blSCUSSION PAPER

Report No. DRD103

TRENDS IN REAL WAGES IN RURAL INDIA

1880-1980

by

Deepak LalJune 1984

Development Research DepartmentEconomics and Research Staff

World Bank

The World Bank does not accept responsibility for the views expressed hereinwhich are those of the author(s) and should not be attributed to the WorldBank or to its affiliated organizations. The findings, interpretations, andconclusions are the results of research supported by the Bank; they do notnecessarily represent official policy of the Bank. The designations employed,the presentation of material, and any maps used in this document are solelyfor the convenience of the reader and do not imply the expression of anyopinion whatsoever on the part of the World Bank or its affiliates concerningthe legal status of any country, territory, city, area, or of its authorities,or concerning the delimitations of its boundaries, or national affiliation.

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Revised,June, 1984

This paper is for a volume on 'Poverty in India'

edited by Pranab Bardhan and T. N. Srinivasan.

TRENDS IN REAL WAGES IN RURAL INDIA

1880-1980

by

Deepak Lal

University College, London

and -

Development Research Department,

World Bank

Part of the research for this paper was supported-by the World Bank under itsRPO 671-84.- Comments by T. N. Srinivasan and statistical assistance byMasocd Ahmed are gratefully acknowledged.

The World Bank does not accept responsibility for the views expressed herein

which are those of the authors and should not be attributed to the World Bank

or to its affiliated organizations. The findings, interpretations, and

conclusions are the results of research supported-by the Bank; they do not

necessarily represent official policy of the Bank. The designations employed,

the presentation of material, and any maps used in this document are solely

for the convenience of the reader and do not imply the expression of any

opinion whatsoever on the part of the World Bank or its affiliates concerning

the legal status of any country, territory, city, area, or of its authorities,

or concerning the delimitation of its boundaries, or national affiliation.

Abstract

This paper charts long-term trends (over a century at the All Indialevel) in rural real wages, which can be derived from available administrativestatistics on rural wages, to see if the conclusions of an earlier study (Lal,1976) based solely on National Sample Survey data (for the post 1950 period)concerning a positive association between trends in rural real wages and inthe changing balance between the demand and supply of rural labour, areupheld. A real rural wage series for a century is derived, and used with timeseries data on labour supply and agricultural output to estimate a simple neo-classical model of wage determination for the whole 1880-1980 period and forthree sub-periods. It is found that some mild support is provided,particularly for the pre 1914 and post 1950's period for a -- classical modelof rural wage determination. The paper also summarises the results from otherstudies concerning the post Independence performance of rural real wages,which also support the "neo-classical" model of wage determination as aworking hypothesis. The paper lends support to the view that, given thelikely future growth in the rural labour force, raising the demand for labourremains the single most important means for alleViating rural poverty. Thepaper's estimate of the increase in the rate of growth of agricultural outputin the post Independence period to 2.4% p.a. over its long-term trend of justunder 1% p.a., has not been spectacular in relation to the growth in rurallabour supply (of about 2% p.a.). Hence, there has been no acceleration ofthe rate of growth of rural real wages in the post Independence period overthe long-run trend rate of under half a percent per annum, and hence it wouldbe unrealistic to expett any significant reduction in the extent of Indianrural poverty. But to the extent that the supply of rural labour is alsoinfluenced by the absorption of labour in industry, it is the failure ofmodern Indian industry to markedly increase its demand for labour despite highgrowth rates of investment which must also be assigned a major role in thelimited poverty redressal in India.

Introduction

Delineating trends in rural real wages in India has been highly

controversial, in part because of the different time periods over which the

trends are charted. 1/ The passion the subject still arouses is similar in

many ways to that surrounding the statistical debate concerning the trends in

the terms of trade of developing and developed countries.

