An Analysis of Price and Output Behavior in the Indian Economy: 1951-73**Extracted by permission of the North-Holland Publishing Co., from Journal of Development Economics (June 1979).

Publisher Summary This chapter presents an analysis of price and output behavior in the Indian economy for the period 1951–1973. Inflation in the Indian economy over the period 1951–1973 has been moderate by international standards, the general price level increasing at an average annual rate of about 3%. This apparently moderate overall increase for the period as a whole, however, conceals some important features of inflation within this period. A 10-year period of price stability ending in 1960–1961 was followed by a much higher rate of price increase in the second half of the period. This was particularly true after 1964–1965 when a succession of agricultural droughts, slowing down of Public Law 480 imports from the USA, increases in government expenditures on account of the Indo-Pakistani war and later the Bangladesh refugee relief—all contributed to the high rates of inflation in the economy. The increases in the import prices of oil, fertilizers, etc., further intensified the inflationary pressures in the economy.