ECONOMIC TRENDS

PRICE TRENDS.

The study of price trends is of immense importance because it furnishes a key to the study of the economic conditions of the people. Apart from seasonal and temporary fluctuations in prices, there are cyclical as well as permanent fluctuations in the general level of prices. Here we are concerned more with the cyclical and permanent fluctuations as well as with the conditions born of the changes in the purchasing power of the rupee.

The Chanda District Gazetteer published in 1909 gave very valuable information about the price trends during the period between 1859 and 1909. The account of prices from the same is reproduced below: -

Agricultural produce. General course of prices.

" Before the development of communications, the prices of agricultural produce were regulated almost solely by local conditions, and variations were characterised by great abruptness from year to year according to the conditions of the particular season. So long as the monsoon was regular and harvests favourable, prices ruled at what would now be deemed an absurdly low figure, but a failure of the crops immediately sent them skyhigh. The only regulating influences which operated to tone clown the violence of these fluctuations were the habit of hoarding sufficient grain to meet the consumption of two year-, and the maintenance of Public granaries. This period of insularity continued practically all over India till about the middle of the 19th century, and the Mutiny may be taken as the dividing line which separates it from the modem condition of affairs under which India is bound up in the commercial comity of nations, and the state of the cotton crop in Carolina reacts on the prices of cotton at Chanda. Thus prices prior to the Mutiny have, broadly speaking, but a topical value, and it need not be a matter for much regret that we have no reliable figure previous to 1832. Subsequently to the Mutiny, the chief influences which have permanently affected the course of prices in India as a whole are-(1) the transfer of the territories of the East India Company to the Crown, a step which immediately resulted in a great development of commercial and industrial activity accompanied by large imports of the precious metals, and (2) the opening of the Suez Canal in 1870, which led to the development of the grain trade with Europe. Turning to more local influences, for Chanda, the crucial date is 1877 when the rail was opened as far as Warora; and the present year 1908, when the Warora line was extended to Ballalpur, thus bringing large tracts of hitherto insufficiently developed country within reasonable distance of the railway, should also mark the beginning of a new era. More temporary influences have been-(1) periods of scarcity and famine, notably from 1861-1869, in 1897, and in 1900, at all of which periods the District itself suffered distress, and the great famine of 1877-78 in western and southern India, which caused a general rise in the price of food-grains all over India, and (2) the American War of Secession in 1861-1865, which created a strong demand for Indian cotton, and sent up the prices of agricultural produce in general."

" Development of communications and greater command of money have had the inevitable result of inflating the prices of agricultural produce. In considering the course of prices of such produce in this District subsequent to the Mutiny the following periods are to be distinguished:-

(1) 1859-1861.-Normal period prior to development of communications.

(2) 1861 - 1869.-Period of high prices culminating in famine.

(3) 1871 1878. Normal period: communications in course of development.

(4) 1878-1880.-Period of high prices caused by famine  in other parts of India.

(5) 1881-1896.--- Normal period: communication by rail  now established as far as Warora.

(6) 1897-1902.-Famine period.

(7) 1903 to date.-Period of gradual recovery, crops approximating to normal.

"It is the normal periods that are of most permanent interest to the economic hisiorian as displaying the steady upward trend of prices, which accompanies development, and a fair idea of this upward tendency can be obtained by summarily comparing the rales of the three principal food crops raised in this. District in various normal series of years. In the tabular statement below abnormal years are neglected. The prices entered are taken from the official returns and relate to petty retail transactions: they give a somewhat higher rate than the figures found in the books of mahajans, and they are by no means absolutely correct: but as a guide to the relative prices at various periods they may be accepted as fairly accurate: -

