Social Scientist. v 5, no. 54-55 (Jan-Feb 1977) p. 9.


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ASHOK MITRA

Industrial Growth and Income Distribution

IN WHAT FOLLOWS we will pursue, with the help of some recent data, an aspect of the relationship between the distribution of national income and industrial growth. As is well known, a certain shift in the distribution of national income has been attempted in the country in the course of the past decade through the manipulation of the terms of trade between industry and agriculture. With 1961-62== 100 in each case, in 1974-75 the official price index of food articles was 363.6, offoodgrains 400.7, and of industrial raw materials 327.4; in contrast, for manufactures as a group, the price index was 254.5; for machinery and transport equipment 254.5; and for finished products 238.6.1 The weighted terms of trade between the two sectors have thus moved in favour of agriculture by close to 50 per cent since the early 1960s.2 A major consequence of this movement in prices has been the shift in income distribution in favour of the surplus-raising farmers. In certain regions, the accretion of additional income with the relatively affluent farming sections may have led to a rise in the level of money earnings of wage labour as also to a slight increase in the incomes of small farmers. But such ^percolation' effect has had only limited significance.3 A movement in the terms of trade in favour of farm products incorporates and reflects the fact of a rise in the price level of foodgrains, and the



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