Indian Journal of Economics January 1944

The City of Lucknow in the U. P. is one of the deficit areas and we shall get a clear idea of the complexities of the problem by studying the position of this city in some detail. [...] If the industrial workers specially those employed in the organised industries form a very small proportion of the total population which is in fact the case and if the employers have to buy the articles in the black market at competitive rates it maters little from the inflationary point of view whether part of the price of foodstuffs consumed by the workers is paid by the employer and pa [...] The one generally adopted in India is of the last variety with the further qualification that the allowance attaching to each slab of income forms a smaller proportion of the income as we pass from the lower to the higher incomo slabs; the allowance in the lowest slab covering about 75 per cent. [...] coverage of the extra costs of living may be suported on the following grounds:— (a) Rise and fall in the cost of living are ascertained with the help of index numbers and in compiling index numbers we can at best take note of only a portion of the expenditure of the family. [...] But to explain the fluctuations in the holding of stocks as the fons et origo of the trade cycle is to mistake the effect for the cause; these fluctuations are the resultant of changes in prices brought about by fluctutions in investment in fixed capital.