SEERS PER RUPEE

Year

Rice

Juari

Wheat

1839-1861

22.89

59.82

33.33

1871-1877

14.50

28.00

19.00

1881-1885

15.90

33.70

24.50

1886-1890

13.40

25.20

18.00

1891-1896

12.50

20.30

16.15

1903-1906

10.74

20.73

13.74

" The prices given above relate to Chanda city only. Rates differ in the various tahsils and within each tahsil itself, but the variations are not so extraordinary as to call for particular remark. At the recent settlement it was calculated that the rise in the prices of agricultural produce since the settlement of 1868 amounted to over cent per cent in the Chanda tahsil and the Upper Taluk of Sironcha, to 70 per cent, in Warora and the Lower Taluks, and in Brahmapuri to 40 per cent for rice, 70 per cent for wheat and linseed, and to 50 per cent for juari. Percentages are however too rigid to be satisfactory in calculations of this type, and perhaps a better idea of the general rise of prices may be gained from the following quotation from Mr. Chhotelal's Inception Report, dated 1896: ' It is well to add what the people relate regarding the rise of prices when they compare the current prices with those in pre-settlement days. They say that dhan was sold in pre- settlement days at Rs. 2.8 to Rs. 3 per khandi, while it is now sold at Rs. 5 to Rs. 6 per khandi ; juari was then sold at Rs. 4 per khandi, while it is now sold at Rs. 10 per khandi; til was sold at Rs. 7, Rs. 10 or Rs. 12 per khandi, while it is now sold at RS. 20 or Rs. 23; and linseed was then sold at Rs. 3 to Rs. 5 per khandi, while it is now sold at Rs. 20 per khandi. This shows that the people consider that prices have doubled since settlement. And striking a rough average of all crops, it is safe to say that prices have again gone up by between one-third and one-half since Mr. Chhotelal wrote the passage just quoted.

Prices of staple foodgrains in Sironcha.

" The course of prices in Sironcha calls for some brief remarks. At the first settlement in 1866 they stood at an abnormally high figure owing to the fact that the construction of the Godavari Navigation Works had brought about a large influx or outside labour. But, taking the years immediately preceding this artificial inflation of prices and excluding those years in which prices were forced up, the average price of the staple crops from 1847 to 1861 was rice 39, juari 51 and til 29 seers to the rupee. A good deal of difficulty was experienced at the recent settlement in determining how far these prices had advanced. There was practically no open bazar, and the official returns of the Upper Taluk were not to be trusted, as they related only to retail transactions on a very petty scale, while for the lower Taluks there were no official returns at all. The mahajan's books again are unreliable, for, to secure their own profits, they fix an artificial rate, at which they take grain at an un-justly low rate from the tenants in order to settle the running accounts which the latter keep with them. The rate:- prevailing in 1902 are given by Mr. Hemingway as follows:-

SEERS PER RUPEE

 

Rice

Juari Til

Upper Taluks

     

According to official returns

12

23

--

According to mahajans' books

22.5

43

--

Lower Taluks

 

   

According to mahajans' books

18

42

15

" The general rise of prices has, therefore, not been without marked effect even in the landlocked Upper Taluk. The rise has indeed been even more marked there than in the more accessible Lower Taluks, as the figures of the original settlement appears to give the prices at which food was bought up for the market at Rajahmundry. Considering the lack of communications, this sharp increase is.somewhat difficult to explain, but the exstence of the railway at Warangal appears to have influenced the course of prices. 

Prices of staple food- grains in the District. Rice.

" Excluding Sironcha, we may now consider the course of  rest of the price for each of the three staple food-grains of the rest of the District, rice, juari and wheat. During the period from 1834 to the Mutiny, the price of rice at the head-quarters of the District ranged between 25 and 30 seers to the rupee. From 1859 to 1861. which are generally regarded as normal years, the average price was 22.89 seers. Thence forward until 1869 a series of bad years and, in a lesser degree, the improvement of trade due to the American Civil War, caused a sharp upward rise, and the course of prices ran as follows 1862. 15 seers; 1863,12.5: 1864 and 1865, 9; 1866, ll.6: 1867. 7; 1868, 10.2; 1869, 5.9 [Figures from 1834 to 1869 are for uncleaned rice and later one's for cleaned rice.]. Ensuing years witnessed a return to the normal which may he said to have lasted till 1896. with one break in 1878-1880 when prices went up owing to the Madras and Bombay famines from 1871 --1878, the average rate was 21.3 seers: during the abnormal period 1878 1880 it rose to 10.7 seers. The remaining 15 years of the normal period may be divided into three quinquennia, during each of which a gradual but persistent rise in value may be remarked. for this, improved communications are accountable, but the inflation of prices in rice is less remark-able than in the case of other crops, chiefly because rice is mainly grown for local consumption but partly also because it was yielding uniformly good outturns during these years. The average prices for each quinquennium were:-

1881 - 1885

15.90 seers.

1886-1890

13.40 seers.

1891 - 1895

13 seers.

