SPEECH OF SHRI C D DESHMUKH
MINSTER OF FINANCE
INTRODUCING THE BUDGET FOR THE YEAR 1954-55
Dated : February 27, 1954
I
present the statement of the estimated receipts and expenditure of the Government
of India for the year 1954-55.
REVIEW OF ECONOMIC CONDITIONS
2. The presentation of the annual budget provides an opportunity for a review
of the economic conditions of the year which form the background against which
the budget for the coming year has been prepared and I propose to give a brief
account of the main features of the country's economy in the year now drawing
to a close.
3. Like other countries India has been going through a process of return to
more normal conditions after the war, a process which was disturbed and delayed
by the outbreak of the Korean war and its after-math. The return to normality
commenced in 1952 and continued during 1953. Thus while at the end of December,
1951 the price index of all commodities had risen from 397.1 immediately before
the commencement of the Korean war to 432.2, by the end of December, 1952 it
had fallen to 374.5, well within the level reached at the time of the outbreak
in Korea. In 1953 the variations of prices were within a narrower range than
in the previous year and at the end of December 1953 the index number had risen
by a little under 5 per cent and stood at 392.6. Throughout the earlier months
of the year and until about the middle of August there was a continuous but
a moderate rise in prices, largely caused by temporary factors. The supply position
was slightly difficult and the difficulty was aggravated by expectations of
lower output in certain important commodities like black pepper, sugar, cotton
and ground nuts. The demand for certain commodities like sugar and cotton also
rose owing to increased internal consumption and the physchological effect of
all these factors was to generate an upward movement of prices. Measures were
taken from time to time to improve the supply position and bring down prices
and among these I would mention the imposition of the ban on the export of sugar
and gur, restriction on the export of groundnut oil, liberalisation of imports
of conconut oil and copra, reduction in import duties on palm oil, copra, sugar
and cotton, seed oil, the opening of fair price shops, the issue of a large
quantity of foodgrains and the reduction in the price of imported wheat supplied
by the Centre. These measures played an important part in arresting the upward
movement of prices and between August and December there was a continuous decline.
The general index number at the end of December was 20 points less than the
peak figure reached in the middle of August. Since then there has been a slight
increase but there is yet no evidence that this is not due to purely temporary
and seasonal causes.
4. Over a wide field there was also marked increase in production during 1953.
The domestic production of cloth and cement reached new records. Most of the
other industries also showed a significant increase in their production. The
general index number of industrial production, which stood at 128.7 in 1952,
the highest for any post-war year, was exceeded in 1952, the average for the
first nine months being over 133. Though later figures are not yet available,
there is good reason to believe that 1953 would be the best year yet for industrial
production. This achievement is note worthy because in some very important industries
production was below normal owing to certain special factors. The strike in
a steel plant resulted in a drop in the production of iron and steel, the total
for which is now estimated at a little below the 1.1 million tons reached in
1952. Similarly the production of copper dropped by nearly a sixth on account
of a strike. Jute manufactures were about 83,000 tons below the output of 1952,
during part of which year the mills worked longer hours. Sugar production was
also nearly 2 lakh tons less than in 1952 owing to a smaller acreage under sugarcane
and the diversion of part of the cane supplies to the production of gur. The
fact that, in spite of the drop in production in some individual industries,
the general index number of industrial production in 1953 will be higher than
in 1952 gives an indication of the progress achieved.
5. Industry, however, cannot be said to have been entirely free from difficulties.
The jute industry was faced with the problem of maintaining its export market
and had to be assisted by a readjustment of the export duties. The tea industry
was also helped to meet a difficult situation created by the fall in the price
of tea and is now in a healthier position than it was at the beginning of the
year. Lack of demand is also affecting certain industries like paints, power-driven
pumps and asbestos cement sheets. But the complaint so common in 1952 that industry
in general was facing a severe recession may now be said to have largely disappeared.
Nevertheless, the need for increasing efficiency and economy, especially in
markets characterised by keener competition, still remains paramount.
6. The improvement in the general food situation recorded in 1952 was maintained
during 1953. With the sustained improvement in production there has been a drop
in food prices and at one stage there was concern in certain quarters over the
possibility of prices falling below the economic level in certain parts of the
country. The improvement in the food position has made it possible to relax
controls in several directions. Gram has been completely decontrolled as also
coarse grains except in a few areas. Controls on wheat have also been relaxed
with the exception of certain restrictions on inter-State movements. The year
1953 closed with a comfortable stock of about 15 lakh tons of foodgrains, of
which about 5 lakh tons were held in the Central reserve. The prospects for
the coming harvest are generally good and, if the monsoons do not disappoint
us next year, the food prospects may be said to be reassuring. In view of this
improved position the target of food imports next year has been fixed at a much
lower figure than in recent years: any improvement in this respect also improves
materially the country's balance of payments position.
7. The production of cash crops during 1953 was also good except in the case
of jute, which has shown a decline, partly due to adverse weather conditions
and partly to fall in prices at the time of sowing.
8. While the general economic situation in the country continues to improve,
there has, in recent months, been an aggravation of the problem of unemployment.
The number of the unemployed registered with the Exchanges rose continuously
from 425, 000 in March 1953 to 522, 000 in December. The problem of unemployment
has been discussed at great length on the floor of the House and I had occasion
to explain both the dimensions of the problem and the measures that Government
have in hand for dealing with it. I should only like to reiterate what I have
said in the past, namely, that the problem should be viewed in its proper perspective.
Unemployment is not a short term phenomenon calling for short term remedies.
It is one which calls for long term measures and ultimately it is only by a
considerable increase tn economic activity that it will be possible to absorb
the increasing number of men and women who come out of our schools and universities
year by year. This means an increase in the tempo of development in which both
the public and the private sectors have to take their due share. So far as the
public sector is concerned, the Planning Commission have recently expanded the
Plan to the extent of Rs.175 crores, mainly to assist in meeting the situation
created by unemployment in rural and urban areas. Measures for increasing employment
opportunities have become an integral part of the Plan and in the orderly implementation
of the Plan lies, in my view, the most promising method of easing the position.
9. I just mentioned the role of the private sector in mitigating unemployment.
Industry has to expand and new industries providing wider opportunities for
employment have to spring up in the country. To assist in such a development
Government have under consideration the question of setting up an industrial
Development Corporation to stimulate the flow of capital into new industries.
