NOTES 71 The larger deficit shown in the revised estimate for the last financial year has been greatly due to the sharp rise in the capital account deficit from an estimated Rs 848 crores to Rs 1396 crores. In the current financial year the deficit has been kept down to Rs 320 crores by taking into account special borrowing of Rs 480 crores from the Reserve Bank of India against the blocked deposits with the Bank under the scheme of compulsory deposit of additional wages, half of dearness allowance increases and percentages of income from income tax payers. The Finance Minister has taken into account Rs 1206 crores as external borrowings. Thus the budget is heavily depending on foreign assistance. The net borrowing after repayments will be Rs 815 crores against Rs 682 crores in the revised estimates for the last year. In addition to this, the budget also takes into account other receipts like Rs 150 crores of old credits and Rs 178 crores as ^deposit of loan assistance" from Iran. This is perhaps the highest borrowing so far. Similarly the market borrowing is also stepped up to Rs 810 crores compared to Rs 532 crores budgeted for 1975-76. This heavy dependence on foreign aid on the one side and large-scale concession to foreign companies on the other is a clear indication of the Government of Indians growing dependence on foreign assistance. It is also revealing that a large amount of foreign assistance is likely to come from USA and organizations under its control. A close analysis of the budget reveals that the government is deliberately following a policy of encouraging investment by giving large-scale concessions to private industry and upper income groups. This is being done by stimulating consumption in certain sectors and it is claimed that the budget will generally encourage savings and investment in the economy. But there is no guarantee that the savings if generated will be invested. The Finance Minister has overlooked the fact that this type of development is not very conducive to sustained economic growth. The budget has focused very sharply on two crucial questions: a) Can a country like India at its existing level of per capita income adopt such a path of development, completely overlooking the wider social objectives? b) Is it possible for India to develop the economy by such heavy dependence on foreign aid? RS 1 K N Raj, "Growth and Stagnation in Indian Industrial Development*), Mainstream, 21 February 1976. a IS Gulati, "Growth-oriented Budget," Economic and Political Weekly, 13 March 1976. 9 "Sondhi PaneP, Economic Times, 1 April 1976.