The Age Of Stars

forex · 1 February 1957

IMF purchase + stand-by (US$127.5 mn + US$72.5 mn SBA from 1957-03-11)

US$200 mn

First IMF stand-by. Not the first IMF use (see 1948).

VerifiedOfficial record. Source: IMF lending table; IMF AR 1957

forex reserves · 1 February 1957

First IMF drawing (USD 127.5 mn + USD 72.5 mn SBA)

USD 200 mn

Sterling reserve drain after Suez and Second Plan imports

VerifiedOfficial record. Source: IMF lending table; IMF AR 1957

money market · 16 May 1957

Bank Rate raised from 3.5 to 4.0 per cent

+50 bp

First change since 1951

VerifiedOfficial record. Source: RBI Bank Rate chronology

money market · 16 May 1957

Bank Rate 3.5 → 4.0%

+50 bp

Kaldor budget and the BoP squeeze

ReportedOfficial record. Source: RBI Bank Rate chronology

forex · 31 October 1957

Reserve floor cut from Rs 515 crore to Rs 200 crore by ordinance

−Rs 315 crore floor

Reserves at Rs 421.2 crore (US$884 mn) at end FY 1957-58

ReportedOfficial record. Source: RBI Act amendments; Economic Survey App. 6.1(A)

equities / governance · 16 December 1957

Feroze Gandhi's Lok Sabha speech exposes LIC–Mundhra

Rs 1.27 crore of LIC funds

Led to TTK's resignation (Feb 1958)

ReportedPress. Source: livehistoryindia.com

Import licensing squeeze (Jan–Jun and Jul–Dec 1957 licensing periods)

The 1956-57 BoP crisis ended First Plan liberalisation and started comprehensive QRs

Reserves fell from US$1,895 mn to US$884 mn in two years.

ReportedPeer-reviewed. Source: Bhagwati & Desai (OECD 1970); Economic Survey App. 6.1(B)

Export Risks Insurance Corporation (July 1957; forerunner of ECGC)

Domestic export-credit insurance, reducing reliance on London markets

ReportedOfficial record. Source: ECGC history (as in 11-decade file)

Import licensing tightening (Jan–Jun and Jul–Dec 1957 licensing periods)

Second Plan BoP crisis

The sterling balances drawn down, and imports of consumer goods and non-essentials severely cut. Start of comprehensive quantitative controls under the Imports and Exports (Control) Act 1947.

ReportedPeer-reviewed. Source: Bhagwati & Desai, India: Planning for Industrialization (OECD 1970); Bhagwati & Srinivasan (NBER 1975)

Export Risks Insurance Corporation (forerunner of ECGC)

State export-credit insurance begins, reducing reliance on London export-credit cover

ReportedOfficial record. Source: ECGC history

RBI (Amendment) Ordinance 1957-10-31 / Second Amendment Act: reserve floor cut to Rs 200 crore (of which Rs 115 crore gold)

Released the foreign-securities reserve (formerly held in London as sterling) to pay for Plan imports

ReportedOfficial record. Source: GKToday; RBI Act as amended

RBI (Amendment) Act 1957: reserve floor cut

The statutory minimum foreign-exchange and gold reserve cut to Rs 200 crore, so that reserves could be run…

The statutory minimum foreign-exchange and gold reserve cut to Rs 200 crore, so that reserves could be run down to pay for imports

ReportedPeer-reviewed. Source: RBI History vol. 2

insurance / capital markets

LIC–Mundhra affair: LIC bought shares in six Mundhra companies (Richardson Cruddas, Jessop…

Exposed by Feroze Gandhi in the Lok Sabha on 1957-12-16. The Chagla report held FM T.T. Krishnamachari constitutionally responsible, and he resigned (1958-02-13 or 02-18, conflict). Mundhra was convicted. The list of the six companies is from secondary accounts, not the Chagla report.

ReportedPress. Source: livehistoryindia.com; Wikipedia "Haridas Mundhra"; scroll.in; Chagla Commission Report 1958 (primary, not seen)

insurance / capital markets

LIC–Mundhra affair (LIC bought shares in six Mundhra companies on 1957-06-25, under Finance…

Exposed by Feroze Gandhi in the Lok Sabha (Dec 1957). The Chagla report (Feb 1958) held FM TTK constitutionally responsible, and TTK resigned. H.M. Patel and LIC chairman L.S. Vaidyanathan were censured. Mundhra was convicted and jailed.

ReportedPress. Source: scroll.in (2024 book excerpt); Wikipedia "Haridas Mundhra"; Chagla Commission Report 1958 (primary, not seen)