"The year 1896 with an average price of 12.2 seers was the last of the normal seasons and since then the average price has been 10.6 seers. In the famine of 1897, which was a period of heavy exports, prices averaged 8.9 seers, and went as high as 7.2 in August; in the 1900 famine, 8.7 seers was the average, and 7.3 the highest price reached.

juari.-" The price of juari in 1832 is given by Major Lucie Smith as 34 seers to the rupee. From 1834 to 1859, the price varied between 40 and 60 seers to the rupee, and in 1860 the extremely low figure of 80 seers to the rupee was recorded. There was a sharp rise in 1861, when prices went up to 38 seers, and in the ensuing eight years of distress very high quotations were reached. In 1862 the rate was 20 seers, by 1864 if bad risen to 13.7; it then declined to 20 seers in 1866, but again went up, this time to the high figure of 10.3 seers in 1869. Then followed the period of normal prices, in which the fluctuations of juari displayed exactly the same characteristics as have already been noted in dealing with rice. Excluding the exceptional years 1878-1880, when the rate went up to 19 seers, the gradual rise of prices consequent on the opening of the railway in 1877, is shown by the periodical averages given below:-

Years

Average price in seers per rupee

1871-1877

28

1881-1885

29.5

1886-1890

24.5

1891 - 1895

20.5

In 1896 the rate stood at 17.5 seers. The next quinquennium 1897-1901 includes both famines, and the average price of juari rose to 15.1, reaching its highest annual figure in 1900 when the average price was 9.7 seers. Three times viz., during the months of August 1897, and June and August 1900, the prevailing rate rose to 8.1 seers. In the following quinquennium 1902-06 there was a marked fall and the average price attained 20.6 was equivalent to that obtaining in the years immediately preceding the famines.

Wheat.-"In 1832, according to the figures given by Major Lucie Smith, the average price of wheat at the headquarters of the District was 22.8 seers. From 1839 to 1860, the rate fluctuated between 32 and 41 seers, the latter figure being recorded in 1859, which may be looked upon as the last year of patriarchal cheapness in Chanda. From 1861 to 1869 the rise was rapid, the rates, according to the same authority, being 25 seers in 1861, 16 seers in 1862, 13.7 in 1863. 11.7 in 1864, 12.5 in 1865 and 1866, 7.7 in 1867, 11.8 in 1868, and 8.7 in 1869. During the ensuing normal period, the figures were as follows: -

Years

Average price in seers per rupee

1871-1877

19

1881 - 1885

22.5

1886-1890

19

1891 - 1895

16

During the temporary pressure of prices in 1878-1880 wheat was forced up to 13 seers per rupee. In 1896 the retail price of wheat was 14 seers. In the ensuing quinquennium of scar-city, diversified with famine, an average of 9.9 seers was reached, the culminating price being 8 seers in 1900. From 1902 to 1906 the average price recovered to 12.5 seers.

Prices of other agricultural produce.

" The table of prices given in Major Lucie Smith's report shows no returns for cotton prior to 1839, when it is shown as selling at the rate of a little over 8 seers to the rupee. This very low figure-has never again been approached, and already by 1844 we find that the price has risen to 3.25 seers. Henceforward until the outbreak of the American War, prices ruled between about 3 and 4 seers to the rupee, but as soon as the war began to affect the market they went up with a bound. According to Major Lucie Smith's figures they ranged between 1 and 2 seers from 1862 to 1869, but, in view of the general drop in prices all over India after 1865, it appears probable that there is some mistake in his figures for the later years. From the cessation of the war until 1884, prices seem to have continued with very slight fluctuations at the rate of about 5 to 6 seers to the rupee, the only exceptional years being 1871 and 1872 when the rates rose to 1.5 and 2.5 seers, respectively. In 1885, the price went up to 2 seers, and from that date till 1903 the rate never fell below 2 seers: in 1907 it stood at 1 seers. Linseed sold at 11 seers to the rupee in 1866: from 1867 to 1894 the rate varied from 8 to 15 seers; in 1895, it rose to 6.7 seers, but fell again to 10 in 1898. In 1901 and 1902 it stood at only 6 seers, but decreased in 1903 to 8 seers. In 1907 it stood at 7 seers Til stood at 10 seers in 1866, varied from about 8 to 12 seers between 1867 and 1887: it made a sharp advance in the following year, and between 1888 and 1894 fluctuated between about 6 and 7 seers. In 1907, the rate was 6 seers. Gram sold at an average rate of 13.7 seers from 1891 to 1895, of 12 seers from 1896 to 1900, and of 13.2 seers from 1901 to 1905. In 1907 the rate was 9 seers.

Salt.