In an earlier paper (Lal, 1976) I had questioned the empirical basis

of the view that within the existing agrarian st-ucture, agricultural growth

which raises the demand for labour will be in sufficient to raise rural real

wages and/or alleviate rural poverty. 2/ On the basis of the data available

from the National Sample Survey for 1956-57 and 1970-71 (both agriculturally

'normal' years), for changes in the real wages of male agEicultural labourers,

and changes in the household consumption of the 'weaker sections' in the rural

areas of the states in India, I had argued that earlier studies which had

sought to show, not merely that, the agricultural growth flowing from the

Green Revolution had not led to real wage rises but had led to the

immesirisation of the rural poor, were flawed, as they were based on the

unreliable data provided by the administrative statistics on money wages and

prices collected and published by the Ministry of Agriculture in Agricultural

Wages in India (AWI). As Rao (1972) had shown, in his comparison of the

agricultural wage data from the NSS and AWI that, the latter were not

scientifically collected as compared with the former, I had argued for relying

solely on the NSS data in charting real wage trends. This conclusion has been

found to be too extreme by some (see Jose (1978)) who have cited Rao in their

defense, as not excluding "the possibility of (the AWI data) being used for

analysing spatial variations and long-term trends in the behaviour of wage

DLD/AR-078/7/23/84 -2-

rates." (Jose, ibid, p.A16". This paper therefore is concerned with charting

long term trends in .rural real wages, from the available administrative

statistics on rural wages, to see if the conclusions of the earlier study

based solely on NSS data, concerning a positive association between trends in

rural real wages and in the changing balance between the demand and supply of

ruraly labour, would still apply. But whereas past studies of real wage

trends (including our own) have sought to chart these trends largely in terms

of end point comparisons of the level of real or money wages, at different

dates, in the post Independence period, in this paper I attempt to present a

time series analysis of the trends in a 'composite All India rural real wage

rate" (derived in the first part of the paper), over the century 1880-1980.

This analysis is undertaken in the second part of the paper. Needless to say,

given my published qualms about using these administrative statistics, with

their measurement biases of unknown direction and extent, as well as those

unknown errors involved in deriving an All India aggregate figure, I would not

claim any definitiveness whatsoever for the reported trends, and hence all the

results in this paper must be treated with an even greater degree of caution

than is usual. On the other hand economic historians, who do not have the

luxury of ever hoping to find definitive quantitative evidence for many

aspects of the past, may not be too worried about such scruples, and may find

our derived trends over a century of some interest.

DLD/AR-078/7/23/84 -3-

The third part of the paper seeks to explain these trends in terms of

a simple supply and demand model of wage determination. In this context it

should be noted that the surplus labour theory of Lewis, whilst cQo.qpatible

with a demand and supply determination of rural wage rates, asserts that given

the assumed perfectly elastic supply curve of rural labour, raising the demand

for rural labour would have no influence on th' rural real wage until the

labour surplus has been removed. 3/ The empirics in part three should

therefore also be useful for determining the likely validity of this view for

rural India. in this third part we also summarise the results of recent

studies which are relevant in assessing the disputes concerning (a) the

existence of surplus labour, (b) the changing incidence of rural poverty 4/

and (c) the process of rural wage determination for which the reading of the

entrails from real rural wage trends has been considered to be important.

II

Derivation of Money and Real Rural Wage Series - 1880-1980

Till 1873 there are only scattered literary accounts which provide

some indication of likely wage trends. Radhakamal Mukherjee has attempted to

examine real wages from the time of Akbar (1600) to 1938. He finds that over

this whole period there is a 50 percent decline in real wages, but for the

1850-1940 and 1900-40 period he shows substantial increases (see Col (1),

Appendix Table 1). For the 1850-73 period, scattered evidence from a number

of dubious sources is summarised by M. Mukherjee (1969, pp. 87 & 88), which

show a fairly constant real wage over this period. For the period from 1873

till the early part of the 20th century, a relatively more systematic source

of wage data is available in the serial official publication Prices and Wages

DLD/AR-078/7/23/84 -4--

(PAW), the precursor of the AWI. Its faults are similar to those of the post

Independence AWI data. It was rejected in 1914 by K.L. Datta (1914), as

agricultural wages were collected by untrained reporting agencies, who

commonly reported cash wages for labourers in towns and, their neightbourhood,

and these were unlikely to be typical of the rates in the relevant: rural

areas; a critique which echoes that of Rao (1972)'s of the post Independence

AWI data. This PAW data is given in col (2) Table A.1.

