India - Economic situation and development prospects (Vol. 1 of 2) : Report

Report No. 6090-IN India: Economic Situation and Development Prospects (In Two Volumes) Vol)jme 1: Executive Summary and Main Report May 9,1986 South Asia Programs India Division FOR OFFICIAL USE ONLY Document of the Wbrld Bank This report has a restricted distribution and may be used by reipientse oinly in the petformance of-their official duties. Its contents may rot otherwise be disdosed without World Bank authorization.  CURRENCY AND OTHER QUIVALENTS Currency Prior to June 6, 1966: US$1.00 = Rs 4.7619 Rs 1.00 = US$0.21 From June 6. 1966 to mid-December 1971: US$1.00 = Rs 7.50 Rs 1.00 = US$0.13333 Mid-December 1971 to end-June 1972: US$1.00 = Rs 7.27927 Rs 1.00 = US$0.1374 After end-June 1972: floating rate Rate end-February 1986: US$1.00 = Rs 12.1520 Rs 1.00 = 0.0823 Rupee values have been converted into dollars by using the prevailing exchange rates indicated above up to 1970/71. For subsequent years the following average rates in rupees per US dollar have been used: 1971/72 : 7.444 1972/73 : 7.706 1973/74 : 7.791 1974/75 : 7.976 1975/76 : 8.653 1976/77 : 8.939 1977/78 : 8.563 1978/79 : 8.206 1979/80 8.076 1980/81 : 7.893 1981/82 : 8.929 1982/83 : 9.628 1983/84 : 10.312 1984/85 : 11.887 Source: IMF, International Financial Statistics (IFS), line "'rf. n In this report an estimate of 12.2 Rupees per US Dollar was used for 1985/86. Weights Unless otherwise specified all weight measures are metric. Years The Indian fiscal year runs from April 1 through March 31.  FOR OFFICIAL VS ONLY TITLE : INDIA: ECONOMIC SITUATION AND DEVELOPMENT PROSPECTS VOLUME I: EXECUTIVE SUMMARY AND MAIN REPORT COUNTRY : INDIA REGION : SOUTH ASIA SECTOR : COUNTRY ECONOMIC REPORT TYPE CLASSIF MHtYY LANGUAGE 6090-IN CEM Restricted 05186 English ABSTRACT : This report attempts to review key issues the Government is likely to face and policy options open to them in their efforts to improve the efficiency and growth of the economy. After a brief review of the economic performance during the Sixth Plan, Chapter 1, discusses objectives and development strategy of the Seventh Plan. Chapter 2 focuses on key policy changes that have been introduced during the past year and evaluates recent macro-economic performance. Chapter 3 addresses to tne implications of current sectoral policies; past and planned investment; and their combined impact on growth and efficiency in six principal sectors of the economy-- agriculture, energy, manufacturing, transport, hous- ing and urban development and population. Chapter 4 examines the steps that would be required to achieve the domestic resource mobilization goals of the Seventh Plan and Chapter 5 attempts to shed light on the twin questions of: (i) how realistic are the balance of payments assumptions of the Plan; and (ii) what policy changes are needed to assure their realization? This document hs a etrcteddisbuio and may be usd by ncients only in te peformuae of ther offiaW dutie. Its c tonnts may o othese be dbcksed wnthout Word Bank auXtholDn  Acknowledgement This report was prepared in Wat'hington by the members of the India Division and of the World Bank's New Delhi Office under the leadership of Zafer Ecevit (Senior Economist). The main contributers were John Hansen, Samuel Lieberman, Alexander Nowicki and Garry Pursell. Annand Gupta, Lloyd McKay, Felipe Morris, Peter Pollak, V.J. Ravishankar and S. Sengupta made contributions to different chapters. South Asia Project Department's General Agriculture, Irriga4ion, Power, Transport, Urban and Water Management Divisions prepred background papers for Chapter 3. Sajitha Bashir, Robert King and P. Rajagopalan provided statistical support. John Holsen (Regional Chief Economist) and Willem Bussink (Prin- cipal Economist in New Dehi Office) also made significant contributions to the report.  INDIA: ECONOMIC SITUATION AND DEVELOPMENT PROSPECTS Table of Contents Page No. EXECUTIVE SUMMARY A. Introd^uction and Recent Policy Changes ........................ i B. Recent Economic Performance.......................... viii C. Sectoral Investments and Policies............................. x D. Domestic Resource Mobiliation ................................ xvii H. External Resources for Deve