Limping Into 1967

Press, Volume CVI, Issue 31256, 31 December 1966, Page 11

Limping Into 1967

(N.Z. Press Assn.—Copyright/

NEW DELHI, December 30.

South Asia limps into 1967 with an economy suffering desperately from too many babies, too little food and chronic border tensions. Foreign exchange reserves are at their nadir, the value of national currency is declining steadily, prices are galloping skyward, the gross national product cannot keep up with the birth rate, and the India-Pakistan feud keeps defence spending disproportionately high. Each of the five South Asian countries—lndia, Pakistan, Afghanistan, Ceylon and the potential for viable economies. However, the prospects are grim that the spark will be found to get the economic machinery rolling in the predictable future. Most of this gloom is cast over India, the largest and most populous by far of the five.

“Terrible,” one economist replied when asked to describe India’s economy. The nation-wide drought of 1956 resulted in a decline of about five per cent in India’s gross national product. The crop picture improved sufficiently in 1966 for the gross national product to remain just about even. Population But the population was increasing by about 2.5 per cent each year—more than 12 million additional persons to feed, clothe and house each year.

Inflation and other factors had weakened India’s rupee until the Government devalued the rupee by 57 per cent on June 5.

Together with devaluation, the Government liberalised imports of certain items essential to getting India’s industries rolling again, and made some concessions designed to attract foreign investment in fertilisers, so badly needed by India’s farmers. Pakistan was able to keep from following India down the devaluation path, but the country is suffering from inflation, as well as the same population excess and food shortage that troubles India.

Pakistani farmers did not suffer from as severe drought as India’s in 1966. Largely as a result of the agricultural improvement, the country

could expect an increase of about 4 per cent in the gross national product for the year. Deep In Trouble

Ceylon is still deeply in trouble and trying to fight its way back from the ruinous fiscal policies of the past Ceylon’s traditional foreign investors have not been as quick to return as had been expected. The Prime Minister, Mr Dudley Senanayake, has been looking to East Germany and China for help. East Germany has agreed to build Ceylon a large textile mill, and Peking is going to take Ceylonese rubber in exchange for Chinese rice. Ceylon once was a foodsurplus nation, but has not yet been able to effect agricultural reforms needed to regain this position.