Indian Journal of Economics April 1944

Inflationary finance is the source of a double rise in the prices of consumable goods; by witdrawing men and resources from the production of cosumable goods to meeting the demands caused by war it reduces the supply of the former ; and secondly by increaing the_ stock of money in the hands of the consumers to purchase this reduced supply of consumable goods it icreases the demand f [...] It is essential that the grade or qqulity should be clearly defined; otherwise unless the gy de for which the price is fixed is absolutely the lowest there is the possibility of deterioration in the quality of the article such as the substitution of adultered ghee for pure ghee; similarly if the price of a phial of patent medicine is fixed the contents of the phial may be reduced. [...] Price control is particularly difficult in India in the absence of reliable statistics of production stocks and consumption the lack of grading facilities the non-emergence of the habit of granting cash receipts for sales the want of strong organisation of producers and dealers and the eistence of a large number of semi-independent provincial governments and States. [...] Effective price control has to take note of 1. the size of supply in relation to demand 2. the different positions of different commodities in relation to demand and 3. the elasticity of the supply of the factors of production in the case of each controlled commodity. [...] The Indian Finance wrote: "We are still in the stage of accomplishing in terms of paper and personnel than of production of the right articles in the right quantities and in the right time." 2. In spite of the groundwork cleared by the Eastern Group Conference and recently by the American Technical Mission the War Supply Department has managed matters with no thought for the morrow.