Hopeful trends

WITH the import bill causing a Rs 1,000-crore trade deficit in 1974-75 and the fuel-fertiliser-food complex again accounting for the lion’s share, the foreign exchange position this year was officially described in April as “very difficult”. Three months ago, the country’s foreign exchange reserves stood at Rs 1,000 crore, inclusive of gold and SDRs. This indicated an increase of about Rs 100 crore over 1973-74. Since the reserves were being run down, the position was far from reassuring. But the recent offers of multi-faceted relief have brought about a distinct improvement. MG Kaul, Secretary of the Department of Economic Affairs, stated on return from the Paris meeting of the Aid-India Consortium that the foreign exchange outlook for the current fiscal seemed to be “reasonably good and manageable” in respect of essential imports. Conservation has still to be the watchword, but it is heartening to learn that adequate supplies of vital commodities would be duly forthcoming. The establishment of the Third Window, the sizeable Oil Facility inflows and, what is more important, the expectations of a better export performance in the coming months justify Kaul’s optimism. Besides, some of the internal constraints on export development will not apply this year. But Kaul has himself conceded that the situation “cannot be said to be free from uncertainties.” The most helpful fact in easing the situation would be the total commitments ($1,775 million) made at the recent Aid-India Consortium meeting. Of this the World Bank’s share would be $1,075 million. Again, Consortium aid disbursement is likely to be about $1,650 million — $370 million more than last year.

Advertisement