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India's Foreign Economic Policies

Published online by Cambridge University Press:  18 July 2011

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Extract

While the West is occupied with the cold war, an economic test is slowly shaping in Asia. Upon its outcome may depend the political beliefs and allegiance of half the world's people. The issue may be stated simply, although the forces at work are complex and intricate: Can India, with a population of 360 million, under the democratic process, with free elections and a mixed economy similar to mat of many Western nations, meet the national aspirations for economic betterment and a more abundant life more fully and more rapidly than Communist China, with its totalitarian rule of 500 million people and its forced labor, forced investment, and forced production? In spite of all the propaganda about progress in Communist China, it is probable that the Indian record of actual achievement is more impressive, though less well publicized.

Type
Research Article
Copyright
Copyright © Trustees of Princeton University 1955

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References

1 See the report of an International Monetary Fund Mission to India, “Economic Development with Stability,” Staff Papers, IMF, III, No. 3 (February 1954), p. 319.Google Scholar

2 See “The Colombo Plan: The Third Annual Report of the Consultative Committee on Economic Development in South and Southeast Asia,” HMSO, Cmd. 9336, Ottawa, October 1954, pp. 26–50.

3 Government of India, Planning Commission, Five Year Plan Progress Report for 1953–54, New Delhi, September 1954.Google Scholar

4 There are 4.762 rupees to the dollar. The rupee is thus worth approximately 21 U.S. cents.

5 Some observers of the Indian scene disagree, and claim that it is absorptive capacity, not finance, which is the major limiting factor in Indian economic development. While absorptive capacity is undoubtedly a limiting factor in certain fields, it is not, in the opinion of die Indian Planning Commission and of die audior, a major factor retarding economic growth in India, as it is in the case of Indonesia, for example.

6 “India Forges Ahead,” The Economist (November 20, 1954), p. 658.

7 Government of India, Planning Commission, The First Five Year Plan: A Summary, New Delhi, 1952, p. 28.Google Scholar

8 Cohen, Jerome B., “Economic Development in India,” Political Science Quarterly, LXVIII, No. 3 (September 1953), p. 392.Google Scholar

9 “Planning and Its Promise,” Eastern Economist, Independence Number, XXIII, No. 7 (August 13, 1954), p. 250.

10 For a more extended analysis, see Das Gupta, A. K., “India's-Foreign Economic Policy,” India Quarterly, x, No. 3 (July-September 1954), pp. 215–25.CrossRefGoogle Scholar

11 See International Monetary Fund, Asian Department, “Payments Problems of India,” April 30, 1954.Google Scholar

12 See Reserve Bank of India, Report on Currency and Finance for the Year 1953–54, Bombay, 1954, pp. 6572.Google Scholar

13 Reserve Bank of India, Monthly Bulletin (May 1954), pp. 405–25.Google Scholar

14 See U.S. Department of Commerce, World Trade Information Service, “Foreign Trade of India, 1952–1953,” Part 3, No. 54–7, Washington, D.C., November 1954.

15 International Monetary Fund, Asian Department, “Payments Problems of the ECAFE Region,” June 17, 1954.Google Scholar

16 U.S. Department of Commerce, World Trade Information Service, “Trade of the United States with South, Southeast and East Asia, 1953–1954,” Part 3, No. 54–7, Washington, D.C., November 1954.Google Scholar

17 “Trading Behind the Curtains,” Eastern Economist, XXIII, No. 17 (October 22, 1954), p. 672; see also Croesus, “Trade with China,” ibid., No. 4 (July 23, 1954), pp. 135–36.

18 According to available figures, this is not the case. In the six-year period from 1948 through 1953, India drew $200 million from the sterling area dollar pool, while she contributed about $344.6 million during the years 1939–1946. See Reserve Bank of India, Monthly Bulletin (May 1954), p. 302.Google Scholar

19 Gupta, Das, op.cit., pp. 220–21.Google Scholar

20 See Government of India, Ministry of Commerce and Industry, “Import Trade Control Policy for the Licensing Period, July-December 1954,” Delhi, 1954.

21 Reserve Bank of India, Indian News Digest, VII, No. 160 (September 16, 1954), p. 186.Google Scholar

22 See “Export Policy for Manganese and Iron Ores,” ibid.

23 See “Freer World Trade,” Eastern Economist, XXIII, No. 9 (August 27, 1954), p. 355.

24 See Ganguli, B. N., “India and the Commonwealth: Economic Relations,” India Quarterly, X, No. 2 (April-June 1954), pp. 125–43.CrossRefGoogle Scholar

25 Mookerjee, Subimal, “Trade and Payments Agreements of India,” International Monetary Fund, June 21, 1954.Google Scholar

26 Provisions in Articles 3 and 4 of the Treaty of Commerce and Navigation with Great Britain, signed in London on July 3, 1815, apply to India and are in force at the present time.

27 Reserve Bank of India, Census of India's Foreign Liabilities and Assets, Bombay, 1950, p. 120.Google Scholar

28 Pizer, Samuel and Cutler, Frederick, “Foreign Investments and Income,” Survey of Current Business, XXXIV, No. 11 (November 1954), pp. 613.Google Scholar

29 Gupta, Das, op.cit., pp. 223–24.Google Scholar

30 U.S. Department of Commerce, “Investment in India: Conditions and Outlook for United States Investors,” June 1953, p. 2.Google Scholar

31 For further details, see Government Measures Affecting Investment in India, A Handbook of Information issued by the Economic Advisor to the Government, New Delhi, 1950, 66 pp.

32 Croesus, , “India and America—A Report,” Eastern Economist, XXIII, No. 18 (October 29, 1954), p. 714.Google Scholar

33 For an example of current ambivalence and contradiction, see “Debate on Economic Policy in the Lok Sabha,” Indian News Digest, VIII, No. 167 (January 1, 1955).

84 See U.S. Department of Commerce, Office of International Trade, “Study of Factors Limiting American Private Foreign Investment, Summary of Preliminary Findings and Recommendations,” Washington, D.C., July 1953.Google Scholar

35 “The Colombo Plan: An Indian Critique,” Eastern Economist, XXIII, No. 16 (October 15, 1954) p. 614.

36 The Indians, quite rightly, do not regard the sterling releases as external assistance, since they are payments (blocked) for services rendered by Indians to the British during World War II. Sterling balances, which reached a peak of £1,299.4 million ($5,237 million) in April 1946, had by March 31, 1954, been reduced to £565 million ($1,582 million). Under the agreement with the British, whereby £35 million ($98 million) is released annually, the Indians are pledged to maintain a minimum sterling balance of £310 million ($868 million). At this level, India's gold and foreign exchange holdings would approximate 40 per cent of the currency circulation, the minimum prescribed by the Reserve Bank of India Act.

37 Reserve Rank of India, Report on Currency and Finance, opcit., p. 46.Google Scholar

38 Government of India, “Budget of the Central Government for 1954–55,” as laid before Parliament, New Delhi, February 27, 1954.Google Scholar

39 International Monetary Fund Mission to India, opxit., p. 383.Google Scholar

40 See Tinbergen, J., “Capital Formation and the Five Year Plan,” Indian Economic Journal, 1, No. 1 (July 1953), pp. 15.Google Scholar