HIGH PRICES IN INDIA

Dominion, Volume 13, Issue 101, 23 January 1920, Page 7

HIGH PRICES IN INDIA

CONTRIBUTORY FACTORS

WARNING TO SPECULATORS

Speaking on a resolution advocating an inquiry into high prices in India, in the Imperial Legislative Council. Mr. Mant classified the causes of the high prices Under three heads: firstly, all-world factors; secondly, all-India factors: and thirdly, local factors (states the "Christian Science Monitor's" correspondent in Indin). "The first head," Mr. Mailt enid in his speech, "need not detain us long. For some years past the principal nations of Europe have devoted their whole energies to the work of destruction instead of production, with the inevitable result that there a world shortage of the necessaries of life. "Together with this contraction of production, which in itself would tend to raise prices, there has been a huge inflation of European currencies, and these factors combined are quite sufficient to account for lite universal rise in prices. These were bound sooner or later to react on India both abroad and by adding to the cost of the articles that she imports. The restrictions imposed on export*; partly by shortage of tonnage and partly by the deliberate action of the Government, have retarded the operation of this factor. 1 but have not removed it altogether, while in the case of imports the shortage and high cost of freight has had the opposite effect, as it has reduced supplies of such articles as cotton cloth, and thus raised prices here. Rice and Wheat Areas Reduced. "Turning to all-India factors, the. area under rice and wheat was last year contracted by 1G,000,000 acres as compared with the previous year, and the estimated output was reduced by nearly 15,000, 000 tons. In normal times tho balance of trade in favour of India is adjusted by importing the precious metals, which nro used partly for hoarding, partly for ornaments, and partly for expanding the currency. During the war, the most important countries in Europe and America placed an embargo on the export of gold, while silver also was difficult to obtain. To provide funds for our export trade and to finance important item* of war expenditure the Government of India was compelled to issue notes against British Tieasury bills held by .the Secretary of State in London,

"I pass on to local factors. The shortage of rolling stock on tho railways involved great difficulty in distributing our reduced supplies of foodstuffs. This accentuated tho effects of local scarcity and created great opportunities for tho • profiteer." ■ • ' Restricting Exports. Mr. Mailt wont on to say that tho pro'blem with which they had had to -deal had comprised conservation of food, stuffs, distribution, and prices. It had been decided in February last to. restrict exports 'of foodstuffs and to appoint * foodstuffs commission, to . control their distribution. In the first seven months of 1919 exports of pulse and flour had been reduced from 1,12.1,000 toils to 62,000, and r'ce by 70 jier cent, In Burma, tho Wheat Commission had saved tho situation by providing shipping. Supplies lwd not only been conserved, they had also been supplemented by imports from Australia. Thanks to the Wheat Commission, wheat had been boujjht and freight arranged at a cost considerably below market rates. Mr. Mailt added that the shortage In Bengal and As=am was a recent development, In Bengal, up to the end of last year, prices had been so-low that they were a causo of anxiety to the Conferenco of Registrars of the 'Co-operative Societies. He added that supplies wcro now pouring in from Burma and that it hoped that by the end of the yea* It would be possible to allow trade to roBume its normal channels. Benefit of Rise Control. While admitting that rice control had been of enormous "benefit to India, Mr. Mant said: "As to the.economic aspect of the present situation, in restricts ing exports we hnvo adopted a policy which our predecessors always rejected as economically unsound, and as a result wo have divorced Indian food.priccs from world prices. Wo were driven to this 'course by abnormal circumstances, and wo recognise that if we were to follow it as a permanent policy, tho results which tliev, our predecessors, feared, would inevitably ensue. There mo many other crops that compete with food grains, and if India ceased to import those grains the cultivators would ccnso to grow more than is required for homo consumption. The one tiling that has saved India from disaster in the present vear is tho fact that she normally exports food grains. It. is this surplus pro-, dnced for export which provides India with a margin on which she can fall back in oerods of scarcity." In conclusion, Mr. Mant warned speculators who might be holding on to stocks in tlie iiono that the embargo on exports would shortly be removed thabcontrol would be maintained until there was a considerable drop in prices. . He also produced a. statement showing India s imports of bullion, absorption' of rupees, and net exports during the last ten years. In the fivo waf years tho 'balance of trade in India's favour averaged 20-90 crores per annum. He added: "If theso results continue, if there is a permanent rise in the value of India's products, which are mostly derived from the soil, \yithonf, a corresponding increase in the cost of her imports, the futuro may b» regarded as hopeful. In the past tho oovertv of tho agricultural classes has been tho chief obstacle to the spread of education and the introduction of imDroved methods of cultivation. If tho profits of tho cultivator are inct'cnmt he will bo able to Afford better education nnd better methods, and these in turn will still further raise his income and his standard of living." The Case of Cloth, In the debate which followed, Mr. Chanda moved' that tho Government should tnke measures with regard to the reduction of the present high prices. Nawab Ali Clioudri, supporting Mr. C/handa's resolution, said that in his ooinioH tho measures so far adopted by tho Government had.been insufficient. Mr. Lev expressed disappointment" that no mention had lx>en made of the nigh Price of cloth. Tho case of cloth was, , in his opinion, apposite to the case of Foodstuffs, as Tndia was an importing cnuntrv in the matter of cloth/ ihis made anv control of prices of cloth liioro difficult and more dangerous. impossible to prevent high prices without reducing imports. The Government had attempted to stimulate manufacture of cloth in India, but this could only bo done to a limited extent, The meaMires which„tji,c taken had resulted! in,-a., of prices. r.'.]nin