PROBLEMS AND PROSPECTS 161 the requisite marketed surplus in foodgrains, supply raw materials and absorb industrial products. A good harvest accompanied by profitable prices should normally be expected to stimulate growth in industrial output. The seven per cent growth rate in 1975-76, a year of record harvest, is nothing unusual. Similar growth rates were noticed during 1968-70, the two years following the bumper harvest of 1967-68. These gains were submerged by the dismal failure in the subsequent years. Industrial Growth Rate In general, growth of industrial products since 1965 has been much lower than the rates upto the end of the third plan. There has even been a deceleration — the rates being 3.5 per cent and 2.75 per cent during 1965-70 and 1970-74 respectively.1 In the last three years, industrial output has grown at the rate of - 0.2, 2.5 and 7.0 per cent respectively. It follows that the seven per cent growth rate in 1975-76 is an exception rather than representing a trend. It is also worth remembering that even this rate accompanied by a bumper crop is well below the annual growth rate achieved in the second and third plan periods. It is also lower than the projected growth rate for the fifth plan. The average for the first two years of the fifth plan is no more than 5 per cent which is lower than the modest rate of eight per cent envisaged for the fifth plan period. What then is the basis of the optimism in government circles? Weather cycle statistics would show that only two out of every five years could be expected to be good. Therefore, we cannot expect a bumper crop every year to substain even a seven percent growth rate in industrial production in the remaining years of the fifth plan. Could we say with any degree of confidence that the domestic demand for industrial goods would be so buoyant as to boost industrial production despite possible adversities in agricultural production? The current situation does not seem to warrant any such optimism. Some of our heavy and capital-goods industries are already languishing for want of domestic demand. Stocks of finished goods in steel, coal, heavy engineering, cement, aluminium and fertilizers are piling up. One million tonnes of steel are lying unsold. More than ten million tonnes of coal remain piled up near the pit heads. The bulk of bank credit for organized industries is locked up in finished goods inventory because of poor offtake. According to the Ministry of Industry and Supply, the public-sector units of heavy industries put together do not have orders for more than Rs 1700 crores. Of this, Bharat Heavy Electricals Limited (BHEL) accounts for Rs 1100 crores. Heavy Engineering Corporation Rs 200 crores. Mining and Allied Machinery Corporation Rs 75 crores and HMT Rs 40 crores. These orders could sustain production only for about two years while the lead time for such heavy industrial ^oods is around four years.2 The order book of BHEL seems to be empty beyond 1978.3