For the 1900-46 period, the best data available according to

Sivasubramonian (1977) is from the Labour Gazette of the Government of India,

for Bombay province. The workers are classified by urban and rural sectors,

and as field labourers, ordinary labor and skilled labor. For our purposes it

is the 'field labor' series which is relevant. This "includes all workers who

are engaged in agriculture pursuits and are actively employed in wages in

occupations such as ploughing, F,)wing, transplanting, weeding and reaping"

(Sivasubramonian, 1977, p. 480). This series is shown in column (3) Table

A.1.

For the post Independence period, the AWI data by state has been

assembled by Jose for the period 1956-57 to 1971-72. He uses wage rates for

the category of 'male field labour', or for 'ploughman' where the former is

not available, by district for one month in the peak agricultural season in

each state. The district figures are weighted by the male agricultural

laborers in the district to obtain the statewise average. His data, and the

price deflators (the agricultural consumer price indices) are summarised in

Table A.2.

DLD/AR-078/7/23/84 -5-

The data from the NSS for 1950-51, 1956-57, 1964-65, 1970-71, and

1974-75 is summarised in Table A.3.. This relates to average wages of males

aged between 15-59 of non-cultivating wage earner households in each state.

Finally, Table A.4 provides the statewise data on the increase in

money and real wage rates of male agricultural labourers in India between

1970-71 and 1979, based on the AWI data partially published in the Ministry of

Agriculture's Agricultural Sittation in India, Sept. 1979. This is the only

currently available data to form any judgment on real rural wages in the late

1970's.

We have combined the PAW data from 1873-1900, with the rural series

of Sivasubramonian for the period 1919-46, and the AWI series from 1956-57 to

1970-71, from Jose's data with the 1979 (partial) AWI data, and interpolations

for 1950-51 and 1974-75 from the NSS to derive the All-India rural money and-

real wage series given in columns (1) and (2) of Table 1. it should be noted

that for the post Independence period the statewise data shown in the Appendix

Table has been aggregated by weighting it with the statewise data on the male

agricultural labour force from the 1961 and 1971 Censuses. Moreover, the

price index used to derive the real wage till 1950, is that given (and used)

by M. Mukherjee, based on All-India wholesale prices, which is shown in

column (4) of Table 1. For the post Independence period, the respective real

wage estimates given for each state were derived by applying the ACPI for the

state, and the resulting real wage rates were aggregated as described above.

The implicit All-India ACPI of our post-Independence series is not reported,

but can be readily derived from the money and real wage figures for these

years. We have, however reported the wholesale price index for food

commodities from 1950 onwards, linked to the Mukherjee series in column (4) of

Table 1.

DLD/AR-07817/23/84 -6-

II

Time Series Analysis of Trends in Composite Real Wage Series

We first fitted a geometric trend line to the 74 data points for real

wages that we have in Table 1. This yielded the following equation:

(R.1) RLW(t) = 102.8 (1 .0 0 4 8 )t r2 = 0.40; DWS = 0.32

where RLW is the real wage, and t is time. Table 2(I) gives the estimated

autocorrelation function, and Table 2(11) gives the computations of the

partial autocorrelation function (PACF) for successive autoregressive (AR)

model fits, to the residuals of the trend equation R.1. From the correlograms

and the use of Quenouille's procedure (namely, where at 95% confidence, VT

times the PACF > 1.96) (see Gottman, p.248), it would appear that an AR(2) and

possibly and AR(3) process would generate the observed residuals, (as T=74;

and VT.PACF(3)=2.32; /T.PACT(2)=-1.29; VT.PACF(1)=6.45). . 5/

We therefore estimated the following AR(2) model of real wage trends:

Log RW(t) = a + bt + ut (1)

ut plut-I + P2ut- 2 + e

The results for the whole period and sub-periods are summarized in Table

2.111. (Note that in rows 4 and 6, we have fitted the above model to a data

set in which the data for the missing years has been filled by linear

interpolation - NAINTERP.) The trend growth rate of real wages over the

period 1867-1978, of 0.4% per annum is statistically significant. Figure 1

charts the real wage series, and the computed trend line (for the case where

NAINTERP has been used).

DLD/AR-078/7/23/84 -7-

For the sub-periods the estimated geometric growth rates were

1873-1900: 0.00% p.a.