As I mentioned in the statement I made in the House last Wednesday, Govt. are
also exploring possibilities of bringing into existence, with the co-operation
of private interests both in this country and outside, of another Corporation
to promote the expansion of industry. These discussions, in which the International
Bank for Re-construction and Development are also taking interest, are still
in their preliminary stages and the House will appreciate that I am now in no
position to say anything definite about the outcome.
BALANCE OF PAYMENTS
10. The country's balance of payments position was generally satisfactory during
the year that is now drawing to a close. The House will remember that for the
first time, after a series of deficits earlier that year, a heartening surplus
in the external accounts emerged in the third quarter of 1952. This trend became
more pronounced in the last quarter of that year the surplus for which amounted
to Rs.38 crores, Rs.13 crores more than in the preceding three months. From
the beginning of 1953, however, the surplus began to decline and in the second
quarter of 1953 a deficit of about Rs.10 crores emerged for the first time in
twelve months. In the third quarter of last year we nearly balanced our account,
and for the last quarter for which final figures are not yet available, there
may well be a small surplus. Taking the year as a whole we are likely to have
a moderate surplus, which is reflected in the Sterling balances held by the
Reserve Bank, which have risen from Rs.706 crores at the end of December, 1952
to Rs.723 crores by the end of December 1953. This overall improvement has,
however, been achieved at a reduced level of trade. Export receipts for the
first nine months of 1953 amounted to only Rs.375 crores, registering a decline
of Rs.125 crores compared with the corresponding period of 1952. But this decline
in export earnings has been more than balanced by the decline in imports which
at Rs.434 crores were less by Rs.174 crores as compared with the previous year.
11. The fall in the country's export earnings is, in the main due not to a contraction
of exports but to a fall in export prices. Over the whole field of international
trade we are now definitely in a buyer's and not a seller's market and the effect
of this transition on prices has to be constantly kept in mind in regulating
the country's export trade. It is not enough to maintain the present quantities
of exports and the markets for them at that level. It to necessary to off set
the fall in export earnings due to a reduction in prices by expanding the country's
exports. During the course of the year many export duties were readjusted with
this end in view. The duties on hessian, linseed and linseed oil were reduced
while the duties on some cotton goods and on selected jute manufactures like
twist, yarn, rope and twine, hessians other than cloth and bags and all other
descriptions of jute manufactures were totally abolished. These measures appear
to have had a healthy effect and trade in the three principal commodities figuring
in our export trade, namely, jute, tea and cotton textiles appears, in recent
months, to have recovered from the difficulties which faced it in selling these
goods abroad. In order to allow new line of export to develop, the Sea Customs
Act has also been recently amended to permit the grant of a rebate of import
duty on raw materials and components used in the manufacture of goods subsequently
exported. A special organisation to deal with export promotion has also been
set up.
12. The reduced payments for imports in 1953, as compared with the previous
year, have to be considered against the background of the special factors which
accounted for the high level of imports in the latter year, in which there were
very substantial imports of wheat and raw cotton. The improvement in the food
position and the increase in the production of cotton has led to a contraction
of imports of both in the current year. Although industrial production has,
on the whole, remained buoyant, the demand for supplies of raw materials from
abroad has not been on a level commensurate with the higher output. Part of
this may be explained by the switch over to indigenous supplies and the running
down of inventories. But the position is not one which need cause anxiety, especially
when one remembers the somewhat exceptional level of imports in the previous
year against which the fall is measured.
DOLLAR POSITION
13. The improvement in the dollar position during last year was even more striking
than the improvement in the balance of payments position as a whole. In the
first nine months of 1952 we had a deficit of Rs.127 crores on current account;
in the corresponding period of 1953 we had a surplus of Rs.18 crores. This improvement
is largely due to smaller payments for food and cotton purchases from the United
States. In the latter half of 1952 India's contribution to the gold and dollar
reserves of the Sterling Area amounted to $70 million against a net drawal of
$ 188 million in the first half of that year. In the first half of 1953 we had
to draw a small sum of $14 million from the Central pool. Figures for the latter
half of 1953 are not yet available but the preliminary figures indicate that
during the five months ended last November we made a net contribution of $ 22
million to the Central reserves.
14. The improvement in the balance of payments position of this country has
also materially assisted in strengthening the Sterling Area’s position
as a whole. I do not propose to say anything in detail now about the conference
of Commonwealth Finance Ministers held last month in Sydney, as I have already
made a full statement on the subject on the floor of the House. The Conference
provided an opportunity for a free and frank exchange of views among representatives
of the participating Governments and the review of the progress of their development
plans. While individual countries would pursue policies best suited for their
own needs, there was general agreement that all of them should follow sound
internal policies, increase production and facilitate the expansion of world
trade which would make it possible to achieve the multilateral convertibility
of Sterling and other important currencies. So far as India is concerned, I
would only repeat what I said last year, that the pursuit of these policies
does not involve the adoption of any new policy by Government. By resolutely
persevering in the implementation of the Five Year Plan we shall best serve
the rest of both ourselves and the Sterling Area.
15. Before leaving the subject of external finance I should like to make a brief
mention of a few other matters of interest in this connection. As the House
is aware, we have taken a number of loans from the International Bank for Reconstruction
and Development for some of our development projects and the question of increasing
this arena of assistance is under constant consideration. A mission of senior
officials of the Bank visited this country last September with the object of
studying the trends in the country's economy and considering the possibilities
of further participation by the Bank in new projects. The report of the Mission
is still awaited but, meanwhile, discussions are going forward for obtaining
assistance from the Bank for the setting up of a thermal station in Trombay
and financing a hydro-electric generator, which is part of the Koyna multipurpose
project.
16. In view of the satisfactory balance of payments position we are also proposing
to repurchase from the International Monetary Fund a portion of our currency
which we sold to the Fund in 1948 in exchange for dollars when we needed the
dollars to meet the heavy balance of payments deficits with the dollar area
during that year. Out of the total outstanding of $ 100 million, we propose
to repurchase the equivalent of $72 million, of which the equivalent of $ 36
million will be purchased next month and the balance in the coming year. The
repurchase of the rupees will result in a saving of the interest charges paid
to the Fund.
17. The House is aware of the assistance which India has been receiving from
friendly countries outside for the country's development schemes. This has come
from Commonwealth countries under the Colombo Plan, from the United States Government
and certain private agencies in that country and from other friendly countries
like Norway. In the current year a sum of $ 77.1 million was provided by the
indo-U.S. Technical Co-Operation Agreement for utilisation on agreed development
projects. The Government of Canada have agreed to provide a further sum of $
13. 6 million. The Ford Foundation, which has been providing assistance for
a programme of rural development made available an additional sum of $ 1 million
for undertaking a training programme for social education and health. Under
the Colombo Plan we are also providing assistance to neighbouring countries.
