34 SOCIAL SCIENTIST the IMF projections although both the volume and unit prices of oil imports have been lower than in 1980-81. The trade deficit for 1981-82 at Rs.5779 crore was only marginally lower than in 1980-81 and almost 10 per cent higher than IMF projections. This divergence between the projected and actual balance of payments position in 1981-82 occurred despite the stability in world crude oil markets and lower import volumes of petroleum products, the burden of which is normally cited as the main reason for the adverse payments position. The recurring balance of payments deficits faced by India are basically caused by adverse movements in the terms of trade, and because export volume has been relatively stagnant since 1976-77 while the volume of imports has steadily increased. A recent study has shown that India's share in world trade fell from 1.1 per cent in 1948-49 to 0.4 percent in 1980-81. The annual index of India's net terms of trade, with 1968-69 as the base, fluctuated between 106 and 124 between 1970-71 and 1973-74. The purchasing power of Indian exports remained favourable to the extent the index exceeded 100, a situation that changed for the worse in 1974-75 with the index ranging between 90 and 95 till 1978-79. The erosion in the buying power of exports become severe in 1979-80 when the index dropped to 66, declining by 5 per cent in 1980-81 and by a further 8 per cent in 1981-82. F1CCI (Federation of Indian Chambers of Commerce and Industry) has estimated that out of the terms of trade loss of about Rs. 6000 crores between 1969-70 and 1979-80, about a third was due to the successive hikes in oil prices, the balance being accounted for by rising prices of other major imports. While it may be argued that high oil prices have both a direct adverse effect and an indirect one through higher prices of imports with a high energy content, the analysis does show that it is wrong to visit the sins of balance of payments deficits solely on oil price hikes. Stagnant export volume since the mid-1970's remains the main problem therefore, since the alternative option of drastically reduced imports has been ignored since 1978-79 and is now specifically forbidden under the terms of the loan agreement with the IMF. In fact, if the full IMF loan is drawn by India, debt servicing would in itself present serious problems in the absence of a rapid and sustained expansion of exports. The annual interest amount alone would be roughly Rs. 500 crores and the total burden would exceed Rs. 1000 crores when repayment begins. Since the import dependence of the economy would by then have been accentuated with further import liberalisation on the cards, the prospects of a rapid rise in exports in 1982-83 assumes increased importance. The export-import policy for 1982-83 announced in April 1982 fulfils the assurance given by the Government of India to the IMF of its intention to take significant steps towards liberalisation. The main features of this policy are: (1) the inclusion of more than 100 new