NEW DELHI: A chaotic fiscal scenario confronts the Indian economy as it steps into the next decade.

‘An extremely difficult balance of payments position and escalating prices loom large over the dis mal economic horizon with the country reeling under the impact of the gulf crisis.

‘As 1990 draws to a close, the common man continues to reel under the burden of spiraling prices with a double digit inflation sagging industrial production and a mounting trade deficit beset the economy.

‘The optimism expressed by Chandra Shekhar, on the resilience of the Indian economy, notwithstanding the coming days portends hard decisions and a further tightening of belts by all strata of society.

‘A midyear levy on petroleum products in the aftermath of the Gulf crisis and fresh taxes on man-made fibers to rope in Rs 1340 crores in a year, a week before Christmas, has brought little cheer to the festivities.

‘The year which began with a new government, headed by Mr V.P. Singh, crying horse about ‘empty coffers” ends on a note of dismay with India’s credit rating plummeting to a new low.

‘The dismal situation was further complicated by the social tensions and disturbances arising out of the two major controversies of the year Mandal commission report and the Babri Masjid issue.

As the year draws to a close, the effect of the development is evident in all sectors of the economy. Price shave spiraled, industrial production, which showed signs of booming early on, has been sagging, trade deficit has mounted, foreign exchange reserves have touched an all-time low and balance of payments are in doldrums.

‘The compelling situation has led to the Chandra Shekhar government to look for a massive loan from the International Monetary Fund. Exercises are already on in the finance ministry to get the loan ‘on easy terms

‘The only silver lining in the ‘economy is the for the third yearn succession agricultural production has been booming. The food grains production during 1990-91 promises to touch another record 175.5, to 178 million tonnes, as per latest Estimates.

The new government with its farmer oriented policies ordered a waiver of farm loans and enhanced procurement prices of food grains.

Although waiver of farm loans ‘increased governmental expenditure, further worsening the fiscal ‘imbalance and enhanced procurement prices fueled inflation, the ‘incentives given to the farmer, coupled with good monsoons have raised the prospect of a good crop in the current year.

‘The monsoon (June September) has been excellent in most parts of the country, with the seasons total rainfall for the country as a whole being 106% of the normal.

‘The northeast monsoon (October November) has also been satisfactory for the southern and the easter stats, although was deficient for northern and north western states of Rajasthan, UP, West Madhya Pradesh and Gujarat

‘As a result of the good monsoons kharif food grains during the current year is expected to be in the range of 101 to 102 million tonnes.

‘Though it is difficult to make any firm assessments about the size of the rabi crop as even the sowings have not yet been completed, the likely output is expected to be “of the order of 74.510 765milion tonnes, making 2 total of 1755 to 178.5 million tonnes as against last year’s production of 17050 million tonnes.

WASHINGTON: India grew poorer and its foreign debt grew heaver in 1989 compared to 1988, according to “world debt tables 1990-91″, released by The World Bank,

“The gross national product, the sum total of goods and Services produced in the nation, shrank. From $ 267.208 billion in 1988 t0, 262.089 billion in 1989S one billion about Rs 18,050 million currently) the first dip in five years while its foreign debt shot up 10S 62.509 billion in 1989 from 57.254 billion in 1988,

‘The debt comprises India’ long term debt of 56.253 billion, short-term debt 4.689 billion and use of IMF credit 1.566 billion.

According to OECD external ‘debt tables, India’s external debt and liabilities outstanding at the end of 1989 stood at 69,1695 billion compared to 68,345al the end ‘of 1988, it included nonbank trade claims suppliers credit and ‘other liabilities like nonresident deposits, not included in world debt tables,

Article extracted from this publication >> January 4, 1991