THE IMF LOAN, FACTS AND ISSUES,. Government of West Bengal, Calcutta, November 1981, pp 109, Rs 5.00.
THIS set of essays released on 23 November 1981, the first day of the winter session of Parliament and the day that witnessed a massive workers' rally in New Delhi, has already attracted a good deal of attention. Written by eminent economists from New Delhi and Calcutta, these essays have been compiled and published by the Finance Minister of West Bengal, Ashok Mitra, who has also written an introduction. These essays constitute the first systematic critique of the Government's decision to go in for the loan and of the IMF as a lender.
Before we begin a review of these essays two acknowledgements are called for. First, we must acknowledge the singular contribution of N Ram, the Washington Correspondent of The Hindu, who by making the relevant documents available to the Indian people, initiated a widespread debate on the loan and its implications. These despatches are reprinted in the volume under review. Second, we must acknowledge the untiring efforts of Ashok Mitra and the Government of West Bengal who, in fact, opened the issue for discussion when they invited 23 distinguished economists of varying ideological hues to Calcutta in August 1981 and discussed in detail the current economic policies and problems and the then impending IMF loan to India. As Mitra recalls, "They had at that time warned the nation on the pitfalls which are inherent to the IMF's Extended Financing Facility loan", a warning that was brushed aside by the Union Finance Minister Venkataraman as being ill-informed and unduly alarmist.
Ashok Mitra has once agai^ taken the initiative by publishing these essays on the eve of Parliament's post-mortem of the loan agreement. The fundamental questions that relate to the IMF loan are basically three: firstly, what were the precise circumstances that led India to seek this loan; secondly, what are the consequences of accepting the IMF loan; and, finally, indeed most importantly, what is wrong with going in for a loan from the IMF under the EFF? These essays attempt to answer these and related questions.
To begin with, as Prabhat Patnaik ("Implications of Borrowing from the IMF") reminds us, the Government has nowhere presented a case for going in for such a massive loan from the IMF; what it has done was to suggest that this loan was occasioned by a balance of payments deficit (p 70). It is argued that this loan will allow India a breathing time which will be used to pursue policies that will help