68 SOCIAL SCIENTIST of real output increased by 3.5 percent while demand, indicated by money supply, expanded by over ten per cent during the same period. The overall deficit of the Central and State governments together was about Rs 429 crores in 1970-71, and it increased to Rs 631 crores in 1971-72. The net bank credit to the government sector increased by Rs511 crores during 1970-71 and by Rs 1182 crores in 1971-72. The figures for the current year are likely to be considerably high $ and the Union Finance Minister Y B Ghavan has already given forebodings of such a possibility. Deficit financing which has a strong influence on prices has been used by the Government as a method of resource mobilisation, a method which transfers the earnings of the working people to the owners of property. The rise in money income, if any, cannot keep pace with rising prices^ and as a result, the real income of the working people falls. The Finance Minister admitted in the Lok Sabha in August this year that the purchasing power of the Rupee is 42.4 per cent of what it was in 1949. But, in fact, the decline in purchasing value of the Rupee has been more alarming. According to the Directorate of Statistics, Government of Tamilnadu, the erosion of money value has been between 60 and 80 percent for most of the commodities of essential consumption. Discription of article 1949 Price ind [ices as ir i1972 Res chas exp per194 Base year 1939=100 1956 (Jui 1966ie) ddual purling power >ressed as • cent of 1-9 value Per cent of erosion that has occurred Cereals 235 472 763 1232 19.0 81.0 Pulses 512 434 923 1537 33.3 66.7 Sugar & Jaggery Vegetable Oils Kerosene 416 711 170 318 615 182 628 1809 311 1238 1811 453 33.3 38.2 37.5 66.7 61.8 62.5 Textiles 325 425 564 898 36.2 63.8 Metals 286 398 673 1590 18.0 82.0 Building Materials 191 550 762 1160 16.5 83.5 Source : Directorate of Statistics, Government of Tamilnadu, The urban middle class, together with the landless labourers and poor peasants in the countryside, have been among the worst hit. According to a study by the Research Bureau of The Economic Times (Bombay July 31, 1971) a family of four with an annual income ofRs 6000