.5 2.1 0.4 2.55. France 30.5 15.6 46.1 30.4 16.o 46.46. Germany 102.2 43.4 145.6 92.0 43.5 135.57. Italy 20.1 6.7 26.8 20.6 5.2 25.88. Japan 72.0 33.2 105.2 65,2 33.1 98.3

9, Netherlands 6,5 6.3 12.8 7.2 6.8 14.010, Norway 0.2 0,1 0.3 0.5 0.1 o.611. Sweden 3.5 1.7 5.2 3.5 1.5 5.0

12. U.K. 40.1 18.5 58.6 44.8 16.8, 61.613., u.S.A. 79.8 55.2 135.0 90.6 61.0 151.614,, I2RD 56.A 33.0 89.1 58.4 34.6 93.015., IDA 6.4 18.2 24.6 8.8 22.6 31.4

Sub-Tota1 (A) 437.1 14248 -61 U 441.6 249.'S 690

B. Otlhers

1. Switzerland 6.2 2,3 8.5 4.6 2.3 6.92. Others b/ 3,4 6.6 10.0 1.4 12.2 19.4

Sab-Total (B ) 829 18.5 6.o 14.5 26,3

Total I (A + B) A6 .7 249.7 696.4 447.6 263.8 717.2

II. Debt Service Payable Throuh Exort of Goods

1. ]@algaria - - -2, Czeohoslovakia 9,4 1.7 11.1 7.0 1.1 8.13. G.D.R. 3.1 0,9 4.0 3.1 0-7 3.84e Hungary 0.4 0,1 0.5 0.4 0.3 0.75, Poland 2,0 0-4 2.4 2.1 0.4 2.56, Rumania o,6 0,1 0,7 0.6 0.1 0.77. Yrugoslavia 7.6 1.1 8.7 4.7 0.4 5.18. UTSSR 52.4 7T2 59.6 117.4 6.6 124.0

.7otal II .... J. 11@5 &UtLO t59.6 144.9

III. Gran r Total (I + II) 522.2 261.2 7854 582.9 273.4 862.1

Note. Corvs:eged from ionor currency data as indicated in Table

,f Base- oan estimated stock of public debt outstanding on Maroh 31, 1976.

/ Inol-udss OPEC countries Finland and Spain.

Sources: 1L,s r sf Finance, Department of Economic Affairs; and IBRD Debtor Reporting System.

Table 5.1

CONSOLIDATED FINANCES OF CENTRAL & STATE GOVERNMTENTS(in Rs. billion)

1950/51 1955/56 1960/61 1965/66 1969/70 1970/71 1971/72 1972/73 1973/74 1 1975/76(Revised (BudgetEstimates) Estimates)

Revenue Receipts 7.86 10.27 17.73 7.04 53.31 58.63 69.01 7797 87.89 107.63 118.21

Tax Revenue 6.27 7.68 13050 29.22 42.00 47.52 55-75 64.36 73.89 88.89 99.26Direct Taxes (2,31) (2.59) (4.02) (7 34) (9.63) (10.09) (11.71) (13-46) (15.52) (17.17) (19 21)Indirect Taxes (3.96) (5.09) (9,48) (21.88) (32.37) (37-43) (44-04) (50.90) (58-36) (71.73) (80e05)

Non-Tax Revenue 1.55 2.41 3.74 6,88 11.23 11.06 13.10 13.54 13.96 18.95 19,81Other 0.04 0.18 0,49 0094 0.08 0°05 0.16 0.07 0,04

Revenue Expenditures 73 AC.3O 16.98 34.18 52.7 57.17 69.91 78.48 86.70 98.99 109.9Non-Developmental 5.19 6.12 9.53 19.76 31.17 33-52 42002 46.10 51.27 57,90 63.29Developmental 2.09 3.96 6.91 13.39 20.99 23.37 27053 32.07 35.39 41.06 46.65Other , 0,03 0.22 0.54 1003 0,56 0.28 0.36 0.31 0,04 0.03 0004

Capital Expenditures 1.69 4007 9.76 20.46 15.96 21.28 23.72 25.s8 28.03 40.40 39.91

Non-Developmental 0.26 0.42 0.81 1.64 1.82 3.40 2,50 1.49 2.24 2,45 2,82Developmental 1.18 2,71 5.70 10.49 10.27 12,01 15,74 16.40 17.67 23.90 24.08Loans and Advances (net) 0.25 0.94 2.59 7.54 3,86 5.87 5.47 7.97 8,12 14.04 13,01Other - - o.66 0.79 0,01 - 0.01 0.01 - 0,01

Capital Receipts 1.19 2,10 752 13..62 14.7 1E.U 17.52 17.90 19,09 25.22 2s.56

Market Borrowiings (plet) - 0.04 0.83 1.38 2.24 2.46 2,60 4.08 6,23 6.29 7.08 6.16Small Savings (net) 0,34 o067 1.04 1.51 1.29 1.84 2.24 3.73 4.74 3.25 3.80Other 0.89 MO60 5.10 9-87 11.04 11,79 11,20 7,94 8.o6 14.89 18.60

Overall Surplus/Deficit 005 - 2.00 -149 -3.98 - 0.58 -59 - 7010 - 8.48 7jS- 6,54 -1

Financing

Treasury Bills 0,22 1,33 - 0.78 2,88 0.84 4000 2.86 9006 5°33 6.41 2.39Ways & Means Advances 0 0.04 - 0.03 0,14 0.04 0,22 0,02 0.04 0.31 - 0.12 0.30RBI Long Term Support n.a. 0,41 2,03 0,67 0.15 - 0.65 - 0,28 - 0.04 2.32 - 0.37Changes in Cash Balances - 0,23 0.26 0,21 0.29 - 0.45 0,02 4.50 0.58 - 0.21 o062 0.43

a/ Centre-State transfers have been netted out. In those cases where the amount of the transfers differs as between Centre and State accouants, theamount registered in the Central account has been used. Due to changes in budgetary classification, the data from 1974/75 onwards are not exactlycomparable to those for previous years,

Source: Ministry of Finance,

Table 5.2

CENTRAL GOVERNMhT FINANCES 3/(in Rs billion)

1950/51 1955/56 1960/61 1969/66 1969/70 1970/71 1971/72 1972/73 1975/74 197ed 17

Estimates) Estimates)

Revenue ReceiPts 4-.39 5s.7 o1003 23.3 500SO 33.16 59.96 45.4 50.32 64.052 Q6,i

Tax Revenuei 35-57 4.11 7.30 17.85 22.01 24,51 29.28 34,43 39.00 49004 54,36

Direct Taxes (1.28) (1.4) (2.02) (4 68) (5.26) (5,04) (5.77) (7.38) (8.36) (10.18) (11.37)Indirect Taxes (2.29) (2.97) (5.28) (13.17) (16.75) (19.47) (23.51) (27,05) (306 (385 (42.9")

Non-Tax Revenue 0.82 1.13 2.31 4.70 8.44 8.63 10.62 10.99 11.28 14.96 15.48Other - 0.13 0.42 0.84 0.05 0.02 0.06 0-03 0.04 0002 0,03

Revenue Expenditures s.ss 4A95 9.53 20.19 29028 3.53 40.96 .2 96 5707 63.86

Non-Developmental 3.33 3-55 5.72 13.31 19.47 20.84 26.70 29.55 31.92 39.29 42.58Developmental _/ 027 o.67 1.25 2,54 3,81 4,50 5.21 6.12 6,14 7.64 9.66Grants to States 0.25 o.60 2.t3 3.50 5.93 6.17 8.99 9.59 9.86 10.82 11.58Other - 0,13 0-43 0.84 0.04 0.02 0.06 0002 0.04 0,03 0.04

Capital Expenditures j,,1 3.82 7-78 16,62 12.02 15.72 16.27 21.22 ao.s 30.17 28.82

Non-Developmental 0.16 0,37 0.64 1.58 1.5G 3.50 2.70 1.62 2.35 2.27 2.63Developmental 0.50 0.77 2.66 5-00 5.09 6.12 8.69 7.42 7.39 13.28 12.70Loans and Advances (net) 0,59 2.68 3.82 9.25 5.36 6.10 4,87 11.60 10,14 14,62 13.49Other -- o.66 0.79 0.01 - 0.01 0058 0.70 0.00 0.00

CapitalE ReceiptSs 0.61 1055 6.03 11.40 9,88 11.84 12.82 12.43 122 i7.69 20.34

Market Borrowings (net) -0.11 0,35 0-72 1.24 1.43 1.44 2.94 4.87 4.64 4.95 3.25Small Savings (net) 0,34 o.67 1,04 1.51 1.29 1.84 2.24 3.74 4.74 3.25 3.80Other 0.38 0.31 4.27 8.65 7.16 8.56 7.64 3,82 2.84 9.49 13.29

Overall Surplus/Deficit - 0,10 2.07 -1.25. -2.02 _0.89 -2,25 -4.44 - 8.62& -6.00 - 6.24 -2.4

Firianoing

Treasury Bills 0.22 1-33 - 0.78 2.88 0084 4,00 2.86 9.06 - 5.33 6.41 2.39PBI Long-Term Support n.a. 0.41 2,03 o.67 0,15 - o,65 - 0,28 - 0.04 2.32 - 0.37 -Changes in Cash Balances -0.12 0,36 0.25 -0,45 -0.17 - 0.74 1.74 - 0.75 -1.21 - 0.82 0008Changes in Treasuiry Bills

Holdings by States n.a. 0-03 - 0-25 -1.08 0.07 - 0.36 0,12 0.35 - 0,44 1.02 -

a/ Due to changes in badgetary classification, the data from 1974/75 onwards are not exactly comparable to those for previous years.

.~/ Excluding the States, share in Central Taxes,

c/ Excluding all developmental and non-developmental expenditures financed through grants to the States,

d/ Excludes book adjustment of Rso 4.21 billion on account of Centre's assistance to States for clearing their overdrafts.

u After allowing for post-badget concession of htso 0.22 billion.

Sourcw: MAinistry of Finance.

Table 5.75

STATE GOVEBNMVENT FINANCES -a/(in Rs billion)

1950/51 1i55/56 1960/61 1965/66 1969/70 1970/71 1971/72 1972/73 197d/74 2AM t97s/76TRev-ised TBudgetEstimates) Estimates)

Revenue Receipts ..76 l9 101 t.674 14.22 A0.99 45.91 5159 58L2 6A

Tax Revenue 2.69 3,56 6.23 11,37 20.02 23,01 26,45 29092 34081 39u87 44,40

Direct Taxes (1.03) (1.45) (2,03) (2066) (4.37) (5.05) (5-92) (6.08) (7,11) (6-94) (7-86)Indirect Taxes (1,66) (2.11) (4,20) (8-71) (15066) (17.96) (20,53) (23,84) (27-71) (32-93) (36.54)

Non-Tax Revenue 0.76 1,34 1.88 3-35 5-42 5-35 5-72 6.48 7-08 7-99 8-73Grants from Centre 0,27 0,73 2.24 3,84 6.06 5,83 8-73 9.48 9.70 10.56 11.18Other 0,04 o.o6 0.06 0.11 0.04 0,03 0.09 0,03 - _ _

Revenue Expenditures 5.7±4 6.t4 10.16 19.01 32.20.34, 40.90 46.61 52.77 5. 6z.to

Non-Developmental 1.86 2,57 3,81 6,45 11.70 12768 15-32 16.55 19.35 18.61 20.71Developmental b/1.

82 3.29 5.66 10.85 17.18 18,87 22.32 25.95 29.25 33.42 36.99

Interest Payments to centre 0.03 0.19 0.58 1.52 2.81 2.59 2.96 3.82 4-17 4.00 4.40Other 0.03 0.09 0,11 0O19 0.51 0.26 0.30 0.29 - - _

Capital Expenditures D.L2 28.63 4,s 9.82 8.00 906 1O.77 1.27 1I.9& 16.06 1.i52

Non-Developmental 0.10 0.05 0.17 0,06 0.26 -0.09 - 0.19 - 0.12 .10 0.18 0.19Developmental 0.68 1t94 3.04 5.49 5,18 5,89 7,05 8.69 9.93 10.62 11038Loans and Advances (net) 0,21 0,70 1.31 4.27 2.56 3.26 3.92 4.71 3T70 5.26 3.95

Capital Receipts 10j2 3.21 403 8.20 8.97 7.90 8.02 14.11 12.96 1. 12.66

Market Borrowings (net) 0.08 0-49 0.67 1.00 1.02 1.16 1.14 1.37 1.65 2.13 2.91Loans from Centre (net) 0,53 2,36 2.32 s-so 4.46 3.77 4.01 8,59 6.34 6.83 5018Other 0.51 0.19 1.04 1,70 3.49 2.97 2,87 4.15 4.97 4.41 4.57

Overall SurPlus/Deficit 0,15 0°07 - 0.24 - 1.96 0.31 -1.34 -2.66 s.2/ -1.7S -0,30 -065

Financing

Ways and Means Advances -0.04 - 0.03 0.14 0,04 0022 0.02 0.04 0031 -0.12 0.soChanges in Cash Balances -0.11 -0.10 - 004 0.74 -0.28 0.76 2.76 0,7T/ t.oo 144 0°35Changes in Treasury Bill

Holdings n.a, 0,03 025 1.08 -0,07 0.36 -0012 -0,35 0-44 -1.02

a/ Due to changes in budgetary classification, the data from 1974/75 onwards are not exactly comparable to those for previous years.

b/ As recorded in Central Government accounts.

S/ Excludes book adjustment of Rs. 4.21 billion on account of Centre's assistance to States for clearing their overdrafts.

Source: Ministry of Finance.

Table 5.4

TAX REVENUE - CENTRE AND STATES -(in Rs billion)

1950151 J955/56 t 960/61 1965/66 1969/70 1970/71 1971/72 1972/73 1973/74 w 4.2L 1 LTRevised (hge

Estimates) Estimates)

TAX REVENUE - CENTRE

Income Tax 1.34 1.32 1.69 2.72 4.48 4.73 5.37 6,25 7.41 7047 7.91Corporation Tax 0,39 0.37 1.10 3.05 3.53 3.71 4.72 5-58 5,83 7.13 7.81Customs Duties 1.58 1.67 1.70 5.39 4.23 5-24 6.96 8-57 9.96 13.00 12.84(of which Export Duties) (0.47) (0,38) (0,13) (0.02) (0.68) (0.63) (0.72) (0,90) (0.85) (0.94) (0.94)Union Excise Duties 0.68 1-45 4,16 8.98 15.24 17,59 20.61 23.24 26.02 24.82 28.99Other 0.06 0.04 0,30 0.47 0,75 0.79 1.07 1t41 1.48 8.87 10.53A. Sub-total 4.09 4.85 8.95 20.61 28.23 32.06 58.75 4507 52.70 6129 6B¢08

Les8: States' Share of:

Income Tax 0.48 0.55 0.87 1.23 2.93 3-59 4.62 4.88 5.28 5.12 5.43Excise Duties - 0.17 0.75 1.46 3.22 3.90 4.75 5.67 6.31 7.03 8.21Other _ 0.02 0.03 0.07 0.07 0.06 0.08 0,07 0.11 0.10 0.08

B, Tax Revenue Retainsd by Centre 3 .5 4.11 lam 17.85 22.01 24.51 29.28 34.43 ,59.0 49.04 54.65

TAX REVENUE - STATES

Sales Tax 0.58 0.81 1.59 3.69 6.60 7.58 8.30 9.52 11.36 14.42 16.35State Excise Duties 0.48 0.45 0.53 0.99 1.78 1.96 2,37 2.83 3,58 3.83 3.95Stamps and Registration 0.26 0.29 0.44 0.80 1,14 1.28 1.37 1.45 1.73 1.97 2.16Lacd Revenue Tax 0.50 0,78 0,97 1.20 1.16 1.21 1.02 0,94 1t59 1.55 1.95Motor Vehicles Tax 0.08 0.15 0,34 0o60 0.99 1.10 1.18 1.32 1.49 1.69 1.88Other 0.32 0,34 0.68 1.33 2.10 2,33 2,78 3.25 3.44 4,15 4.87

C. Sub-total 2.22 2.82 455 8.61 1377 .15.46 17.O2 19.31 23.19 27.61 51.t6

Add: States' Share of:

Central Taxes 0.47 0,74 1.68 2.76 6,25 7,55 9°43 10.61 11.62 12.26 13.24D. Tax Revenue Retained by States ~2.69 5S6 6.23 1137 20.02 23.01 26.45 29.92 34.81 39487 44.40

TOTAl - CENTRE AND STATES (B+) 6.26 7.67 13± 29.22 42.00 47.52 55.73 64.35 73.81 88.91 98.76

Adjustment / + 0.01 + 0.01 - 0.03 - -0.03 _ + 0.02 + 0=01 t 0.08 - 0.02 + 0-50

MNS0LIDATED TOTAL 6.27 7.68 13.50 29,22 42.00 47.52 557S 64.36 73589 88.89 99.26

l Due to changes in budgetary classification, the data from 1974/75 onwards are not exactly comparable to those for previous years.Al Adjustment to take into account the fact that in the consolidated statement on Centre and State finances, the States' tax revenue includes

the States' sharu in Central taxes as recorded in the Central accounts rather than as in their own accounts.

Source: Ministry of Finance.

