M a r c h 1 1 , 1950
ECONOMIC W E E K L Y
G o v e r n m e n t p o l i c y of stabilisat i o n o f personal income, W i t h
d e v a l u a t i o n last September, that
p o l i c y became one for the a c t u a l
r e d u c t i o n o f real income—for i n stance, i f t h e T . U . C . p o l i c y w e r e
c a r r i e d out t it w o u l d mean a c u t
of 5 per cent in real wages by the
end o f the year. B u t w i t h wage
claims outstanding b y unions r e p r e s e n t i n g , some
four m i l l i o n
w o r k e r s , t h e policy o f restraint
has p a t e n l y b r o k e n d o w n . Wages
and salaries were, of course, o n l y
one side of the q u e s t i o n — d i v i dends were supposed to be stabi-
lised as w e l l , b u t n o w a series of
increased dividends have been
declared by p r o m i n e n t companies.
L e y l a n d M o t o r s have increased
theirs by 25 per cent a n d Hoover's
has gone up by 12 per cent. D e n t a l M a n u f a c t u r i n g , Bowaters and
B r i t i s h H o m e Stores, w i t h a n u m ber of smaller firms, have done
likewise. This puts " f i n i s " on any
p o s s i b i l i t y of an even " r e s t r a i n e d "
wage freeze and may w e l l mean
t h a n i n d u s t r i a l peace has gone as
one of the most valuable assets of
British industry.
From the Washington End
The Dollar Bill For
Marshall Plan
T
H E E.C.A.
Administrator,
P a u l H o f f m a n and Secretary
of State Acheson testified before
the
Congressional
Committees
for t h e a p p r o p r i a t i o n of funds f o r
the M a r s h a l l P l a n for 1950-51,
the t h i r d year o f the P l a n . A s
compared w i t h $5800 m i l l i o n s i n
the first year of the P l a n a n d
$4200 m i l l i o n in the c u r r e n t year,
the r e q u i r e m e n t s for t h e f o r t h c o m i n g year are estimated at $3.1
b i l l i o n . T h e r e is expected to be
a saving of $150 m i l l i o n in t h e
c u r r e n t year's p r o g r a m m e ; therefore, the actual a p p r o p r i a t i o n
asked for in the c o m i n g year is
$2950 m i l l i o n . In the course of
his testimony, Hoffman gave an
exhaustive r e v i e w of the actual
w o r k i n g o f the M a r s h a l l P l a n a n d
also indicated the lines of policy
for the coming year.
T h e increase i n p r o d u c t i o n
achieved b y the M a r s h a l l P l a n
countries, M r . Hoffman testified,
had been spectacular; the indust r i a l production in 1949 was onet h i r d higher than w h a t i t was i n
1947 and w e l l above the p r e - w a r
level. I n the t w o years o f M a r shall Plan h a r d coal p r o d u c t i o n
had
expanded by 17 per cent,
steel 52 per cent, electric p o w e r
21 p e r cent, cement 58 p e r cent
and cotton y a r n 31 per
cent.
A g r i c u l t u r a l p r o d u c t i o n had been
b r o u g h t v e r y nearly to the prew a r level. Food g r a i n p r o d u c t i o n had increased by 30 per cent
sugar 40 per cent etc., b u t even
so, the progress has not been adequate. F u t u r e gains i n i n d u s t r i a l
and a g r i c u l t u r a l p r o d u c t i o n , M r .
H o f f m a n w a r n e d , could n o t be expected to match the spectacular
results thus far achieved, because
the p r i n c i p a l bottlenecks had a l ready been eliminated.
M r . Hoffman also testified that
the E.R.P., .countries had p u t
t h e i r f i n a n c i a l houses i n m u c h
better o r d e r than before and that
the prospects of c o n t i n u e d f i n a n cial s t a b i l i t y , despite d e v a l u a t i o n
of currencies, w e r e good.
