FROM THE FREE PRESS ARCHIVES

CRISIS TO CRISIS

The economic survey of Asia and the Far East for 1000 which will be discussed at the 17th session of the UN Economic Commission for Asia and the Far East (ECAFE), scheduled to begin in New Delhi on March 8, presents a somewhat dismal picture of this Continent. According to this survey, with the solitary exception of Japan which is going through a period of “inflationless prosperity,” the rest of the Asian and Far Eastern countries are passing from one crisis to another. Indonesia experienced snowballing inflation during the period under review while Ceylon managed to maintain domestic stability and sacrificed much of its foreign assets; and India and Pakistan were faced with an acute shortage of foreign exchange. Although the ECAFE survey subtly hints at the conclusion that the main trouble with those countries of Asia which are committed to industrial development at an accelerated pace is that they have been over investing in the public sector, it must be remembered that the basic weakness of the economy of Asian and Far Eastern countries is largely due to the widening gap between world demand for manufactured products, including capital goods from the West. Indeed the primary responsibility for narrowing this gap is that of countries concerned, but the gap can be narrowed only with the active cooperation of the highly advanced countries.

There are certain observations made in the survey which warrant more than a passing attention of the Asian countries in question.The survey points out, for instance, that in most countries the principles on which income-tax laws are based are in need of review and the tax structures are in need of rationalisation. It draws attention to the fact that the “lofty objective of reducing inequality” may be better achieved by means other than taxation. For, excessively high, income-taxes merely encourage assesses to dodge them. Equally important is the survey's warning against the dangers of deficit financing and inflation are unavoidable in the early stages of economic expansion when they affect the lower income groups adversely. Further, they will also push up industrial costs. Cut in social overheads and steady rise in the cost of living do not create the right kind of atmosphere for rapid industrialisation. March 7, 1961