Table 9.9

WRRENT EXPENDITUBES - CENT1E AND STATES(in Rs billion)

t125/st 1955/16 1960/61 1965/66 1969/70 1970/71 1971/72 1972/75 1973/74 1246 XEstimates) Estimates)

CENTRAL GOVENENT

A Non-Developmental

a. Tax Collection 0.10 0.13 0.23 0.30 o.42 0.48 0.52 0.57 0.65 0.87 0.97

b, Adisinistratiye Servicen 0.22 0.35 0.63 1.13 1.80 2.08 2,63 2-79 2.90 3.64 4.16

c. Defense 1.64 1.72 2.48 7.62 9.66 10.51 13.47 14.39 14081 19.52 20.36

d. Interest Payments 0.71 o.96 1.93 3.71 5.65 6.06 6.70 7.72 8.82 10.22 11.88

e. Other 0.66 0.39 0.45 0-55 1.94 1.71 3.38 4.08 4.74 5.04 5.21

sub-total 3.m 3 ss 5.u 1s.st 19.47 20.8Q 26.70 29.55 st s2 39.29 42.58

B Developmental

a. Education 0.03 0.14 0.44 0.94 0.86 1.02 1.08 1.31 1-35 1.52 1.78

b. Public Health 0.02 0.06 0.26 0.44 0.79 0.80 1.10 1.34 1.04 1.25 1.42

c. Agriculture 0.02 0.07 0.14 0.30 0.29 0-47 0.63 0.86 0.82 0.83 1.13

d. Indwtry 0.04 0.10 0.28 0.32 0.32 0.35 0.36 0.53 0.60 1.31 2.22

e. Other 0.16 0.30 0.13 0.54 1-55 1.86 2.04 2.08 2,33 2.73 3.11

sub-total 0.67 .125 238 4.50 .2t .L12 6.14 7.64

C Other - 0-13 0.43 0.84 0.04 0.02 0.06 0.02 0.04 0.03 0-04

D Grants to States 0.25 0o60 2.13 3.50 5.93 6.17 8.99 9.59 9.86 10.82 11.58

Total (A + B + C t D) 5.$ 495 .295 20.19 29.25 45.28 4 7.78 6.86

STATE GOVERNMENTS

E No-Deveolpmental

a. Tax Collection 0.23 0,38 0,50 0.69 1.00 1.36 1.53 1.65 2.17 2.64 2.98

b. Administrative Services 0.99 1.23 1.67 2.84 4-04 4.35 4.92 5-27 6.09 7.41 8.15

c. Interest Pay'ments (other o.o6 0,13 0.29 0,56 0.95 1.41 1.62 0.91 1.23 1.78 2.16

than to Centr-)d. Other 0-58 0083 1.35 2,36 5.71 5.56 7.25 8,72 9.86 6,78 7.42

sub-total 1.86 257 3.81 6.45 11.70 12.6s 152 16.55 19 18.61 20.71

F Developmental

a. Education 0-58 1.04 1t95 3,83 7.03 7.97 8.92 10.03 11.76 13,77 15.40

b. Public Health 0.26 0,47 0.81 1.53 2.81 3.02 3.59 4.41 4-55 5.43 5.80

a. Agriculture 0.21 0.27 0.38 1.09 1.50 1.55 1,85 2.46 2,58 3-09 3.s6

d. Industry 0-05 0.16 0.21 0.30 0.33 0.33 0.37 0.44 0.53 0.61 0.69

e. Other 0.72 1.35 2.31 4,10 5.51 6.oo 7.59 8.61 9-83 10.52 11.24

sub-total 1.82 3.29 9.66 10.8s 17.8 18.87 22.2 25.95 29.25553.42 569

G Other 0,03 0.09 0.11 0.19 0.51 0.26 0.30 0.29 0.00 0.00 0.00

H Interest Pay.e-nte toCent_r 0.03 0,19 0.58 1.52 2.81 2.59 2.96 3.82 4.17 4.00 4.40

Total (E + F + G + H) 5174 6014 10.16 1s.ot i2.20 34,40 4Q-9 46.61 s2.11 s6.0l

TOTAL CENTRE AN2) STATES nt) .7.51 10O50 16.98 3A-8 52.72 .7.17 .951 78.48 86.70 98.99 09.9s

A + S + C + E + F + G)

a Due to change6 in budgetary classification, the data from 1974/75 onwards are not exactly comparable to those for previous years.

Source: Ministry of Finance.

Table 5.6

TRANSFERS BETWEEN CENTRE AND STATES !/(in Rs billion)

1950/51 1955/56 1960/61 1965/66 1969/70 1970/71 1971/72 1972/T3 197374 1L X

Estimates) Estimates)

States' Share in Central Taxes 0.48 0.74 1,65 2.76 6.22 7,55 9.45 10.62 11.70 12.25 13t.72Grants to States 0.25 o060 2.13 3.50 5.93 6,17 8,99 9,59 9.86 10.82 11.58

Loans to atates (groSs) 0.61 2.55 3.39 8.36 10.56 10.28 12.09 15.18 15.76 11.43 11.28Loan RepaYments by States - 0.08 -0.24 -0.95 -2.76 -6.33 -6.58 -8,54 -6,55 -9.69 -5.60 -6.85Interest kepajmets by States - 0.03 -0.19 -0.58 -1.52 -2.81 -2-59 -2.96 -3.82 -4.17 -4.00 -4.40

Net Transter 1.23 3.46 S06 4 1'.57 14.8 19.03 25.02 2i.46 24.90 25.33

Al All data. are taken from Central Government accounts. Due to changes in budgetary classification, the data from 1974/75 onwards are notcKactly comparable to those for previous years.

Sourcse 4inistry of Finance.

Table 5.7

ECON0IOC CLALSIFICATION OF TE tRAL GOVERNT FINANCES(in Rs billion)

1960/61 1965/66 1967168 1969/' 1970/71 1971/72 19722173 1957 /L6(Revised fBudgetEstimates Estinates)

A. RVEE n 22,t6 2L28 28.82 l1-55 7iA.1F 43.3P 48.28 60.S7 67.09Tax Receipt. 7.29 17.83 19.29 21.89 24-34 29.03 34.18 38.76 .48.82 54.36Incom frn Property and

Enterprise. 1.65 3.74 4.22 5.88 5.71 6.18 7.37 7.45 10.04 11.16Fees and Misoellaneous Receipts 0.33 0.60 0.76 1.05 1.28 2.96 1.80 2.07 1.71 1.57

B, CURRENT EXFENDITRS 8.60 18.6 2 2 6.40 9.09 37.77 4t.t4 4A4.72 $5.51 5.87

Consumption Expenditure 4,33 11.09 12.80 14.77 16.70 20.54 22.62 23.12 28.97 31.24Transfer Pvmsnts .^/ 4.27 7.54 11.12 11.63 12.39 17.23 18.52 20,60 24.34 2T.63

C. SAVINGS ON CRRT ACCOUNT (A - B) 0.67 3A.U .6 Z2s 2A 0.40 2.2t Aal 462.6 -922

+ Retained Profits and Depreciation 1.00 1,57 1.03 1,60 1.79 2.29 2.25 1.29 0.81 2.43Provisions of Railways, Posts etc.

D. GROSS SAoINGS 1.67 S1 JA AL7 A 2f 4.46 s.8$ 8.07 10o65

+ Capital Transfer. 0.39 0.80 0.32 0.46 0.55 0.31 0.38 16.86 1.13 0,72+ Loan Repayments Y/ 1.21 3.73 4-92 8.48 8,93 10.54 1t.00 14.64 11.14 12.76

E. TOTAL RECE2S ,27 9.6j 6.65 12.96 13.51 1j5,4 15.84 7,7. - 20.34 24.13

F. CAPITAL EXPENDITURE 10.73 23.89 25B IS 26.88 31.'j 34.60 42.4 6 49.17 52.12

Direct Investment 3LO7 5AM 4.68 3AM 5.19 S7 6,77 7.82 114.49 10.l8

Gross Fixed Capital Formation 3.02 5.49 4.56 4.30 4.85 5.66 6.65 7.11 8.56 8.87Increase in Inventories 0.05 _ 0.29 0,12 -0.37 0-34 0.31 0.12 0.71 2.93 1.31

Indirect Investment 6329 t6.tO It65 1a.92 .zL49. 25.3n 30.5 29.77 3.373 36.71

Capital Tranefsr o.69 1.32 1.37 1.92 1.93 2.84 4.29 3.56 3.53 4C35Investent in Shazes 0,77 1.40 1.50 3.03 3.05 2.75 2.99 3.00 4.65 6.24Loans for Capital Formation 4.26 10.32 9.40 7.45 8.82 10.48 13,81 12.83 16.71 19.23Other Loans o.61 2.28 4.04 6.47 6.10 7,28 9.40 10.21 7.73 6.87Other 0.06 0.79 0.07 0.05 1.59 0,02 0.09 0.17 0.11 0.02

Debt Repayment 1.27 294 A.46a 5.5 4.83 5.28 3A9U 25.56 4.95 s.25Amortization of Foreign Debt 0.18 0.81 1.88 1.79 1.99 1.94 2.18 19.82 2.93 3.16Long Tern Rupee Debt 1.09 1.74 2.58 3.94 2,84 3.34 2.91 5.54 2.02 2.07

G. OVERALL DEFICIT ( F.E ) 7.46 14.22 18.89 t.562 18.00 21.06 26.60 25.60 28.83 27.2

Fi-anced by:

Market Borrowings 1-97 2.84 3552 5.36 4.28 6.27 7.79 10.25 6.96 5.32Foreign Debt: PL 480 2.90 2.13 3,74 2.17 1.06 0.82 -0.02 1.18 -0.51 -0.42

Other 1.84 4.82 5.08 5.01 4.32 4.37 4.94 6.82 12,60 11.59Small Savings 1.08 1.51 1.23 1.29 1,84, 2.24 3.73 4.75 3.26 3,80Other Unfunded Debt 0.43 0.91 1.10 0.47 1.56 § 0.97 o.96 1.01 1.77 1,50Other Debt 0.41 0.28 2.16 0.86 2.09 1.20 0.51 -1.75 -1.53 3.96

H. BUDGETARY DEFICIT (Minus Surplus) 1.17 t.75 1±46 2&5 28 S.19 8.69 .~4 6.28 2.24Treasury Bills -1.41 2.18 1.65 0.63 3.59 3.49 9.55 4.46 4.28 2.16Change in Cash Balances

(Minus = Increase) 0.24 -0.45 0.41 -0.17 -0.74 1.70 0.86 -1.12 2.00 0.08

a/ Mainly subsidies, interest payments and grants to States.

b/ Mainly from State Governments.

S/ mainly grants or loans for capital formation by State Govermnents and Government enterprises.

A/ Includes compensation bonds valued at Ra. 796 million in respect of nationalized banks.

e/ Includes sales of Treasury Bills to holders other than the RBI.

Source: Ministry of Finance, Economic Classification of the Central Budget,

Table 5.8

PLAN EXPENDITURES BY MAJOR SECTORS(a.t current prices-in Rh billion)

Annual AverageThird Plan Annual Plans_t(1961-66) 1966-69) 1969/70 1970/71 1971/72 1972/73 1973/74 1974/7Si 61Th.

(Actuals) eRevised B)udgetEstimates) Estimates)

Agriclture and Allied Sectors - 2.18 3.22 3.08 3.74 4.28 5.47 5.39 5.80 6.91

Irrifttion and Flood Control 1.33 1.57 1.93 2.10 2.48 3.20 3.83 4.54 4.68

Power 2.51 4.04 4.70 5.14 6.06 6.56 6.86 9.48 11.02

Villate and Small Industrien 0.48 0.42 0.40 0.43 0.48 0.55 0.56 0.59 0.74

Industry and Minerals 3-45 5.03 4.45 4.65 5.91 6.28 7.36 12.42 16.44

Tra'smort and Communications 4.22 4.07 4.11 5.08 6,36 7.43 7.83 11.01 1O.40

Scientific Research 0.14 0.15 0O13 0.18 0.24 0.35 0.40 0.51 0.71

Education 1.18 1.02 0.87 1,15 1.58 1.94 2.20 1.60 1.84

Health 0.45 0.47 0.40 0.51 0.66 0.85 0.93 0.82 0.95

Family Planning 0.05 0.23 0-37 0.48 0.59 0.80 0.54 0.54 o.63

Water Supply and Sanitation 0.21 0.34 0.51 o.66 0.86 1.25 1.31 1.37 1.38

Housiig, Urban and Regional 0.25 0.25 0.32 0.43 0.52 0.58 0.85 1.60 1.42bevelopments

Welfate and Backward Classes 0.20 0.25 0.21 0.25 0.32 0.39 0.47 0.52 0.49

Social Welfare 0.04 0.04 0.04 0,05 o.o6 0.25 0.24 0.15 0.14

Labor Welfare and Training 0.11 0.12 0.04 005 0.05 0.10 0.08 0.09 0.07

Other Schemes and Programs W 0-35 0.39 0.29 0.34 0.35 1.02 2.79 0.91 1.96

17.15 2162185t.61 2.24 30. 37.02 AIa6-4 51.95 59.78

c Excludes provisions for buffer stock.

I Includes, among others, provisions for employment promotion programs, hill and tribal areas, North Eastern Council and nutrition.

0ource.: Reserve Bank of India, Report on Currency and Finance 1974/75, Economic Survey 1975/76, and Planning Commission.

Table 5.9

PLAN EXPENDITIIRES BY MAJOR SECTORS(at 1960/61 prices-in Ra billion) _4

Annual AverageThird Plan Annual Plans

Setor (1961-66) (1966-69) 1969/70 1970/71 1971/72 1912/75 1973/74 97.4L75..1.. (Actuals) TRevised (Bdget

Fstimates) Estimates)

Agri=lture and Allied Sectorspi 1.96 2.38 2.10 2.37 2.52 3.o6 2.61 2.18 2.53

Irrigation and Flood Control 1.19 1.16 1.32 1.33 1.46 1.79 1.86 1.71 1.71

Powrer 2.26 2.99 3.21 3.26 3.57 3.66 3.32 3.57 4.03

Village and Sall Industries 0.43 0.31 0.27 0.27 0.28 0.31 0.27 0.22 0.27

Industry and Mineral.2 .10 3.04 2.95 3.49 3.51 3.56 4.68 6.02

Transport and CoutmunioatiolW 3.79 3.01 2.81 3.22 3.75 4.15 3.79 4.14 3.81

Scientific Research 0.13 0.11 0.09 0.12 0.14 0.19 0.19 0.19 0.26

Education 1.o6 0.76 0.59 0.73 0.93 1.08 1.07 o.60 0.67

Health 0.40 0-35 0.27 3.32 0.39 0.47 0.45 0.31 0.35

Family Plannl 0.04 0.17 0.25 0.31 0-35 0-45 0.26 0.20 0.23

Water Supply and Sanitation 0.19 0.25 0.35 0.42 0.51 0.70 0.63 0.52 0.51

Rousing, U1rbas and Regional 0.22 0.19 0.22 0.27 0.31 0.32 0.41 o.60 0.52

Developments

Welfare and Backward Classes 0.18 0.19 0.14 0.16 0.19 0.22 0.23 0.20 0.18

Social Welfaxe 0.04 0.03 0.03 0.03 0.04 0.14 0.12 o.o6 0.05

Labor welfare and Trainin 0.10 0.09 0.03 0.03 0.03 0.06 0.04 0.03 0.03

Other Schemes and Programs 0.31 0.29 0.20 0.22 0.21 0.57 1.35 0.34 0.72

15.40 16.00 14.92 16.01 18,t7 20.68 2o.16 19, 21.89

a/ Expenditures in current prices have been deflated by the adjusted wholesale price index (see Table 6.12).

b/ Excludes provisions for buffer stock.

o/ Includes, anong others, provisions for employment promotion programs, hill and tribal areas, North Eastern Council and nutrition.

Sources: ReservS Bank of India, Report on Currency and Finance 1974/75, Economic Survey 1975/76 and Planning Commisnion.

Table 5.10

PLAN EXPENDITURES BY MAJOR SECTORS(in peroentages)

Annual AverageThird Plan Annual Plans

Sector (1961-66) (1966-69) 1969170 1970/71 1971/72 1972/73 1973/74 1974/7L t975/76(Actuals) (Revised (Budget

Estimates) Estimates)

Agriculture and Allied Sectors 12.7 14.8 14.1 14.8 13.9 14.8 13.0 11.1 11.6

Irrigation and Flood Control 7.7 7.2 8.9 8.3 8.0 8.6 9.2 8.7 7.8

Power 14.7 18.7 21.5 20.4 19.7 17.7 16.5 18.3 18.4

Village and Small Industries 2.8 1.9 1.8 1.7 1.5 1.5 1.3 1.1 1.2

Industry and Minerals 20.1 23.2 20.4 18.4 19.2 17.0 17-7 23.9 27.5

Transport and Communications 24.6 18.8 18.8 20.1 20.6 20.1 18.8 21.2 17.4

Scientific Research 0,9 0-7 0.6 0.7 0.8 0.9 1.0 1.0 1.2

EAucation 6.9 4.8 4-0 4.6 5.1 5.2 5,3 3.1 3.1

Realth 2.6 2.2 1.8 2.0 2.1 2.3 2.2 1.6 1.6

Family Planning 0.3 1.1 1.7 1.9 1.9 2.2 1.3 1.0 1.1

Water Supply and Sanitation 1.2 1.6 2.3 2.6 2.8 3.4 3.1 2.7 2.3

llousing, Urban and Regional 1.4 1.2 1-5 1.7 1.7 1.5 2.0 3.1 2,4Developments

Welfare and Backward Classes 1.2 1.2 0.9 1.0 1.1 1.1 1.1 1.0 0.8

Social Welfare 0-3 0.2 0.2 0.2 0.2 0.7 o.6 0.3 0.2

Labor Welfare and Training CA6 o.6 0.2 0.2 0.2 0.3 0.2 0.2 0.1

Other Schemes and Programs b/ 2.0 1.8 1.3 1.4 1.2 2.7 6.7 1.7 3.3

100.0 100.0 100.0 t.D.O 100.0 100.0 tO.& 10.0

a/ Excludes provisions for buffer stock.

jh/ Includes, among others, provisions for employment promotion programs, hill and tribal areas, North Eastern Council and nutrition.

