The Gazetteers Department

The structure of prices in a changing economy is an indicator of economic growth and hence, it is very important to study the changes in price trends. Such a study gives us an idea of the general economic condition of the people. It is again very important because the price mechanism regulates production and governs the pattern of consumption. The structure of prices of consumer goods is particularly important in judging the standard of living of the people. It is more particularly with the prices of consumers' goods that we are concerned here.

The general trends of prices in an area like a district are always in conformity with the broad trends of prices in the whole country. The price mechanism which is of basic importance in a free economy uniformly works in all the sections of the economy. The price level is a function of a multiplicity of factors, such as, variations in the quantity of money (currency notes plus bank credit), volume of total national production, supply of and demand for consumers' goods, conditions of exports and imports and fiscal as well as physical controls imposed by the government. Any change in any of these factors gives rise to an imbalance in the price level. Furthermore, agricultural commodities, by their very nature, are prone to seasonal variations.

Apart from seasonal and temporary variations there have been marked changes in the purchasing power of the Indian rupee from the beginning of this century. The purchasing power of the rupee has been declining constantly. Prices of all commodities had risen very steeply during World War I and the rise continued till the thirties when the Great Depression set in. The depression which threw the economies of the U. S. A., the U. K., France and Germany out of gears brought about a sudden fall in their price levels. The slump which affected these countries led to a fall in the demand for our agricultural commodities in international markets. Depression in the trade of cotton and vegetable oils affected the Indian economy badly. This downward trend continued till 1933 after which prices of all commodities began to rise steadily.

The price trends in the district from 1921 onwards are given below.

The prices [Census Report: Hyderabad State, 1931.] of foodgrains and all other agricultural commodity were very high in 1921 due to conditions of scarcity in the district Conditions improved in the subsequent years. The agriculturists reaped very good returns for their produce. But, cotton, an important crop, had a precipitous fall in price in 1926 and had not recovered from it till the beginning of the next decade. The World-wide Depression caused the slump in cotton prices. The trend of prices [Ibid.] of important commodities during the decade is given below: —

(Prices in Rs. per maund of 40 seers)

Commodity	1925	1926	1927	1928	1929	1930
(1)	(2)	(3)	(4)	(5)	(6)	(7)
	Rs. as.	Rs. as.	Rs. as.	Rs. as.	Rs. as.	Rs. as.
Cotton	47 0	39 5	27 9	30 6	29 9	29 11
Wheat	9 8	9 7	9 9	10 6	8 6	7 12
Jowar	5 8	4 8	4 0	5 1	5 6	3 14
Bajri	5 0	4 13	4 13	4 12	4 6	4 6
Rice	10 0	9 5	9 13	9 11	8 6	8 9

The decade (1931-40) which followed could be divided into four periods, viz., the Depression (1929-33), the Recovery (1933-37), the Recession (1937-1939) and the War Period from September 1939.

The index numbers of wholesale prices of some important commodities in the former Hyderabad State which could be fairly regarded as representing the price level in the district as well for the period 1931-41 are shown in the following statement [Census Report: Hyderabad State, 1941.] (Table No. 3).

TABLE No. 3

(Base year—January 1922)

Commodity	1931-32	1932-33	1933-34	1934-35	1935-36	1936-37	1937-38	1938-39	1939-40	1940-41
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)	(10)	(11)
Rice	50	50	48	55	54	56	58	57	75	70
Wheat	37	37	36	34	33	44	47	41	46	47
Jowar	43	43	43	54	49	53	51	61	65	55
Bajri	45	45	47	57	53	59	55	59	68	57
Gram	31	31	34	40	37	48	50	52	54	54
Tur	36	34	36	45	43	50	55	51	53	49
Cotton	75	72	67	75	74	79	73	70	84	77
Linseed	41	43	43	43	46	50	50	48	49	51
Castor-seed	56	58	48	50	54	64	60	59	75	59

Price controls: The rising prices compelled the government to institute price control, and to check profiteering and unhealthy speculation. Accordingly the Hyderabad state government established a Price Control Committee for the state and appointed a controller of prices for the district.

An announcement was also made through the press and radio the effect that " people selling at rates which exceed 5 per cent on the average price prevailing in the last week of August, 1939, in so far as the foodstuffs, ghee, sugar, salt, locally manufactured goods like vegetable oils, matches, cigarettes, etc., are concerned, and 10 per cent on all other articles will be prosecuted under Rule 81 of the Defence of Hyderabad Ordinance" [of. Census Report: Hyderabad State, 1941].

The prices took a downward turn from January, 1940, to July, 1940. This was, however, a temporary phase after which prices began to "rise steeply. The trend was maintained throughout the War period. The close of the War had very little effect upon the price level The Korean War boom brought about a further rise in the prices of all commodities in the district. The following statement gives the average prices of certain commodities in 1952-53, 1955-56, 1959-60 and 1960-61 in the district.

(Prices in rupees per Bengal maund)

Commodity	1952-53	1955-56	1959-60	1960-61
(1)	(2)	(3)	(4)	(5)
Rice	32.86	14.54	26.83	23.55
Wheat	26.26	17.37	24.98	22.79
Jowar	12.75	11.31	15.53	14.17
Bajri	13.00	12.31	15.23	16.88
Gram	22.50	10.14	14.15	15.72
Tur	14.00	10.69	16.37	14.00
Gul	16.55	10.49	23.63	12.53
Groundnut	18.85	14.31	21.37	26.15
Cotton	24.00	23.91	32.89	32.93

The lower prices in 1955-56 could mainly be attributed to bumper agricultural season. The high prices of rice, wheat, gram and gul in 1952-53 might have been due to failure of certain crops in that year.

It is interesting hereto compare the trend in index numbers of food articles in India with those prevailing in Bhir district.

The following is the statement of such index numbers for period between 1955 and 1960.

Year	All-India	Bhir District
1955	85	62
1956	99	72
1957	107	88
1958	112	89
1959	118	107
1960	120	111

With the continuing rise in the price level the State had to intervene. A number of licensed fair price shops were opened for supplying foodgrains on ration cards. In 1961, there were 41 fair price shops in the district. They are supplied with commodities by the government from their godowns.

The impact of this arrangement is substantial. The fair price shops have helped to hold the price line to some extent. They serve as a sort of buffer. Whenever prices rise either through speculation or through short supply due to bad harvest or otherwise, foodgrains are supplied from the government godowns.