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Inflation and the Rural Poor

Inflation and the Rural Poor S D Sawant The impact of high inflation on rural poor is much higher than on the urban poor To hedge this effectively various rural employment programmes should be integrated with a sharply targeted public distribution system DOES inflation hurt the rural poor more than others?1 Our hypothesis is that during the period of excessive/abnormal rise in wholesale price index it is the rural prices, particularly the prices paid by the poor which register much faster growth than the prices in the urban areas where incomes of majority of workers are insulated against inflation. The analysis, that follows, examines this hypothesis and its policy implications for the current economic scenario. We begin with the data on consumer price index and the wholesale price index at the national level borrowed from the latest Economic Survey, 1992-93 (Table4.2, p 75). They are reproduced in Table 1 which provides annual rate of inflation (percentage changes) in the wholesale price index, the consumer price index for (a) industrial workers, (b) urban non-manual employees, and (c) agricultural labourers henceforth, to be referred to as WPI, CPI (IW), CPI (UNME) and CPI (AL), respectively.

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