Sources: Reserve Bank of India, Report on Currency and Finance 1974/75, Economic Survey 1975/76 and Planning Commission.

Table 6.1

MONEY SUPPLY(in Rs billion)

Year Currency Demand Deposits TotalAmount Percent Amount Percent Amount

1960/61 20.98 73.1 7.71 26.9 28.69

1961/62 22.01 72e2 8.45 27.8 50.46

1962/63 23.79 71.9 9.31 28.1 33.10

1963/64 26.05 69.4 11.47 30.6 37.52

1964/65 27.69 67.9 13011 32.1 40.80

1965/66 30.34 67.0 14.95 33.0 45.29

1966/67 31.97 64.6 17.53 35.4 49.50

1967/68 33.76 63.1 19.74 3609 53.50

1968/69 36.82 63.7 20.97 36.3 57.79

1969/70 40.10 62.8 23.76 37.2 63.86

1970/71 43.83 61.4 27.57 38.6 71.40

1971/72 48.22 59.2 33.16 40.8 81.38

1972/73 54.43 57.8 39.70 42.2 94,13

1973/74 63.36 58,4 45.12 41.6 108.48

1974/75 A 63.79 55.3 51-48 44.7 115T27

a/ Provisional.

Source: Reserve Bank of India, Report on Currency and Finance, 1968/69and 1974/75.

Table 6.2

MONETARY RESOURCES

(in Rs billion)

Year Currency Demand Deposits Time Deposits TotalAmount Percent Amount Percent Amount Percent Amount

1960/61 20.98 52.9 7.71 19.5 10.95 27.6 39.64

1961/62 20.01 51.9 8.45 19.9 11.98 28.2 42.44

1962/63 23.79 52.3 9e31 20.4 12.43 27.3 45.53

1963/64 26.05 51.7 11.47 22,8 12.85 25.5 50.38

1964/65 27.69 50.4 13.11 23.8 14.18 25.8 54.98

1965/66 30.34 49.5 14.95 24.4 16.05 26.2 61.34

1966/67 31.97 46.9 17.53 25.7 18.66 27.4 68.16

1967/68 33.76 45.2 19,74 26.5 21.10 28.3 74.60

1968/69 36.82 44.3 20.97 25.2 25.27 30.4 83.06

1969/70 40.10 43.0 23.76 25.4 29.50 31e6 93.36

1970/71 43.83 41.4 27.57 26.0 34,48 32,6 105.88

1971/72 48.22 39.2 33.16 26.9 41.76 3309 123.14

1972/73 54.43 37.5 39,70 27.3 51.02 35.2 145.15

1973/74 63.36 37.4 45.12 26.6 61.04 36.o 169.52

1974/75 / 63.79 34.0 51.48 27.5 72.27 38.5 187.54

a/ Provisional.

Source: Reserve Bank of India, Report on (urrency and Finance, 1968/69 and 1974/75.

Table 6.3

DEFICIT AND CHANGE IN MONETARY RESOUJRCES(Rs billion - current prices)

Change in Bank Change in Net Bank Change in Change ina/ Credit to Credit to Government Foreign Monetary

Year Deficit -3 Commercial Sector Reserve Bank Other Banks Assets Other Resources

1961/62 1.81 1.40 1.59 0.43 -0.57 -0005 2.80

1962/63 1.80 2.17 2.07 -0.05 -0.43 -o.67 3.09

1963/64 2.12 2.59 1,95 0.47 0.35 -0.52 4.84

1964/65 1.62 2X50 1.28 0.79 -0.19 0.23 4.61

1965/66 3.98 2.86 3.71 o.96 -0.24 -0.93 6.36

1966/67 1.89 4.86 1.20 0.79 0.78 -0.81 6.82

1967/68 2.24 4.22 1.67 0.79 0.13 -0.37 6.44

1968/69 2.63 5.09 3047 0.96 1.64 -2.70 8.46

1969/70 0.58 7.14 -0.90 1.18 2.50 0.39 10.30

1970/71 3e59 8.88 3.11 1.99 -0.28 -1.19 12.51

1971/72 7.10 8.49 8.82 2.99 o.60 -3.64 17.26

1972/73 8.48 11.17 8.00 5.24 -0.42 -1.98 22.01

1973/74 7.75 17177 7.47 2.07 1.07 -4.01 24.37

1974/75 -/ 6.54 14.08 3,35 3.97 -2.80 -0.58 18.02

i As defined by Planning Commission, i.e. change in short-term and long-term advances by the RBI to theGovernment, as well as change in cash balances.

i Provisional.

Source: Reserve Bank of India, Report on Currency and Finance, 1968/69 and 1974/75.

Table 6.4

GOVERNMENT MARKET BORROWING (NET)(in Rs billion)

Year Center States Total

1961/62 o.63 0.74 1.37

1962/63 0.73 0.85 1.58

1963/64 0.83 o.64 1.47

1964/65 1.00 0.85 1q85

1965/66 1.04 1.07 2.11

1966/67 0.80 0.97 1.77

1967/68 0.94 0.68 1.62

1968/69 0.78 0.70 1.48

1969/70 1.39 0.81 2.20

1970/71 1.34 1.00 2.34

1971/72 2.95 1.03 3.98

1972/73 4.78 1.34 6.12

1973/74 4.72 1.65 6.37

1974/75 4.95 2.12 7.07

1975/76 (budget) 3.25 2.91 6.16

1975/76 (actual) 4.53 2.73 7.26

Source: Ministry of Finance.

Table 6.5

SEI1CTED MOARY POLICY INSTRUMENTS

Bank lMinimum Cash Statutory Liqi4- Net Liquid1Lty minimum MaxizmYga~ Rate Denosit Ratio dity Retio , Ratio LendingRate Deposit Rate

1964 5 3 25 28 7.00

1965 - Febrary 6 3 25 28 7.00

1968 - Narch 5 3 25 28 7.00

1970 - February 5 3 26 31 7.00

- April 5 3 27 32 7.00

- August 5 3 28 33 7.00

1971 - January 5 3 28 34 7.25

- June 6 3 28 34 7.25

1972- August 6 3 29 34 7.25

- November 6 3 30 36 7.25

1973 - March 6 3 30 37 7.25

- May 7 3 30 37 7.25

- June 7 5 30 39 10 7.25- September 8 7 6 30 40 10 7.25

- September 22 7 7 30 40 10 7.25

-December 7 7 32 40 11 7.25

1974 - April 7 7 32 40 11 8.00

-Jun 29 7 5 33 40 11 8.00.July 23 9 5 33 40 12.5 / 10.00

D December 14 9 4.5 33 40 12.5 10.00

- December 28 9 4.0 33 39 12.r 10.00

197'j - November 1 9 4.0 33 - 12.5 10.00

a/ Dates given are those of the effectiveness of the announced measures,

./ Minimum cash resources to be deposited with the RBI as percentage of aggregate demand and time liabilities.

i/ The ratio of liquid assets (exclusive of those under i/) to aggregate demand and time liabilities.

j/ Liquid assets as defined under o/ min-s borrowings from RBI, SEBI and IDBI as percentage of aggregatedemand and time liabilities,

e/ The minimum lending rate is not applicable in respect of advances to priority sectors such as exports,agriculture, and small-scale industry.

t/ For depcsits over five years.

/ Adjusted for the interest rate tax, the minim lending rate may be about I percentage point higher.. Starting from November 1, the net liquidity ratio was abolished as a guideline for access to refinance.

Source: Reservs. TanF. of India, Report on Currency and Finance 1973/74, and various issues of the Bulletin.

Table 6.6

SLCTED BORR0WI1G AID LEDIRI RAM - GROSS YIRL1(in percent)

1966/67 1968/69 19170/1 1971/72 19T2/b 1977/l74 19745 197

(as on Deember)BR* Rate 6 5 5-6 6 6 6-T 7 -9A/ 9

DeDosit Rates

Post Offioe Savings 4 3.5 4 4 4 4 5 5Fized Deposits for 1 year or lese

than 2 yeare with Large Banks 6 5-5 5.5 6 6 6.75 8 k8

Rate on bank Advances

Rate of Scheduled Banks / 8-9 8.50-9.50 8-11 9-12 9-12 1Om1l 1551 815-18

Lo,w+e Lending Ratj - RuDe. Loenx

ID)II .8) ) 5 8.5 9 10.25 11.00 A'nOCI 9 9.5 11825 12.00ICI ) 8-5 9 10.25 11.00

C.ntral Government 8eoArities

3 percent 1986 or later / 5.57 4.99 5.00 5.00 5.00 5.00 5.00 5.003.T5 percent 1974 / 4.94 4.22 4.26 4.44 4.52 4.0 A/4 percent 1 980, 5.10 4.38 4.55 4-97 4-98 4.91 5-37 5-54

Bazar Bill Rate Bambaby 15.00 15.00 15.00 15.00 15.00 15-17.00 17-21.00 21.00

Private Securities

Debentures:

Redemption Yield 7.97 7.96 8.11 8.70 9.40 8.86 9.48 11.46Running Yield 6.85 7.16 7.31 7.40 7.46 7-98 8.07 8.49

Preference Shares 9.38 9.95 9.72 10.09 10.36 10.34 10.81 12.10Ordinary Shares 7.71 6.81 5.53 6.49 6.86 5.59 4.23 5.89

Note: Data for Central Government Securities,and Private Securities are averages.

if Raised with effect from July 1974./ Raised with effect from July 1974. The highest rate for deposits over 5 years is now 10.00 percent. Previously it was 8.00 percent.

S/ Data based on Surveys of the Reserve Bank. The rise in 1967 is due to a change in classification rather than to a change in rates.No data have been published after April 1968. The rates for the later years are those most commonly charged.

4/ Raised with effeot from lot December 1975./ Running yield./ Redemption yield.

Mf Matured on 16th July 1974./ Rates at which bills of small traders are discounted by Shroffs - these are unofficial quotations.

Sources Reserve Bank of India.

Table 6.7

COMURECIAL BANKS SAVINGS AND TIME DEPOSITS AND SMALL SAVINGS(Yearly net receipts in Rs billion)

1969/70 1970/71 1971/72 1972/73 19.73J4 1974/75

I. is De t S 1.86 2, 3A 4 4.12

II. comrcia_Ak_Time Deposits /. 4.87 6. 9 9 . 9-51 t0.64

III. Small UTIM 1.25 S 2 1.41 ASO1 2&5%

a. Current Series - DepoNits 0.97 1.88 2.32 3.56 5.00 3.00

Of whioh3

poOt Office Saviygs Bank Deposits (0.77) (0.93) (0.56) (0.61) (1-45) (-0.31)

post Offioe Recurring Deposits (O.Ot) (0-07) (0-15) (0.24) ( 0-31)

po0 t Office Tine Deposits I (0.77) (1.50) (2.67) (3-15) ( 2.88)

Cusulative Time Deposits (0.20) (0.17) (0,19) (0.13) (0-17) ( 0.12)

b. Current Series - National Savings Certificates 0.04 0.88 o.96 0-75 0.56 0.57

c. Discont5nued Series 0.24 -0.84 -0-93 -0.90 -0.89 -v103

/ The sayingo deposits are not strictly time or demand deposits but a combination of both. The definition followed is that of theReserve BaSk Of India.

S Exclusive of interbank deposits.

gI Introdueed since March 16, 1970.

Sources BeserC Bank of India.

Table 6.8

SCHEDULED COIOMECIAL BANK ADVANCES - PRIORITY SECTORS AND FOOD PROCUREMENT(in Rs million)

June 1969 3 2/ June t970 June 1971 / June 1972 June 1973 June 1974 June 1975Amun eren montPrcn -" ________ Amount Per___ Amoun roent Aut ercentAmount Pereent - Amolant Percent Amount Percent Amount Percent Amount Percent _____ Pert .bi' Pe /Advances -zPirtySco

I Aailt 1.884 5.2 5.48 8.1 3,825 8.0 4.400 8.0 8.3 6,469 8.2 8.431 9-4Of which:

Di)ect Finance to Farmers 536 1.5 1,840 4.4 2,364 5.0 2,677 4.9 3,418 5.3 4,354 5.5 5,635 6.3

II S-a1 Sale Sector 2.941 8 4.4S6/ 10.6/ 5.489 / . J/ 6.646 tt 8.074 12.6 100.833 138 12.046 .4Small Scale Industries 2,856 7.9 4,141 9.8 4,974 10.4 5,984 10.9 7,234 11.3 9,715 12.4 10,501 11.7Road transport Operators 82 0.2 306 0.7 482 1.0 623 1.1 793 1.2 1,036 1.3 1,449 1.6Industrial Estates 3 n.s. 9 n.s. 33 n.s. 39 0.1 47 0.1 8t 0.1 96 0.1

III Exorts 2.702 LS '.266 7.8 3.808 8.0 4.5 8.0 5.670 8.8 8,030 10.2 AL&, n.a.

IV iority Sector 221 0.6 / 516 / L2 8A 3/.8 / t.to8 1,Q78 2s02 2t.

Retail Trade and Small Business 194 0.5 428 1.0 720 1.5 919 1.7 1,138 1.8 1,390 1.8 1,563 1t.7ProfetsionalJ Self Employed 19 n.s. 67 0.2 86 0.2 159 0.3 257 0.4 358 0.5 434 0.5Education 8 n.s. 21 0.0 37 n.s. 30 n.s. 34 n.s. 37 n.s. 41 n.s.

TotalSe (I+II+III+IV) 7,74S 21.5 11.656 27.7 13,965 22,d 16.511 50.1 20.492 31.9 27.116 54.5 n.a. n.a.

Advances for Food Procurement 2,332 6.5 2,067 4.9 3,788 8.0 5,420 9.9 4,677 7.3 5,235 6.7 7,954 8.9

T!otal _Bak Advances. to All Sectors 35.988 100.0 42.127 100.0 47.629 100.0 54,799 100.0 64.121 100.0 78,585 100.0 89.629 tOO.O

a/ Outstanding as on the last Friday of June each year.

3/ As percent of total bank advances to all sectors.

./ Does not include advances to industrial estates as these figures were not easily obtainable.

&/ These are understated. They cover only public sector banks which account for about 90 percent of the total advances.

Souree Reserve Bank of India.

Tble 6.9

ASSISTANCE BY TEWl-LENDING INSTITUTIONS TO TH INDUSTRIAL SEIOR(Rs million)

1960/61 1962/66 1970/7t 1971/72 1912/7:SZ 197L4. Sano- Dig.. Sano- Dig- Sano- Die- Sanoe Dis- Sano- Dis- Sano- Dia- Sano- Dig-tioned burd tioned busod tioned bursed tione bur saursed tioned bursed tioM bed

Loans

1I543 325 705 511 1,271 774 870 624 1,638 1,134 2,228 1,647IFCIA 275 74 401 230 285 165 265 195 416 256 388 303 270 360ICICI 117 31 239 223 384 258 345 285 424 359 545 401 573 428IRlto 66 11 61 35 72 52 76 eoSiC. 92 48 274 161 490 331 634 390 778 441 1,021 541 1,434 799SIDOs 3 3 171 95 164 107 181 127 230 161 213 199

Sub-Total A484 lil t.42 9.24 2.A035 1.'60 2 .745 1.762 2O 1.842 3,894 2.592 4ALM 3I

UTILIC I hI 154 18 20 27 141 9 116 42 171 106 250 455Total 4 14 M t.7 960 2,055 t 8 2.886 Il. 2,846 1.8 4,065 2.698 5 043 5.9I

Ulexuritiu ad frot 3ubgliuti to Share. and hbenm"a

IDBI 87 28 28 47 133 14 55 43 82 48 90 2TIFCI 19 11 58 41 38 9 22 8 41 24 31 15 36 9ICICI 17 16 57 30 54 31 52 18 TO 38 67 34 56 26IRCISF0. 19 19 6 4 7 6 9 6 9 5 5 2SIDO 14 11 22 16 72 36 54 39 48 45 122 69

Sub-Total 36 2r f 12 148 107 286 82 229 t50 M.5 n48 509 DAUTI 22 18 108 51 150 16 99 57 77 77 71 76LIC S/ hI 96 79 158 54 90 44 85 98 89 93 205 103Total 56 27 3 226 AIA 212 526 142 3 4 518 312

Total Assistanoo

IDBI 630 353 733 558 1,404 788 925 667 1,720 1,102 2,318 1,674IFCI 294 85 459 271 323 174 287 203 457 280 419 319 306 370ICICI 134 47 296 255 439 289 397 303 494 397 611 435 629 454IRCI 66 11 61 35 72 52 76 80SFC0 92 48 253 180 496 335 641 396 787 447 1,031 546 1,438 804SIDCs 17 14 193 III 236 144 235 166 279 206 335 267

Sub-Total 5- J .1 t iuS J.O'7 28.t84 t 461 3A.Oj 194- 29 1s99 A1I 2.fl3 3 5 .649UTI 22 18 107 51 t50 16 99 56 77 77 71 76LIC a/ a/ 250 97 178 81 231 53 201 140 259 200 455 558

GRAND TOTAL 520 180 1.927 1i186 2,469 1,599 3,412 1,914 3,259 2,188 4,468 316 5.,62e 4,283

a/ Provisional.h/ Includes direct lassi, refinanoe to banks and rediscounts; exclusive of refinanee to SFCs to avoid double counting./ Including disburseements on aecoount of guarantees.,/ Foreign currency loans converted at poet devaluation value../ Data not compiled for these years, The total assistance figure for the year 1960/61 includer loans and underwriting by tLe LIC./ Does not include Re. 25 million converted into loan out of Re. 70 million debentures sanCtioned to a compary earlier.