Western Europe had made good
p r o c e s s in the matter of trade
also exports h a d increased by 50
per cent, since 1947, i n t r a - E u r o pean trade had been restored to
the p r e - w a r l e v e l and payments
balanced except as regards the
d o l l a r area, w i t h w h i c h also there
has been some i m p r o v e m e n t . The
p r i n c i p a l p r o b l e m of the E.R.P.
countries, however, was less prod u c t i o n t h a n trade.
T h e E.C.A. A d m i n i s t r a t o r also
t o l d the Congress A p p r o p r i a t i o n s
C o m m i t t e e that apart f r o m U.S.
grants a n d loans, the o n l y ways
of closing the d o l l a r gap for West250
e r n E u r o p e was b y r e d u c i n g
its need for
dollar import
through building up internal
sources of supply a n d by increasi n g its d o l l a r earnings t h r o u g h
d i r e c t as w e l l as t r i a n g u l a r trade.
I n c e r t a i n commodities Europe's
post-war dollar i m p o r t s h a d been
a b n o r m a l l y h i g h . H o f f m a n stressed the i m p e r a t i v e need for the
U . S . t o i m p o r t m o r e f r o m the
M a r s h a l l P l a n countries, i f the
l a t t e r w e r e to balance t h e i r payments a n d m e n t i o n e d the figure
of 1 b i l l i o n
as the
additional
d i r e c t d o l l a r earnings needed for
this purpose.
A n s w e r i n g the c r i t i c i s m that
larger i m p o r t s f r o m W e s t e r n
E u r o p e w o u l d compete u n f a i r l y
w i t h U . S . domestically produced
goods, M r . Hoffman pointed o u t
t h a t m a n y of these i m p o r t s w o u l d
not be competitive and the rest
w o u l d f o r m such a small p r o p o r t i o n o f t h e t o t a l p r o d u c t i o n i n the
U . S . t h a t i t c o u l d create problems
o n l y in a few localities to w h i c h
relief m i g h t be g i v e n d i r e c t l y , in
the f o r m of u n e m p l o y m e n t insurance to w o r k e r s etc. M r . Hoffm a n seems to regard the question
o f relief t o management w i t h i n difference w h i l e M r . A c h e s o n
took the v i e w that it was definitely a responsibility of the G o v e r n ment to p r o v i d e r e l i e f to industries h u r t f r o m increased foreign
c o m p e t i t i o n . It is an i r o n y that
the U.S. w h i c h is preaching the
gospel of free trade s h o u l d take
such a v i e w of things!
M r . H o f f m a n also d w e l t at great
l e n g t h on the economic unificat i o n o f Western E u r o p e , the b u r n i n g issue of the day. W h i l e p u t t i n g the utmost emphasis on the
u n i f i c a t i o n of the E u r o p e a n econ o m y to make it dynamic a n d exp a n d i n g , M r . H o f f m a n d i d not
t h i n k t h a t the progress made so
far towards i n t e g r a t i o n h a d been
bad b u t that it h a d n o t been good
enough. The E.R.P. countries
h a d r e m o v e d 50 per cent of the
q u a n t i t a t i v e restrictions o n p r i vate i m p o r t s , some progress had
been made to e l i m i n a t e d u a l p r i c i n g and discussions were going on
for the f o r m a t i o n of a c l e a r i n g
union.
F o r a t i m e it l o o k e d as if the
ECONOMIC W E E K L Y
M a r c h 11, 1950
clearing u n i o n w o u l d not materialise.
Not
only
the
UK
was reported to have objected to
i t , b u t some of the departments
of the U.S. G o v e r n m e n t also d i d
not favour the proposal, b u t M r .
Hoffman's and M r . Acheson's
address on the subject appears to
have impressed the Congress, and
the clearing u n i o n n o w seems to
be a certainty. Besides, no less
than $600 m i l l i o n s are to be set
apart f r o m the appropriation for
the n e x t year for the purpose of
helping integration, i n c l u d i n g the
establishment of the clearing
union.
