The truest index of our economic progress is the size of our total national surplus. But unfortunately, the nation’s surplus is much more difficult to calculate than total national income. Some idea of the surplus, however, is very necessary not only fixing the long-term objective of planning but also to decide from time to time the immediate direction of detailed policy. It is in this field that extra information about our banks is most helpful. Their health or ill-health is a more exact index for an economy like ours than for advanced industrial societies. This is so because a characteristic of all backward economies is a ravenous propensity for consumption. What remains after social consumption is so little that any manifestation of a concrete surplus is a welcome and very significant indication. If such a surplus accretes at levels where hitherto no accumulation of capital has been noticeable, the health report of the economy can be said to be basically sound, in the sense that development can be optimistically expected.

The statistical tables relating to banks in India now published by the Reserve Bank add the quality of exactness to the June report on the Progress of Banking in India, and are helpful in sustaining optimism about the fundamental condition of the national economy. In spite of the very obvious rise in conspicuous consumption in certain urban sectors of our society, and increased export of the national capital due to the needs of hurried industrialisation, the total deposits of joint stock banks in India rose during 1955 by Rs 92 crores, fixed deposits rose by Rs 53 crores. Another sign of health, is the increase in the  number of branches of banks in the country while there has been a desirable decrease in the number of banking companies themselves….

(EDIT, August 15, 1956.)

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