Souroes Reserve Bank of India, Report on Currency and Finance 1974/75.

Table 6.10

INDEX UIMES OF WhOLESALE PRICES - BY YEARS(Base 1961/62 = 100)

Marufac-tures

Food Articles Liquor & Fuel, Power, Light Industrial Machinery & Trans- Intersed. Finished All

Tohal Food! ra Pi Rioet a Pde Tobaooo & Lubricants Raw laterials Chemicals port Equipment Total Products Produnts Comm 1itie

weight. = 41-3 14.8 6.7 3.2 2.7 2.5 6.1 12.1 0.7 7-9 29.4 5.7 23.7 100.0

1950/51 97 n.a 98 111 102 n.. n.a. 84 78 68 T/ 5 73 76 86.1

1955/56 72 73 78 80 68 81 78 69 83 85 79 72 80 73.9

1960/61 100 1O2 103 99 101 110 98 102 94 97 98 94 99 99.8

1965/66 145 154 137 149 191 133 124 133 126 118 118 125 117 131.6

1966/67 171 183 169 178 225 134 134 158 144 126 128 140 124 149-9

1967/68 208 228 200 214 328 152 142 156 157 132 131 147 127 167.3

1968/69 197 201 196 204 223 193 147 157 169 133 134 145 132 165.4

1969/70 197 208 196 215 239 195 155 180 184 136 144 160 140 171.6

1970/71 204 207 201 209 240 185 162 197 188 148 155 179 149 181.1

1971/72 210 215 204 208 272 195 172 191 197 159 167 197 160 188.4

1972/73 240 248 231 222 W30 233 181 204 201 168 177 212 168 207.1

1973/74 296 296 283 226 411 251 215 299 220 184 206 268 190 254.2

1974/75 364 401 366 380 507 3o6 316 327 300 242 255 320 239 313.0

1975/76 / 355 368 365 336 436 318 348 271 329 262 253 304 240 306.0

Percentage Change in Wholesale Price Index(over previous year)

1955/56 -8.5 -3.4 -5.0 -3.7 5.5 -10.5 -1.9 -2.9 -2.3 0.7 0.9 2.7 -1.5 -5.1

1960/61 0.8 0.1 2.8 -6.4 -o.6 10.5 3.0 17.5 -2.4 4.4 11.0 14.8 10.4 6.6

1965/66 6.6 5.5 7.9 8.0 -0.5 1.5 3.3 12.8 7.7 5.4 8.3 11.6 8.3 7.7

1966/67 17.9 18.8 23.4 19-5 17.8 0.8 8.1 18.8 14.3 6.8 8.5 12.0 6.o 15.9

1967/68 21.6 24.6 18.3 20.2 45.8 13.4 6.o -1.3 9.0 4.8 2.3 5.0 2.4 11.6

1968/69 -5.3 -11.8 -2.0 -4.7 -32.0 27.0 3.5 o.6 7.6 0.8 2.3 -1,4 3-9 -1.1

1969/70 - 3.5 - 5.4 7.2 1.0 5.4 14.7 8.9 2.3 7.5 10.3 6.1 3.8

1970/71 3.6 -0.5 2.6 -2.8 0.4 -5.1 4.5 9.4 2.2 8.8 7.6 11.9 6.4 5.5

1971/72 2.9 3.9 1.5 -0.5 13.3 5.4 6.2 -3.0 4.8 7-4 7.7 10,1 7.4 4.0

1972/73 14.3 15.4 13.2 6.7 21.3 19-5 5.2 6.8 2.0 5.7 6.0 7.6 5.0 9.9

1973/74 23-3 19.4 26.0 3.6 24.5 7.7 18.8 46.6 9.5 9.5 16.4 26.4 13.1 22.7

1974/75 23.0 35.5 29.3 68.1 23.4 21.9 47.0 9.4 36.4 31.5 23.8 19.4 25.8 23.1

1975/76-' -2.5 -8.2 -0.3 -11.6 -14.0 3.9 10.1 -17.1 9.7 8.3 -0.8 -5.0 0.4 -2.2

a/ Relates to maohinery only.9/ Based on returns for 10 months.

E0e: Reserve Bank of India, Report on Currency and Finance 1974/75, as well as various issues of the Bulletin, and Press Notes issued by the Office of the Economic Adviser,

Ministry of Industry and Civil Supplies.

Table 6.11

INDEX NUMBE OF WHLE8SALE PRICES BY MONTHSFB*ne 1961/62 =100)

ManufacturesFood Artioles Liquor & Fuel, Power, Light Industrial Machinery & Trans- Intemed. Finished All

Total Foodgrains Rice Wheat Pulses Tobacco & Lubricants Maw Materiala Chemicals port Equipment Total Products Products Coditieg

Weights = 41.3 14.8 6.7 3.2 2,7 2.5 6.1 12.1 0.7 7.9 29.4 5.7 23.7 100.0

A-reraRe of Weeks

January 313 313 294 245 437 253 235 321 226 195 222 500 202 271.4February 316 320 302 248 443 262 273 326 238 198 227 307 208 275.5March 321 331 318 249 455 273 288 323 262 206 233 311 214 282.9April 326 350 337 295 450 269 287 324 272 210 242 317 223 289.1

May 341 371 346 356 459 294 312 326 281 220 246 336 225 298.1June 351 3T6 356 347 459 305 313 335 287 226 249 339 228 308.1July 367 592 370 363 479 306 312 343 287 232 254 537 233 314.5August 376 412 389 380 509 302 313 354 291 242 261 339 242 525.5

September 386 437 404 407 554 309 316 356 300 244 262 323 245 32n.7October 382 432 402 400 556 315 320 331 301 249 262 324 247 325.9November 376 417 376 392 563 315 320 321 309 253 257 305 246 319.1December 370 409 343 402 559 316 320 322 313 253 257 504 255 316.8

ji2January 368 410 352 410 529 314 322 318 311 254 255 307 243 316.0Februawy 365 407 359 408 498 310 322 308 324 255 255 301 244 313.5March 358 397 362 395 465 310 324 293 326 265 253 298 243 309-1April 361 392 374 357 458 313 322 287 332 261 252 299 241 509.2

May 371 395 389 343 459 316 323 287 331 261 252 301 240 313.2June 371 396 396 342 453 318 326 283 329 262 252 300 240 312.3July 361 386 398 335 428 315 350 274 330 267 252 300 241 309.2Auguat 365 382 394 333 433 313 352 281 331 262 252 304 240 311.2

September 363 376 386 331 443 316 352 269 332 263 253 306 240 309%3October 362 358 367 326 435 318 352 26C 330 263 253 302 241 307.9November 349 343 340 325 433 322 362 260 324 262 253 306 240 303.2Deoember 328 326 309 331 412 325 368 256 323 259 253 307 240 294.4

1976

January 319 322 299 335 408 321 368 256 323 259 254 310 240 290.5

PzroentanChbangre in Wholesale Price Index(over corresponding month of previoue yeer)

January 17.6 31.0 19.7 67.3 21.1 24.1 37.0 -0.9 37.6 30.3 14.9 2.3 20.3 16.4F brua 15.5 27.2 18.9 64.5 12.4 18.3 17.9 -5.5 36.1 28.8 12.3 -2.0 17.3 13.9MIrch 11.5 19.9 13.8 58.6 2.2 13.6 12.5 -9.3 24.4 28.6 8.6 -4.2 13.6 9.3April 10.7 12.0 11.0 21.0 1.8 16.4 12.2 -13.4 22.1 24.3 4.1 -5.7 8.1 T.0

May 8.8 6.5 12.4 -3.7 0.0 7.5 3.5 -12.0 17.8 18.6 2,4 -11.4 6,7 5.1June 5.7 5.3 11.2 -1.4 -1.3 4.3 4.2 -14.5 14.6 12.9 1.2 -11.5 5.3 1.4July -1.6 -1.5 7.6 -7.7 -11.6 2.9 12.2 -20.1 15.0 15.1 -0.8 -11.0 3.4 -1t.7August -2.9 -7.3 1.3 -12.4 -14.9 3.6 12.5 -20.6 13.7 8.3 -3.4 -10.3 .0.8 -3.8

September -6.o -14.2 -14.5 -18.7 -20.0 2.3 11.4 -24.4 10.7 7.8 -3.4 -5.3 -2.0 -5.6October -5.2 -17,1 -8.7 -18.5 -21.8 1.0 10.0 -21.5 9.6 5.6 -3.4 -6.8 -2.4 -4.9November -7.2 -17.7 -9.6 -17.1 -13.1 2.2 13.1 -19.0 4.9 3.6 -1.6 0.5 -2.4 -5.0December -11.4 -20.3 -9.) -17-7 -16.3 2.8 15.0 -20.5 3.2 2.4 -1.6 1.0 -5.9 - -7.1

9276

January -3 -21.5 -15.1 -18.3 -22.9 2.2 14.3 _20.5 3.9 2.0 -0.4 1.0 -1.2 -8.1

Sourceas leserve Bank of India, Report on Currency and Finance 1974/75, as well as various issues of the Monthly Bulletin; and Prese Notes issued by the Office of the }conomic Aiser.Ministry of Induntry and Civil Supplies.

Table (o.12

ADJUSTED WSHOLESALE PRICE INDEX i(Base 1961,162=100)

Average of Months

1950/51 76.2

1955/56 76.6

1960/61 98.4

1965/66 118.6 -

1966/67 128.8

1967/68 133.2

1968/69 136.5

1969/70 144.2

1970/71 155.1

1971/72 166.8

1972/73 176.1

1973/74 203.2

1974/75 261.4

1975/76 .. 268.7

/ The official wholesale price index for all commodities(See Table 6.10 ) has been adjusted so as to reflectchanges in the prices of petroleum products, chemicals,manufactured goods, machinei'y and transport equipment.The index shown here therefore excludes food articles,liquor and tobacco and industrial raw materials.

/ Based on returns for ten months.

Source: IBRD estimates.

Table 6.13

SOME DOMESTIC PRICE RATIOS

Iudex Number of Wholesale Prices (1961/62 = 100) Terms of TradeYear Agricultural ,Won-agricultural Agriculture Versus Agriculture Versus Agriculture Versus

(WSril - Mmarhl C oditieCs Oommodities Manufactures Foodgrains Fertilizers Non-agriculture Manufacture Poodarain

Weights (33.20) (66.80) (32.26) (14.78) (5.3)

1961/62 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.01962/63 102.3 104.5 103.2 105.4 98.2 97.9 99.1 93.21963/64 108.4 111.1 105.9 115.2 96.4 97.6 102.4 83.71964/65 1309. 118.0 109.4 145.5 93.9 110.9 119.7 64.51965/66 141.7 126.6 117.0 154.3 97.1 111.9 121.1 62.9

1966/67 166.6 141.6 125.3 182.9 103.2 117.7 133.0 56.41967/68 188.2 156.9 129.1 228.4 124.0 119.9 145.8 54.31968/69 179.4 158.4 132.8 201.0 125.7 113.3 135.1 62.51969/70 194.8 160.1 139.7 208.2 132.9 121t.7 139.4 63.81970/71 201.4 171.0 149.7 206.8 135.6 117.8 134.5 65.6

1971/72 199.6 182.8 160.5 214.9 135.6 109.2 124.4 63.11972/73 219.7 200.8 168.8 247.5 143.0 109.4 130.2 57.81973/74 280.6 241.1 189.6 296.0 151.4 116.4 148.0 51.11974/75 350.8 294.2 243.8 400.7 275.0 119.2 143.9 68.6

1975

April 333.9 266.8 247.7 391.8 302.4 12501 134.8 77.2338.8 277.9 247.2 394.9 301.4 121.9 137.1 76.3

June 339.4 292.5 247.1 395.5 301.4 116.0 137.4 T6.2

July 330.1 306.7 248.6 386.0 292.0 1O7.6 132.8 75.6August 332.6 319.0 247.5 382.2 282.5 104.3 134.4 73.9September 324.8 301.9 247.9 375.7 282.5 107.6 131.0 75.2

October 316.4 304.6 247.9 358.5 277.9 103.9 127.6 77.5November 307.8 300.3 247.3 343.1 277.9 102.5 124.5 81.0Deoember 246.8 325.6 277.9 85.4

a/ Weighted average of the indices for rice, wheat, jowar, bajra, maize, barley, ragi, gram, arhar, moong, masur, urad, potatoes, onions,oranges, bananas, cashewnuts, apices & condiments, tea, coffee, betelnuts, tobacco raw, cotton raw, jute raw and mesta, hemp raw, coirfibre, grc)undnuts, linseed, castorseed, rapeseed, gingelly seed, cotton seed, copra, tanning material, eugarcae, rubber, logs and timber and bamboos.

W/ weighted average of indices for chemicals, machinery and transport equipment and finished produote.

Sources: Office of the Economic Adviser, Ministry of Industrial Development, Index Numbers of Wholesale Prices in India.GOI, Economic Survey, 1975/76; Reserve Bank of India Bulletins.

Table 6.14

CONSUMER PRICE INDEX NUMBERS FOR INDUSTRIAL WORKERS & URBAN NON-MANUAL EMPLOYEES

Percentage Change in IndexUrban UrbanNon-Manual Non-Manual

Industrial Workers &1Dloyeez Industrial Workers EmployeesAverage of Food Index General Index General Index Food Index General Index General IndexMonths _ (1949t100) (1949 = 100) (1960 = 100) (over previous year)

1950/511 101 102 n.a 1.0 2.0 n.a1955/56 94 96 n.ab, na -3.0 n.a1960/611 125 124 100-' n.a 1,6 na1965/66 174 169 132 n.a 7.6 n.a

1966/6' 198 191 146 13.8 13.0 10.61967/68 228 g 213 1 159 15.2 11.5 8.91968/69 223 212 a16 -2.2 -0.5 1.21969/70 223 215 167 0.0 1.4 3.7

1970/71 233 226 174 4.5 5.1 4.21971/72 237 233 180 1.7 3.1 3.51972/73 258 251 192 8.9 7.7 6.71973/74 320 304 221 24.0 20.1 15.1

1974/75 415 385 270 29-7 26.6 22.21975/76 411 c/ 389 280 -1.0 1.0 3-7

Average of Weeks (over corresponding month of previous year)

1974

January 340 321 231 28.8 25,9 18.5February 344 325 233 28.8 25-5 18.9March 353 331 238 29.3 27.0 19.6April 365 344 244 29.9 27-9 20.8

May 382 357 251 30.4 28.9 21-3June 390 366 256 30.0 29.3 23-7July 405 378 262 27.8 28.1 21.3August 421 390 27O 30.3 30.0 23-9

September 442 406 279 36.8 34.9 27.4October 443 407 282 33.8 31.7 26-5November 436 402 283 29.8 27.6 25-2December 427 396 282 27.8 25.3 23-7

t97S

January 426 396 280 25.3 23.4 21.2February 422 395 278 22.7 21.5 19.3March 416 390 277 17.8 17.8 16.4April 418 393 278 14.5 14.2 13.9

may 424 397 281 11.0 11.2 12.0June 426 399 283 9.2 9eO 10-5July 418 394 280 3.2 1.0 6.9August 413 390 280 -1.9 0.0 3-7

September 410 388 280 -7-2 -4.4 0.4October 405 384 280 -8.6 -5.7 -0.7November 400 383 n.a. -8.3 -4.7 n.a.December 382 372 n.a. -10.5 -6.1 n.a.

a/ Based on four months figures in the interim series (1949=100) and eight months figures as estimatedfrom the new series of index on base 1960=100.

3/ Relates to the period January to March, 1961.:/ Based on returns for 9 months.

/ Based on returns for 7 months.

Sources: 1. Reserve Bank of India, various issues of the Bulletin and Report on Currency and Finance 1974/75.2. Data for Consumer Price Indices for Industrial Workers on a fiscal year basis were supplied by

the Ministry of Labour, Labour Bureau, Simla.

Table 7.1

PRODUCTION OF PRINCIPAL CROPS

Annual Averageunit First Plan Second Plan Third Plan Anrnual Plans Fourth Plan-/ i9 7J2 ' 197 l4 1974g75 l

FOODGRAINS Million tons 63.18 78099 8700 87076 102.95 97JQ 104.66 101.06

a) Cereals Million tons 53,1 iZLZ 1 58A 77147 92.05 87.12 2Aa9 90^67

Rice Million tons 25.03 30.33 35.15 35.93 41.81 39.25 44,05 40.25

Wheat Million tons 7.90 9.74 11.07 15,53 23.37 24.73 21.78 24.24

Jowar Million tons 7.49 8.68 8.85 9.69 8.32 6.97 9.10 10*22

Bajra Million tons 3.41 3-43 3.95 4.49 6.03 3.93 7.52 3.23

Maize Million tons 2.71 3.57 4,59 5.62 6,09 6.39 5.80 5.72

Others Million tons 6.60 6.49 6.28 6.21 6.44 5.85 6.41 7.00

b) Pulses Million tons 10.04 11.75 11.14 10.29 10.90 3L92i1 10.00 10.40

of which:

Grams Million tons 4.69 6,00 5.13 4.63 4.89 4054 4.10 4.06

NON FOODGRAINS

a) Oil Seeds -/ Million tons 5.52 6.71 7.35 7.19 8.29 6.86 8.85 8.36

of which:

Groundnuts Million tons (3.53) (4.73) (5.12) (4.92) (5.49) (4.09) (5.93) (4.99)

Rapeseed & Million tons (0.91) (1.09) (1.27) (1.38) (t70) (1.81) (1.70) (2.21)Mustard

b) Sugaroane Million tons 5.54 8.11 11.13 10.70 13.12 12,76 14.43 14.31(in tons of gur)

c) Cotton Million bales 3,66 4.54 3.10 5.19 5,54 5.42 5.96 6.69

d) Jute Million bales 3.93 4.44 5.68 4.90 5.50 4.98 6,22 4.49

Mesta Million bales 0,85 1.36 1.68 1.13 1.22 1.11 1.46 1.33

Notet Production relates to production in agricultural year - July/June.

a/ Provisional.

b/ Five major oilseeds - groundnuts, rapeseed and mustard, linseed, castorseed and sesaum.