In the budget for the next year the total sum received by us by way of external
assistance under the Colombo Plan and from friendly foreign countries is expected
to amount to Rs.45 crores while we shall be spending on the provision of such
aid to other countries about Rs.2 crores.
FINANCIAL YEAR 1953-54
18. I shall now give a brief account of the financial position in the current
year and the prospects for the coming year.
19. The House will remember that the budget for the current year placed the
revenue at Rs.439.26 crores and the expenditure at Rs.438.81 crores leaving
a nominal surplus of Rs.45 lakhs. In balancing this budget, I had taken credit
for a recovery of Rs.18 crores from Pakistan on account of two instalments due
from that country in repayment of the partition debt. Hon'ble Members are aware
of the large number of complicated problems which are outstanding between us
and Pakistan of which the settlement of the partition debt is only one issue.
Over the whole front we have been trying to achieve a settlement of these issues
but it has not been possible to arrive at a settlement so far. I may, however,
mention that I have been having discussions on this subject with the Finance
Minister of Pakistan and we both hope that it will be possible to commence the
repayment of the debt in the coming year. This single factor has made for a
deterioration of Rs.18 crores in the revenue budget for the current year, and
converted the surplus of Rs.45 lakhs into a deficit of Rs.16. 96 crores.
20. The total revenue this year is now placed at Rs.413. 69 crores and the expenditure
at Rs.430.65 crores leaving, as I just said, a deficit of Rs.16.96 crores. Of
the drop of Re.25.57 crores in revenue, Rs.18 crores are, as I have already
explained accounted for by the non-receipt of the instalments expected from
Pakistan. Customs revenue to expected to be Rs.10 crores less than the sum provided
in the budget, largely due to the readjustment of export duties during the course
of the year, particularly the export duties on jute, to enable Us to maintain
our position in world markets where there has been a gradual shift from a seller's
to a buyer's market. Union excise duties are expected to show a drop of nearly
half a crore. The revenue from taxes on income and corporation tax to, on the
progress of actuals, expected to show an improvement of Rs.6 crores, of which
nearly Rs.3 crores will be absorbed by larger payments to the State Governments
on account of their share of income tax. The receipts under other heads are
unlikely to differ materially from the figures I had taken in the budget estimates.
21. On the expenditure side the revised estimates show an improvement of Rs.8.16
crores. This is made up of a drop of Rs.1.57 crores in the expenditure on the
cost of revenue collections, Rs.2.7 crores in the provision for civil Administration
and Rs.8.73 crores in the provision for Extraordinary Charges, partly offset
by increased expenditure of Rs.1.68 crores under Debt Services and Rs.3.64 crores
under the head Miscellaneous. The decrease in the cost of revenue collection
is mainly due to a saving of Rs.94 lakhs in the provision for the payment to
the States of their share of the Union Excise Duties due to the readjustment
of certain excess payments in the previous year made on a provisional basis,
and a reduction in the collections of the shared taxes. The decrease under Civil
Administration is distributed over a number of heads, details of which are given
in the Explanatory Memorandum. A substantial portion of the saving is due to
lapses in the provision for basic and social education and economic development
in the Tribal Areas, where the progress on the implementation of developmental
schemes has been slower than anticipated. There is also a saving of Rs.93 lakhs
in the provision for transfers to certain funds, the actual transfers being
less than was expected at the time the budget was framed owing to the delay
in passing the necessary legislation. Under extraordinary charges the budget
included a total provision of Rs.17.37 crores for community development schemes,
local works, industrial housing and Grow More Food. The total expenditure on
these items is now estimated at Rs.8.72 crores. Community Development schemes
are now getting under way and the expenditure on them,, in what is practically
their first year of operation, has been less than estimated. Similarly, it has
not been possible, owing to the inevitable delay in the drawing up of schemes
spread over, a large number of States and within each State, over a large number
of districts, and involving a measure of local or State contribution to spend
fully the provision made for local works. Assistance to States for Grow More
Food schemes is partly given by way of grants and partly by way of loans, the
actual distribution depending upon the nature of the schemes accepted for Central
assistance. On the progress of actuals, it is expected that the expenditure
by way of grants would be about a crore less than was assumed in the budget.
Subsidies on industrial housing are also expected to be less than the budget
by about Rs.243 crores mainly due to, the slower progress in the expansion of
industrial housing which, among other things, requires the co-operation of industrial
employers and their willingness to undertake such schemes. In spite of the efforts
made for accelerating schemes for the promotion of the welfare of the back ward
classes, it has not been possible to spend the entire provision made for this
purpose in the budget. If I may put it somewhat shortly, the entire saving in
the provision for extraordinary charges is largely due to a short fall in the
developmental expenditure, the result largely of the inherent difficulties in
the way of getting these schemes going. Under Debt Services, the increase of
Rs.1.68 crores is mainly accounted for by the hardening of discount rates of
treasury, bills, while under Miscellaneous the increase is largely due to an
unforeseen expenditure of Rs.1.77 crores on payment of subsidies on foodgrains,
mostly to Travancore-Cochin, which has a special problem, as a large importer
of costly rice from outside, and a carry over of Rs.2.06 crores from the last
year in the payment to sugar factories out of the special excise levied in November,
1952, as part of the measures to secure a reduction in the price of sugar.
22. Before I pass on to the estimates for the coming year, I should like to
mention the expenditure on Defence Services during the current year. The total
net expenditure is expected to be just within the figure taken in the budget.
While the total estimate remains about the same, there is an increase of Rs.2.46
crores in the Air Force estimates offset by decreases in the expenditure on
the other Services. These variations are mostly due to variations in the forecast
for the receipt of stores.
FINANCIAL YEAR 1954-55
23. For the coining year, I estimate the revenue at Rs.441.03 crores and the
expenditure at Rs.467.09 crores leaving a deficit of Rs.26. 06 crores on revenue
account.