E.R.P. funds in the coming
year, it has been decided, w i l l be
administered in such a w a y as to
lead to economic unification. The
requirements of the various countries arc to be computed in a different way. Instead of the m e m ber countries p u t t i n g up their
o w n requirements for a l l types of
commodities and services, adding
these up and presenting the t o t a l
to the U.S. the U.S. has n o w fixed
a ceiling for each c o u n t r y on the
basis of experience of the past
years and has asked the M a r s h a l l
Plan countries to s u b m i t p r o posals for b r i n g i n g d o w n their
deficits to the figure set by the
E.C.A. w i t h o u t halting progress
towards u n i t y . Countries w h i c h
take measures to speed up integration have been promised
special help. The appropriations
for 1950-51, it should be added,
assume a 10 per cent increase in
the dollar earnings of the West
European countries and a cut of
11 per cent in their d o l l a r requrements.
The U.S. G o v e r n m e n t had
hoped for a clear v e r d i c t in the
B r i t i s h elections, as it w o u l d have
helped to expedite the process of
integration and the setting up of
the clearing u n i o n . B u t the close
finish has created
uncertainties
and may delay both.
The tentative allocation of
funds in the year 1950-51 are as
follows, subject to w i t h h o l d i n g of
$000 m i l l i o n for efficiency payments and the clearing u n i o n .
W o r l d S i l v e r in 1949
The total silver p r o d u c t i o n of
the Western Hemisphere was
123.5 m i l l i o n ounces in 1949 as
compared
w i t h 121 m i l l i o n in
1948 and 121.8 m i l l i o n in 1947.
As usual Mexico's p r o d u c t i o n
was the largest, being 50 m i l lion in 1949, followed by the
U.S,A. w i t h 34 m i l l i o n and
Canada w i t h 16.9 m i l l i o n .
New Y o r k silver prices w h i c h
continued to p r o v i d e the basis
for silver transactions t h r o u g h o u t
the Western Hemisphere, remained f a i r l y steady, fluctuations being l i m i t e d to a rise of 3¼ cents
per ounce from 70¼ to 73½ cents
an ounce. This stability was in
some measure due to the operations of the B a n k of M e x i c o w h i c h
extended considerable support to
the N e w Y o r k silver m a r k e t at
times. In 1949 the U.S.A. i m ported in a l l 103.2 m i l l i o n ounces
of w h i c h 58.5 m i l l i o n were f r o m
Mexico and exported 33.4 m i l l i o n
ounces, of w h i c h 24.2 m i l l i o n was
destined to H o n g k o n g , p r i n c i p a l l y
on Chinese G o v e r n m e n t account.
In 1949 t w o measures of silver
legislation were referred to the
appropriate committees of the
Congress: one was the B i l l of Representative C e l l e r to repeal the
S i l v e r Purchase A c t of 1934 and
the other was Representative Sanborn's B i l l proposing a bimetallic
standard,
w i t h g o l d at $56 per
ounce and
silver at $3.50 per
ounce. The estimated consumption by arts and industries in the
U.S. was 90 m i l l i o n oz.
M e x i c o obtained contracts for
silver coinage f r o m Saudi A r a b i a
251
and the Chinese Nationalist G o v ernment for an aggregate q u a n t i ty of about 50 m i l l i o n ounces. At
the end of the year, the M e x i c a n
Congress
authorised a
new
domestic silver coinage p r o gramme.
