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What Sort of Incentives for Exports?
Economic and Political Weekly
Vol. 7, No. 8 (Feb. 19, 1972), pp. 465+467-470
Published by: Economic and Political Weekly
Stable URL: http://www.jstor.org/stable/4361047
Page Count: 5
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The mid-term appraisal of the Fourth Plan not only fails to take note of the implications of the disappointing export performance in the first two years of the Plan, it goes further to cling uncritically to the impossible 7 per cent annual rate of export growth for the entire Plan period. Yet the fact is that exports have increased at less than 5 per cent per annum under the Plan so far. And unless suitable policy measures are taken, the near-stagnancy in exports is likely to continue. The country lost an opportunity recently to adjust its exchange rate to a more realistic level of a far lower gold parity. By opting instead for a deepening maze of concealed as well as direct export subsidies and for a gradual withdrawal of export duties, the Government has not only chosen to put the exports sector at the mercy of administrative rules of thumb and of pressure groups lobbying for ever-increasing concessions, but has allowed whole quantities of foreign exchange - earned via the import replenishment scheme - to stay outside its allocative control. An alternative the Government still has before it, according to this paper, is the dual exchange rate - which, while it gives preference to the exports sector, at the same time both brings the foreign exchange earned directly under control of the authorities and does away with bureaucratic discretion.
Economic and Political Weekly © 1972 Economic and Political Weekly