24. The revenue from customs in the coming year has been placed at Rs.175 crores
against the current year's revised estimate of Rs.160 crores. The improvement
of Rs.15 crores is due firstly to the additional duty expected to be collected
next year on the increased imports of sugar on Government account, now estimated
at between 4 and 5 lakh tons, against 2. 5 lakh tons this year, secondly to
increased yield from the import of commodities which carry high revenue duties,
which may be expected with the easing of our foreign exchange position, and
thirdly to the normal expansion of revenue. The revenue from Union Excise Duties,
is placed at a crore less than in the current year. The yield from sugar will
be Rs.21 crores less than in the current year, receipts in which were somewhat
inflated by the proceeds of the special excise which was withdrawn last November;
but this will be partly set off by an improvement of Rs.1 crore in the receipts
from tobacco and about half a crore from the other excises. Under income Tax,
I am repeating the revised estimate for the current year. I expect that the
progressive drop in the arrears of excess profit and other taxes will be made
good by the improvement in normal collections. Revenue from the Estate Duty,
recently levied, is likely to come in for the first time in the coming year.
It is a new tax, the yield from which is most difficult to estimate. The administrative
machinery for the assessment and collection is being specially assembled and
trained and I hope it will be possible to get it in full working in the coming
year. I have taken credit for a gross revenue of Rs.4 crores from this duty,
nearly the whole of which will be transferred to the States in accordance with
the provisions of the Constitution. Under Currency and Mint, following the Increase
in the gross income of the Reserve Bank from the increased yield on treasury
bills held In the issue Department, the surplus profits paid to Government next
year are expected to be Rs.5 crores more than the current year's payment of
Rs.121 crores. I have also taken credit for the receipt of one instalment of
Rs.9 crores from Pakistan. As I explained earlier, I hope to reach a settlement
of this issue in the near future and I am confident that it will be possible
to commence these repayments with effect from the coming year.
25. For next year I am budgeting for a total expenditure of Rs.467. 09 crores,
of which Rs.205.62 crores will be on Defence Services and Rs.261.47 crores under
Civil Heads.
26. In present circumstances, I do not think I need make any apology for the
size of the expenditure on Defence Services. As I mentioned last year, there
is no question of any sizeable reduction in the size of the Armed Forces so
long as there exists any danger 60 the country's security. In spite of recent
developments likely to affect the balance of power in the area in which we and
our vital interests are located, we are not embarking on any scheme of expansion
of our Armed Forces. We are only going ahead with our normal programme of bringing
the Navy and the Air Forces upto reasonable efficiency in men and material and
the increase of Rs.6 crores in the expenditure next year over the current year
is due to this normal programme. While the recent developments have underlined
the need for continuous vigilance on our part that the country's security is
not in any way jeopardised, and the House may rest assured that this vigilance
to being kept, it is not our intention to halt or slow down the economic development
of the country, on which, in the long term, the country's inherent strength
depends, by entering into any race for armaments.
27. Civil expenditure next year is expected to be Rs.30.5 crores more than in
the current year. I do not propose to weary the House by giving a detailed account
of individual increases, particulars of which are given in the Explanatory Memorandum.
I shall content myself with drawing attention to the more important factors
which account for this increase.
28. I must remind the House that the coming year will be the fourth year of
the Five Year Plan and it to reasonable to expect arise in the tempo of developmental
expenditure during that year. The bulk of the increase of Rs.30.5 crores in
civil expenditure is due to this factor. For example, the total expenditure
on what may compendiously be called the nation building and developmental services
in the coming year is likely to amount to Rs.53.67 crores against Rs.39.52 crores
in the current year. Expenditure on scientific departments, mainly on grants
to scientific institutions and outlay on scientific services, is likely to be
about a crore more than in the current year. The budget for education, providing
for substantial grants for the expansion of basic and social education throughout
the country, will be about Rs.8 crores more than in the current year. Nearly
a crore and three-quarters more will be spent on medical and health services
and about Rs.2 crores more on agriculture and allied services. Increased provision
has also been made for the development of village and small-scale industries,
so vital to the balanced development of the country. Community projects and
national extension services between them will cost Rs.81 crores more than in
the current year; about a crore more will be spent on grants for grow more food
schemes and a crore and a quarter on schemes of social welfare These increases
in developmental expenditure together account for Rs.25 crores roundly of the
total increase of Rs.301 crores.
29. The increase of Rs.51/2 crores in the rest of the expenditure is mainly
due to two factors. A lump sum provision of Rs.3.6 crores has been made under
grants-in-aid to States for meeting any Assistance that may have to be given
to the State of Jammu and Kashmir if the scheme for financial integration of
that State with the Indian Union, somewhat on the pattern of the former Princely
States, which is under discussion withit, materialises. The payment of the States
share of Union excise duties next year will, on the basis of the estimated revenue
from the shared excises, be about three quarters of the crore more than in the
current year. Increased provision has also, been made under grants-in-aid to
States for the welfare of Scheduled Tribes, Scheduled Castes and other backward
classes. While, obviously, there are bound to be small increases here and there
on account of the normal growth of expenditure, I think I could truthfully claim
that the increase in expenditure in the coming year is mostly on development
in accordance with the approved plan.
CHANCES IN CLASSIFICATION
30. In the estimates of the coming year I have, in consultation with the Comptroller
and Auditor General, made a change in the classification, to which I must draw
the attention of Hon'ble Members. The proper allocation of expenditure between
revenue and capital is always a matter of some difficulty, particularly against
the background of the large development programme, which is in process of implementation
and which takes into account the resources of the country as a whole. While
it is true that normally every effort should be made to meet current expenditure,
in the sense of administrative expenditure and expenditure that does not result
in the creation of tangible assets, from current revenue, an exception may have
to be made in the case of expenditure which, in the broader national interest,
is incurred at a faster pace than would be justified by the amount of revenue
that can be raised, or is expenditure which while it technically does not create
any tangible assets to the Government which spends the money nevertheless results
in the creation of such assets for the community or for other Governments. The
House will remember that in the budget for 1951-52 I transferred to revenue
from capital certain types of grants on the ground, that the expenditure on
the payment of these grants does not create any durable asset for the Central
Government. I believe that the principle behind that change is still valid but,
if it is carried to its logical conclusion, it may create a difficult position
for revenue when, as under the Plan, we are providing Central assistance on
a substantial scale to State Governments and others by way of outright grants
for purposes which, if they had been the direct concern of the Centre, the Centre
would have met from borrowing. I have in mind three types of grants namely grants
for industrial housing, grants for local works and grants to State Governments
under the report of the Gadgil Committee which recently looked into the question
of the implementation of the special undertaking given to the States of Saurashtra,
Madhya Bharat, Rajasthan and Patiala and East Punjab States Union in their integration
agreements that the remedying of their backward condition would form the subject
of a special enquiry. The first represents the capital contribution which does
create an asset and which, if the Central Government were building the houses
for its own purposes, would have been met from borrowings. The second is mostly
for the construction of roads, buildings, etc. in local areas which also creates
durable assets for the community. The third is merely the conversion of a part
of the Central assistance under the Plan to these States from loans to grants
and additional grants for the construction of certain administrative buildings.