The
coinage
programme started in 1947 received a setback as the b u l l i o n
value
of
the
coins t u r n e d
higher t h a n t h e i r face value. T h e
new l a w provides for the m i n t i n g
of one-peso, 50-centavo a n d 25centavo coins, to be composed of
30 per cent silver, 10 per cent
n i c k e l , 10 per cent zinc and 50
per cent copper. The one-peso
coin w i l l have a gross weight of
13 1/3 grams and w i l l contain 4
grams of silver. Official stocks
of silver w i t h the B a n k of M e x i c o
at the end of 1949 totalled about
ECONOMIC W E E K L Y
M a r c h 11, 1950
materialise, because there was
strenuous opposition f r o m the
a g r i c u l t u r a l interests, T h e result is t h a t these schemes, w h i c h
are l i t e r a l l y h a n g i n g i n m i d - a i r ,
have to be financed t h i s year f r o m
the revenue account i f t h e y are
not to be left hanging indefinitely.
T h e y c o u l d v e r y w e l l have been
financed f r o m allocations f r o m the
revenue reserve, b u t the C e n t r a l
G o v e r n m e n t have imposed f a i r l y
s t r i c t conditions t o d r a w i n g f r o m
it.
T h e budget speech discloss cert a i n interesting features, among
w h i c h may be listed the following:
In the first place, we have the
stoppage of the post-war reconst r u c t i o n grants, g i v e n by the Cent r a l G o v e r n m e n t , w h i c h w e r e usef u l for c a r r y i n g o u t i m p o r t a n t
development schemes. T h i s has
forced the G o v e r n m e n t as pointed
out above, to approach the people
for v o l u n t a r y loans.
Secondly, the G e n e r a l Sales
T a x , w h i c h has been g r o w i n g
r a p i d l y in i m p o r t a n c e as a source
of revenue
to the p r o v i n c i a l
governments m a y not continue to
be the same kamadhenu w h i c h it
has been for the last few years.
T h i s year the tax is expected to
y i e l d Rs. 13.03 crores and it is
estimated to y i e l d Rs. 15.52 crores
next year. A s the Finance M i n i ster stated, o w i n g to the p r o v i sions of Sec. 286 of the C o n s t i t u t i o n A c t , the tax cannot be l e v i e d
on the m o v e m e n t of goods between state and state and conseq u e n t l y , the y i e l d
from it may
come d o w n .
stationary being r o u n d about Rs.
8 crores d u r i n g t h e last few years.
The static n a t u r e of the y i e l d f r o m
the l a n d t a x points to the need for
b r i n g i n g more l a n d under c u l t i v a t i o n and for greater and better
i r r i g a t i o n and o t h e r facilities to
i m p r o v e its y i e l d . It also points
to the u r g e n c y of other i m p o r t ant reforms in l a n d revenue administration in regard to w h i c h
the Congress A g r a r i a n Reforms
C o m m i t t e e has made recommendations a n d about w h i c h the
P l a n n i n g Commission now app o i n t e d w i l l have something m o r e
precise to sal.
These significant trends in the
financial p o s i t i o n of the
State,
some of w h i c h are common to a l l
T h i r d l y , there is the more or
less complete e x t i n c t i o n of the
revenue u n d e r Excise, o w i n g to
the p o l i c y of p r o v i n c e - w i d e p r o h i b i t i o n . This year, i n fact, the
y i e l d from i t has been p u t d o w n
at the v e r y n o m i n a l figure of Rs.
0.46 lakhs compared to Rs. 14.68
crores in 1946-47.
F o u r t h l y , w e have the heavy i n cidence of the M o t o r Vehicles
T a x , w h i c h i s expected t o y i e l d
Rs. 2.95 crores in 1950-51, and the
rates of w h i c h are a d m i t t e d .by
the Finance M i n i s t e r himself to
be t h e highest in the c o u n t r y , if
not i n the w h o l e w o r l d .