1919-1947: 0.47% p.a.

1950-1978: 0.36% p.a. (using NAINTERP)

Thus real wages would seem to have been stagnant in the late 19th century, and

havd!been rising by about about 0.4 to 0.5% per annum in the 20th, with a

small fall in the rate of growth in the post Independence period.

Trends in Agricultural Output and Male Rural Labour Force

We would expect these real wage trends to be related to the trends in

agricultural output and the growth of the rural male labour force. Columns

(4) and (5) provide the constant price series for agricultural output, and

male labbur force, in Table 1, whose notes explain the sources.

The geometric trend fitted to the data on agricultural output for the

whole period,1868-197 9 , yielded:

(R.2) Y(t) = 5 7 .7 (1 .008 9 )t r2 = 0.8425; n = 99; DWS = 0.58

Table 3(I) and (II) show the computed ACF's and PACF's for the residuals from

R.2. Using Quenouille's procedure, an AR(2) process is sugg!ested. (as T=99;

/T.PACF(3) = 1.61; /T.PACF(2)=4.6; /T.PACF(1)=6.95.

Fitting an AR(2) model the agricultural output series yielded the

results shown in Table 3.III. For the 1876-1979 near century, agricultural

output was growing at the compound rate of about 0.9% per annum. In the sub-

periods the rates of growth were

1885-1900: 0.6% p.a.

1919-1946: 0.6% p.a.

1950-1978: 2.4% p.a.

DLD/AR-078/7/23/84 -8-

Thus there is a marked acceleration of agricultural output growth in the post-

Independence period.

Whilst, from column (7) of Table 1, we can fit the following geometric trends

to the male labour force (rural) data for the same periods:

(R.3) 1885-1980

E(t)=82.2(l.01048)t r 2 =0.91; n=96

(a) 1885-1900:

E(t)=95(l.0038)t r2=0.84; n=16

(b) 1919-1946:

E(t)=107.7(1.009)t r2=0.98; n=28

(c) 1950-1978:

E(t)=149.2(1.019)t r2=0.98; n=29

Table 4, summarises these estimated geometric growth rates in real wages,

agricultural output and the rural male labour force, as well as reporting the

compound rates of growth for these three variables, as well as for

agricultural output per rural male worker (derived in column (6) of Table 1)

for the whole 1873-1980 period. The only significant point worth noting is

that, in the post-Independence period, there has been no change in the growth

rates of real rural wages, but a rough doubling in those for agricultural

output and the (male) rural labour force, over their long term trend growth

rates.

DLD/AR-078/7/23/84 -9-

III

The Determinants of Real Rural Wage Trends

In this section we seek to explain movements in the rural real (and

money) wage series compiled in Table 1, for the past century (1880-1980), at

the All-India level, in terms of a simple neo-classical model of rural wage-

determination. For those with an a priori belief in the validity of such a

model, its success in explaining the movements in our derived rural wage

series might provide an indirect validation of that series. We proceed to

derive a reduced form equation for estimation purposes, from a highly

aggregative model, in which agricultural output (X) is produced by one

variable input, labour (L) and a fixed input land (N), through a Cobb-Douglas

production function:

X=A.Lo:.N (2)

The money wage rate is denoted by w, the price of agricultural output by p1

and the real wage w/p = W

As we will be treating output (X) as exogenously determined, the restricted

cost function (C) is given by

C = G( w ;N,X) (3)

From which the derived demand function for labor (Ld) is

L (4)d

For the Cobb-Douglas production function in (2) (where A = aP ), the

restricted cost function will be (see Varian p. 67):

C =X.w'P.NP (5)

From (4) and (5)

f hd N (6)

from which taking logs and rearranging yields the labor demand function as:

DLD/AR-078/7/23/84 -10-

InL d = Ina + lnX + (a-1)lnw + $ln.N. (7)

Labor supply (Ls) is taken to be a function of the real wage rate

(w) , and its cpnstant elasticity form is specified as

ln.Ls = Tny0 + Y1lnw (8)

the reduced form for percentage changes in the real wage (d ln w (t)) is

then given from (7) and (8) by:

dlnw(t) = a0 + a1 .dlnX (t) + a2.dln N(t) (9)

Table 5(I) shows the estimated equations for the above model. It is

apparent that though the model fits the data for the late 19th century and the

Post Independence period faily well for the case with a one period lag on the

output (X) variable (for which alone the results are reported), the post World

W%r I period's 'fit' is non-existent.