"From 1862 to 1874 the trade in salt was hampered by the existence of the customs line, and the average cost was 13 lbs. per rupee. On the abolition of the line in the latter year, the price immediately fell to 17 lbs. In 1878, when the salt duty was lowered from Rs. 3 to Rs. 2.8 per maund, the price stood at 18 lbs. per rupee, at which figure it remained until 1882 when it fell to 20 lbs. In that year a further reduction of duty to Rs. 2 per maund was effected, and from 1883 till 1887 the cost of salt averaged 22 lbs. to the rupee. In 1888 the duty was again raised to Rs. 2.8 per maund, and thenceforward until the policy of reducing the duty was renewed in 1903, the average cost was 19 lbs. The recent reductions of duty, viz., to Rs. 2 per maund in 1903, to Rs. 1.8 in 1905, and to Re. 1 in 1907 have naturally resulted in a corresponding decline in the cost of salt which is now sold at 36 lbs. (18 pailis) to the rupee.

Prices of other common articles.

" The following are the present retail prices in Chanda bazar in demand. Bricks for building houses of the common necessaries of life - most cost from Rs. 3 to Rs. 6 per 1,000; country tiles Rs. 2.8 to Rs. 4 per 1,000; sand, 4 cart-loads a rupee; bamboos. Rs. 2 to Rs. 7 per 100; small tattas for thatching 1' 6" x 1' 2" Rs. 7 to Rs. 10 per 1,000; large tattas 6' x 6' are sold at two to  rupee: small beams cost Re. 1, large Rs. 6 each; ratters (siwars) if of teak cost Re. 1 each, of other kinds of wood Rs. 15 per 1,000. A bottle of country liquor holding 60 tolas or three-quarters of a seer, is sold at 10 annas or Rs. 1-4 according to strength. Country sugar is retailed at 2 seers to the rupee other sugar at 4 seers, gur at 6 seers; potatoes 8 to 10 seers per rupee: brinjals 2 pice and onions 4 pice a seer: chillies 3 seers the rupee; cloves 14 annas a seer, cardamoms 20 tollas to the rupee; cocoanut oil 12 annas, and linseed, til and castor oil 10 annas per seer, milk 8 seers to the rupee: ghee Re. 1 to Rs. 1-4 per seer; cotton seed (sarki) 17. and oil-cake 13 seers per rupee; tamarind fruit, two maunds of 12 seers each per rupee. Firewood costs Rs. 1-8 to Rs. 2 per cart-load: cow-dung cakes 4 annas per 100; karbi Rs. 6-4 per 100 bundles, grass Rs. 4 to Rs. 6 per 1,000 pulas. (looking utensils are retailed at Rs. 1-12 per seer if of brass, at Rs. 2 to Rs. 2-12 per seer if of copper: if of the alloy of zinc and copper or brass called bharat the price is Rs. 1-2 per seer. Large iron buckets cost from Re. 1 to Rs. 1-4, and small from 8 to 10 annas a piece. Common kerosene oil is sold at Rs. 2-8 per tin or 2 annas a bottle. Among leather articles, mots cost from Rs. 1 to Rs. 20. hand-buckets Rs. 3 to Rs. 5. ropes 75 feet long and 1 inches in diameter Rs. 7 to Rs. 10 a piece; shoes. Re. 1 to Rs. 1-8 a pair. Common cloth sells at 3 to 4 annas a yard: a pair of ordinary dhotis fetch Rs. 2 to Rs. 3-4 and the coarse cloth known as khadi is sold at Rs. 1-4 per than of 20 by 1 cubits. Cotton and newar tape for cots is sold at from Rs. 4 to Rs. 6 for a piece 100 cubits long and 4 inches broad: ordinary sewing thread is sold at three pice a reel: a box containing 20 white muttas of No. 30 and weighing four seers is sold at Rs. 6. The prices of country carts are Rs. 40 to Rs. 100 for a dhamni, Rs. 20 to Rs. 30 for a rengi, Rs. 20 to Rs 40 for a khachar, Rs. 20 to Rs. 40 for a bandi, and Rs. 100 or Rs. 150 to Rs. 200 for a tonga." [Central Provinces District Gazetteers, Chanda District, 1909, Volume A; pp. 205-15]

In the period that followed, a fall in the purchasing power of the rupee was visible. Apart from the fluctuations of a seasonal and temporary nature, the prices of all goods have been rising. During the First World War prices of almost all goods rose sharply. This trend of higher prices continued fill the Great Depression of 1930. The depression which produced an adverse impact on the economics of the U. S. A., U. K., France and Germany had an adverse effect on the prices of primary goods in the international markets. This led to a momentous slump in the prices as well as demand for Indian goods in the inter-national markets. The Indian economy received a severe set-back. The slump continued till 1933. after which there was a revival of prices and demand.

