ECONOMIC PERFORMANCE 1975-76 121 Between March 1975 and March 1976,, the index of wholesale prices fell by 7.6 per cent and foreign exchange reserves increased from Rs 969 crores to Rs 1695 crores, or by as much as 75 per cent2. One should not exaggerate this performance. Within the preceding quinquennium itself there were two years,, 1970-71 and 1973-74, when the growth of real national income exceeded five per cent, and thus came close to what was achieved in 1975-76. These were years of agricultural recovery. Given the weight of agriculture^ a sharp jump in agricultural output makes a big impact on the national income growth rate. The same was true of 1975-76 as well. Point growth rates, whether overall or relating to particular sectors, can be quite misleading. We have to decide for example whether a jump in agricultural output represents a recovery from a very bad year or the scaling of a new height compared to the normal achieved hitherto. A better criterion is provided by peak-to-peak comparisons. Compared to the previous peak output of foodgrains of 108 million tonnes in 1970-71, the 116 to 118 million tonnes of 1975-76 represented a less than 1.5 per cent annual compound growth rate, less in other words than the population growth rate. Hence while the level of foodgrain output does testify to an increased productive capacity of the economy, the extent of this increase should not be exaggerated. But the question arises: to what extent is even this growth likely to be sustained? CURRENT EXPERIENCE Certain disquieting features have already loomed on the horizon. Available indicators show that the upsurge experienced in 1975-76 is already tapering off. First, the current harvest is not expected to be any larger than last year's. If anything, it may be smaller. Industrial production has been showing a declining trend since March 1976. While the industrial growth rate between March 1975 and March 1976 was 10.9 per cent, between September 1975 and September 1976 it was only 6.2 per cent\ Alternatively, between March 1975 and September 1975 industrial output declined by 5.7 per cent. For the corresponding period of 1976, the decline has been 7.9 per cent, suggesting that this year's experience is not even as good as the last. This impression of a slowdown of industrial growth, or of not having broken out from the relative stagnation of recent years, is corroborated by many other pieces of evidence. First, it is reported that capital raised through new issues in the private sector between March and September 1976 was of the order of Rs 52 crores compared to Rs 65 crores in the corresponding period of 1975, suggesting a lower level of investment.4 Secondly, the number of workers laid off in the last one year has been estimated to be as large as 7 lakhs, of which only about half a lakh are in jute facing poor international demand.5 The phenomenon of ^sickness5' of mills is reported to have become so acute \hat commercial banks may have to face a loss of as much as Rs 1000 crores