Sources: Ministry of Agriculture, Directorate of Economics and Statistics, various issues of Estimates of Area and Production of Principel Crops in India

and the Roonomic Survey, 1975/76,

TABLE 7.2

a/Public Distribution of Foodgrains

(in thousand tons)

1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975

-9 nSdtok 67 1,927 1.815 1.695 3,893 4,387 5,334 7.879 3.410 2.945 2,486

Rice 361 528 417 665 1,182 1,724 1,834 2,310 1,357 1,409 1,092

Wheat 306 1,270 1,033 760 2,126 2,329 3,127 5,031 1,900 1,018 1,186

4,031 4,009 4.462 6.805 6.381 6.714 8.857 7.665 8,424 5.L64 9,426

Rice 2,951 3,100 2,785 3,373 3,581 3,043 3,462 2,550 3,462 3,482 4,955

Wheat 375 219 779 2,373 2,417 3,183 5,088 5,024 4,531 1,885 4,098

imop te 1.462 10.358 8.672 5,694 3',872 3.631 2.054 415 3,614 4,877 7,407

Rice 783 787 453 446 487 206 240 131 - - 130

*'heat 6,583 7,784 6,348 4,766 3,090 3,425 1,814 314 2,414 4,203 7,016

I55e. ~ 10,079 14,085 13,166 10,221 9,382 8,841 7,816 11,396 11.414 790 11,122

Rice 3,586 4,131 3,010 3,287 3,405 3,050 3,230 3,688 3,206 3,753 3,134

Wheat 5,939 8,142 7,366 5,755 5,195 5,347 4,455 7,413 7,130 5,669 7,554

ligX Stock 1,927 1,815 1.69 3,893 4.38l 5,33 7,879 3,410 2,945 2486 7,699

Rice 528 417 665 1,182 1,724 1,834 2,310 1,357 1,409 1,092 2,521

Wheat 1,270 1,033 760 2,126 2,329 3,127 5,031 1,900 1,018 1,186 4,799

NOte: By definition Opening Stock + Procurement + Imports = Issues + Closing Stook. In practice the right hand side of the equation is invariably

smaller than the left. While some of this is due to stocks in transit and stock losses, the size of the discrepancy each year is large

enough to cast doubts on the reliability of some of the figures.

i Individual position for the two main cereals, rice and wheat has been shown, the balance in total foodgrain being accounted for by other

foodgra.ins.

: Department of Food, Ministry of Agriculture.

TABLE 7.3

Availability of Cereals and Pulses

Cereals PulsesMillion Million Net Availabilitytone tons Per Person Per _Withdrawals (in grams)(-) from Net Net

VProduction -iet Inports Govt. Stocks Availability Availabilij7 Cereale Pulses Tote19-)54 53055 0383 (+) 0.20 54.18 9.76 387.7 69.8 457.31956 50a44 1,39 (-) 0.60 52.43 10.23 360o6 70.4 430.91958 49,46 3.22 (-) 0.27 52.95 8.87 350.2 58.7 408.9i960 56,89 5.13 (-) 1.40 60o62 10.38 382.8 65.5 448.3t961 60e77 3,49 (-) 0,17 64,43 11.14 398.7 69.0 468.71962 62.27 3.64 (-) 0e36 66.27 10.24 402.0 62.0 461.61963 60,18 4.55 (-) 0.02 64.75 10.08 384.4 59.8 443.81964 61.76 6.26 ( 1) .24 69.26 8.81 401.0 51.0 452.6

1o65 67,31 7,45 (.) 106 73.70 10.85 418,6 61.6 430.21966 54.60 10,34 (0.) 014 64.80 8.68 360o0 48.2 408.21967 57.65 8,66 (-3 0,26 66.57 7,30 561.7 39-7 401.41968 3/d, 72.58 5.69 (+) 2.04 76.23 10.57 404,1 56.0 460.11969k 73.14 3,85 ( 0) 0,46 76,53 9.09 397.9 47.3 445.2

1 9 7 0 j 76.83 3.58 (+) 1.11 79.30 10.20 403.2 51.9 455.11971 .W 84.53 2,03 (4. 2.57 83.99 10.32 417.8 51.3 469.11972 82.31 (-) 0,49 (W) 4,69 86.51 9.70 420.2 47.1 467T31973k 76.23 3.59 C-) 0.49 80,31 8.67 383.1 41.4 424.51974 A' 82.13 4.83 b/ () 047 88.12 8.75 / 411.9 40.9 452.81975 i 79.33 7.41 - (+) 5.21 81.53 9.10 - 373.6 41.7 415.3

Notest 1. Net production has been taken as 87.5 per cent of the gross production, 12.5 per cent being provided for feed, seedrequirements and wastage.

2. Figures in respect of change in stocks with traders and producers over a year are not known. The estimates of netavailability given above should not therefore be taken to be strictly equivalent to consumption.3. Net Availability = Net Production + Net Imports + Changes in Government Stocks,

g provisional,

Gross Imports.Relates to net production only.

Source Government of India, Economic Survey 1975/76.

Table 7.4

ALL INDIA INDEX NUMBERS OF FOODGRAINS NON-FOfDGRAINS AND ALL CROPS(Base: Triennium ending 1961/62 = too)

Index of Area Under Crops Index of Agricultural Production Index of YieldYear$ Foodgrains Non-foodgrainm All Crops Foodgrains Non-foodgrains All Crop. Foodgrains Mon-foodgraina All Crops

1949/50 85.0 69.6 82.1 74.9 68.1 72.8 87.0 97.9 89.81950/51 83.2 77.2 82.0 67.4 72.2 68.9 79.1 93-5 83.21951/52 83.3 84.5 83.5 68.2 75.0 70.3 81.1 89.9 83.71952/53 87.8 80.9 86.5 75.4 71.1 74.1 86.9 89.1 87.5

1953/54 93-7 80.7 91.3 89.0 72.0 83.9 96.9 96.4 96.81954/55 92.9 88.7 92.2 85e7 82.6 84.8 94.0 99-7 .95.61955/56 95.2 91.0 94.4 85.6 81.6 84.4 91.4 93.4 91.91956/57 95.7 93.6 95.2 89.5 89.6 89.5 95.0 97.9 95.1

1957/58 94.2 94.2 94.2 81.7 88.3 83.7 87.0 94-7 89.41958/59 98.7 95.1 98.0 97.0 95.6 96.6 99.2 1o3.6 100.51959/60 100.0 97.3 99.4 95.2 92.7 94.3 95.4 96.2 95.71960/61 99.4 98.4 99.2 102.1 103.8 102.7 102.8 104.2 103.3

1961/62 100.6 104.3 101.4 102.7 1o3.5 103.0 101.8 99.6 101.01962/63 101.6 104.9 102.3 99.4 105.4 10.4 96.3 102.3 98.51963/64 101.1 105.4 102.1 101.7 108.2 103.9 99.3 103.3 100.81964/65 101t.7 108.8 103.3 112.0 120.9 115.0 108.5 107.5 108.1

1965/66 99.1 107.2 1OO.9 89.9 107.1 95.8 89.6 96.2 92.21966/67 99.3 105.6 100.7 91.9 1O3.7 95.9 91.7 97.4 93.81967/68 104.6 106.5 105.0 117.1 i15.6 116.6 113.5 108.1 111.51968/69 103.7 101.7 103.3 115.7 113.2 114.8 109.1 105.0 107.6

1969/70 106.4 105.6 106.2 123.5 120.5 122.5 116.3 1o6.5 112.71970/71 10t7.0 108.4 107.3 133.9 126.6 131.4 122.0 110.9 118.01971/72 105-5 110.8 106.7 132.0 128.9 130.9 120.1 112.5 117.31972/73 1o2.6 105.9 103.4 121.2 118.9 120. 113.1 106.2 110.6

1973/74 108.8 110.8 109.4 131.5 137,1 133.4 117.9 115.6 117.11974/75 104.6 109.4 105.8 125.6 136.5 129.3 115.4 115.6 115.5

Notes: 1. Indices from 1966/67 to 1974/75 are subject to revision.2. Original indices for the years 1949/50 to 1958/59 with base 1949/50=100

shifted to the base for the Triennium ending 1961/62 = 100

Source: Ministry of Agriculture, Directorate of Economics and Statistics.

Table 7e5

FOODGRAINS FRODU'CTION BY MAJOR STATES(in million tons)

1968/69 1971/72 1974/75Coarse Total Coarse Total Coarse Total

Rice Wheat Cereals Pulses Foodgrains Rice Wheat Cereals Pulses Food&rains Rice Wheat Cereals Pulses Foodnrains

Andhra Pradesh 4.34 n.s. 2.25 0.25 6.85 4.72 0.01 2.18 0.38 7.29 5.70 0.02 3-07 0.42 9.21Asasm 2.25 n.s. 0.02 0.03 2.30 1.91 0.05 0.01 0.03 2.00 1.98 0.08 0.01 0.04 2.11Bihar 5.20 1.26 1t41 1.00 8.87 5.27 2.49 0.41 0.89 9.07 4.56 2.00 0.81 0.87 8.24Gujarat 0.23 0.62 1t37 0.12 2.35 0.52 0.90 2.65 o.16 4.22 0.18 0.73 1.16 0.09 2.16

Haryana 0.27 1t52 0,59 0.63 3.01 0.54 2.40 0.92 0.68 4.55 0.40 1.96 0.61 0.38 3.35Rimachal Pradesh 0.10 0.26 0.58 0.02 0.96 0.10 0.39 0.42 0.03 0.95 0.10 0,36 0.58 0.03 1.07Jammu & Kashmir 0.49 0.21 0.37 0.03 1.10 0.37 0.17 0.39 0.03 o.96 o.96 0.19 0.33 0.03 1.01Karnataka 2.00 0.16 2.50 0.39 5.05 2.10 0.19 3.31 0.47 6.o6 2.08 0.26 3.75 0.86 6.95

Kerala 1.40 - n.B. 0.02 1.43 1.35 - n.s. 0.01 1.37 1.33 - n.s. 0.01 1,34Madhya Pradees 3-00 2.01 2.80 1.65 9.46 3.70 3.19 2.39 2.35 11.63 2,41 2.43 3.02 2.22 10.08Maharashtra 1.37 0,43 4.49 0.87 7.16 1.37 0.50 2.44 0.64 4.95 1.41 0.79 4.53 1.07 7.80Orisa 4.70 0.02 0.31 0.40 5.43 3.62 o.o4 0.30 0.39 4.35 3.17 0,06 0.33 0.42 3.98

Punjab 0.46 4.52 1.02 0.25 6.25 0.92 5.62 1.09 0.31 7.93 1.18 5.53 1.24 0.24 8.19Rajasthan 0.06 1.18 1.82 0.86 4.01 0.16 1.89 2.97 1.32 6.33 0.10 1.82 2.09 0.95 4.96Tamil Nadu 3.94 n.s. 1.38 0.09 5.42 5.30 n..s 1.49 0.15 6.94 4,17 n.s. 0.77 0.12 5.o6Uttar Pradesh 2.92 6.og 4.00 3.28 16.30 3.78 7.55 3.45 2.92 17.70 3.49 7.04 3.68 2.25 16,46West Bengal 6.25 0.30 0.10 0.51 7.16 6.51 0.92 0.11 0.32 7.86 6.54 0.84 0.10 0.37 7,85

Sub-total 31.k 18.58 25,01 10.40 95.11 422A 26-1 24.53 12 104.16 39. 6 24.11 26.08 i0.Qs .22

Others 2015 0.07 0.17 0.02 0.90 1.03 o.1o 0,07 0.01 1.01 0o99 0.13 0.10 0,01 1524

All India Total 3916 J1B.65 25L l042 94-04 AIM2? 26.4t 24Q60Q 11.09 oQs5.t7 A25 ,24. 2 26e1t J9.32 J10Q6

4 Provisional.b/ Includes the States of Manipur, Meghalava, Nagaland & Tripura, and Union Territories.

Source: minijtTy of Agriculture, Directorate of Economics and Statistics.

Tabl e 7.6

FOOITGRAIN5 CONSUMPTION AND SUPPLY (1970-1980) - ACTUAL. ESTIMATED AIND PROJECTEDC /

Onit 1970 1971 197 iE 1974 t97 1976 t977 1978 t972 MM8------ ------- Actu oa ----------------- -- Estimated- - Projeoted ------ ---- -

Population / Million mnmbers 538.90 550.80 562.50 574.20 586.06 597.78 609.74 621.93 634.37 647.06 660.00Consumption per capita Gun/day 455 469 469 424 453 414 450 459 468 477 487

Kgs/year 166.1 171.2 171.1 154.9 165.3 151.2 164.2 167.5 170.8 174.1 t77.8Total ons,,pti Million tons 8.e50 .44fl 92 88.96 96.88 90-4 tOO.t 104.2 108.4 112.7 117.3

SUPPLY

Grass Prodxuction

WheatI Million tons 20.09 23.83 26.41 24.73 21.78 26.50 27.0 28.3 29.6 31.1 32.6Rice Million tons 40.43 42.23 43.07 39.25 44.05 40.25 46.5 46.9 48.3 49.7 51.2Other Million tons 38.98 42.36 35.69 33.05 38.83 36-55 39.5 40.9 42.6 44.2 45-9

Total, actual or estimated fl Million tons 99.50 1o8.42 105.17 97.03 104.66 103.30 114.0 116.1 120.5 125.0 129.7

1958-1974 Trend/Projections - weather normal Million ton 95-04 97.18 99.38 1o0.62 103.92 106.27 1o8.67 - - - -1973-1980 Trend/Projections - weather normal Million tons - - - - 104.00 107.90 112.00 116.1 120.5 125.0 129.7

Lesee Seed, Feed-Waste Million tons 12.47 13.57 13.16 12.13 13.08 13.42 17.10 17.4 18.1 18.7 19.5

NOt P-~d-oti-~ Million tons 87.03 94485 92.01 84.90 . 89.88 9 8 . 7 3 1 4 106.3 110.2

Less: 0ha1 in StoC, -3 Million tons -1.11 -2.57 4.69 0.47 0.40 -5.70 -2.80 - -

Plus% Iot

Vol' . Million tons - 2s03 OQd I25.5 6.A1A4 7.QValue USS million 348 284 176 105 1,028 1,210 1,008 924 1,008 1,075 1,193

Total SI Million tons 89.50 94.1 88.02 96.2 8 -0A .4IA 10t, ioLA 112t7 .llal

8k The cOnsumption year is the calendar year as shown. Production includes the kharif crop of the previous year and the rabi crop of the year shown. This tetds to udetestimateactual availability in years of good monsoon (e.g. 1975).

:/ 1971 figure based on population census adjusted to mid-year. From 1974 onwards population assumed to grow at 2 % per annum. This differs from I1ND estimate of Table 1.1but is conraistent with official GOI figures.

a/ Derived from aggregate population and consumption. From 1976 onards the figures allow for increases due to population growth plus increased consumption per capita due togrowth in income. This is based on an annual growth of 6% in GICP and an income elasticity of 0.5.

d/ Production in 1975 and 1976 based on 1BRD eptinate. Projections asume 4.8 % per annum increase (as per plan target).k/ From 1976 onwards production is assumed to grow at 3 % per annum as a base of 45.5 million tons.]/ From 1977 onrwards based on the 1973-1980 trend (see footnote h).£/ Based on the equation log y = 1.8615 + o.oo97t, where t is I in 1958. This represents a growth rate of 2.3 %.

/ Based on production growth of 21 million tons during Fifth Plan from bass of 104 million tons and projected at the same rate of 3.75 % per annum to 1980.i/ Provision for seed, feed and waste at 12.5 % of production up to 1974, at 13 % in 1975 and at 15 % thereafter.j/ A minUs sign indicates an increase in stocke, i.e. a reduction in availability in the year concerned. hemge in stocks has been assumed zero once total stock reach 11 million

tons by the end of 1976.S/ Actual to 1975. From 1976 onwards this in the balancing item between consumption needs and internal availability.jl/ US$ valaes at current prices, on fiscal year basis.

Sources: Ministry of Agriculture and IBRD Estimates as indicated in footnotes above.

Table 7.7

LAND UTILIZATION STATISTICS 1972/73

Area Percent(million ha)

Total Cropped Area 161.9 49.2

Of which irrigated (39.2) (11.9)

Less: Area Sown More Than Once 24.S 7.5

Of which irrigated (7.1) (2.2)

Net Area Sown 137,L 4t.7

Of which irrigated (32.2) (9.7)

Total Land Under Fallow .7.4

Of which:

Current Fallows (15.2) (4.6)Other Fallows ( 9.3) (298)

Uncultivated Lana Other Than Fall0ow AQ..

