Economic breakthrough

WITH the notable upswing in both farm and factory output in recent months, Union Finance Minister C Subramaniam’s highly optimistic appraisal of the nation’s economy appears warranted. The inflation spiral has at long last been broken and according to Subramaniam, an inflation rate of ‘minus 2.5 per cent” had been achieved in the week ended July 12. India’s achievement in containing inflation, he has said, is being cited as an example at international conferences. Less than two years ago, this country was listed among the 33 worst affected by the oil crisis and the consequent distortion of the economy. Even if the benefit of the price fall, as was recently conceded, has not yet percolated down to the common man at all retail levels, the achievement is commendable. Until the autumn of 1974, nothing that the administration did would reduce prices and the traders had the last laugh. Besides, the rain gods are smiling continually this year. Given some showers later in the season, there seems no reason why the expected 5 to 6 per cent increase in the national income against barely 2 per cent last year should not materialise. The Finance Minister would appear to be leaving others way behind in optimism. The distinct improvement had not been foreseen by most financial experts. And even the Economic Survey issued shortly before the last Central Budget had warned that in the context of many imponderables in critical areas, we have only a limited margin of manoeuvrability in bringing about a sharp acceleration in the overall rate of growth. Economic policy planners, it added, would have to grapple hard in 1975-76 with the task of raising the growth rate beyond the trend of 3-3.5 per cent.