ABSTRACT
As we have seen, in the wartime inflation in India the lag of money wages1 behind final prices and prices of raw materials helped reduce labour’s share by permitting increased gross margins and reducing labour’s share of total prime costs. In the immediate postwar inflation, money wages, rising faster than prices of manufactures, helped rising raw material costs to reduce gross margins. The result was that labour’s share of gross value added rose despite the declining share of labour in total prime costs. In the inflation of the Second Five Year Plan, rising raw material costs reduced gross margins, and the rise of money wages was sufficient to ensure relative stability of labour’s share, even though money wages were lagging behind final prices and raw material costs, and even though labour productivity was rising. The rate of rise of money wages was not, however, in this period sufficiently fast to cause a clear redistribution of gross factory income towards labour, even given the pressure of rising raw material costs on margins.
