Social Scientist. v 16, no. 179 (April 1988) p. 2.

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Together with this pattern of inter-sectoral growth, there has been in recent years a particular pattern of inter-sectoral terms of trade movement, which is analysed in the paper by Jayati Ghosh. Expressing scepticism on the traditional argumentation regarding the causes and consequences of shifts in inter-sectoral terms of trade, she suggests that the terms of trade movement against agriculture since the mid-seventies has had the effect of the growth of incomes, especially in the urban services sector, incorporating public administration and defence. The demand generated by these rising incomes is oriented much more towards luxury goods, especially consumer durables, and is much less food-intensive compared to the demand pattern of those who are losers from the terms of trade shift. The observed decline in the share of cereals in total consumption expenditure on the one hand, and the observed boom which is occurring on the other hand in the production and assembly of durable consumption goods such as televisions, VCRs and passenger vehicles, are both linked to this change in income distribution.

Amal Sanyal's analysis of the fiscal crisis, embedded within an interesting discussion of the political economy of monetary policy in India, also has a bearing upon this pattern of inter-sectoral growth. The State in India rests upon a 'coalition' of classes, and he distinguishes between two different elements of costs incurred in maintaining this coalition. On the one hand, the State has to arbitrate between the claims of the different constituents of this coalition, and inevitably ends up doling out large and growing amounts in the form of transfer payments to these constituents. On the other hand, precisely for playing this arbitrating role, and protecting this coalition from attacks from the oppressed, it has to incur a large and growing expenditure upon the bureaucracy and the military and paramilitary forces. The result is a rapid increase in government current expenditure, which since it is not matched by appropriate taxation upon the dominant classes, leads to a fiscal crisis, a choking off of government's productive investment, and a tendency towards stagnation in the material commodity-producing sectors.

It is unfortunate that we cannot publish the discussion which followed the presentation of each of these papers at the seminar. We do hope nonetheless that the readers would find the papers stimulating and provocative.

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