38 SOCIAL SCIENTIST hirepurchase agreements which are sustained by bank credit. Demand for vehicles has dropped drastically leading to the disappearance of black market premia and to output cuts by the main assemblers. While TELCO has imposed a 20 per cent cut in production, Ashok Leylandhas curtailed output by 40 per cent. The tight credit policy also underlies the slump in demand for tyres, tractors and diesel engines. Poor demand from these sectors, combined with large imports has affected the steel industry which is burdened with inventory levels twice as high as normal and reduced offtake from stockyards. Given low offtake, SAIL has informed the Railways of its inability to offer higher traffic demand, thus causing unprecedented levels of idle rolling stock and increased pressure on the resource position of the Railways despite the recent increases in fares and freight charges. The commercial vehicle industry is a good example of the inadequacy of the index of industrial production in capturing the impact of the recession on the small-scale firms that are the worst affected in such conditions. The main assemblers of vehicles in India succeed in passing on the effects of stringent credit conditions and recessionary trends to the hundreds of small-scale and ancillary units by delaying payment for supplies or cancelling orders placed. The effect of such measures on the small firms is obviously not reflected in the index of industrial production. The situation in the commercial vehicle industry may show a slight improvement because of the concessions made by the RBI on October 25, 1982, to enable State road transport undertakings to purchase vehicles. The overall credit position is, however, unlikely to improve because the IMF has further tightened credit expansion ceilings from 23.1 per cent for 1981-82 to 17.9 per cent for 1982-83 in the case of net bank credit to government and from 19.4 per cent to 18.2 per cent in the case of total domestic credit. The imposition of such stringent controls on credit expansion is intended to reduce both domestic inflationary pressures and the external deficit. We have seen that prospects for any improvement in the balance of payments position are extremely bleak. Price Situation The picture on the price front is not very encouraging. The wholesale price index (1970-71 ==100) rose from 274.8 in April to 289.8 in the week ending October 2. The Economic Times Wholesale Price Index for wheat rose from 178.9 on June 31, 1982, to 197.9 on October 30—an increase of 19 points over four months. The Economic Times Retail Price Index for Greater Bombay increased by 17.3 per cent over 1981-82 compared with an increase of 17.9 per cent over the year 1980-81. Despite its limitations the index shows that the rate of increase in retail prices in 1981-82 was not significantly lower than in 1980-81, and figures for the current year do not indicate a moderation of inflation, particularly in the case of food articles. At the same