A prewar year is used in India as the base for constructing most price indices. In International Financial Statistics of the International Monetary Fund all price index series, such as those reproduced in Table 1, have been adjusted so that the index for 1948 equals 100.
Reserve Bank of India, India’s Balance of Payments, 1948-51, and Bulletin, April 1953.
Since the writing of this report, the rationing of wheat has been terminated in most cities.
Creation of credit equivalent to the reduction of reserves attributable to a balance of payments deficit on either current or capital account is not inflationary and, indeed, is necessary to restore the money supply and thereby prevent deflation in a country in which the money supply is properly related to economic policy and the balance of payments deficit is an appropriate deficit that can be financed. In the case of a current account deficit, the credit expansion is necessary to match the additional supply of goods and services available from abroad and enables home investment to exceed domestic savings. In the case of a deficit on capital account, the credit expansion obviates the need to use domestic savings to match the capital outflow and permits the whole of domestic savings to be used for home investment.
Series reported in International Monetary Fund, International Financial Statistics.
Report of the Committee on the Taxation of Trading Profits (London, April 1951, Cmd. 8189), pp. 35-46.