NOTES 59 production causing the ruin of millions of peasant holdings. The most significant example of disguised dumping effected by the United States is its mass sale of agricultural "surpluses" on the markets of the developing countries under US PL 480, a practice which had become one of the main levers of US foreign policy. The disastrous effect of these "surpluses" under the guise of "aid" on the markets of these countries stands out particularly clearly in the case of India. It began to import American grain (wheat, rice and maize) in 1951 when there had been a marked rise in grain and food prices on account of bad harvests. Between 1951^ and 1958 the annual imports of American "surpluses" did not exceed 1,500,000 tons. However these imports were noticeably stepped up in 1959 and 1960 to 3,100,000 tons and 4200,000 tons. In May 1960 the United States and India signed an agreement allowing for deliveries of 16,000,000 tons of grain and 1,000,000 tons *of rice in the course of following four years. Food Aid From then on these grain deliveries have taken the form of an alternative to agrarian reforms which in the opinion of many economists are absolutely vital for the expansion of agricultural production. This policy has resulted • in our grain production showing a marked decline from 12,000,000 tons in 1961-62 to 9,000,000 in 1963-64. Smaller grain harvests have led to a rise in grain prices, and this in turn made India still more dependent on American grain deliveries which by 1964 exceeded 5,000,000 tons. Nevertheless, these deliveries on an average did not make up more than 10 per cent of our market stocks: they were used to supply the army and the urban poor in the country's industrial centres. Another point that should be noted in this connection is that because of the poor sections5 low purchasing power the grain supplied by the US was sold on the internal market at prices considerably lower than the import price. The situation in its turn required the allocation of considerable subsidies out of the budget. In the period 1956-64 alone the government spent close on Rs 1000 million on these subsidies. American grain deliveries were not the decisive factor in the supply of the population with grain and foodstuffs, in particular in 1964-65 when local production of cereals (wheat, rice and other) rose to 87,000,000 tons as against 79,400,000 tons for the preceding year. They continue to constitute a disorganizing factor in both the home market and cereal production. Given the low purchasing power of the poor, large quantities of US grain often fell into the hands of dealers who, making the most of the situation, later sold it again at higher prices. The farmers, in their turn, having virtually no machines or fertilizers and seeing no hope of increasing their incomes from long-term Investment in their holdings, refrained from making such investment during those years which in the long run led to the shrinkage of grainsown area throughout the country. The solution to India's gfain problem is believed to be the creation of stable conditions favouring the expansion of^agricultural production.