The Wall Street Journal of December 20th carried an article on India's economic growth by Mr. Shenoy, director of the School of Social Sciences, Gujarat University, Ahmedabad. The article is remarkably frank in its appreciation of the set-up in Indias
",2e0eln India, national income has grown by 54% during the past 12 years.eeelut it cannot be inferred from this statistic that the level of living of the Indian people has gone up correspondingly. India's population has been rising at an annual rate of 2.2%, This alters Materially the picture...The rise in per-capita income in the past 12 years was only 1.3% a yearees.the past decade has scen substantial shifts of income which have benefitted the small upper—income group at the expense of the magsos, These shifts have resulted from inflation from controls and from the undue expansion of the public sector of the economy, Inflation obviously has cut into the buying power of those whose incomes rise very little or not at all, and this includes the majority of the population. Traders and industrialists, on the other hand, have often beon ina position to profit handsomely from rising costs.
Economic controls, by creating monopolies and nearmonopolies, often bring profits to the traders and industrialists they protect. Controls also provide incentives for black-market opsrators, And the monopoly and black—market gains ultimately are collected from the consu= mer through higher prices....eFrom this standpoint, perhaps the worst controls are those over imports. Import licences fetch enormous prices in the market, varying from 30% to 500% of thoir face value, depending on the commodity involved, If the average price runs about 15h, a not illogical assumption, the illicit gains from sales of import licences run close to $1 billion a year.
These illegal gains are shared by government functionaries, "contact" men and the recipients of the licences — all likely to be among the nation's more prosperous group. ‘shen Indian consumers purchase imported commodities, or commodities produced from imported raw materials, they contribute from thoir meagre incomes to the affluenee of those who trade in these licences....Graft and corruption unque= stionably have converted into private incomes a portion of the funds supposedly invested in India's state enterprises, These illicit benefits like all the other income shifts, have tended to widen the gap between the prosperous Indians and the rest of the population.
Per-capita consumption of food grains averaged 15.8 ozs. per day in 1958, below the usual gaol ration of 16 OZSe, the army ration of 19 ozs. and the current economic plan's target of 18 ozs.. Since then, the average has fluctuated downward. Between 1956 and 1960 the annual per-capita use of cloth fell from 14.7 metres to 13.9 metres. Further evidence of the plight of the bulk of the population shows up in the wage rates of industrial and agricultural workers, Although output of each industrial worker has risen 2% times in the past docade, wage rates on average have gone up by only 10%, Agricultural wages have actually declined. In the context of steadily rising prices, both groups of workers, in real terms, have done even less well, Moreover, unemployment has increased. .ecee™