Of whioh:

Permanent Pastures (12.9) (3-9)Miscellaneous Tree Crops ( 4 6) (1-4)Cultivable Waste (15:8) (4.8)

Land Not Available For Cultivation 43 8 1353Of which:

Land in Non-Agricultural Use (16.2) (4.9)Barren and Uncultivable Land (27.6) (8.4)

Forests 20.5

TOTAL REPORTING AREA 3o06.1 9.1

Land for Which No Statistics Available 2297 6.9

TOTAL GEOGRAPHICAL AREA 1288 l000

Source: Ministry of Agriculture, Directorate of Economics and Statistics.

Table 7.8

AREA UNDER CROPS 1972/73(in 1000 hectares)

Irrigated Non-Irrigated Total

Rice 14,455 22,233 36,688Jowar 548 14,965 15,513Bajra 507 11,310 11,817Maize 1,095 4,743 5,838

Wheat 10,751 8,712 19,463Barley 1,197 1,252 2,449Other Cereals 425 6,169 6,594

Total Cereals 28.978 69.384 98.362

Gram 1,098 5,869 6,967Other pulses 667 13,281 13,948Total pulses 1,765 19,150 20,915

Total Foodgrains 30.743 88.534 119.277

Sugarcane 1,872 580 2,452Other Fooderops 1,844 1,967 3,811Oilseeds 1,026 15,797 16,823

Cotton 1,632 6,047 7,679Tobacco )Fodder ) 1,712 9,891 11,861Other Non-Food ?

a/

Total Crops 39,087 122.816 161.903

a/ Includes an area of 258,000 hectares for which details are not available.

Source: Ministry of Agriculture, Directorate of Economics & Statistics

Table 8.1

PERCENT CHANGE IN TUE INDEX OF INDUSTRIAL PRODUCTION

Average Compound Growth Rate(percent per annum) Percent Chance over Previous Year Januar,-Sertember

1961/65 1966/68 1969/73 196_ 1969 1970 A1M2 1972 i192 mU i / 1975 over 1974

Mining and Quarrying 3¢0 2.6 6.2 2.2 1.1 3.0 7.0 -0.4 13±3

Manufacturing 9.0 .Q AA4Q 6.1 I±5 2±5 7 0.9 1 25

Food ManufatoLring 4.1 -0.9 5.4 4.1 18.6 11.5 0.1 3.2 -4.9 0.1 11.8

Beverages and Tobacco 8.0 3.8 1.8 11.9 -0.1 3.3 7.3 -4.6 3.0 0.8 -12.1

Manufacture of Textiles 2.8 -0.7 0.1 4.6 -4.4 2.0 -3.5 7-9 -1.0 -4.6 - 1.1Manufacture of Footwear and Wearing Apparel 11.1 4.3 -4.7 -1.0 -9-5 -7.2 4.2 -10.3 0.3 -2.8 - 0.8

Manufacture of Wood and Cork exceptManufacture of Furniture 18.6 0.7 -8.0 10,2 10.2 -11,7 12.8 -2.9 -27.3 3.9 - 8.8

Paper and Paper Products 8.0 7-9 5.1 10.7 9.0 7.3 4.2 0.2 4.6 7.5 - 7.3Leather and Fur Products 4.2 -5.6 -5.9 -10,9 -13.1 -27.0 -15,3 8.3 27.5 -.3.8 16.4

Rubber Produits 9.8 8.2 4-4 17.7 6.5 0.2 12.1 5-9 -1.8 6.3 3.4Chemicals and Chemical Products 8.9 10.7 7.8 15,6 8.5 5.2 6.8 16.3 2,8 -1.1 -0-3

Petroleum Refinery Products 8.9 19.4 5.1 ¶0.9 8.8 5.2 6.6 0.1 4.9 1.8 4,4Non-Mletallic Mineral (including cement) 8.3 1.2 8.1 -o.6 14.5 7.0 9.8 8.5 0.8 0,2 4.0

Basic Metal Industries 12.2 2.5 2.1 26,5 9.8 -3.9 1.6 8,0 -4.2 0.3 16.6

Metal Products 15.5 -4.3 6.2 1.9 24.3 -2.2 7.0 3.5 0.2 8,3 -0.1

Non-Electrical Machinery 26.5 1.5 7.7 8.1 14.4 -3.6 1.0 7.9 13.0 4.5 5.6

Electrical Machinery 15.8 10.1 9.4 13.7 16.2 12.3 11.6 7.5 0.3 5-5 -6.1Transport Equipment 15.6 -12.2 1.2 -0.6 -1.1 -4-5 -7.6 9.2 10.9 6.7 -4.4

Miscellaneous Industries 5.8 -12.7 3.4 -15.3 16.0 16.8 -5.0 -24.1 -13.9 -5.6 -13.9

Electricity Generated 12.6 13.8 7.6 15.6 12.9 10.9 7.5 9.0 -1.8 714 7-

All Commodities (Seasonally Adjusted) 9.0 2,0 4.2 6 *9 3.1 9 7.1 0.7 2.2 3.2

_/ Compiled on the basis of the Index of Industrial Production (base 1960 = 100) for all periods except the year 1974 over 1973, and the January-September

months of 1975 over 1974. These two columns are on the basis of the new index (base 1970 = iOO).

Scurce: Central Statisticaml Organization.

Table 8.2

PRODLUCTION OF SE6EC7MV ll1BTRI5S (Page 1)

19W61 1965/66 1966/69 12WM ~~~~~~~~~~~j AprLI -8optexbor

Unit 1960/61 196/66 1966/69 1969/70 170/71 1971/72 1972/73 1973/74 1974LZ5 174 - 2II MINRI8,

Coal ( million tons 55.7 70.3 75,4 80.0 75.8 76.3 80.2 81.9 90.7 42.2 47,2IroC re- Million tone 18.7 23.9 28.0 30.8 32.5 34.7 35-7 35-7 35.5 15.0 18.0

Ii 8dtlto8oAL 18D08!URIES

1ig Iron million tons 4.31 7.09 7.29 7.39 6.99 6.80 7.27 7.00 7.64 3.44 3.99Stesel Ingote Million tons 3,42 6.53 6.51 6.45 6.14 6.41 6.28 5.76 6.43 2.93 3.39Finished Steel Million tons 2.19 4.51 4*7Q 4.80 4,48 4.79 5.02 4.47 4.91 2.25 2.70Steel Casti6s '000 tons 34 57 49 46 62 54 70 67 64 31 30Aluisinum (virgin metal) '000 tons 18.3 62.1 125.5 135.1 166.8 181.5 173.7 147,9 126.6 60.3 82.5Copper (Virgin motal) '000 tons a.s 9.4 9,, 9.8 9.3 8.3 12.4 12,7 15.6 4.4 8.8

III !9MMICAL MMIXG 1N30S1.IIS

Machine T

ools Million rupees 70 294 254 329 430 55° 626 673 925 401 486tShgar Mill Maohinery Million rupees 44 77 115 139 139 177 182 223 270 133 143Cotton Textile Machinery

TMillion rapees 104 216 143 196 303 338 309 458 727 325 346

Cement Machinery Mil-ion rupees 6 49 74 1O0 42 22 41 81 93 50 29Railway 7agon '000 numbers 11.9 3355 16.5 14.9 11.t 8.5 10.8 12.2 11,1 5,0 5-0Autejobiles '000 nembers 55.0 70.7 79.5 79.8 87.9 91.3 89.4 99.8 81.7 42.6 56.7

i omeercial Vehiolee '000 ourbere (28.4) (35.3) (35.9) (35.5) (41.2) (30,5) (38.1) (42.9) (40.7) (19.4) (20-7)ii) Paesesger Care '000 numbers (26.6) (35.4) (43,6) (44.3) (46-7) (51.8) (51-3) (56.9) (41.0) (23.2) (16.0)

Motcr Cycles & Scooters '000 rombere 19.4 40.7 70.8 91.0 97.0 112.7 116.7 124,0 149.0 70-0 81.4Power Drimn Pumps '000 numbers 109 244 317 559 259 208 278 339 282 118 129Dietel Exgines (statiory) '000 nwIbers 44A7 93.1 119.5 134.2 65.7 69.9 92.8 138.1 114.3 43.4 68.3

ienai1 Engines (vehicnlar) '000 numbers 1o.8 8.1 2.5 2e8 3.2 1e5 2.2 2,6 2.9 1.4 1.4Slnrtr4g Machinem '000 numbers 303 430 429 340 235 312 334 257 335 166 134

Biryolem Million numbers 1.1 1.6 1e9 2.0 2.0 1.8 2.4 2.6 2.3 1,2 1.0

IV E=C7I! ENIMMIIG _I"Sl JEI

P<ower TranAfowmers Million k.v.a. 1.4 4.4 4.7 5.7 8.1 8.9 9.7 12.4 12.4 5.4 5.6tlectrio Motors Million hp, 0.7 1.7 1.9 2.3 2.7 2.3 2.8 3.2 3.7 1.7 1.4MlTe tric Fans Yillion numbers 1.1 1.4 1.5 1.5 1.7 2.1 2.5 2.1 2.2 1.2 1.1Eleotric Lanps iillion nombere 43.5 72.1 97.8 98.8 119.3 120.6 143.6 120.6 134.0 64.6 61.2Radio Receiver Million numbers 0.3 0.6 1.5 1.7 1.8 2.0 1.8 1.8 2,0 1.0 0.7Electric Cables

i) Aluminium Conductors '000 tons 23.6 40.6 56,1 61,2 64.2 79Y7 70.0 46.4 28.6 11.5 19.3ii) Bare Copper Conductors '000 tons 10.1 5.1 0,9 2.1 0,7 0.7 1.0 14 1.3 0.8 0.5

8/ ?rov1jSiona. (Continued Page 2)b/ From 1960/61 t.o 1971/72, the figuree are on a oalendar year besie.

Table 8.2

PRODUCTION OF SELECTED INDUSTRIES (Pa.ge 2)

Unit 12LOJ61 12~~~~~L66 12LBL6 -/ - __

Unit _ 196016 1965/66 1968/69 t162/70 1970/71 1971/72 / 7 127UL141 .12L _T !2'A 4/-~ ~~ ,:r.r{V'a T - IDUJSTRIES

rlL.,ogenous Fe till.3lre '000 tona 98 233 543 716 830 952 1,059 1,058 1,182 512 647.? Fw: l ra o000 ton 52 11 210 222 229 278 326 319 323 1 9 10

-enurio ',cid 'OO tons 368 662 1,034 1,197 1,053 975 1,226 1,343 1,434 724 679oaulK Ash '000 tons 152 331 408 427 449 489 483 480 516 239 271'. '3tic Soda '000 tons 101 218 314 354 371 385 391 419 426 209 124P,arer and paper Board '000 tons 350 558 658 723 755 803 733 776 825 416 407

.:. >eztoris.si 1'000 tons 567 695 630 635 683 808 773 710 753 372 367bpber Tires and Tubes

i.) Aatomobilv Tires Million numbers 1.44 2.31 3-41 3,62 3.79 4-33 4.30 4.66 4,83 2.42 2.49il3 Automohile Tubes Million numbers 1.35 2.27 3.04 2.90 3-45 4.24 4.29 4.28 4.18 2.13 2.33iii) Biqycl e Tires Million nmmbers 11.15 18,46 24.58 21,32 19.20 22.36 20.86 24.03 25.00 12.58 12.46iv) Bicycle Tubes Million numbers 13.27 18.62 17.73 16,79 13.81 14.35 13.81 16.22 18.53 9,37 8.01

Cr, nt Million tons a.0 10.8 12.2 13.8 14.4 15.0 15.5 14.7 14.7 6.8 8.1Refined Petroleum Products Million tons 5.8 9.4 15-4 16.6 17.1 18.6 17.9 19.7 19.5 9.9 10.3

VI TEXTILE INDUSTRIES

Jute Textiles '000 tone 1,097 1,302 998 944 958 1,129 1,074 1,074 1,049 576 643Cotton Yarn '000 tons 801 907 972 962 929 902 972 1,000 1,025 525 477Rayon Yarn '000 tons 43-8 75.6 99.2 98.8 98,1 102.3 113.1 101.1 115.9 60.3 49-1

Cotton Cloth Billion metres 6.7 7.4 7.9 7-7 7,6 7,5 7.9 7-9 8.3 4.2 1-9 _

i) Mill Sector Billion metres (4.6) (4.4) (4-3) (4.2) (4-1) (4.0) (4.2) (4.1) (4,5) (2-3) (2,0)ii) Decentralized Sector Billion metres (2.1) (3.0) (3.6) (3.5) (3.5) (3-5) (3.7) (3.8) (3.8) (1.9) (0 , 9)w/Artsilk FabriOs Million metres 544 878 1,011 863 947 968 918 846 n.a. n.a. n.a.

VII JOOD INDUSTRIES

Sugar 2/T'000 tons 3,029 3,510 3,558 4,261 3,740 3,110 3,875 3,948 4,793 769 918Coffee '000 tons 54.1 62.1 66.6 64.6 72-7 95.6 71.8 87.0 86.1 45.3 45-7Vanaspati '000 tone 340 401 466 477 558 594 580 449 352 151 206Tea Million kg6 322 376 398 401 421 430 446 468 493 337 328

AlVIII ELECTRICITY GENERATED Billion kwh 16.9 33.0 47.4 52.0 55.8 60.7 63.6 64.6 69.4 33.5 37.1

g Provisional.b/ Data for the quarter April-June only.

A Annual figures relate to the sugar season which is October-September from 1967/68 season, Earlier it was November-October.

Relates to publio utilities only.

Sorc,e: Government of India, E0onomic Survey 1975/76.

Table 8.3

IMSTALLD CaPACIYY AID CAPACITY UTILZATION RATIOS OF SELlCTID IBDWSTRIMS

Indumtr PeAt t971 1972 1973 1974 (Jan.-Sept)Installed Utilisation Istlle4d Utili.ation Installed I2tilimatiom UtilizationCapacity Ratio (%) Capacity Ratio (%) Capacity Ratio (%) Ratio (%)

I BaRic Industries

Cement '000 tons 18,491 81 19,752 s0 19,764 76 69Sulphuric Acid '000 tons 1,969 52 1,963 58 1,976 65 61Caustio Soda '000 tons 372 100 452 92 439 94 82Light, Medim and Heavy o000 tone 362 27 385 30 385 31 n.a.

Structurals

Steel Castings '000 tons 134 39 132 43 138 43 40Aluminium Sheets and Circles '000 tons 60 75 72 69 72 7A 63,Copper Sheets and Circles Tons 4,000 79 4,000 80 4,000 76 64ŽBrass Sheets and Circles '000 tone 48 35 48 35 4B 33 n.a.

Soda Ash '000 tone 471 101 504 96 508 92 97Nitrogenous Fertilizers '000 tons 1,534 58 1,534 68 1,704 64 76Phosphatic Fertilizers '000 tons 472 53 484 62 491 66 60

II Capital Goods Industries

Railway Wagons '000 numbers 33 27 34 30 34 35 24Motor Vehicles '000 numbers 72 126 72 125 72 136 73Power Transformers 'CCO k.v.a. 6,264 140 6,684 139 15,576 76 61Electric Motors '000 h.p. 2,568 90 2,736 93 5,940 50 61

Machine Tools Million rupees 754 69 754 82 754 85 78Building and Road Constrao- Million rupees n.a n.a 558 54 700 45 n.a.

tion MachineryCement Mill Machinery Million rupees 260.0 12 260.0 8 260o0 28 38Chemioal and Pharmaceutical million rupees 527.1 38 636.7 41 725.0 41 53

Machinery

Mining and Coal Washery Million rupees n.a n.a 300.0 26 300.0 30 16 S/Machinery

Paper and Pulp Machinery Million rupees 66.6 80 135.4 46 146.0 31 59 c/Sugar Machinery Million rupees 230.0 70 281.5 70 281.5 72 80S

III Intemediate Goods Industries

Storage Batteries '000 numbers 1,284 88 1,284 86 1,284 97 76Dry Cells Million numbers 563 98 638 100 638 95 50Tyres - Automobiles '000 numbers },384 124 3,852 114 3,850 113 116Tyres - Cycles '000 numbers 31,826 63 31,824 68 32,623 62 76

Tubes - Automobiles '000 numbers 3,242 124 3,852 113 3,950 107 106Tubes - Cycles '000 numbers 28,950 43 28,956 50 28,956 47 65Paints and Varnishes Million kgs. 98,3 69 103.2 73 123.8 60 48Ceramics (Refractories) '000 tons 1,140 65 1,140 70 1,140 63 63

IV Consumer Goods Industries

Radio Receivers t000 numbers 2,308 84 2,658 72 2,568 64 74Bicycles '000 numbers 3,020 64 3,720 60 3,959 59 64Cigarettes Billion nmmbers 56.4 117 56.4 110 61.2 105 97Vanazpati '000 tons 987.2 60 1,064.4 57 1,077.4 43 34

Soaps '000 tons 215 149 216 137 218 38 79Matohee Billion sticks 214.4 108 214.4 102 214.4 101 104Footwear (Leather) Million pairs 13.8 115 13.8 100 13.8 52 47Footwear (Rubber) Yillion pairs 55.2 79 51.6 84 52.0 75 70

Hurricame Lanterns '000 numbers 3,120 87 3,120 112 3,120 77 58Electric Lamps Million numbers 85 155 84 152 84 150 81

(Incandescent Filament)Electric Fans '000 nmbers 1,816 107 2,760 91 2,838 80 79Glass and Glassware Million sq. mts. 21.6 79 21.6 79 21.6 65 41

.,/ Provisional.

y/ Macept in cases where the production figures refer to the whole year, production data for part of the year have been related to the proportionateshare of total installed capacity.

S/ Data refer to the whole year.

