ECONOMIC TRENDS

PRICE TRENDS

The study of price trends is helpful in understanding the general economic situation and standard of living of the people in the district. Apart from empirical interest it gives an insight into the economic condition of the community of people from time to time.

The Wardha District Gazetteer published in 1906 gives an account of the trends of prices from 1855 to 1903, which is reproduced below. [Central Provinces District Gazetteers, Wardha District, 1906, Vol. A., pp. 133-35.]

"Prices in former years.—The average prices for the years 1855-61 as obtained by Mr. Purshotam Das from the account books of four different firms were wheat 86 lbs. per rupee, linseed 74 lbs., cotton 20¹/2 lbs, and juar 116 lbs. Immediately after 1861 the price of cotton was enormously inflated by the American War and those of grain followed in its course. The prices of the quinquennium 1861-65 were nearly or quite treble those of the preceding decade in the case of wheat, linseed, juar and cotton. In 1867 the railway was opened and various causes have since combined to prevent a fall to anything like the old level. But the 30 year's settlement did not take account of the heavy inflation after 1861 because it was not foreseen that it would be permanent. The settlement was not undertaken for the purpose of raising the revenue, which it was considered was already sufficiently high, but of equalising its incidence. It took in fact very little account of assets of prices, and left the revenue at practically the same figure as had been paid during the preceding 40 years. At the settlement of 1892-94 the Settlement Officer arrived at the conclusion that the general rise in prices since the period preceding the 30 year's settlement (1862-63) had been 150 per cent on the average of the four staple crops. The price of cotton had more than trebled. The average rates for the years 1888-92, which were taken as those prevailing at the time of settlement, were wheat 34 lbs., linseed 26 lbs., juar 48 lbs., and cotton 5 lbs. per rupee. Juar is the staple food of the District, but its wealth is derived from the cotton crop, and as juar is practically not grown for export its price does not greatly affect the cultivators."

"Recent rates.—Since 1891 the price of ginned cotton has risen as high as 3.8 lbs. per rupee in 1893, while in 1898 and 1899 it has been as cheap as 6 lbs. It has generally, however, varied between 4 and 5 lbs. and in most years has been higher than the settlement price. In 1903 it was 4.2 lbs. and in 1904 rose to 3.8 lbs. It is certain that the people have reaped very large profits from the sale of cotton. The cultivator, however, usually sells his cotton uncleaned, and the price of uncleaned cotton in rupees per khandi of 9 maunds is the one commonly known to the people. The price of juar has always been above the settlement rate since 1891. The average price during the decade 1891-1900 was 36 lbs. and between 1901 and 1903, 40 lbs. The highest point touched was 21 lbs. in 1897. In the famine years juar has not always been procurable in sufficient quantities to meet the demand for consumption. Wheat and linseed have also never since been so low as at settlement. The highest price of wheat was 16 lbs. in 1900, the average for the five years 1891-95, 29 lbs. and for the years 1901-04, 22 lbs. Linseed has fetched very high prices in recent years, the retail rate having in some years been double the settlement rate and seldom less than 50 per cent, higher. The average price for the decade 1891-1900 was 18 lbs. and for 1901-04, 15 lbs. The fact that such prices have not induced the cultivators to put a larger area under this oil seed appears to be eloquent testimony to the profits reaped from cotton cultivation."

Prices of miscellaneous articles.—"The prices of other commodities have not increased in the same ratio as those of agricultural produce. Previous to the abolition of the salt customs line in 1874, the price of salt varied between 15¹/2 and 17 lbs. a rupee during the years 1860-1875. On the reduction of the duty it fell to 20 lbs. to 22 lbs. between 1876 and 1890. Between 1891 and 1903 the price remained almost uniform at a little cheaper than 21 lbs. Locally it is said that the ordinary rate for considerable quantities has been a rupee for a maund of 23 lbs. On the first remission of taxation in 1903 the price went down to 14 annas a maund but advanced again on the destruction of a considerable stock by fire in Bombay. In 1904 the retail price of salt was 21.7 lbs. Mirza-pur sugar sells at Rs. 3 to Rs. 3-8 per maund of 20 lbs. or 5¹/2 to 6¹/2 lbs. per rupee, and Mauritius sugar at about Rs. 2-8 per maund of 8 lbs. a rupee, being sometimes a little cheaper. Ghi sells at Rs. 10 to Rs. 10-8 per maund of 24 lbs., and its retail price is 2 lbs. per rupee. Cotton seed fetches Rs. 1-4 per maund of 40 seers and juar stalks Rs. 15 per thousand bundles in the country and Rs. 20 in towns. An acre yields 500 bundles. Grass generally sells at Rs. 5 to Rs. 10 per thousand bundles in towns. The price of fuel has also risen largely and a cartload costs Rs. 1 to Rs. 1-4."

