Delhi. Oct 14
India, already reeling under the financial burden of accommodating nine million refugees and plagued by a mounting budgetary deficit, is expected to plunge into a serious recession unless the economy receives a huge injection of foreign aid within the coming months.

According to a preliminary survey by the Finance Ministry, the direct and indirect cost of keeping Bengal refugees alive will have amounted to about £350m by the end of the financial year in March. Economists estimate that at least £200m will have to be reflected as an additional deficit when budgetary accounts are completed.

At the same time defence expenditure, at present at a level of £700m, is expected to rise dramatically because of tensions on the subcontinent. Defence spending and the financial burden of the refugees will account for about half of the national revenue this year.

In the meantime serious side effects of the refugee problem on the economy are apparent. The movement of large stocks of supplies to refugee camps has placed a tremendous strain on the railway and road systems. The depletion of food stocks and other essential commodities has pushed the rate of inflation up from five per cent to seven per cent and prices are spiralling up beyond the means of the ordinary Indian.

In many areas the bottlenecks in the railway system have disrupted the supply of steel and other raw materials to key industries.

But apart from the financial burden imposed by the refugee problem, the Indian economy is sagging in other respects. Huge losses incurred in the public sector of industry and talk of nationalization and socialism have created a discouraging climate for investment and have had a devastating effect on industrial growth. In the first six months of this year the growth rate plunged down to 1.6 per cent as compared io 4.7 percent for the same period in 1970 and a rate of 7.1 per cent in 1969.