In all these three cases I am convinced that it would be proper to meet the
expenditure from capital. But as the expenditure does not create any durable
asset for the Centre, I propose that it should be written back to revenue over
a period of fifteen years so that ultimately all this expenditure is met from
revenue. This proposal has the advantage of securing a measure of stability
for the revenue budget, while at the same time outlay on development schemes
is not held up by the mere size of the revenue resources currently available.
In accordance with the change mentioned above, a sum of Rs.16 crores will be
debited to the capital budget, next year. There may be other similar expenditure
in the coming years and it will be decided from time to time, in consultation
with the Comptroller and Auditor General, whether it should be initially debited
to revenue or capital.
COMPENSATION TO DISPLACED PERSONS
31. Hon’ble Members are aware of the interim scheme of compensation for
the loss of immovable properties in West Pakistan which was sanctioned last
November for certain categories of displaced persons. The scheme involves, in
addition to the transfer of property in kind like houses and the adjustment
of outstandings of rehabilitation loans, the payment of some amount in cash.
These payments are likely to amount to a substantial sum and it has been decided,
in consultation with the Comptroller and Auditor General, to debit these payments
initially to capital and then write them back to revenue over the next fifteen
years. I need hardly mention that the debit of these payments directly to revenue
would involve a very heavy strain on the revenue budget and there is good justification
for spreading the burden over a reasonable period.
CAPITAL EXPENDITURE
32. The current year's budget provided for an expenditure of Rs.76.64 crores
on capital outlay. I now expect that the expenditure will amount to no more
than Rs.63.9 crores. The large saving of Rs.13 crores occurs mainly under three
heads. On Defence a saving of a little over Rs.41 crores is likely to be realised
mainly due to slower progress on certain works and the non-receipt of some plant
and machinery. Civil works will also show a saving of Rs.4 crores roundly, again
due to slower progress on works taken up during the year. Schemes of Government
trading, which were expected to involve a net outlay of Rs.31 crores in the
budget, are now likely to balance their accounts. These three heads together
account for a saving of Rs.11.9 crores. The savings under other heads are relatively
of smaller amounts and part of the savings will be absorbed by4nereased expenditure
on the Damodar Valley Scheme where it has been possible to accelerate progress.
33. For next year a total provision of Rs.145.75 crores has been made for capital
expenditure. The large increase over the current year's revised estimates reflects
a rising tempo of developmental expenditure to which I referred briefly earlier
in my speech. In the first three years of the Plan developmental expenditure
was necessarily somewhat smaller than the proportionate outlay for that period.
This is partly due to the essential time taken in the preparatory work on new
schemes. It is also partly due to the fact that in the earlier period of the
Plan Government had to be cautious in going forward with expenditure, so as
to keep inflationary trends under control. Now that the economic climate is
better suited for stepping up investment and the schemes themselves are gathering
momentum, and in some cases nearing completion, the expenditure in the last
two years is bound to be much more than in the current year.
34. I shall briefly mention the more important factors accounting for the increase
in the provision for the budget year. The estimates include a provision of Rs.16
crores for grants to States for development which will be written back to revenue
over a period of fifteen years. A gum of Rs.4 crores has also been provided
for payment of compensation to displaced persons which will be similarly spread
over revenue. For Railways an increased provision of Rs.16 crores has been made
partly to meet essential commitments and partly to make good the fall in resources
which the Railways themselves were expected to provide under the Five Year Plan
for development. Expenditure on Posts and Telegraphs will be nearly Rs.4 crores
more than in the current year. On Major Ports about Rs.21/2 crores more will
be spent on the development of the Kandla Port and the nearby township of Gandhi
Dham. The provision for residential and office buildings in New Delhi, where
the accommodation problem is still acute, is being increased by nearly Rs.33/4
crores. The development of roads and national highways next year will cost a
little over Rs.131/4 crores against Rs.81/2 crores this year. The general building
programme for Government departments located outside Delhi, covering both residential
and office accommodation, will cost Rs.8 crores next year against Rs.21/2 crores
this year. Rehabilitation works will also require an additional outlay of Rs.75
lakhs. Provision has been made for a possible outlay of Rs.10 crores on the
new steel plant which Government are putting up in collaboration with a German
Combine. Capital outlay on Defence will, next year, cost Rs.173/4 crores, an
increase of nearly Rs.71/2 crores over the current year which provides for the
normal programme of reorganisation and the carry over from the current year.
35. In addition to the provision for capital outlay mentioned above, the estimates
include Rs.160 crores this year and Rs.214 crores next year for loans to State
Governments, mostly for their development projects.
36. Hon.1ble Members may wonder whether the increased sums provided for development,
both in the revenue and in the capital budget, are likely to be spent in full,
when one remembers the large savings in the provision for developmental expenditure
in the last two years and anticipated savings in the current year. The reasons
for the slower progress of development schemes, which these lapses reflect,
have, I freely confess, been a matter of some concern to Government. We have
asked a senior officer to conduct a quick examination of the existing procedure
in the drawing up, sanction and execution of development schemes and to report
on the causes leading to the present unsatisfactory position. Government attach
the greatest importance to the implementation of the Five Year Plan within the
period contemplated in the Plan and it is their intention to take all measures
possible to remove the procedural and other impediments to the progress of the
development schemes. I hope it will be possible to take early decisions on the
findings of this enquiry and I am confident that it will be possible to spend
the increased sums provided in the next year's budget Such an increase is absolutely
necessary if the targets visualised in the Plan have to be achieved and Government
are determined that all possible steps should be taken to achieve these targets.
37. The House is aware of the recent decision of the Planning Commission to
make certain readjustments in the Five Year Plan. This Plan, as formulated last
year, provided for a total outlay of Rs.2,069 crores. This figure is likely
to be increased by about Rs.175 crores as a result of the readjustments, I have
already referrred to. In the first three years the expenditure, taking both
the States and the Centre together, will be of the order of Rs.1, 000 crores,
a few crores less and not more. This would leave something like Rs.1, 200 crores,
to be spent in the next two years, of which a substantial portion will fall
on the Central budget either by way of direct expenditure or in the form of
assistance to the State Governments. In the context of this, the substantial
increase in the budget provision for the coming year is inescapable and Government
will strain their utmost to see that the development envisaged in the Plan and
provided for in the budget goes forward.
