NEW DELHI: The World Bank and the IMF have asked India to devalue the Rupee by 22% as a price for their aid package the Right Wing Bharatiya Janata Party (BJP) alleged on Wednesday.
Quoting a confidential report of the World Bank the BJP economic expert Dr Jay Dubashi warned this type of massive devaluation would play Havoc with the economy and the common man in the country.
He said the confidential report was now with the Indian govt the report sets out detailed conditions for loans from these two international agencies he added.
Such devaluation was tailor made recipe for recession and inflation he said adding that it would bring down Rupee sharply from Rs 21 to 27 per dollar and raise costs of all imports particularly petroleum products
Dr Dubashi was also critical of the selling of 20 tonnes of gold in Zurich by the Indian govt to raise 240 million dollars foreign exchange. He said such gold sales in May end had brought down the credit rating by a notch.
Dr Dubashi gave statistics to say that such devaluation would push petrol prices to Rs 16 per liter overnight and that of cooking gas cylinder to Rs 80.
He claimed the report called for drastic reductions in the import Tariff from the present 130% to 30%
Since this would affect the govt revenue considerably the report had recommended hike in excise duties by 20% and cutting down of govt expenditure by 10%:
Dr Dubashi said a sizeable hike in excise duty would lead to a sharp fall in industrial growth and closure of industries leading to large scale unemployment.
He said the report was keen on slashing import Tariffs on all goods including consumer goods and putting them on open general license. It expects capital goods production to go down by 12% and other goods by 6%.
Article extracted from this publication >> June 14, 1991