As there was considerable .price variability in this period as

compared with the ones preceeding and succeeding it, and as it has been found

that money wage changes tend to lag those in prices 6/ we fitted another model

in which the demand for labour depends on the current real wage as in

equation (7), but labour supply depends on last year's real wage 7/ so that,

instead of (8) we have:

InLs = In* + p1ln w(t-1) (8")

From (7) and (8'), the reduced form estimating equation for the second wage

determination model is:

dlnw(t) = b + b dlnX(t) + b2dlnN(t) - b3d1nw(t-1) (9")

The results again for the case where output is lagged one period are reported

in Table 5(11). Though the overall fit improves marginally for the 1921-1946

DLD/AR-078/7/23/84 -11-

period, the sign on the only significant variable (the lagged real wage) is

wrong. This second model in fact only performs well for the 1892-1900

period. Thus all that we can conclude is that our wage determination models

seem to work for only the 19th century and post Independence periods. The

results reported for the full period 1892-1978 through linear interpretation

of the missing data cannot be taken too seriously, whilst that from pooling

the data for the three sub-periods (5(I),d(i)) does not provide too good a

fit, in part because the length and hence the weight of the inter war and pre-

Independence period is over half. As during this period much of the variation

in real wages was due to variations in prices, the role of the other two

factors (agricultural output and changes in sown area) which were of greater

importance during the previous and succeeding periods are understated. Hence,

in Table 5(I) and 5(11) we have also reported the results from excluding these

years, and these show that the output factor as well as the lagged wage effect

on labour supply in'rural wage determination have been significant, in the

remaining years of our series.

Hence, we would conclude that our computed real wage trends may not

be inconsistent with a neoclassical model of rural wage determination, and

mutatis mutandis to the extent we believe independently in the validity of

such a model, the results of Table 5 could lead us to conclude that our

computed rural wage series for 1880-1980, is perhaps not yielding purely

spurious trends!

As we do not have any data on rural wages by region for this whole

period, no attempt has been made to chart regional trends, which of course are

concealed (even though they may be considered to be of much greater

importance), in the aggregative exercise of this paper. However, for the

post-Independence period a recent attempt to explain real wage changes in the

DLD/AR-078/7/23/84 -12-

Punjab at the district level, using district level AWI data may be noted. 8/

This study by Bhalla, though not based on an explicit model of wage

determinaticn, attempts to explain variations in real wage rates of

agricultural labourers in the Punjab between 1961 and 1977 in terms of changes

in output per rural male worker and in.the price level. She found that: "the

rapid growth of farm output tended to push up real wages; the growth of the

labour force at rates far above the rate of growth of population tended to

pull real wages down. The outcome, it appears, was often decided by

inflation, which periodically eroded real wages to levels below even those

attained in 1961. As of 1977, for the Punjab as a whole, the forces of rising

productivity had won. But it was a narrow victory. Over the entire period,

real wages for male agricultural labourers, went up by between six percent

(for weeding), and 20 percent (for harvesting)" (Bhalla, p.A-57). However the

end point estimates of regional wage trends in the 1970's from the AWI data in

Table A.4 show that real wages declined in the Punjab by 4.5% between 1970 and

1979. But as 1979 was an agriculturally poor year, these end point estimates

of trend can be treacherous. For this reason the other declines in regional

wage rates for 1979 as compared with 1970 for the AWI data shown in Table A.4

cannot be used to draw inferences about either rural wage determination or of

the effects of agricultural growth on real wages.

Finally, we may note that in so far as the 'surplus labor' model

postulates a constant rural real wage, our computed real wage trends for the

past century do not provide support. Nor can it be concluded that increasing

population pressure makes it likely that such a model will become more

applicable in the future. For there has been a positive association between

population growth, agricultural growth, and the growth of rural real wages.