WAYS AND MEANS
38. The current year's budget provided for an overall deficit of Rs.138 crores
of which Rs.28 crores was proposed to be met from the cash balances and the
balance of Rs.110 crores by the expansion of floating debt. On the basis of
the revised estimates, the overall deficit will amount to Rs.128 crores. The
opening balance for the year was Rs.19 crores more than I expected, the improvement
reflecting the lapses in the provision made under various heads of expenditure.
The market loan during the year amounted to only Rs.75 crores against the budget
anticipation of Rs.100 crores but this short fall was more than offset by an
improvement of Rs.40 crores in the cash outgo on the repayment of debt where,
because of the large holdings of the maturing loan in the Cash Balance investment
Account, only Rs.76 crores had to be paid in cash against the estimate ofRsd110crores.
The net income from small savings during the year has been rather disappointing
and may not amount to more than Rs.40 crores against the budget estimate of
Rs.45 crores. The intensive drive on the part of certain State Governments to
mobilise savings for their own public loans has to some extent affected the
flow of money into Small Savings. This in itself is not a matter of any concern
since, to the extent additional resources are mobilised by the States, their
dependence on the Centre is reduced. But in the long term it is essential to
develop the savings movement so that, irrespective of temporary factors like
the one I just mentioned, a continuous and rising flow of small savings is maintained.
The question of securing this is, as the House is aware, receiving the constant
attention of Government. Recently steps have been taken to extend the system
of authorised agents which had been revived as an experiment in three selected
States to all the States. We are also experimenting with the use of Village
Panchayats as authorised agents and if this succeeds it will be extended to
all the States. I mentioned last year that Government were taking steps to interest
voluntary social and women's organisations in the movement. A Women's savings
week organised last March produced very encouraging results and a regular Women's
savings campaign has been inaugurated. A representative Central Advisory Committee
has been set up to guide and organise the campaign and a large number of selected
voluntary organisations are being appointed as authorised agents to mobilise
savings. It will be some time before the results of these measures become apparent
but I believe that they would go a great way in developing the movement. Taking
the budget as a whole, I expect that the expansion of treasury bills to leave
a closing balance of the order of Rs.50 crores at the end of the year need now
amount to no more than Rs.80 crores against Rs.110 crores taken in the original
budget.
39. The overall deficit next year is estimated at Rs.250 crores. This is largely
due to the substantial provision made for increased expenditure on development
in both the revenue and capital budgets. During the coming year one loan namely
the 21 per cent Loan, 1954, with an outstanding balance of Rs.35 crores falls
due for payment, while Government have the option of redeeming another loan,
the 31 per cent Loan, 19 54-59,with an outstanding balance of Rs.13 crores.
It has been assumed that both these loans will be discharged and credit has
been taken for a market loan of Rs.75 crores. Small Savings next year may amount
to Rs.45 crores. Allowing for all these and for the net receipts from the various
miscellaneous transactions under debt and remittance heads, the receipt of foreign
assistance, etc. It will be necessary to expand treasury bills by its 250 crores
to balance the budget overall.
40. There is another way of looking at the ways and means problem. Government
have to find Rs.26 crores for meeting the revenue deficit, Rs.395 crores for
financing essential capital outlay and-assisting the State Governments, local
bodies, etc. for financing their development schemes and Rs.53 crores for the
repayment of the maturing debt. Against this they hope to raise Rs.75 crores
from the market. Foreign assistance and dollar loans may bring in Re.48 crores
and Small Savings Rs.45 crores. Other miscellaneous debt and remittance transactions
may bring in Rs.56 crores. This will leave a gap of Rs.250 crores in the available
resources to balance the budget. A the cash balance will just provide the necessary
till money and cannot be drawn down any further, the whole of this gap will
have to be met by the issue of treasury bills. The amount for which it will
be necessary to float treasury bills will depend upon the actual circumstances
of the year as they develop. But for the purposes of the budget I have assumed
that it will be of the order of Rs.250 crores.
41. There will be some-not many, I expect, -in this House and outside who will
have doubts as to the wisdom of launching upon deficit financing on this scale.
I have given the most careful thought to this question, and, on a balance of
considerations, I am convinced that in the conditions as they now are and are
likely to be in the near future, we are, not taking any undue risks in going
forward in the manner I have indicated. In fact, deficit financing to a moderate
extent is necessary under present conditions. The period of inflationary stresses
is now well behind us and there are signs that the high levels of production
we have attained in various lines, and which we would like to improve upon -cannot
be sustained without some increase in money supply in the hands of the public.
42. In judging, the economic effects of the budgetary deficit, it has to be
borne in mind that part of it might well be neutralised by a balance of payments
deficit. For some time past, as I have indicated earlier, we have not, on balance,
been drawing upon our sterling balances. This is an indication that the level
of economic activity in the country so far is not high enough to create any
large demand for external resources; in other words, the optimum level of tempo
of development has yet to be reached. A country's balance of payments is subject
to many uncertain and unpredictable factors, and there is always need for caution.
Nevertheless, so long as the domestic price situation is well in hand, and there
are internal reserves which can be drawn upon in case of need, deficit financing
for development involves little risk. Indeed, it can be said that deficit financing,
subject to safeguards, has a definite part to play in bringing into use the
unutilised resources in the system. It was in view of theme considerations and
in the context of the recent increase in unemployment in certain sectors that
the expansion of the Plan was decided on,, and the budget proposals for the
next year have been framed in pursuance of this decision. With domestic food
production at a satisfactory level, and with the outlook for larger imports
from abroad better, should need arise, the budgetary deficit envisaged will,
I expect, prove reflationary rather than inflationary. If, however, major changes
in the economic situation or climate take place, obviously, Government policies
will have to be reconsidered. For the time being, I should say that in the context
of our developmental needs, it is important for us not only to live within our
means but also to live upto our means.
43. This leads me to another point. The bulk of the deficit finance this year
and the coming year will be more than accounted for by the Central assistance
given to the States for their development schemes. The experience of the last
three years has been that, while development schemes are more or less going
forward according to the Plan, the States have not shown the same readiness
to augment their resources to the extent envisaged in the Plan. In the same
period, Central assistance to the States has been growing the Finance Commission's
award transferred over Rs.80 crores from the Centre to the States, which have
not been counted against the assistance promised to the States. I am not suggesting
for a moment that the development of the States is not the concern of the Centre
but I do feel that the States, should make a more determined contribution towards
shouldering the burdens of the Plan than they have done so far. By raising more
resources they would help in reducing the amount which the Centre will have
to find by recourse to deficit financing and thereby contribute to strengthening
the country's economy.
