M J K THAVARAJ
Has Indian Industry Turned the Corner?
INDIA has had two consecutive years of good harvest culminating in a large buffer stock of about 23 million tonnes of foodgrains. Exports have increased in value. The level of foreign exchange reserves has risen. Industrial production has increased by about seven per cent during 1975-76. These favourable factors have led to the claim that Indian economy has turned the corner, meaning that a firm path of growth lies ahead. Deeper analysis would, however, reveal that a recession psychology is gripping the Indian economy and pervades economic policies of the government. In fact, the situation abounds with contradictory trends. Record harvests and large buffer stocks could not prevent an increase in the wholesale price of foodgrains. Increased exports are accompanied by deteriorating terms of trade. Larger amounts of foreign aid are being assured even while the foreign exchange reserves accumulate for want of suitable avenues of utilization. Corporate saving and domestic investment tend to stagnate even when the relative share of profit in value added has increased substantially. These contradictions are more pronounced in the industrial sector in India today, calling for a closer scrutiny of the problems and prospects.
A good part of Indian industry is agro-based. Therefore industrial growth depends on the extent to which agricultural sector can release