We have also taken a series of steps to meet the challenge of price increases. On the resource mobilisation side, you will agree that a sizeable effort was made in the budget presented in May 1971. Recently, to meet the very substantial commitments on account of refugees from Bangladesh, a conference of Chief Ministers and Governors was convened to consider the whole range of problems of resource mobilisation in depth and some new measures for further raising of resources have been taken both at the Centre and in the States. We have also decided to reduce non-Plan and non-essential expenditure by 5 per cent. Similar steps for bringing about economy in expenditure are being taken by the State Governments. The overdrafts of the State Governments constitute another important factor in the money creation. This matter was also discussed recently with the State Chief Ministers and I am sure some fruitful results will follow soon.
We have been pursuing a fairly cautious and restrictive credit policy in recent months. While legitimate and reasonable requirements of funds for all productive efforts have to be met fully, the supply of credit for speculative and hoarding activities will have to be reduced drastically. The public sector banks and the Reserve Bank of India now scrutinise very carefully the requirements of funds of over Rs. one crore presented by each individual party to ensure that the funds are utilised only for genuine productive purposes. Detailed information is now asked from all parties who solicit bank assistance of over Rs. 25 lakhs. This should have a perceptible impact in cutting off credit for speculative activities. Futures trading in gur has been banned recently with a view to ensuring adequate supplies of cane to sugar mills and bringing down sharp increase in the price of gur. Forward trading in all edible oils and oilseeds has been suspended and the Forward Contracts (Regulation) Act has been amended to remove some lacunae. In view of the rising trend in sugar prices, the availability of bank credit to sugar mills and trade has been further curtailed and the validity period of release orders has been reduced from 45 to 30 days. The sale of sugar by factories to registered dealers and stocking of sugar by traders has also been restricted. To meet the shortage of controlled cloth, the cotton textile mills have been asked to step up their production of such cloth and in order to check the malpractices in the sale of controlled varieties of cloth, the mills have been directed to stamp consumer price per metre on every metre length. of the cloth. A sizeable buffer stock of foodgrains has been built up, and major foodgrains are being sold at fixed prices through a network of fair price and ration shops in the country. The States have also been advised to further strengthen the public distributive system.