Source: Reserve Bank of India, Report on Currency and Finance 1974/75,

Table 8.4

GROSS AND NOT FDtFD ASSL'PS IN THE CORPORATE SECTOR(in R. million)

1960/61 1965/64 1965/66 1967/68 1969/70 191/ 1972/73 192D74

A PRIVATE ODRPORATE SECTORSample of 1,333 Public

Public Limited Companies Limited Companies Revised Sample of 1.501 Public Limited Companies Revised SampDle of .650 Pablic Limited CPlmpanies

Gross Fixed Assets 18.,2 24i246 31,431 38,969 44.976 F5.40 60.233

Net Fixed Aesets 10.8792 22.47 7 224S22 31501852

i) large Public Ltd Companies /(Numsber of Companies) (304) (304) (304) (359) (369) (369)

Gross Fixed Assets 22,227 28,156 32,874 43,378 45,920 50,171

Net Fixed Assets 13,362 16,725 18,401 22,364 24,290 26,095

ii) Medium Public Ltd Companies(Number of Companies) (1,197) (1,197) (1,197) (1,291) (1,281) (1,281)

Gross Fixed Assets 9,204 10,815 12,102 12,117 14,513 15,522

Net Fixed Assets 5,001 5,752 6,121 7,214 7,211 7,757

Sample of 501 PrivatePrivate Ligited Companies Limited Companies Revised Sample of 101 PriTate Limited Companies Revised Sample of 1.001 Private Limited Caopamien

Gross Fixed Assets 1j 4 1,2,6 2,7t5 3,186 5.023 5.9 6,0U

Net Fixed Assets 8 Lo% 1.lt7 1,508 1.692 2.720 2.967 _.t8

B PUBLIC OOPpORATE SECTOR ---------------------------------------------- Sample of Operating Government Companies ------------------------------------------------

Oneratins G vernment Companiear

(survey Size) (45) (47) (6S) (81) (10o) (115) */ (82) (82)

Gross Fixed Assets 1.381 11,172 162800 26.65 32,263 48.195 40.682 45,491

Net Fixed Assets 1.012 89 13,326 20.712 23.e 3Z5165 2L265 29.9U

i) Giant ComPanies /(NumbeT of Companies) (5) (6) (11) (12) (22) (15) (15)

Gross Fix.d Assets 9,695 14,265 23,036 26,931 43,762 35,545 39,513

Net Fixed Assets 7,849 11,414 17,997 19,491 31,969 23,566 25,717

ii) Other Companies(Number of Companies) (42) (62) (70) (89) (93) (67) (67)

Gross Fixed Assets 1,477 2,535 3,621 5,332 4,433 5,134 5,978

Net Fixed Assets 1,053 1,912 2,715 3,931 3,196 3,699 4,197

C TOTAL ODRPORA.TV SECTOR(For above Com-panies)

Gross Fixed Assets 20.852 3,252 50.424 68.341 825 106.42Q

Net Fixed Asoets 12,704 23,830 3,006 494,66 61t,75 61.733

Note: The paid-uP capital of the 1,501 oompanies included in the survey of large and medium public limited companies account for about 80 % of the paid-up capital of all

non-government and non-financial public limited companies. The paid-up capital of the 701 companieo in the survey of mediuim and large private limited companies account

for 50 % of the paid-up capital of all medium anid large non-government and non-financial private limited companies which have a paid-uip capital of Rs. 5 lakha and above.

For the years 1960/61 to 1969/70, the Government companies included account for about 75 5( of the paid-up capital of all non-financial non-promotional government companies,

Except for the year 1971/72, data for Governmenit companies have been compiled on the basi:u, of periodic surveys conducted by the Reserve Bank of India.

a/ Companies withl paid-up capital of Rs. 1 crore and over.]2/ Companies with paid-up capital of Re.20 crores and over.

Informatiol has besn saIpPlied by the Bureau of Pablio Enterprises.

Souroes: Reserve Bank of In(lia, various issues of the Bulletin, and the Bureau of Public Enterprises.

Table 8.5

PROFITABILITY RATIOS OF MEDIUMY & LARGE PUBLIC LTD OTANIES ACCORDING TO INDUSTRIAL CLASSIFICATION

Gross Profits as Percentage of Total Capital 2mplqbred , I Profit after Tax as Percentage of Net Worthl/

Sample of Sample of , Sample of Sample of

t555 Gre 1501 omunieo Sample of 1650CM e5 Companies 7 74 t0 CorPanies_ Samle of 1650 Co92anie1960/61 1963/64 1965/66 1968/69 1970/71 1971/72 1972/73 1973/74 1960/61 1963/64 1965/6619669 1970/71 1971/72 tg72/7 1973/74

Tea Plentations 12.2 8.1 9.2 7.3 11.6 10.0 9.5 10.4 9.2 4.9 5.7 3.8 9.8 7-7 6.3 8.8

Coffee Plantations 10.4 17.9 9.6 8.1 12.7 16.8 9.9 14.9 10.3 11.8 9.1 6.3 10.1 13.1 8.8 11.6

Rubber Plantations 17.1 14.4 12.2 10.9 13.0 12.0 9-7 9.8 10.5 9,6 7.8 7.1 9.6 8.5 8.1 6.8

Edible Vegetable Oils 8.6 6.a 11.3 16.0 9.3 3.0 7.4 16.7 10.3 4,0 1o.3 15.7 9.8 .g.S. 6.7 23.2

Sugar 8.8 t0.9 10.2 13.0 4.8 8.9 15.5 9.7 11.3 7e8 10.7 13.2 3.6 9.5 16.9 11.3

Tobacco 13.4 11.4 18.4 16.6 16.4 16.2 10.7 14-0 8.7 4.3 9.2 11.4 10.9 11.8 7.8 8.8COtto- Textiles 12.2 9.0 5.4 5.3 7.7 6.3 9.7 15.1 13.8 7-2 1.3 -0.2 5.8 0.9 10.6 24.7Jute Textiles 8.1 11.3 5.8 3.6 5.7 10.6 4.6 0.8 1 7.6 9M9 4.4 -2.0 4.6 15.2 2.9 -n.e.Silk 8

mBd RNs3on Textiles 14.8 11.1 17.6 17.5 20.7 17.6 17.3 20.5 15.0 11.5 14.3 17.4 16.2 14.9 13.9 16.o

Woolleh Textiles 19.4 16-4 7.5 7.6 12.0 13-4 12.4 10.6 18.0 t6.1 5-0 5.0 12.3 13.4 9.9 13.0

Iron and Steel 7.3 12.5 10.9 6-3 7,4 5.6 1.8 5.4 11.2 14.2 8.5 5.5 6.4 3-2 -n.e. 3.6Aluminium 11.8) 15t0) 12.1 9.0 13.1 10.6 8.9 4.6 17.5) 13.1 ) 16.9 10.5 19.4 13-9 7.9 1.4Other Non-Ferrous Metals ) ) 17.3 5.0 11.0 11.8 16.5 13.1 ) ) 18.2 4.0 12-5 22.0 17-4 11.3

Efrgine 2ring Industries n.a. n.a. 11.9 7.3 10.4 11.2 1o.6 11.1 n.a. n.a. 12.2 4.5 11t5 11.3 9.8 10.8

Of wrhichs

Transport Equipment (9.9) (1o.5) (1t4.) (7.5) ( 9.0) ( 9.8 ) ( (2 6) 9T.) (12.3) (11.0) (14.0 5.5) (1 .7) ( 7.5)Electrical Machinery (12.3) (t5.5) (140.3) (T7.2) 1t.8) (74.) (12.6) 1t.9 (13.7) (ts-s) (14 ( 3.4) (92-5) ()5-5 1tt7 (t.sMachinery (li.6 (t2.3 ( 9.3 (7.2) 7.7) ( 7.9) ( 9 2) tt0.2)I (14.9) (12.7) 9-2) 4,0) ( 8-7) ( 7-3 9.92 ( 12:1

Foundries ( 8.6 (10o9 (0.o ) ( 3.2) 13.9 ) (11.9) (10.4) (11.7) 7.4) (11.4) (12 ) 3.8) (17.5) (13.8 (0.3 ( 13.6Metal Products (11.2) (12.5) (13.) (7.6) (13.9) (14.5) (12.72 3.3) (10 .) ( 9.3) (12.5) (5.3) (12. ) (2.4 (10.0) ( 12.0)

Chemicals n.a. n.a. 14.9 12.2 13-5 14.7 14.9 15.0 n.a. n.a. 12.1 9.6 15.5 16.5 16.3 15.2

Of -hich:

Basic Industrial Chemioals (13.7) (10.3) (10.9) ( 8.3) (11.7) (13.1) (13.7) (13.8) (14.2) (10.4) (9.1) ( 5.9) (15.9) (17.1) (18.4) (16.0)Drugs & Pharmaceuticals (14.4) (15.6) (23.3) (22.0) (21.6) (20.8) (20.3) (19.2) (17.2) (12.7) (18.1) (16.9) (16.5) (16.4) (15.6) (15.7)

Other Chemicals (t2.6) (12.6 7) (14.9) (12.5) (13.3) (15.0) (13.9) ( '5 o (12.9) ( 9.9) (12.5) ( 9.8) (13.0) (13.9) (10.3) (11.7)

Matches 16.1 5.o0 15.2 14.2 22.9 20.4 16.4 10.3 12.5 1o.o 8.5 8.6 14.4 13.4 11.1 11.2Mineral Oils 12.8 14.5 11.0 17.8 21.5 15.2 6.3 14.1 11.0 7.4 6.3 12.2 17.8 15.3 7.5 9.4Cement 8.3 10.1 11.0 7.6 9.7 9.5 6.3 2.8 7.8 9.2 11.2 8.4 11.8 9.4 4.7 -n.sPaper and Paper Products 9.5 7.9 6.o 6.9 12.2 12.7 10.2 10.8 9.9 8.8 4.6 6.6 14.5 15.6 12.0 11.8

Electricity Generation 7.6 9.9 8.6 7.1 8.3 9.4 9.0 8.s 9.2 9.8 10.9 7.9 9.0 9.0 7.9 6.9Tradiag 8.2 9.2 10.1 7.8 7.9 8.6 9.5 8.1 9-9 9.6 10.7 9.0 8.3 1o.1 10.8 9.4Shipping n.a. 3.9 3.9 6.7 7.0 6.1 5.1 7.8 n.a. 4.2 4.7 10.8 12.5 12.8 12.7 1s.6

Total_Publi. Ltd Com anie. 10.2 10.7 10.1 8.5 10. 2Q- 11.0 10.4 11 .0 9 8.9 Wo 11.2 10.5 10.3 11.9

Large Public Ltd Companies n.a. n.a. n.a. 9.1 11.3 11.1 10-7 11.2 n.a. n.a. 10.0 8.3 12.2 11.0 10.6 11.4Medium Public Ltd Companies n.a. n.a. n.a. 6.8 8.0 8.4 9.4 10.6 n.a. n.e. 5.9 2.7 6.1 5,7 9-4 13.4

hote: See footnote to Table 8.4 q

a/ Capital employed refers to net total assets (including intangible and miscellaneous non-current assets).

/ lNet worth ti equal to paid-up capital + forfeited shares + reserves and surplus.

Q/ Relates only to companies with paid up capital of Re 1 orore and over.

_5urc8: Reserve Bank of India, various issues of the Bulletin.

Table 8.6

INV SET T IN PUBLIC SECTOR ZNTERPRISEStin Es million)

_Itemn 1968 1970 1972

Steel 6,180 8,900 11,790 14,190 16,940Engineering ) 3,550 8,330 9,940 9,860Chemicals ) 1,980 3,500 4,890 6,140Petrol.eua wf ) 2,410 3,780 3,990 3,940

Mining & Minerals ) 1,580 2,730 3,680 4,840Aviation & Shipping 470 1,010 1,430 1,850 3,200Building and Repairing Ships ) 100 180 260 360Trading / ) 840 710 3,140 3,540

Other ) n.a. 880 1,070 1,700

TOTAL 2&JM Q 2J0Q3j 43.010 50.520

Investment According to Revised Classification

A. Enterprises Producing and Selling Goods

Steel 16,937 18,403 20,290Minerals & Metals 5,972 7,208 8,726Petroleum 3,939 3,783 3,600Chemicals & Pharmaceuticals 5,537 6,909 8,181Heavy Engineering 6,588 6,574 6,748Medium & Light Engineering 1,060 1,225 1,463

Transportation Equipment 1,824 2,012 2,274Consumer Goods 393 525 674Agro-based Enterprises 78 80 92

Sub-total 42,328 A4l 52.048

B. Service Enterprises

Trading & Marketing Services 3,805 2,926 3,090Transportation Services 3,218 4,220 5,281Contracts & Construction Services 129 158 159Industrial Development & Technical 70 60 46

Consultancy Servicms

Development of Small Industries 268 296 341Tourist Services 104 145 177Financial Services 328 582 891Rehabilitation of Sick Industries 211 - 286 338Insurance Services 60 315 382

Sub-total 8,114 8.988 10,705

TOTAL (A + B) 50.522 5I.707 62.753

Notes This breakdown of snveatment by industry consists of equity participations and loans disbursedfrom the Central and State Governments and from private parties bok local and foreign. Excludedfrom the totals are working capital (generally financed by the State Bank of India) and invest-ment financed by the enterprises out of their own net earnings.

a/ Oimalative - is of Yareh 31 each yeax.i Breakdown of investment is not available separately. Investment in these categories have been

included in the total.i The classification of investment was revised in 1974. Data on this basis are available only

for the years 1972, 1973 and 1974.

Source: Ministry of Finance, Bureau of Pkblic Enterprises.

Table 8.7

CAPITAL DIPLOYED. GROSS PROFIT AND SE'T PROFIT OP SELECTEDJ PUBLIC SECTOR ENTERRISE(in R. million)

1966/Gros GP --- /-69--1971/72 19T71/74 1874755- Tn4trtamox _____ ~~~~iY GPaoj. Nt C.Pit%/ Gross~ GP aaj Net Capitol Gros GPs Nest Caio os C m e '.

______ ____ __i____OR ofi ;I _____ Prof it ib28.2 a t? si:'h uSTEEL & EGNmC

R'indon0 ~ Steel 6,932 18 0.5 -197 8,589 -119 -1.4 -594 8, 275 -200 -2.4 -456 7,788 300 5.9 47 n. .. nm .m.Heavy.kgin...rin Corportion 0.0. -49 n.e.. - 61 1,449 - 89 -6.4 -141 1,652 -7 71 -4.3 -149 1,886 4 0.2 72 n.. 5X.nm .maindiostan Knohien Tools 308 22 7.1 14 572 3 0.6 8 455 55 7.3 II 518 21 4.0 10 S1g.* 84.1 13.6 u9.s

"~g& Allied 07-.M-31 16 48h .. n-y .m ..Corporation27 - 44 -16.3 - 64 262 -2 25 6 -6 3 6 4. .

LOdiaaCOlCPhone Ind-stries 14 9 19.7 13 175 58 21.9 15296 66 2.2496 71 14- 32 602.4 85.5 1.0 3.4HnutnAeronautios 23 2 . 1499 5 53 2 1,665 M . 81,762 1,866 3 's.1 i 8 68 0.

NBhart Earth Mo-er 66 4 6.0 1 136 25 18.4 12 375 52 13.9 26 551 61 11.5 29 602.4 118.6 19.7 34.4Bhaat MeotMonjos 115 27 23.5 15 169 47 27.8 24 513 72 23.1 30 511 84 16.4 39 612.8 76.5 12.4 29.4Bhoot sa-ry Elsotrioala . -48 n.. -57 357 16 4.5 -34 1,666 96 5.7 51 -,2 AQ) A4~?1.il 20/ ,9. O 799' 6N/ 2. /

ke * lwtrioals 552 -50 -5.6 -52 657 -22 -5.4 ~ 59 728 59 5.4 -14)

Fertilizer & hibsalani 91 10 10.9 4 264 10 5.8 3 307 -15 -4.9 '.25 322 .1 .4.0. .-2 930.1 3. 0.5 .38.6

P5rtilts- Corporation of India 795 13 1.6 - 12 879 66 7.5 40 1,591 49 5.1 19 1,078 7 0.6 -15 a.s. 5.a. S.. 5I.S.Hindoetan phstofilss 107 - 15 -14.0 -21 112 -15 -15.0 - 27 118 -16 -15.6 -27 .. nm .. nmIndian Drags & Pharwaertieals 43 - 4 -9.3 - 6 385 - 64 -16.7 -91 550 T - 1.4 - 47 518 6 1.2 -18n.. nm nm ..

MIXING & MNRL

Mation4 Coal1 Developmen t 779 8 1.0 - 2 1,569 57 2.7 15 1,757 - 25 - 1.4 - 58 1,458 -34 - 2.3 .466nm .. .. n

Ney'aolt Lignite Corpo-tion 1,104 -49 -4.4 - 79 1,540 19 1.4 -24 1,585 - 66 - 4.8 -135 1,341 -64 - 4.8 -122 1,516.9 -65.8 -0.5 -117.7Natio,g, Mineral .. flvlopm.nt

Cnrptrntjon 86 5 5.5 - 3 240 - 7 -2.9 - 18 353 - 24 - 6.8 - 32 424 22 5.2 16 ne .. nm. nmHidOxdUa1 line Linited ne 4 0.0 109 4 5.7 1 186 4 2,0 - 3 222 49 22.1 450.. Nm n.a. R.n.m.