In the subsequent period the purchasing power of the rupee fell to some extent. The prices of almost all goods rose considerably. The trend of rising prices was remarkably discernible during the first world war and the years following it. This state of affairs continued till the economic devastation caused by the Great Depression of 1930. The Depression which produced an adverse impact on the economies of the U. S. A., the U. K. and France had an adverse effect on the prices of primary goods in the international markets. The crisis in the international markets had an unavoidable impact on the demand for and prices of agricultural produce in India. These conditions caused a momentous fall in the prices of all goods in the Indian markets. The downward trend of prices continued till 1933 after which there was a revival of prices and international demand.

The outbreak of the Second World War in 1939 was a fateful event in the economic history of India which then formed a part of the British Empire. India had to experience a multitude of economic difficulties incidental to the war time economy. The prices of consumers goods rose in a sporadic manner because of shortages. The scarcity of goods encouraged a trail of black marketing and hoarding.This made it imperative on the Government to enforce rationing of consumers goods, such as, sugar, cloth, kerosene, rice, wheat, jowar, bajri and a number of articles. The cessation of hostilities in 1945 brought down the prices to some extent. The next significant event which brought about the rise in prices was the Korean War boom. The international markets showed signs of inflationary pressure which were actually felt in India as well. But the effect of this boom was conducive to the general economic conditions in India. After the boom there was a slight fall in prices, but it was only short lived.

The price situation improved during 1953, 1954 and 1955. This could mainly be attributed to the increase in agricultural production and favourable harvest conditions. The trend of prices took an upward swing from 1956-57, and recorded its peak level in 1959-60. The 1959-60 prices were by far the highest after the Korean War boom. The favourable harvests of 1960-61 and 1961-62 brought down the prices of agricultural commodities.

The outbreak of hostilities with communist China was an unfortunate event in the economic history of this country. The hostilities had a very adverse impact on the general economic situation. The conditions of war did not encourage the development of industries as it generally happens in other countries. In fact possibilities of sudden recession developed out of rising prices.

The trend of prices of important commodities between 1962 and 1965 as elaborated in the Socio-Economic Review and District Statistical Abstract of Wardha District [Official publication of the Bureau of Economics and Statistics, Government of Maharashtra.] are furnished below:

Prices in 1962-64—

The foreign invasion combined with failure of crops in 1961-62 resulted in rising prices. The authorities therefore decided to collect data on retail prices at Wardha and three centres in rural areas. The prices showed a downward trend during a short interval between January and July 1963, after which there was a upward swing. The prices of rice, wheat, jowar and bajri rose by 27,98,199 and 75 per cent, respectively, over the period between July 1963 and December 1964. The prices of gram dal, tur dal, mug, udid and masur increased by 16,72,69,14 and 183 per cent, respectively during the same period.

Consequent upon shortage of sugar, the prices of gul rose by 51 percent over the period between July 1963 and December 1964. Groundnut oil rose from Rs. 2.10 per kilogram in June 1963 to Rs. 3.25 in September 1964. The prices of vanaspati and linseed oil registered a similar trend during the period.

Prices in 1965—

The behaviour of prices did not fail to show a rising trend in 1965. The prices recorded at the district headquarters showed percentage increase of 92.9 in case of wheat (medium), 89.6 in case of bajri, 167.2 for gram dal and 65.8 for tur dal in December 1965 over those in 1962. The prices of jowar and rice were not recorded as they were prohibited to be sold in the open market. The prices of sugar and gul also increased to a great extent.

Groundnut oil and vanaspati registered an increase of 49, and 34.3 per cent, respectively at the end of 1965. The percentage increase in prices of dhotis, saris and shirting cloth was recorded at 20.3, 6.7, and 30.3, respectively over the said period. Miscellaneous articles, such as, brass utensils, washing soap, cigarettes, etc. also showed a rising trend of prices.

Tables No. 2 and 3 furnish the statistics of wholesale and retail prices prevailing at Wardha town.

TABLE No. 2

WHOLESALE PRICES OF MAJOR AGRICULTURAL COMMODITIES PREVAILING AT WARDHA DURING THE PERIOD 1962 TO 1966.

(Prices in Rs.)

TABLE No. 3

AVERAGE RETAIL PRICES OF IMPORTANT COMMODITIES PREVAILING AT WARDHA DURING THE YEAR 1964-1965.

TABLE No. 3—(contd.)

After 1965—

The price situation took an extremely adverse turn after the Indo-Pakistan war in the autumn of 1965. There was acute shortage of most of the foodgrains, and consumers goods. Speculative hoarding by unscrupulous traders added to the grave situation. The entire price situation appeared like a crisis. The bad harvest in 1966-67 contributed to the crisis which necessitated a positive approach to the problem by the government action.

TOP