F i f t h l y , the y i e l d f r o m land revenue has come to be m o r e or less
253
the states, are b o u n d to exercise
an increasingly profound effect on
the governance of the State in
f u t u r e . Side by side, certain aspects of the State budget on the
e x p e n d i t u r e side also r e q u i r e
m e n t i o n . A conspicuous characteristic in this r e g a r d is that the
cost of general a d m i n i s t r a t i o n has
been steadily m o u n t i n g in recent
years. N o t o n l y have the departments of G o v e r n m e n t g r o w n
in size and n u m b e r , but the cost
of r u n n i n g t h e m has also gone up
considerably, and correspondingly. The growing expenditure on
dearness allowances and other
allowances is a feature of the cost
of a d m i n i s t r a t i o n w h i c h has a d i rect relation to the cost of l i v i n g
M a r c h 1 1 , 1950
ECONOMIC W E E K L Y
i n d e x . T h e f o r m e r has
been
a u g m e n t i n g p a r i passu w i t h the
l a t t e r and there is no i n d i c a t i o n
that G o v e r n m e n t have been s t r i v i n g to accomplish a n y t h i n g consciously to check the inflation and
b r i n g d o w n the cost of l i v i n g ,
w h i c h w o u l d make i t possible for
t h e a d m i n i s t r a t i v e cost to be b r o u g h t d o w n i n its t u r n . T h e poss i b i l i t y of r e t r e n c h m e n t has been
v i g o r o u s l y scouted by the Finance
Minister, who unambiguously
stated t h a t the Report of the Reorganisation and Retrenchment
C o m m i t t e e h a d been e x a m i n e d
w i t h o u t y i e l d i n g any w o r t h w h i l e
results. Since, therefore, t h e r e
can be no r e d u c t i o n in the adm i n i s t r a t i v e personnel, there can
be no r e d u c t i o n of t a x a t i o n also.
In regard to other items of exp e n d i t u r e , p r o v i s i o n made in the
budget for education, c o m m u n i c a tions, housing schemes, p u b l i c
health and medical schemes a n d
expansion of the e l e c t r i c i t y p r o d u c t i o n schemes, w i l l be spent
m o s t l y on b u i l d i n g s and e q u i p ment, so that w h a t r e a l progress
there w i l l be in the services a v a i l able to the people as a sequel to
that e x p e n d i t u r e , is difficult to
estimate. M o r e o v e r , the execu- e x i s t i n g t a x a t i o n i s h e l d o u t b y
t i o n of these schemes w i l l depend the Finance M i n i s t e r and it is
on the a v a i l a b i l i t y of m a c h i n e r y , d o u b t f u l if the people of the p r o e q u i p m e n t and other r e q u i r e - vince w o u l d d e r i v e any consolaments, w h i c h w o u l d have t o b e t i o n f r o m his statement that t h e r e
i m p o r t e d f r o m outside and w h i c h is no i n t e n t i o n to resort to a d d i w o u l d , therefore, depend o n the t i o n a l t a x a t i o n . A s things stand,
exchange a n d other facilities any proposal for a d d i t i o n a l taxaavailable. I t is, however, g r a t i f y - t i o n w o u l d have e v o k e d the most
i n g that a p r o v i s i o n has been vehement opposition f r o m the
made for e x p e n d i t u r e so that p u b l i c a n d the Finance M i n i s w o r k o n such b i g i r r i g a t i o n p r o - ter cannot help r e m e m b e r i n g
jects l i k e the T u n g a b h a d r a and that proposals p u t f o r w a r d b y h i m
Lower Bhavani
projects
w i l l for a d d i t i o n a l t a x a t i o n last year
continue u n i n t e r r u p t e d . F o r the had to be abandoned in p a r t a n d
execution
of
other
schemes modified in other respects, as a
hitherto
classified u n d e r "post- result of p u b l i c protest. P u b l i c
war
reconstruction
schemes", o p i n i o n is not p r e p a r e d to tolerate
w h i c h include sanitary, p u b l i c a d d i t i o n a l burdens w h e n there is
health, drainage and s i m i l a r ones no c o n v i n c i n g proof that prosand i m p r o v e m e n t of c o m m u n i c a - pects for economy have been f u l l y
tions w h i c h had been already e x p l o r e d and considered. Secondsanctioned and are half w a y ly, the budget does n o t envisage
t h r o u g h , the G o v e r n m e n t have the prospect of any considerable
a d m i t t e d l y to depend on the r e d u c t i o n in the cost of l i v i n g or
grants to be made by the C e n t r e l o w e r i n g of p r i c e levels. T h e
o r o n loans raised b y t h e m w i t h State G o v e r n m e n t are, of course,
not p r i m a r i l y responsible f o r
the approval of the Centre.