44. National development is not merely the concern of Governments. In a democracy
like ours, it is also the concern of the people and now that we are having substantial
recourse to deficit financing, I should like to make a strong appeal to the
public to save more and to lend more to Government. I referred a short while
ago to the somewhat disappointing results of the small savings movement this
year. It is not merely for support to this movement that I appeal. It is the
duty of the people to support it on the widest possible front if the process
of national development has to be carried on, as it must be, over a long period.
Development involves sacrifice, and the essence of democratic planning is that
the sacrifice should, as far as possible, be evenly spread and should readily
and voluntarily be forthcoming. To increase capital formation, which is the
agreed objective, firstly, current consumption must be kept within limits, and,
secondly, the production potential must be built-up through utilisation of idle
man-power. This means stinting as well as harder work. So far in the first three
years of the Plan, we have done reasonably well, but the stage has now been
set for a much larger effort. In this, I trust, all sections of the community
will co-operate and give of their best.
45. I now turn to the budget proposals for the coming year.
46. In the context of the substantial overall deficit in the coming year's budget,
I have approached the problem of dealing with the revenue deficit, not so much
from the orthodox angle of balancing the revenue budget as from the larger angle
of raising as much as is practicable by way of additional revenue for meeting
the increased expenditure on development, which is wholly responsible for the
revenue deficit. While, as I have said earlier the economic climate is now suitable
for a moderate amount of deficit financing, it is obvious that every effort
should be made to keep the amount raised by recourse to it as low as possible,
so that it fills only the unavoidable gap between the available resources and
the inescapable requirements for development and is not used to cover any short
fall in resources which could otherwise be currently raised.
47. The House will appreciate that, with the Taxation Enquiry Commission at
work, it is neither proper nor desirable to initiate any large-scale change
in the present structure of taxation until the whole problem has been considered
in the light of the Commission’s recommendations which are expected towards
the end of the current year. I have therefore confined the changes which I propose
to a somewhat restricted field.
CHANGES IN CUSTOMS DUTIES
48. I shall first deal with Customs Duties.
My first proposal is to increase the preferential import duty on betelnuts by
61 annas a pound. Profit margins on betelnuts have for some time been very high,
often leading to the payment of premium on import licences. There is little
justification for the importer and the middlemen retaining such profit and I
am sure the House would welcome this attempt to divert a part of it for the
benefit of the exchequer. I do not think that this would in any way affect the
available supplies or occasion any significant increase in prices. The additional
revenue from this is estimated at Rs.3 crores. In the budget for the current
year, the House will remember that certain changes were made on import duties
as part of the normal readjustments of these duties. Customs duties cover a
very wide variety of goods and the level and incidence of these duties are under
constant review so that readjustments could be made from time to time. The annual
budget provides the most suitable occasion for making these changes except when,
during the course of the year, it is found desirable in the public interest
to make such changes without waiting for the annual Finance Bill. In pursuit
of this policy I propose to make certain changes in the import tariff. Duties
on some articles like plastic and rubber insulated cables, electric fans and
electric conduits are being raised. On the expiry of the period agreed under
the General Agreement on Trade and Tariffs the preference given to the United
Kingdom on the imports of motor cars, motor-car parts and batteries is being
abolished. The net effect of these and other minor changes, with which I do
not propose to weary the House, will be a net increase of Rs.1.25 crores in
revenue.
The third change I propose to make is to abolish the present import duty on
raw cotton. Imported raw cotton enters not merely in the production of cloth
consumed internally but to some extent in the exports of Indian cloth. I mentioned
earlier the arrangements which have been made for the grant of a rebate of duty
paid on imports of raw materials which enter into the manufacture! of our exports.
The whole problem of regulating the import duty on essential raw materials came
under review in that context and, while obviously no final view has yet been
taken, it is felt that a move towards the gradual replacement of import duties
on raw materials by Excise Duties on the goods manufactured from them could
be made. This replacement seems more or less inevitable as the country is progressively
industrialised; it will also make the export trade simpler by removing the complication
involved in the grant of rebates of import duty. I feel that a useful beginning
should be made with the import duties on raw cotton. The loss in revenue is
estimated at Rs.4 crores.
In pursuance of the same policy, the import duty on some varieties of steel
- a basic material is being abolished with immediate effect. They are steel
sheets (both black and galvanised) plates and rails. The, loss of revenue involved
is likely to be Rs.25 lakhs.
The last two proposals will 6.e triven effect to by notification under Section
23 of the Sea Customs Act, which is being issued today.
CHANGES IN UNION EXCISE DUTIES
49. With the abolition of the import duty on raw cotton, I propose to raise
the Excise Duty on super-fine cotton cloth by 6 pies per yard and on the other
varieties of cotton cloth by 3 pies a yard. This is designed partly to replace
the revenue lost by the abolition of the import duty on raw cotton and partly
to rationalise the existing structure of the excise. The abolition of the import
duty will avoid the complications involved in the somewhat cumbrous procedure
of giving drawbacks on exports. It will also facilitate the free imports of
foreign cotton required by the industry by reducing the amount required to finance
it. The increase in excise duties will, to some extent, also reduce the possibility
of diversion of manufactures from one tariff category to another by making it
less profitable than at present, and will also, I hope, ease the current pressure
on Indian cotton. I consider that the changes, taking Customs and Union Excises
together, will make the structure of taxation of Indian cloth more rational
than at present. The net effect of these changes will be an increase in revenue
of Rs.6. 5 crores.
My next proposal is to levy an excise duty of 1 anna and 6 pies per yard on
artificial silk fabrics. The use of artificial silk fabrics is now very widespread
and they compete to some extent with cotton cloth which has to bear an excise
duty. There is no reason why, when the bulk of the cotton cloth is subject to
taxation artificial silk fabrics should be exempt. The new duty will not be
levied on the manufacturers of handlooms and small units which have less than
10-power looms. Art silk fabrics will also be placed in the same position as
mill-made cotton textiles by the levy of an additional 3 pies per yard, corresponding
to a similar levy which is now being made on cotton cloth under the Khadi and
Other Handloom industries Development (Additional Excise Duty on Cloth) Act,
1953. The proceeds will be appropriated to the Special Fund for the Development
of the handloom industry. The revenue from this is estimated at Rs.1. 60 crores.