Oi & NIhlra Gas Iowui-ion 0.. 122 0.. 112 1,557 155 9.8 157 2,207 148 6.7 122 2,204 268 12.2 245 .. nm. ne n.Indiano Oil Corporation 1,100 114 10.4 77 1,526 258 15.6 194 1,744 394 22.6 300 1,777 517 17.8 98 2,358.?Y 608.7 25.8 306.4Coehin Rofinsriss 268 46 17.2 35 253 25 10.6 17 270 5 1.8 - 224.1 -39.4 -17.6 -51.9

Stats Trading Corporation 179 42 25.4 20 577 115 29.9 25 208 146 70.2 47 2M 140 50.0 42 425.4 194.1 45.8 64.6

t,C~ orP.tion 185 82 44.3 3s 165 - 6 -3.6 - 7 210 155 73.8 45 412 562 87.9 115 922.9 480.5 52.1 132.3Ped Cirperatio or India .5 47 0.. 10 1,408 143 10.2 5 6,359 395 6.2 6 5.5 106 2.0 5 n.m. nm n.e. U.4.

M~9AmRkTIOR

Mogho-l Linais 24 2 8.3 2 102 6 5.9 5 14 3 2.1 - 216 15 6.9 8 385.4 22.1 5.7 5.8Air COdia 400 56 14.0 58 536 56 10.5 22 1,28 18 1.4 -20 1,379 67 4.9 3 1,54.6 -26.0 -1.9 88,5Indian Airlines 276 -23 -8.3 '.55 457 37 8.5 16 671 -9 -1.4 51 714 55 4.9 .1l 790.1 49.9 6.3 10.2SMiPPibog Corporation of India 417 57 15.7 45 573 65 11.3 50 1,237 M1 9.2 81 2,305 204 8.8 159 n.e.. n.e. n.m. n.m.

TO'TAL (f or abov enss 13.845 A8- 3,5 ..106 24.761 208 3oS 9859 36.188 5iAf S.9 -_21 57f543 2_&08 6j n.90.. ii.o. n.m.

SoSts' Tb5s tota.1 inrostmnt of these -opanies apooi A- orve No par cet of all JVeoto-nt in the pabLlor Oto ae io.r dootriol od onemil=dartolklngs of Central and State g"o-sients.

g Capi1 0 i soplopd io riced'aoente los dsor-iation, plu, woking anpito.1, not Loo,luding itoo order o...ot-Looio or erpaooion. Capita)l sapl52'd is a at the beginning of the year.Gr Coss profit repreests senses of ons- over _rpenditor after dp-oiatioo hot before to nd interes.t oo lean Net profit ropresents Crone profit ais int-ret and ta- It isnot IdJosted to non operating and prior psriod receipts and sexpense..

nIGins0 profit as pe,rannt of onpito1 soplayed.A~Na~ Eleetrisle has bean merged with Bharat Nea-y Elsetrinooa Lnited.

.785-10 kia8toIst of Finano,, Boren of Poblie .ftrios

Table 8.8

PRODUCTION AND CONSUMPTION OF FINISHED STEEL(in thousand tons)

Apparent / Per CapitaProduction Impor s Exports Const Consumption

(1) (2) (3) (1)+(2)-(3) -TKge }

1951/52 1,091 140 4 1,227 3.41952/53 1,118 160 3 1,275 3.41953/54 1,040 188 4 1,224 3.31954/55 1,264 351 5 1,610 4,2

1955/56 1,280 834 2 2,112 5.41956/57 1,359 t,256 1 2,614 6.61957/58 1,438 1,286 1 2,723 6.71958/59 1,439 806 n.s. 2,245 5.4

1959/60 1,795 793 n.s. 2,588 6.11960/61 2,337 1,238 2 3,573 8011961/62 2,939 1,001 3 3,937 8.71962/63 3,864 870 8 4,726 10.2

1963/64 4,347 888 32 5,203 11.01964/65 4,508 929 76 5,361 11.11965/66 4,604 734 140 5,198 10.61966/67 4,551 405 251 4,705 9,3

1967/68 4,078 452 525 4,005 7.81968/69 4,801 385 682 4t504 8.61969/70 4,986 367 687 4,666 8.71970/71 4,793 629 511 4,911 8.9

1971/72 4,790 1,196 219 5,767 10.31972/73 5,324 1,079 90 6,313 11.01973/74 4,889 925 71 5,772 10.01974/75 5,161 1,126 63 6,224 10.7

a Figures of imports and exports and exports exclude pipes, castings, etc. Thecoverage of finished steel production has not remained the same over the years.

]/ Production figures upto 1959/60 relate to calendar year.

i/ Assuming no changes in steel inventories from year to year.

Sources: Hindustan Steel Limited, Statistics for Iron and Steel Industry in India1974 and information supplied by the Steel Authority of India Limited.

Table 8.9

PRODUCTION OF SALEABLE STEEL - BY MAIN PRODUCERS(in thousarnd tons)

A.S.P.TISCO IISCO BHILAI J1JRGAPUR ROURKELA BOKARO SUB-TOTAL MYSORE DUIRGAP1UR TOTAL

1953/54 793 250 1,043 36 1,0791954/55 796 468 1,264 29 1,2931955/56 812 460 1,272 37 1,3091956/57 812 451 1,263 40 1,3031957/58 799 419 1,218 36 1,2541958/59 899 506 1,405 36 1,4411959/60 1,237 672 56 7 1,972 37 2,0091960/61 1,263 722 332 118 104 2,539 41 2,5801961/62 1,318 737 551 362 186 3,154 41 3,1951962/63 1,413 795 803 486 421 3,918 41 3,9591963/64 1,507 810 884 721 566 4,488 43 4,5311964/65 1,568 755 916 721 689 4,649 44 4,6931965/66 1,568 723 1,028 684 782 4,755 64 n.s. 4,8491966/67 1,568 709 1,329 550 683 4,839 69 2 4,9101967/68 1,534 613 1,252 527 640 4,566 80 7 4,6531968/69 1,465 640 1,345 500 773 4,723 86 24 4,8331969/70 1,440 568 1,495 494 796 4,793 109 41 4,9431970/71 1,375 508 1,549 413 684 4,529 69 39 4,6371971/72 1,387 500 1,568 432 597 4,484 95 34 4,6131972/73 1,458 347 1,746 477 765 4,793 102 36 4,9311973/74 1,200 358 1,682 377 736 4,353 111 35 4,4991974/75 1,461 414 1,693 520 812 4,900 96 37 5,0331975/76 1,217 407 1,514 581 832 138 4,689 70 38 4,797(April-January)

1978/79 (Fifth Plan target) 8,800

Source: Steel Authority of India Limited

Table 8.10

PRODIJCTION, IDPORTS* DISTRIBUTION AND 0ONS1T1PTIO1' OF FERTILIZERS

(in 000 nutrient tons)

Year Nitrogenous Phosphatic a/ Potassic TotalProduction 1; ports Consumption Production Imports Consumption Imports Consumption Production Imports Consumption

1960/61 112.0 171.9 211.7 53-7 1.1 53.1 24.8 29.0 190.5 201.0 293.9

1961/62 154.3 142.9 219.5 65-4 o.6 63.9 30.4 28.0 250.1 171.5 383.5

1962/63 194.2 229.5 360.0 88.3 8.0 8t.4 44.3 36.4 282.5 281.T7 477.9

1963/64 219.1 197.7 407-0 107.8 12.3 116.7 64.1 50.6 326.9 274.0 57402

1964/65 243.2 256.5 434.5 131.0 12,5 147.7 57.2 70O4 374.3 326.0 652.6

1965/66 23709 376.3 547.4 118.8 21.8 132.2 93.6 77.7 356-7 491.7 757.3

1966/67 309.0 574.6 838.7 145.7 129.2 248.6 143.3 115.7 454.7 847.1 1,203.0

1967/68 402.6 975.9 799.5 207.1 370.8 236.5 276.5 129.8 609.8 1,623.1 1,165.8

1968/69 563.0 780.1 1,131.3 213.2 90.8 389.2 165.2 154.2 77602 1,036.1 1,674.6

1969/70 730.6 574.4 1,360.3 223.7 88.1 419.8 99.9 209.4 954.3 762.4 1,989.6

1970/71 832.5 481.6 1,487.1 228.1 32-5 462.0 119.0 228.2 1,o60.6 633-1 2,t77.3

1971/72 949.2 462.5 1,755.4 290.3 240.7 563.1 267.1 303.3 1,239.6 970.3 2,620.9

1972/73 1,054.5 691.4 1,778.9 330-3 211.4 587.4 316.3 332.5 1,384.8 1,219.0 2,698.8

1973/74 1,049.9 660.6 1,829.1 324.5 214.0 649.9 381.0 359.9 1,374.1 1,255.6 2,838.9

1974/75 1,186.6 884.8 1,773.8 331.2 279.9 477.6 443,0 339.2 1,517.2 1,607.7 2,590.6

Consumption Estimates for 1975/76 and Projections for subsequent Yeara

Alternative A

1975/76 2,100 450 270 2,820

1976/77 2,450 495 315 3,260

1977/78 2,800 558 360 3,718

1978/79 3,150 630 405 4,185

Alternative B

1975/76 2,210 420 270 2,900

1976/77 2,580 520 330 3,430

1977/79 3,060 61o 390 4,060

1978/79 3,610 720 470 4,800

Alternative C e/

1975/76 2,210 420 270 2,900

1976/77 2,260 650 360 3,270

1977/78 2,400 690 400 3,490

1978/79 2,500 725 425 3,700

a/ Excludes data in respect of bonemeal and rock phosphate.

j/ Consumption estimates are not available for the years prior to 1967/68. The figures given therefore are for fertilizers distributed.

j FAI, "Consnmption, Produaction, Import and Distribution of Fertilizers in India, 1975/76 to 1978/79", Fertilizer News, January, 1976, pp 36-39.

d/ 1975/76 estimated from preliminary data provided by Ministry of Agriculture, Government of India. Projection B is based on revised plan

target of 4.8 million tons of N,P,K consumption in 1978/79, interpolated for intervening years. Proportions of N, P 2 0 5 and K2 0 assumed

equal to FAT projection.

!/ For 1975/76, same source as estimate B. Beyond 1975/76 projections extrapolate historical linear trend line calculated by fitting the

1960/61 through 1975/76 data to the equation X = a+bT where X is the particular nutrient and T is time.

Source: Actual consumption data from Fertilizer Statistics, 1974/75, Fertilizer Association of India, (FAI). Estimates and projections as

indicated in footnotes above.

Table 8.11

INDIAN RAILWAYS - FREIGHT & PASSENGER TRAFFIC

Freight Traffic Passenger Traffic

Non-Suburban Traffic Suburban TrafficOriginating Net Ton - Average Passengers Passenger. Average Passengers Passenger- AverageYea_ Tonnage Kilometers Lead Originating Kilometers Lead Originati Kilometers Lead

(million tons) (minlion) (Kilometers) (million) (million) (Kilometers) (million) (million) (Kilometers)

1950/51 93,0 44,117 474 872 59,966 68.8 412 6,551 15.91955/56 115,9 59,576 514 780 54,273 69.6 495 8,127 16.41960/61 156.2 87,680 561 914 65,895 72.1 680 11,770 17.31965/66 203.0 116,936 576 1,064 79,130 74.4 1,018 17,164 16.9

1966/67 201.6 116,607 578 1,114 83,800 75.2 1,077 18,335 17.01967/69 196.6 118,860 605 1,159 83,516 76,3 1,098 18,647 16,21968/69 204.0 125,140 615 1,136 87,746 77.2 1,076 19,194 17,81969/70 207.9 128,248 617 1,187 91,514 77.0 1,151 21,868 18,9

1970/71 196.5 127,358 64B 1,212 95,136 78.5 1,219 22,984 18,91971/72 197,8 133,265 674 1,261 101,079 80.2 1,275 24,250 19,01972/73 201.3 136,542 678 1,268 106,931 84,3 1,385 26,596 19.21973/74 184.9 122,354 662 1,217 107,627 88.5 1,437 28,037 19.5

1974/75 196,6 134,837 687 1,o56 99,097 93,8 1,373 27,157 19,81975/76 (April-Dec. Estimates) 160.5 108,609 677 921 82,802 89.9 1,185 23,541 19,9

Average Annaal Growth Rates

1965/66 over 1955/56 5,8 7.0 1.2 3.1 3.8 0.7 7.5 7.8 0,21965/66 over 1i60/61 5-4 5,9 0,5 3.1 3.8 0,7 7.0 6e5 -0°51970/71 over 1960/61 2.3 3.8 1.5 2.0 3.7 0.9 6.o 6.9 0,91974/75 over 1965/66 -0.4 1,6 2,0 -0.1 2.5 2,6 3°3 5.2 1t8

a/ Fasoooken s booked between stations within the suburban areas of Bombay, Calcutta and Madras,

lourmp: at'istry of iailwayFa

TABLE 8.12

Finances of the Indian Railways

(in Rs million)

1960/61 j2k~~~~~~~~~~~~Z66 ~~~Revised Budget1960/61 196S/66 1970/71 1971/72 1972/73 1977j 4 1974/7 197 6 1976/77

OPERATING REVENUES 4.568o 7,335.e7 10.066.9 11.016,9 11l 624_2 11,378.9 14,081.9 17.377.5 19,558.2

Passengers 1,315.9 2,191.7 2,954.9 3,201.2 3,438.1 3,671.5 4,125.5 4,980.9 5,180.1

Other Coaching Services 272.1 394.0 621.1 694.3 656,4 593.5 692.1 830.3 871.8

Goods 2,86l,4 4,654.9 6,18203 6,753.0 7,206.8 6,804.1 9,175.0 11,414.3 13,376.3

Sundries 126.3 222e5 334.0 368.4 356.0 4°0.9 390.2 402.0 430.0

less - Receivables 7.3 127.4 25-4 51.0 33.1 91.1 300.9 250.0 200.0

OPERATINTG EXPENSES 3,582-4 5,830,4 8,473.4 9,169.5 9*826,2 10.663.3 13,172.8 15,813.7 17,160.9

Administration 376.4 558.0 833.1 878.9 922.8 1,025.8 1,293.7 1,615.4 1,587.0

Repairs & Maintenance 1,170-5 1,794.4 2,743,6 2,981.9 3,342.1 3,785.1 4,777.9 5,685.1 6,278.5

Operating Staff 718.9 1,132.9 1,693.8 ,T876.0 1,955*1 2,162.2 2,758.8 3,222.7 3,340.2

Fuel 721.6 1,135.0 1,619.9 1,698.8 1,762-7 1,716.4 2,089.9 2,625.2 2,949.2

Labor Welfare 99,0 189.1 266.4 287-9 305-7 341.3 437.9 524.9 548.3

Others 530.5 654.1 871.2 938*2 968.7 968.6 1,182.0 1,470.7 1,782.6

less - Credits or Recoveries 485.4 605.0 704.6 708.5 690.8 646.1 677.4 724.6 971.6

Sub-total 3,131,5 4,858,5 7,323.4 L95 2 8,566.3 9,353.3 11,862.8 14,419.4 15,514.2

add - Pension Fund - 120.0 148,5 113.8 158.5 158.5 158.5 242.5 295.0

Depreciation 450.0 850.0 1,000.0 1,050.0 1,100.0 1,150.0 1,150.0 1,150.0 1,350.0

Payment to Worked Lines 09 1.9 1.5 1.5 1.4 1.5 1.5 1.7 1.7

NET OPERATINGRE EN 985.6 1.505,3 11593.5 ,847.4 1,798.0 715.6 909.1 1,563.8 2,397.3

less

Dividend on Capital at Charge 558.6 1,037.8 1t645.7 1,512-4 1,615.1 1,709.2 1,874.7 1,982.5 2,076.0

Net Miscellaneous Expenses 106.9 156.9 146,2 156.6 153.7 161.5 172.6 209.4 231.5

NET s-UiRPi.US (+)/DEFIIT--( (it (0 t18S,6 (-) 198.4 ( 14 178.4 (+) 29.2 1 (-)1.138.2 (-)628.1 (+) 89.8

In Percent)

Operating Ratio A/ 78.4 79-5 84.2 83.1 84-5 93.7 93.5 91.0 87.7

Ratio of Net Revenue toCapital at Charge h/ 5.6 6.1 4-3 4.8 4-4 1.4 1.8 n.a. n.a.

a/ Operating ExPenses as % of Operating Revenues.

h/ Net Revenue is Net Operating Revenue less Net iMiscellaneous Expenses of a capital nature.

Source: Ministry of Railways, Railway Budgets.

Table S.j5

PORT TRLAiFIC(in million tons)

1960/61 1965/66 1968/69 1969/70 1970/71 1971/72 1972L73 1973/74 1974/75 a

I- 39a5 54r4or5 0 55.1 549.4

Calcutta 9.4 9.7 800 6.o 6.0 7.3 6.6 6.3 7-5

Bombay 14.3 17.9 16,4 15.2 14.4 16.1 15.9 18.2 18.0

Madras 3.0 4,9 5.4 6.5 6.9 6.8 6.8 7.8 8.02

Cochin 2e0 2.9 5.2 4.8 4.8 4.7 4.2 307 408

Vishakhapatnam 2.8 4.4 8.1 8,3 8.7 8-7 7°4 800 742

Kandla 1.6 2,5 2.0 2.1 1.6 2.0 2,5 3.1 3.5

Mormugao 6.4 7-9 8.8 9.0 11.0 11.7 12.9 14.3 14.1

Paradip 1.2 1.7 2.2 1.9 2.0 2.3 2.6

II, Minor Ports 7.4 7 8.4

III. Total Traffic 43 97.9 61.8 662. 7. TTj & I-IT 2)1_

a/ TP -s ionai

SOuTce E Inis-,ry of Shipping and Tran-port, Report of the Commission on Yiajor Ports and Port Transport Statis: o,s1972/73. Information for the years 1973/74 and 1974/75 was supplied by the Transport Research DiAisionof thb Ministry,