ABSTRACT
This chapter describes in detail the step-by-step approach towards stabilisation and rehabilitation. It can fairly be said that cushioning exchange rates from domestic upsets was regarded as the more sacred since the government appeared to hold to the belief that stabilisation in the foreign exchange market was the prime mover of stabilisation in other sectors. Furthermore, by 1970 internal price stabilisation appeared to have been achieved and attention was moving to the balance of payments. Until 1966 the budget was clearly the biggest single source of increases in the money supply and no amount of effort in other fields could have brought about price stabilisation without some kind of an assault on the budget deficit. During the early years after 1965 there were two other headaches of programme aid for the planners. In economically advanced countries the percentage of the money supply in bank deposits may be as high as 66 to 75 per cent.