measures w h i c h w o u l d b r i n g
A few general conclusions aris- d o w n prices, b u t they c o u l d p l a y
i n g out of the budget estimates t h e i r p a r t b y n o t d o i n g things
for M a d r a s State m a y be r e f e r r e d w h i c h w o u l d c o n t r i b u t e t o a n
to here. No hope of r e l i e f f r o m aggravation of the price levels of
254
M a r c h 1 1 , 1950
essential day-to-day r e q u i r e m e n t s
of the .people.
So l o n g as the
cost of l i v i n g remains at its present h i g h l e v e l , there can in fact
be no p o s s i b i l i t y of any genuine
i m p r o v e m e n t i n the standard o f
l i v i n g of the people, w h a t e v e r be
the scale of e x p e n d i t u r e on
n a t i o n - b u i l d i n g and other schemes
in terms of money. It seems as
t h o u g h it is as m u c h as the State
G o v e r n m e n t can do to m a i n t a i n
budgetary e q u i l i b r i u m if they do
not feel the need to c u r t a i l essent i a l e x p e n d i t u r e and i f t h e y can
prevent food index f r o m going up
by c o n t i n u i n g the r a t i o n i n g syst e m for food. L a s t l y , t h e present budget has to be e x a m i n e d
against the
b a c k g r o u n d of the
consideration that o n l y a few
weeks ago, the w h o l e financial
position was being e x a m i n e d f r o m
the standpoint that the M a d r a s
State w o u l d be d i v i d e d and a
separate A n d h r a p r o v i n c e w o u l d
be constituted.
T h e position
about the proposed d i v i s i o n is at
present dubious, b u t it has led to
complaints that d i s e q u i l i b r i u m ,
w h i c h was apparent a l l along i n
the
a p p o r t i o n m e n t of the p r o vince's
revenues over different
linguistic regions on schemes
w h i c h w o u l d benefit t h e m i n d i v i d u a l l y , persists in the n e x t year's
budget also.
T h e Finance M i n i s t e r ' s speech
indicates that w h i l e the present
b u d g e t a r y a n d f i n a n c i a l position
of the State is satisfactory, despite
the loss of revenue f r o m Excise
and the anxieties due to a d i f f i c u l t
food position, the f u t u r e is p r e g nant
with
uncertainty.
One
source of u n c e r t a i n t y is that it is
not k n o w n exactly h o w the f i n a n cial adjustments between the
C e n t r a l G o v e r n m e n t and the
states under the provisions of the
n e w C o n s t i t u t i o n A c t w o u l d react on the financial position of
Madras i n p a r t i c u l a r and o f the
states in general. T h e D e s h m u k h
A w a r d r e g a r d i n g the allocation o f
the d i v i s i b l e pool of Income-tax
has not been satisfactory f r o m the
point of v i e w of Madras, and
t h o u g h that a w a r d had n o t affected the extent of t h e allocations
in the c u r r e n t year, it m a y do so
in the c o m i n g years, unless some
other more suitable principles of
ECONOMIC W E E K L Y
d i s t r i b u t i o n are e v o l v e d after the
F i n a n c i a l Commission envisaged
in the C o n s t i t u t i o n has been set
up. T h e prospect o f the y i e l d
f r o m the G e n e r a l Sales T a x b e i n g
reduced u n d e r the provisions of
the C o n s t i t u t i o n has already been
referred to. T h e d i s t r i b u t i o n of
the proceeds of tobacco taxation,
w h i c h has p r o v e d a w i n d f a l l for
the p r o v i n c i a l G o v e r n m e n t this
year to the t u n e of about Rs. 56
lakhs m a y also be affected to some
extent. T h e c o m i n g year is,
therefore, a p e r i o d of u n c e r t a i n t y .