Whether there is any causal link between population and agricultural growth

DLD/AR-078/7/23/84 -13-

requires an analysis beyond the scope of this paper. 9/ Our analysis does

however support the conclusion, in contradiction of the surplus labour model

that ceteris paribus, an increase in the demand for rural labour does lead to

a rise in rural real wages. This conclusion is further strengthened by the

recent-studies by Bardhan, Rosensweig, and Bingswanger-Evenson of rural labour

supply and demand functions based on the micro-economic household data

available from the rural household surveys of the NSS and the NCAER. 10/ They

find that both the demand and supply curves for rural labour are relatively

inelastic, so that even small shifts in either of these curves can lead to

greatly amplified changes in real rural wages. The 'surplus labour' model,

hopefully, will henceforth be regarded as a theoretical curiosum in Indian

economics.

IV

Our conclusions therefore can be brief. First, our investigations in

this paper do lend some support to Rao's claim that the AWI data may be useful

'in charting long term trends. Secondly, as in all time-series analysis, it is

important not to draw any conclusions on trends from a short run series.

Thirdly, it is important to formulate and if possible estimate an explicit

theoretical model of rural wage determination, which has not been common in

past Indian discussions. 11/ Fourthly, as a working hypothesis, our

analysis would support the use of a 'neo-classical' model of wage

determination. A conclusion that is also supported by the recent studies of

household rural labour supply and demand functions from Indian micro-economic

data. Fifthly, to the extent that rural money wages tend to lag behind

prices, and rural real wages are of importance in determining the living

standards of the rural poor, inflation is an enemy of the wage earning rural

DLD/AR-078/7/23/84 -14-

poor. Sixthly, given the likely future growth in the rural labour force,

raising the demand for labour remains the single most important means for

alleviating rural poverty. Though agricultural development (even in the

absence of institutional reform) can and has raised the demand for rural

labour in the past, it has not been spectacular in relation to labor supply.

The marked increase in the rate of growth of agricultural output in the post-

Independence period to 2.4% p.a., over its long term trend rate of just under

1% p.a., has however not led to any acceleration of the rate of growth of

rural real wages in the post-Independence period over the long run trend rate

of under half a percent per annum. Given the modesty of this agricultural

performance relative to the increase in rural labor supply (of about 2% p.a.)

it would be unrealistic to expect any significant reduction in the extent of

Indian rural poverty. But to the extent that the supply of rural labour is

also influenced by the absorption of labour in industry, it is the failure of

modern Indian industry to markedly increase its demand for labour, despite

relatively high rates of growth of industrial investment, which must also be

assigned a major role in the limited poverty redressal in independent India.

But that, of course, is another story.

DLD/AR-078/7/23/84 -15-

NOTES

1. K Bardhan (1973) (1977); P. Bardhan (1970) (1973); Bhalla (1979); Herdt

and Baker (1972); Jose (1973), (1974), (1978); Krishnaji (1971); Lal

(1976), (1977); Parthasarthy and Adiseshu (1982); Pandey (1973), (1976);

Santra (1974).

2. Vernon Ruttan has noted an ideological tone in his survey of the

literature on the effects of the Green Revolution on the living standards

of the rural poor. He states: "A second set of criticisms has been more

ideologically motivated. Hope for the radicalization of the lower

peasantry and landless labourers has been viewed as dependent on the

continuation of the process of 'immiserizing growth'. The scale neutral

green revolution technology, which was equally effective on small and

large farms, has been viewed as increasing the political cost of

revolutionary change. By offering a prospect for improvements in the

welfare of rural people, without revolution, the seed fertiliser

technology has become the target of substantial rhetoric." (p. 16).

3. The surplus labour literature is immense. But mention must be made of

Lewis (1954) and (1979), in which he seems to view the model of surplus

labour now in terms of the segmented labour market models for industrial

labour. The latter are surveyed in Lal (1979). On the necessary and

sufficient conditions for surplus labour to exist in Lewis' original sense

the seminal article is by Sen (1966), who shows that these conditions are

provided by a perfectly elastic supply curve for rural labour. An attempt

to directly test this assumption with the data available from the NSS 25th

round is in Lal (1976a). But the most rigorous empirical critique of the

DLD/AR-078/7/23/84 -16-

' surplus labour view is provided by the estimates of household rural labour

supply curves by P. Bardhan (1979) and Rosenzwig (1978), (1983).

