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17
ACTION NEA-10
INFO OCT-01 ISO-00 AID-05 CIAE-00 COME-00 EB-07 FRB-01
INR-07 NSAE-00 USIA-15 TRSE-00 XMB-04 OPIC-06 SP-02
CIEP-02 LAB-04 SIL-01 OMB-01 L-03 H-02 NSC-05 SS-15
STR-04 CEA-01 PA-02 PRS-01 AGR-10 AGRE-00 /109 W
--------------------- 072582
R 300630Z SEP 76
FM AMEMBASSY NEW DELHI
TO SECSTATE WASHDC 8688
INFO AMCONSUL BOMBAY
AMCONSUL CALCUTTA
AMCONSUL MADRAS
AMEMBASSY DACCA
AMEMBASSY ISLAMABAD
AMEMBASSY KATHMANDU
UNCLAS NEW DELHI 14439
E.O. 11652: N/A
TAGS: ECON, IN
SUBJECT: FIFTH FIVE YEAR PLAN IS APPROVED
1. THE FOLLOWING IS THE SUMMARY OF AN AIRGRAM THAT IS BEING
POUCHED TO ADDRESSEE POSTS.
2. ON SEPTEMBER 25 THE NATIONAL DEVELOPMENT COUNCIL APPROVED THE
FIFTH FIVE YEAR PLAN, WHICH CALLS FOR TOTAL EXPENDITURES OF RS
693 BILLION (DOLS 77 BILLION) 1/ DURING THE PLAN PERIOD. OBJECTED
PUBLIC SECTOR OUTLAYS ARE RS 423 BILLION, CONSIDERABLY LOWER IN
REAL TERMS THAN ORGINALLY PLANNED. THE SCALED-DOWN PLAN IS REFLECTED
IN REDUCED GROWTH GOALS AND LOWER PHYSICAL TARGETS IN ALMOST
EVERY SECTORDURING THE PLAN PERIOD NATIONAL INCOME IS
1/ ALL CONVERSIONS IN THIS MESSAGE ARE AT RS 9.00 EQUI DOLS 1,
THE ASSUMED AVERAGE EXCHANGE RATE FOR THE PLAN PERIOD.NOW
EXPECTED TO GROW AT 4.4 PERCENT PERANNUM AND INDUSTRIAL OUTPUT,
7.1 PERCENT. FOODGRAIN OUTPUT IN 1978-79 IS PROJECTED AT EITHER
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125 MILLION MT OR 132 MILLION MT DEPENDING ON THE FUTURE COURSE OF
THE MONSOONS. PLAN PRIORITIES REMAIN ESSENTIALLY THE SAME AS IN
THE RECENT POST, WITH PARTICULAR EMPHASIS PLACED ON IRRIGATION AND
FLOOD CONTROL, POWER, INDUSTRY AND MINING. THE REVISED PLAN
CONTEMPLATES INCREASED RESOURCE MOBILIZATION FROM BOTH DOMESTIC
AND FOREIGN SOURCES. THE TARGET OF SELF-SUFFICIENCY (I.E. NO
FOREIGN ASSISTANCE) BY 1978-79 HAS BEEN ABANDONED.
3. AT THE COUNCIL SESSIONS MRS. GANDHI STRESSED THE IMPORTANCE OF
RAISING THE RATE OF DOMESTIC SAVINGS AND INVESTMENT IN ORDER TO
REACH AN ECONOMIC GROWTH RATE OF 5-6 PERCENT. SHE PROPOSED THE
FLOATING OF DEBENTURES TO MOBILIZE RURAL RESOURCES, WARNED
AGAINST ANY RELAXATION OF THE GOVERNMENT'S ANTI-INFLATION POLICY
AND POINTED TO THE GROWING PROBLEM OF UNEMPLOYMENT.
4. THE PLAN WAS DELAYED BECAUSE OF THE NEED TO RETHINK PLAN
TARGETS FOLLOWING THE OIL CRISIS AND THE SEVERE 1973-74
INLFATION HERE. THE REVISED PLAN (FINAL) DOCUMENTS WILL PROBABLY
NOT BE AVAILABLE UNTIL NOVEMBER OR DECEMBER) IS A MORE MODEST
AND REALISTIC EFFORT THAN PREVIOUS FIVE YEAR PLANS. SUFFICIENT
DOMESTIC AND FOREIGN RESOURCES WILL PROBABLY BE AVAILABLE TO
MEET MOST OF THE PLAN TARGETS, ALTHOUGH SOME OF THEM (E.G.
FOODGRAIN OUTPUT AND INDUSTRIAL GROWTH) SEEM AMBITIOUS. MRS.
GANDHI MADE ECONOMIC SENSE, BUT THE REAL TASK IS TO TRANSLATE
WORDS INTO EFFECTIVE ACTION, PARTICULARY IN THE AGRICULTURAL AND
INDUSTRIAL SECTORS.SAXBE
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