INDUSTRIAL GROWTH AND INCOME DISTRIBUTION 11 was less than the rate of increase in the price level for industrial commodities over this period, which was approximately 45 per cent. Equally noteworthy are Sau's conclusions with respect to trends in the absorption of industrial goods in the urban sector. Between 1952-53 and 1964-65, urban consumption of industrial commodities increased by Rs 6000 million. Of this, as much as one-third is attributable to the top 5 per cent of the urban population; for the other 95 per cent the increase in the money demand for industrial goods was of the order of 45 per cent, that is, the same as the rise in the wholesale price index. This sluggish rate of increase in industrial demand is again easily explained. During any meaningful period since 1947, the rate of rise in money wages, for practically all categories of Indian industrial workers and in nearly each sphere of industrial activity—as also for other sections of urban employees—has been less than the rate of increase in either general wholesale prices or in consumer prices. If the comparison is between the rates of increase in money wages and in foodgrain prices, the discrepancy is even wider. Accordingly, over the years, a steadily rising proportion of money wages accruing to urban employees has been spent on food; the proportion of income allotted for the purchase of industrial products could therefore increase only imperceptibly. Sau's analysis ends with 1964-65, but its implications are obvious. The inter-sector terms of trade have, after all, swung even more sharply in'favour of agriculture and against industry in the past ten years. As wages have continued to lag behind prices, the adverse consequences of the shift in terms of trade an the demand for industrial products must have been still more pronounced. Output in the organized industrial sector has been growing since the 1960s at a rate which is less than half of what it was in the preceding fifteen years.5 This decline in the rate of industrial growth, as we shall see below, is attributable to other factors as well, but one major contributory cause is surely the levelling off of demand brought about by the movement in terms of trade. PR OFITS What has been the effect of the shift in terms of trade on the supply conditions of Indian industry? Where farm prices, including prices of industrial raw materials, advance all along the line, the unit cost of material inputs should, other things remaining the same, increase for industrial activities. The manufacturers would naturally seek to compensate themselves for the increase in the cost of raw materials by raising their product prices; the only problem would then be whether such a rise in product prices could affect demand adversely. While the cost of living of employees would also rise as a result of the shift in terms of trade (because of its impact on food prices), this may not necessarily lead to an immediate rise in money wages; the employers could resist, at least temporarily, the demand for compensatory adjustments in wage