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Ndc) Meetings SUMMARY RECORD OF DISCUSSIONS OF THE NATIONAL DEVELOPMENT COUNCIL (NDC) MEETINGS Five Decades of Nation Building (Fifty NDC Meetings) Vol - II (15th to 25th Meetings) GOVERNMENT OF INDIA PLANNING COMMISSION Please Note: Every effort has been made to ensure that the contents of this publication, which has been compiled for making available at one place the Record of Discussions of fifty Meetings of the National Development Council, are as accurate as possible. However, considering that this voluminous publication has been brought out from the Records, some of which are very old, users are requested to refer to the original text in case of any doubt/dispute. CONTENTS 15th Meeting of NDC ...................................................................................................... 1 16th Meeting of NDC .................................................................................................... 39 17th Meeting of NDC .................................................................................................... 81 18th Meeting of NDC .................................................................................................. 183 19th Meeting of NDC .................................................................................................. 211 20th Meeting of NDC .................................................................................................. 243 21st Meeting of NDC................................................................................................... 275 22nd Meeting of NDC ................................................................................................. 295 23rd Meeting of NDC .................................................................................................. 341 24th Meeting of NDC .................................................................................................. 383 25th Meeting of NDC .................................................................................................. 445 FIFTEENTH MEETING OF THE NATIONAL DEVELOPMENT COUNCIL SUMMARY RECORD NEW DELHI : APRIL 17, 1960 GOVERNMENT OF INDIA PLANNING COMMISSION Fifteenth NDC Meeting SUMMARY RECORD OF THE FIFTEENTH MEETING OF THE NATIONAL DEVELOPMENT COUNCIL AGENDA PAPERS (i) PRICE POLICY FOR THE THIRD PLAN This paper attempts in the main to state briefly the background to the problems of price policy in the context of the Third Plan and to set out the issues which may be considered by the National Development Council. A series of statistical statements are given at the end of the paper for ready reference. I. The Economic Setting 2. In considering the ways and means of maintaining reasonable stability of the price level it is essential to consider together all aspects of economic policy. The course of prices does not depend merely on the relation between demand and supply in respect of individual commodities; there are wider aspects to be considered such as fiscal policy, monetary policy, commercial policy, wage and profits policy, and—not the least important—the extent to which the Plan is well-balanced. It is not proposed in this note to go into all these aspects. It may be self-evident that some prices cannot but rise, partly because of insufficiency of supplies relatively to demand and partly because of tax measures. The aim should be to keep the prices of essential commodities from rising, even though other prices rise. 3. The Third Plan will necessarily impose a strain on the country's resources. A step up in the rate of savings from the current level of 8 per cent or so to about 12 per cent by the end of the Third Plan is not easy of achievement. It is also to be borne in mind that with the rise in prices and cost of living that has already occurred and with foreign exchange reserves down to the minimum required, great care will have to be taken to ensure that the generation of money incomes and higher consumption demands within the economy does not proceed too far ahead of the availability of the goods and services to absorb these. 4. Basically, the problem is to secure a sufficient increase in the production of essential consumer goods like foodgrains and cloth, and also in the output of the raw materials needed to support rising levels of industrial production. In the resources estimates worked out for the Third Plan a limit of deficit financing via the budget is put at Rs. 550 crores. This calculation already takes into account the increases in national income postulated in the Plan. The target, for example, of increased food production over the Plan period is fairly high. Not unless the rates of increase in food production in the course of the Plan are higher than those implied in this target could there be a case for stretching deficit financing beyond the level suggested. 5. It follows that the tax effort envisaged in the Plan should actually materialise and that the necessary steps in this direction have to be taken right from the start of the Plan. The Third Plan, in a word, postulates a rigorous fiscal policy, both by way of increased taxation and through whatever economies in expenditure both on plan and non-plan items are possible. 1 Summary Record of Discussions of the NDC Meetings 6. The object of monetary policy over the last few years has been to permit and facilitate the desirable expansion in credit for productive purposes while keeping down at the same time the creation and use of credit for speculative purposes. Broadly speaking, this policy will have to continue in the Third Plan. The Reserve Bank has recently taken steps to curb unhealthy credit expansion. There is no doubt that a close watch on credit trends in the economy will have to be maintained throughout the Third Plan period. The desired regulation of credit can be brought about in various ways. The choice of techniques—whether through making credit dearer for all uses or through restricting its availability for particular uses—is, of course, a matter for the Reserve Bank to decide on in the light of emerging conditions. 7. Commercial policy can, under certain circumstances, be used to control inflationary pressures. The need, however, for the Third Plan period will be to increase exports and to keep down imports within the limits of available foreign exchange. This means that the impact of commercial policy is likely to be in the direction of raising rather than of lowering prices. 8. There is also the consideration that increases in production do not always take place as planned. The variations in demand are, similarly, not capable of any precise prediction. In a developing economy there are bound to appear imbalances between demands and supplies from time to time. Price policy has, therefore, to be framed with a view to meeting such imbalances as well and this can be done to the extent that the machinery for regulation is already at hand. 9. Need for longterm continuing policy for prices.—In a developing economy in which large expenditures take place, in the ordinary course, there is continuous pressure towards rise in prices in the case of a large range of commodities. It is widely recognised that any undue rise in price reduces the savings available for development and also leads to misdirection of the community's resources. Obviously, the most important factor in keeping prices down or preventing them from rising to any extent is increase in production and the ensuring of adequate supplies. In view of the existing gap, for instance, in the case of foodgrains, between the total demand and the supplies available, certain measures of control and regulation are required if relatively stable prices are to be maintained during the period of the Third Plan. By stability of prices is meant primarily that, as far as possible, changes in the prices of commodities should occur only in response to (a) changes in unit costs and (b) changes in taxation. The nature of the pressures on prices which have existed in recent years and those likely to be exerted during the next few years is well understood. It is, therefore, essential that, apart from unforeseen developments, price policy should be conceived of as a long-term continuing policy and administrative arrangements for implementing it should be made accordingly. 10. In terms of commodities the problems of price policy are conveniently reviewed separately with reference to the following: (a) cereals, specially rice and wheat, (b) food articles other than cereals, (c) agricultural raw materials, and (d) selected industrial commodities. II. Agricultural Prices 11. Minimum Prices.—A large section of opinion has been in favour of minimum prices for 2 Fifteenth NDC Meeting agricultural commodities, including foodgrains. It has been pointed out, that the assurance of minimum prices, if these are not fixed too low, will enable the farmer to undertake long-term investment in agriculture and will thus support the effort for increased production. On the other hand, it has been suggested that since any serious decline in agricultural prices is not a likely prospect in the foreseeable future and Government have already given a general assurance that they will take steps to prevent a situation in which prices decline to unremunerative levels, there is no need for fixing minimum prices. If minimum prices are to be fixed, obviously they have to be conceived as part of a more comprehensive price policy, so that steps are taken both to prevent prices from rising above or falling below certain levels prescribed by Government. The following
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