With the progress of industrialisation, revenue from Customs Duties is bound
to be a progressively less stable source of revenue. Even otherwise, the revenue
from Customs is inevitably subject to the vicissitudes of trade policies and
the availability of foreign exchange. It is, therefore, necessary to turn increasingly
to indigenous industries producing consumer goods for the replacement of a part
of the revenue which, in the past, we used to derive from Customs Duties on
such goods. It is also only appropriate that those industries which have in
the past developed with the assistance of protectionist policies, for which
the consumer paid by way of increased duties should when they have reached the
stage of full development, make a fair contribution to the country's exchequer.
The country's tax structure can be made stable only by broad-basing its excise
without affecting the economy of the industries taxed or placing an undue burden
on the consumers. We are already levying excises on most of the important commodities
produced in the country and the scope for further additions is somewhat restricted,
but even so I feel that there is room for some expansion in this source of revenue.
1, therefore, propose to levy a moderate duty on three commodities namely cement,
soap and footwear. The duty on cement will be Rs.5 per ton, that on soap Rs.5/4/-
per cwt. on washing soap in bars of one pound and more in weight and Rs.6/2/-
per cwt. on other washing soap and Rs.14/- per cwt. on toilet and other soaps
and that on footwear at 10 per cent ad valorem. The incidence of taxation on
all these commodities will not generally exceed 10 per cent of the value. In
the case of soap and footwear the products of cottage industry will be exempted
either by executive orders or directly by definition in the tariff. From such
figures as are available, I expect that the revenue from the excise on cement
would amount to Rs.1.75 crores, that from footwear to Rs.80 lakhs and that from
soap to Rs.1.20 crores.
INCOME TAX
50. No changes are proposed in the income-tax rates which, for next year, will
continue to be the same as at present. Certain formal amendments to the Indian
income Tax Act, intended to continue till 1956 some of the existing concessions
like special depreciation allowance, exemption of profits upto 6 per cent, etc.,
have been included in the Finance Bill. This will maintain the status quo until
Government have had an opportunity of re-examining the need for these concessions
in the light of the Taxation Enquiry Commission's Report. Opportunity is also
being taken of making two small amendments, both of the nature of drafting changes,
in the Estate Duty Act.
NET EFFECT OF PROPOSALS
51. The effect of the above changes may now be summarised. The increased duty
on betelnuts will yield Rs.3 crores and minor readjustments in import duties
another Rs.1. 25 crores. This will be offset by a drop of Rs.4.25 crores from
the abolition of import duties on raw cotton and some varieties of steel leaving
the total revenue from customs duties unchanged at Rs.175 crores.
The increase in the excise duty on cotton cloth will yield Rs.6.5 crores and
the new excise duty on artificial silk fabrics Rs.1.60 crores. The new excises
on cement, soap and footwear will together yield Rs.3.75 crores. The total additional
revenue from excise duties will thus amount to Rs.11.85 crores. This will reduce
the prospective revenue deficit for the coming year from Rs.26.06 crores to
Rs.14.21 crores which I propose to leave uncovered.
I mentioned that the overall deficit for next year would amount to Rs.250 crores,
which will be met by the expansion of treasury bills. The taxation proposals
will reduce the deficit to about Rs.238 crores. For the present I do not propose
to change the figure, taken in the budget for expansion of treasury bills. The
actual amount of this expansion will depend on developments during the course
of the year. I am therefore carrying the effect of these proposals into the
cash balances and leaving them about Rs.12 crores more than would otherwise
he the case.
CONCLUSION
52. This to the fourth budget which I have had the privilege of placing before
this House and, by a coincidence, it happens to be for the fourth year of the
Plan. The main purpose of all these budgets has been to secure the orderly implementation
of the Plan. Progress reports on the Plan have recently been made available
to Parliament and I have no doubt that this arrangement will be continued. I
do not, therefore, propose to say anything on the progress achieved in the implementation
of the Plan as such, but I cannot resist the temptation of looking back and
making an assessment of what has been achieved in the seven years since independence.
Seven years are not a long period in the history of a nation but in the life-time
of a generation they certainly count for something. One can, therefore, understand
the continuous urge for improvement and the frequent criticism that the progress
achieved has not been sufficient. Such criticism is always welcome, both as
a corrective and as a spur to further effort, but it is apt to obscure the sum
of our achievement and place the problem of development out of its proper perspective.
In 1947 we inherited a weakened administration. a war ravaged economy and a
country in which only the rudiments of a welfare state had been developed immediately
after independence we were faced with the gigantic problem of rehabilitating
millions of people uprooted from their homes and cast adrift as refugees. Our
food position was precarious owing to the loss to us of large areas surplus
in foodgrains. We had the colossal administrative problem of bringing over 500
Princely States, of varying sizes and in widely disparate stages of development,
into the stream of the country's national life. Looking back over the seven
years I have no doubt that we can feel some satisfaction at the measure of our
achievement. In this period, the country's economy has been strengthened, inflationary
stresses have subsided or been eliminated and production expanded in many directions.
In particular, notable improvement has been made in the country's food production.
The transport system has been largely rehabilitated. Progress, sometimes well
ahead of schedule, has been made in the construction of large irrigation and
power schemes which were in hand and more of such schemes are being taken up.
Vital industries, designed to reduce our dependence on external sources for
our essential needs, have been started with Government support. In the field
of basic industries effective steps have been taken to improve steel production
and a new steel plant is being set up which, in the near future, will make a
substantial addition to the country's steel production. The Shipping industry
is also being assisted to expand and the important shipyard at Vishakapatnam
has been developed. The rehabilitation of displaced persons is now nearing completion.
The integration of the Princely States has been completed and a well-knit national
Plan, covering in greater or less degree all-important sections of the national
life and economy, has been drawn up and is in process of implementation. The
States have been assisted with increasing sums of money to enable their development
to go forward. What is more vitally important, the people have been encouraged
successfully to co-operate in the fulfilment of this high endeavour.
No idea of the vast upsurge in the national life can be conveyed by translating
all this in terms of money or compressing it into a classified table of estimates
and expenditures. The face of the country is changing and changing for the better.
We know-and none more than those on the Government Benches-that much still remains
to be done. But we can bend our energies to the tasks ahead fortified by the
knowledge that, in spite of mistakes and difficulties, we have made progress
and, conscious that we are on the right road, however, long and arduous it may
be, we shall persevere, with a stout heart, with the task of building up a more
prosperous India. In this task we have received a significant and important
measure of assistance from friendly countries for which we are grateful and
which only spurs us on to more sustained efforts without impairing our will
to be self-reliant as much as possible.