The outbreak of hostilities in 1939 was an important event in the economic history of this country as well. Being a part of the

British Empire, India had to bear many of the economic evils forced on her. Prices shot up from the end of 1939. The acute shortage of consumers goods caused the prices to rise continuously. Consequent upon the shortage of goods there was a deplorable trail of black-marketing and hoarding. Consumers goods such as cloth, sugar, kerosene and many of the luxury goods were scarce. The Government enforced the rationing of consumers goods. The cessation of hostilities in 1945 brought down the prices to some extent. The next important event which brought about the rise in prices was the Korean War boom. The price rise in the international markets during the war found its reflection in the Indian economy which in turn affected the economy of Chanda district as well. After the Kirean War boom there was a slight fall in prices, but it was only short-lived.

Prices did nor show a consistent trend during the period between 1952 and 19588. The satisfactory harvest conditions dining 1953. 1954 and 1955 were responsible for keeping the prices of agricultural produce well under control. Prices, how-ever started rising from 1956-57, and registered a high level in 1959-60. The level of prices came down in 1960-61 and 1961-62 mainly because of satisfactory harvests.

The outbreak of hostilities with China threatened the dislocation of the economy of India and brought about a sporadic trend of rising prices. With the declaration of National Emergency in October 1962 a need was felt to watch the behaviour of prices. In pursuance of Government policies, collection of the statistics of price in the markets in Chanda district was started in November 1962. The price trends in the case of important commodities as elaborated in the Socio-Economic Review and District Statistical Abstract, Chanda District [Publication of the Bureau of Economics and Statistics, Government of Maharashtra.] are furnished below.

Prices in 1963. The prices of most of cereals fluctuated during the year 1963 At the earlier part of year, the wholesale price of rice of fine variety was Rs. 62. medium Rs. 55 and coarse Rs. 50 per quintal but at the end of the year the prices of these three varieties increased to Rs. 84. Rs. 62 and Rs. 58, respectively. The wholesale prices of wheat remained almost stable. But the price of jowar (white) fell to Rs. 36 from Rs. 42 per quintal at the. end of the year. Similarly the price [Prices are even per quintal except otherwise specified.] of bajra declined from Rs.51 to Rs. 47 at the beginning of the year.

The price of gram increased from Rs. 48 to Rs. 55 at the end of the year, which resulted in the increase of the price of gram dal from Rs. 52 to Rs. 65. Arhar (dal) increased considerably from Rs. 82 to Rs. 115. Similarly the price of mung increased from Rs. 60 to Rs. 75 at the end of the year. But the prices of udid and masur dal decreased slightly at the end of the year.

Sugar showed a gradual increase, and the rate was controlled at Rs. 1.29 per kilogram in fair price shops. But due 10 the scarcity of sugar, the price of gul nearly doubled during the year.

The price of edible oils increased in the middle of the year but slightly decreased at the end of the year. Groundnut oil decreased from Rs, 206.25 in the beginning of the year to Rs. 195 at the end of the year. There was a slight increase in the prices of meat, fish, eggs and vegetables during the year. The price of kerosene rose from 36 paise to 49 paise per line by the end of the year.

The prices of cloth remained unaffected throughout the year. Marginal changes were noticed sometimes.

Prices in 1964:-During the 1964 calendar year the prices of most of the cereals fluctuated. The retail prices of rice of line, medium and coarse varieties were 88 paise, 84 paise and 66 paise, respectively, per kilogram during the earlier part of the year. The price of the fine and medium quality rice decreased to 80 paise and 75 paise, respectively, during later part of the year. But coarse rice became slightly costlier because of fall in market arrivals. The wheat price of medium and coarse qualities rose from 70 paise and 58 paise to Rs. 1.25 and Rs. 1.07, respectively. The prices of jowar and bajri rose gradually from 43 paise and 48 paise to 60 paise and 55 paise, respectively, during 1964.

The prices of all pulses except udid increased during 1964. Gram and gram dal went up from 63 paise and 71 paise to Rs. 1.34 and Rs. 1.64 per kilogram, respectively, by December. Arhar dal increased nearly one and a half times from Rs. 1.06 to Rs. 1.57 at the end of the year. The prices of mung dal and masur dal increased from 83 paise and 81 paise to Rs. 1.20 and Rs. 1.41, respectively by the end of the year.

Groundnut oil price increased from Rs. 2 to Rs. 2.25 per kilo-gram. The market prices of meat, fish and vegetables registered a steady increase during the course of the year. Dry chillis experienced a decline in price from Rs. 2.85 to Rs. 2.50 per kilo-gram. Cloth and utensils however maintained stability of prices during 1964.

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