4. Though oaly incidentally. For the positive effects of real wage rises on

alleviating rural poverty see Lal (1976), and on the positive effects of

. growth on rural poverty redressal see B. Dutta (1980) for the latest

estimates, as well as a brief survey of earlier studies.

5. It should no noted that the stationarity conditions for an AR(2) process

are: -1<a 2<1

al+a2<1

a2-al<1

(see Gottman, p. 128). For both the AR(2) model results reported in this

paper these conditions are met, as can be seen from Tables 2(11), and

3(11).

6. See Marvin Kurve (1948); S. Mishra (1948); Rath and Joshi (1966).

7. The correct price index for the supply equation would be the agricultural

consumer price index, and for the demand side the agricultural output

price index. As we do not have ACPI's for the pre-Independence period, we

have used the output price index in both equations. however, note that

whereas the money wages are deflated by the output price index before 1950

to derive real wages from 1950 onwards the deflator used is the ACPI (All

India) implicit in the derivation of our State level aggregate of real

wage.

8. See references in footnote 1. But in addition mention must be made of a

pioneering study by A. Reddy (1979) based on an analysis of private farm

account data for one district in Andhra Pradesh-Nellore. in terms of

tolas of rice he finds the real wage declines from aobut 300 in the 1890's

to 150-200 in the late 1960'so Stagnancy, and in some districts a decline

DLD/AR-078/7/23/84 -17-

in real rural wages in Andhra pradesh has also been charted by

Parthasarthy and Adiseshu (1982) for the 1958-1978 period on the basis of

AWI data.

9. That there might be such a causal link is argued by Boserup. For some

empirical evidence that the Boserup process might be operative in Indian

agriculture see Lal (1981).

10. Also see Lal (1976a).

11. See Ruttan, op cit.

DLD/AR-078/7/23/84 -18-

REFERENCES

K. Bardhan (1973): "Factors Affecting Wage Rates for Agricultural Labour",

Economic and Political Weekly, Vol. VIII, No. 26, Review of Agricuture,

June 1973.

K. Bardhan (1977): "Rural Employment, Wages and Labour Markets in India",

Economic and Political Weekly, Vol. XII,, Review of Agriculture, June,

July 2, and July 9, 1977.

P. Bardhan (1970): "Green Revolution and Agricultural labourers". Economic

and Political Weekly, Vol. V, Nos. 29-31, July, 1970.

P. Bardhan (1973): "Variations in Agricultural Wages - A Note", Economic and

Political Weekly, Vol. VII No. 21, May, 1973.

P. Bardhan (1979): "Labour Supply Functions in a Poor Agrarian Economy",

American Economic Review, March, 1979.

S. Bhalla (1979): "Real Wage Rates of Agricultural Labourers in Punjab 1961-

77", Economic and Political Weekly, Review of Agriculture, June 1979.

G. Blyn (1966): Agricultural Trends in India, 1891-1947: Output, Availability

and Productivity (University of Pennsylvania Press, 1966).

K.L. Datta (1914): Report on the Enquiry Into the Rise of Prices in India

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B. Dutta (1980): "Intersectoral Disparities and Income Distribution in India,

1960-61 to 1973-74", Indian Economic Review, Vol. XV, No. 2, 1980.

J.M. Gottman (1981): Time-Series Analysis - A Comprehensive Introduction for

Social Scientists (Cambridge, 1981)

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Yielding Varieties", Economic and Political Weekly, Vol. VII, No. 13,

Review of Agriculture, March, 1972.

DLD/AR-078/7/23/84 -19-

A. Heston (1983): "National Income" in D. Kumar and T. Raychaudhri (eds): The

Cambridge Economic History of India, Vol. II, (Cambridge, 1983).

A.V. Jose (1973): "Wage Rates of Agricultural labourers in Kerala", Economic

and Political Weekly, Vol. VIII, Nos. 4-6, February, 1973.

A.V. Jose (1978):; "Real Wages, Employment, and Income of Agricultural

labourers", Economic and Political Weekly, Review of Agriculture, Vol.

