Articles by Arthagnani

our basic socialistic pattern insofar as it corrects economic inequality and prevents inordinate and enduring differences among persons and families in wealth, power and opportunities".10 How the extreme progressiveness of the tax structure helps to meet "urgent economic needs", is not so obvious. One cannot accept the Finance Ministry's contention unless one assumes that (i) total savings (government's, wealthy persons', and lower income classes', out of government transfers or multiplier effects of government expenditure) would increase with reduction in "economic inequality", or (ii) that all Government expenditure is of national priority in- vestment type, or (iii) that if left in the pockets of . the people, tax reduction (from present levels) will be frittered away into consumption. Of course, one may tend to grant the socialistic achievements of the progressiveness of the tax structure, though this is also subject to debate when one considers the marginal (direct and indirect) tax burden in recent years.11 But then one ought to know the economic cost of doing so.

Arthagnani THE PRESIDENTIAL ADDRESS to the Forty-Ninth Session of the All- India Economic Conference dealt with a topic which, besides being of general interest, was one on which the President could speak with intimate knowledge. The topic was "The Limits of Economic Policy", and the speaker I G Patel, Chief Economic Adviser, Government of India. Economists are interested in the subject not only because as citizens they are consumers of the product but also because as economists, they are its suppliers. The market for the product, as defined by employment in Government agencies, has increased tremendously in recent times. Patel, however, was concerned with the technical limitations of the product and he magnanimously proposed to deal with the subject "not in the best traditions of a trade union gather- ing"(3).1 The main theme of Patel's address was that the response to economic instruments is indeterminate and, therefore, it is not possible to work out all the implications of an economic policy decision. Secondly, in taking economic decisions, an economist needs to be guided by considerations derived from other disciplines (belonging both to the social and the physical sciences). Thirdly, there are various constraints

planning for economic development). The mildest form of controls being advocated is the reporting-system employed during the early part of the Korean War. Because of the ineffectiveness of this system wage and price controls were slapped on the economy after January 1951. Under the reporting system 200 companies, that carry on 50 per cent of nation's business, regularly and frequently report to the Administration wage, price and operations in order to enable the Government to determine the trends and movements AS NOVEMBER approaches, the question of the monetary policy for the busy season becomes an important issue for discussion. This was not so till 1964, until when the Reserve Bank more or less stood by to provide, at a fixed and to some extent cheap rate, the funds required by banks to finance the seasonal increase in agricultural supplies, subject to selective controls (which took the form of restrictions on the volume of lending against specific commodities). In practice, selective controls did not prove efficient as they could more or less be avoided in the early stages by clean credit and later by replacing the non-acceptable commodity by an acceptable commodity as security.

What is the extent of reliance of industry on imports? The answer to this that one comes across is often a business harangue rather than cold calculation.