A Note on Devaluation and the measures by which it should be followed

Summary

This two-page position paper, dated June 22, 1966, argues that devaluation is the cumulative result of mistaken economic policies and planning by the Union Government. It says the corrective effects of devaluation will be wasted unless the government commits itself to ending inflation, living within its means, reducing non-developmental expenditure, enforcing fiscal discipline, and stopping further civil-service and clerical recruitment. It also calls for restricting foreign loans to essential state functions, postponing and recasting the proposed Fourth Plan, reducing direct and indirect taxes, dismantling permits and controls, and negotiating lower debt-servicing charges.

The note combines long-term structural reforms with immediate relief measures. It recommends easier public loans for stranded industrial projects, assured imported raw materials for exporters, withdrawal of new export duties, and abolition of import duties and surcharges on raw materials, fuels, and spare parts. Its central policy orientation is toward fiscal restraint, reduced administrative controls, expanded domestic production, and greater scope for indigenous and foreign capital. The document refers to repeated warnings by the Swatantra Party but carries no author or issuing-organisation byline.

Key points

• Devaluation is presented as the result of a decade and a half of mistaken economic policy and planning.
• The government is urged to abandon inflationary policies and live within available means.
• Fiscal discipline should include reduced civil non-developmental expenditure and an end to further civil-service and clerical recruitment.
• The proposed Fourth Plan should be postponed and recast by dropping most new state-sector capital projects.
• Permits, licences, import and exchange controls, and Gold Control should be dismantled to encourage production and competition.
• Tax reductions, export incentives, cheaper imported inputs, and relief from debt-servicing charges are proposed as complementary measures.
• Immediate assistance is recommended for stranded industrial projects and exporters who lost import entitlements.