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Review of Agriculture June 1969 Reply C H Hanumantha Rao THE extension of my welfare analysis by T N Srinivasan and P K Bardhan is useful as it provides a method for identifying empirically the income groups in rural (urban) areas who may be better or worse off than their urban (rural) counterparts, given the assumption of identical preferences. One of the main points of my welfare analysis was that the large expenditure groups may not experience a real income advantage in rural areas as compared to their urban counterparts. The estimates of Srinivasan and Bardhan confirm this proposition as they conclude that "for a given price difference the higher expenditure groups spending a larger proportion on more expensive urban goods are worse off relative to their urban counterparts''. It is important to note this because many of the prevailing studies on tax burden assume that real incomes of the rural rich are higher than those of their urban counterparts.

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