ALTERNATIVE APPROACH TO PLANNING 19 total inflationary gap in the economy in period 3 will be given by Scg + SEg ------(19) So long as the structural imbalances will continue to exist^ in the economy and the aggregate supply of goods will lag behind the aggregate demand, the total inflationary gap in the economy will tend to widen in each successive period. In each period the inflation would enable the big capitalists of Departments I and II to secure superprofits. Therefore their demand for consumption goods would tend to increase and create further inflationary pressure in the market for consumption goods. Similarly, each dose of additional money injected into the economy beyond the level of available resources will create further inflationary pressure in the market for means of production. Thus the inflationary pressure in the economy will tend to cumulate over time and if the area of operation of market mechanism in the sphere of distribution is not drastically reduced and effective measures are not taken to restore the structural balances, the whole economy of the country would be dragged into a vicious circle. The total inflationary gap, increasing in each successive period, may reach the runaway stage in the nth period when other factors arising out of the same inflationary situation would be superimposed on the basic imbalances which had begun to arise in the structure of production much earlier and accelerate the growth of inflationary pressure in the country. The total inflationary gap in the nth period denoted by g^ + §E ...•..•...........(20) n n may be so much disastrous that traditional anti-inflation monetary and fiscal policies, if unaccompanied by serious and wary efforts to remove structural imbalances and restore the dynamic equilibrium of expanded reproduction, would not only be infru-ctuous, but even aggravate the crisis in all its economic and non-economic dimensions. The above model for structural determinants of an inflationary situation in a capitalist economy seems to hold good for the Indian economy. The inflationary process as shown in the model appears to be in-built in the economic expansion and planning in India. 2 Sudipto Mundle, "State Character and Economic Policy'-", Social Scientist 22, May 1974, pp 16-17. B Report of the Committee on Distribution of Income and Levels of Living, p 86; Ajlt Roy, Planning in India; Report of the Monopolies Inquiry Commission; Report of t1'* Industrial Licensing Policy Inquiry Committee.