10 SOCIAL SCIENTIST additional outlay which landless labourers as well as small farmers are now called upon to make for the purchase of their food requirements outstrip in most cases the increase in their money earnings. Aside from this, the rise in farm prices contributes, either immediately or with a time lag, to a corresponding increase in the price level of industrial commodities too. In so far as the rate of rise in money earnings of small peasants and farm workers is, over the period, less than that in industrial prices, a further worsening takes place in their real incomes. The poorer sections of the rural community are thus caught in a pincer: they arc compelled to make a larger monetary outlay on foodgrains in case they want to maintain their level of intake; at the same time they have to pay higher prices for a whole range of industrial goods. Effects of the Shift A certain sequence of events can be sketched. First, as the terms of trade improve for agriculture, the relative share of aggregate farm income going to small cultivators and farm workers shrinks. Second, a larger proportion of the earnings of the latter groups than before is now deployed for the purchase of foodgrains; alternately they are forced to reduce their absolute food consumption. In case the quantity of food consumed is not cut back—or at least not cut back initially—the proportion of total income spent on food increases, so that a lower fraction of the earnings than before is available for the purchase of industrial commodities. Accompanying this phenomenon is an across-the-board rise in industrial prices. Once the process has worked itself out, one major consequence of the shift in terms of trade is the decline in the demand for industrial products on the part of a preponderant majority of the rural community, Other things remaining the same, this reduction in the demand for industrial goods on the part of the rural poor would be compensated provided a correspondingly larger outlay is made by the richer sections who experience significant increases in their levels of income, money as well as real, following the shift in the terms of trade. This is, however, unlikely to come about, at least in the case of mass consumer goods, which can be expected to attract the familiar EngeFs Law. While a rise could occur in their absolute level of demand, the proportion of income spent by the affluent farmers on mass consumer goods should actually decline. Most of their additional demand concentrates on a select number of luxury and semi-luxury consumer and capital goods. It is an open question whether, in the overall, the loss of the market among the lower ranges of the rural population groups is compensated by the rise in demand on the part of the richer peasantry. An analysis by Ranjit Sau4 suggests the contrary. While between 1952-53 and 1964-65 the demand for industrial goods in the rural parts of India went up by roughly Rs 10,000 million, or by around 30 per cent, the rate of this rise