because i t w i l l be a p e r i o d of
t r a n s i t i o n f r o m the o l d o r d e r t o
the new and it w i l l be so u n t i l
the financial relations between
the States a n d the U n i o n G o v e r n ments are placed on a firm and
satisfactory footing. M u c h of the
developmental p r o g r a m m e of the
•
State G o v e r n m e n t is i n t e r l i n k e d
w i t h the a v a i l a b i l i t y of grants and*
allocations f r o m the Centre and
as is w e l l - k n o w n , even the borr o w i n g p r o g r a m m e of the former
is dependent in a large measure
o n w h a t a t t i t u d e the Centre w o u l d
display to the claims of the state
in t h a t r e g a r d and on the conditions of the money m a r k e t . Even
so, if the e x p e n d i t u r e at present
i n c u r r e d on educational, village
reconstruction, H a r i j a n u p l i f t and
housing and other beneficial
schemes yields f r u i t , w h i c h it can
do if p u b l i c w e l f a r e is the sole
guide of the G o v e r n m e n t a n d of
those engaged in the execution of
these schemes, it w o u l d be somet h i n g to be t h a n k f u l for. The
Finance M i n i s t e r s t r u c k a n o p t i mistic note in his budget speech;
events must j u s t i f y i t .
Cotton Market
There Will Be Enough
Cotton To Go Round
N
E I T H E R the inadequacy of
raw
cotton n o r the accum u l a t i o n of unsold stocks of
c l o t h are any longer t h e bane of
the I n d i a n
cotton m i l l industry
today. We have it on the author i t y o f the L a b o u r M i n i s t r y i n
B o m b a y that not a single m i l l in
the State is closed at present
either for w a n t of r a w cotton or
for the g l u t of piece goods. T h e
G o v e r n m e n t of B o m b a y , it is
claimed, had t a k e n effective steps
to see that the m i l l s d i d not stop
w o r k i n g for either of the t w o reasons. If at a l l any m i l l s had perforce to r e m a i n closed, it was on
account of the neglected condit i o n of t h e i r machinery. To i l l u s trate, the Sholapur S p i n n i n g and
W e a v i n g M i l l s could not be restarted, despite the enactment of
special legislation, because the
m a c h i n e r y of that u n i t was in a
bad state. T h e n e w
B o a r d of
Directors have n o w taken up the
task of o v e r h a u l i n g the machin e r y ; unless and u n t i l the machin e r y is set in good w o r k i n g order,
it w i l l be a mere waste of v a l u 255
able cotton to restart the m i l l s .
*
*
*
T h e a b o l i t i o n of the d i v i d e n d
l i m i t a t i o n legislation w i t h effect
from
M a r c h 31, 1950 and w i t h
the m o i e t y of tax relief that has
been granted, along w i t h others,
to the m i l l i n d u s t r y is expected
to s t i m u l a t e p r o d u c t i v e a c t i v i t y .
The rationalisation that has been
c a r r i e d out so far in the cotton
t e x t i l e i n d u s t r y on the Wesern
coast of I n d i a has benefitted a l l ,
namely, the m i l l o w n e r , the consumer as w e l l as labour. It has
resulted in a steady d r o p in the
cloth prices for the consumer. It
has helped the m i l l o w n e r by cutt i n g d o w n his costs. It has
simultaneously
benefited
the
worker
i n t h a t i t has
meant
better wages for h i m . Despite
the f a l l i n g costs, the earnings of
factory w o r k e r s i n B o m b a y have
increased
substantially.
The
money wages have increased
several times, w h i l e the real
wages have also
crept
up.
T h e per capita real wages, accordi n g t o the L a b o u r Minister, B o m -