POVERTY & EMPLOYMENT 29 radios, watches, plastic goods, textiles (including synthetics) etc., which in its aggregate expansionary impact would exceed by far the very dubious expansionary effects of the present policy of encouraging the demand for heavily import-dependent electronic goods and other durable consumption goods on the part of the nch2^ A socially broad-based expansion of effective demand constituted by expanding purchasing power in the hands of the poor six deciles of our population, would not only lift the consumer goods manufacturing sector out of the doldrums, but this in turn would extend its linkage effects to the capital goods industries. The imperatives of economic rationality at this juncture are clear. Whether the balance of social forces in the country will ever permit' the policies consistent with economic rationality remains to be seen. 1. Reports in the Economic Times, Jan 10 and 26, 1985. 2. It is well-known that the Indian definition of 'deficit-financing* which includes only Governments borrowing from the RBI and drawing down of cash balances, is narrower than that employed in many advanced *- entries, where government borrowing from commercial banks is included. 3. P.M.*s interview with school children, telecast by Doordarshan in late July 1985. 4. Report in Economic Times, Jan 10, 1985. 5. 'Alternative Strategies of Agrarian Change in Relation to Development Finance in India and China' Paper presented to ICSSR Seminar on Marx, Schumpeter and Keynes New Delhi, January 1984. 6- G.S. Bhalla 1979, Transfer of Technology and Agricultural Development in India* EPWVo\. XIV Nos. 51 & 52 December 1979. 7. M.S. Ahuluwalia, 1977 'Rural Poverty and Agricultural Performance in India* Journal of Development Studies. This is quoted by A.V. Desai 1984. 'The Slow Rate of Industrialisation : A Second Look' EPS Annual Number Aug 1984. Also Desai 1981, 'Factors Underlying the Slow Growth of Indian Industry 'EPW Annual Number March 1981, and I.J. Ahluwahlia 1985, Industrial Growth in India (OUP). 8. V.K.R.V. Rao, India's National Income 1950-1980 (Sage, 1983) p.20 9. Michal Kalecki. (1) The Problem of Financing Economic Development* Indian Economic Review, 1955 (2) The Difference be^veen the Crucial Economic Problems of Developed and Underdeveloped Non-Sociali t Economics* in Essays on Planning and Development. Centre for Researh on Underdeveloped Economics, Warsaw 1958. (3) 'Problems of Financing Economic Development in a Mixed Economy* in Essays on the Economic Growth of the Socialist and the Mixed Economy, Cambridge 1972. 10. Prabhat Patnaik 1980, 'Some Problems of Financing Public Investment in India* Paper and presented at the Humboldt University GDR, Sept 1980, See also P. Patnaik, 'Market Question and Capitalist Development in IndtSP, EPW^ Annual No. Aug. 1984. 11. J.M. Keynes Treatise on Money (The ApifUed theory of Money) Vol. VI. Collected Writings (Mac-millan. CUP 1971), PP 152-157. 12. Figures derived by constructing Lorenz curves from data in Report on Agricultural Census 1970-71, and RBI Rural Debt and .Investment Survey Report, 1971.