XIII, No. 12, March, 1978.

N. Krishnaji (1972):"Wages of Agricultural labour", Economic and Political

Weekly, Vol. VI, No. 39, Review of Agriculture, Sept., 1971. '

J. Krishnamurty (1972): "Working Force in 1971 Census - Some Exercises on

Provisional Results", Economic and Political Weekly, January 15, 1972.

B.S. Marvin Kurve (1948): "Agricultural Wages and Systems of payments in the

Bombay Karnataka", Indian Journal of Agricultural Economics, April, 1948.

D. Lal (1976): "Agricultural Growth, Real Wages, and the Rural Poor In India",

Economic and Political Weekly, Review of Agriculture, Vol. XI, June, 1976.

(1976a): "Supply Price and Surplus Labour: Some Indian Evidence",

World Development, Vol. IV, Nos. 10-11, 1976.

(1977): "Agricultural Growth and Rural Real Wages - A Reply",

Economic and Political Weekly, Vol. XII, No. 20, May, 1977.

(1979): "Theories of Industrial Wage Structures: A Review",

Indian Journal of Industrial Relations, Vol. XV, No. 2, October 1979,

reprinted in World Bank Reprint series, No. 142.

(1981): Cultural Stability and Economic Stagnation: India-c 1500

BC - 1980 (mimeo, London, 1981) to be published as The Hindu Equilibrium.

(Oxford, forthcoming)

DLD/AR-078/7/23/84 -20-

L.J. Lau (1978): "Application of Profit Functions" in M. Fuss and D. McFadden

(eds): Production Economics - A Dual Approach to Theory and Applications

(North Holland, 1978).

W.A. Lewis (1954): "Economic Development with unlimited supplies of labour",

The Manchester School, May, 1954.

(1979): "The Dual Economy Revisited", The Manchester School,

September, 1979.

A. Maddison (1971): Class Structure and Economic Growth (Allen and Unwin,

1971).

S. Mishra (1948): "Agricultural Wages in Relation to Rural Cost of Living",

Indian Journal of Economics, July 1948. .

M. Mukherjee (1969): National Income of India - Trends and Structure

(Statistical Publishing Society, Calcutta, 1969).

R.K. Mukherjee (1967): The Economic History of India 1600-1800 (Allahabad,

1967).

G. Parthasarthy and K. Adiseshu (1982): "Real Wages of Agricultural Labour in

Andhra Pradesh - Two Decades of Stagnation", Economic and Political

Weekly, Vol. XVII, No. 31, July, 1982.

S.M. Pandey (1973): "Wage Determination in indian Agriculture: An Empirical

Analysis", Indian Journal of Industrial Relations, July 1973.

(1976): "Patterns of Wages, Income, and Consumer Expenditure of

Agricultural Labour in India: Problems and policy Perspectives", in S.M.

Pandey(ed): Rural Labour in India (Shri Ram Centre for Industrial

Relations, Delhi, 1976).

V.M. Rao (1972):"Agricultural Wages in India - A Reliability Analysis", Indian

Journal of Agricultural Economics, Vol. XXVII, No. 3, July-September,

1972.

DLD/AR-078/7/23/84 -21-

N. Rath and A.V. Joshi (1966):"Relative Movement of Agricultural Wage Rates

and Cereal Prices: Some Indian Evidence", Artha Vijana, June, 1966.

A.M. Reddy (1979): "Wages Data from the private Agricultural Accounts, Nellore

District, 1893-1974", Indian Economic and Social History Review, 1979.

V. Ruttan (1977): "The Green Revolution - Seven Generalisations",

International Development Review, Vol. XIX, No. 4, 1977.

B. Santra (1974): "Trends in Agricultural Wages - Some Indian Evidence",

Indian Journal of Agricultural Economics, July-Sept., 1974.

Y. Satyanarayana (1981): Wage Trends in' India: 1830 to 1976- An Analysis,

Discussion and Compilation of Data", Studies in Employment and Rural

Development No. 74, Employment and Rural Development Devision, World Bank,

Oct., 1981.

A.K. Sen (1966): "Peasants and Dualism with or without surplus labour",

Journal of Political Economy, Vol. 74, Octoberd, 1966.

J.N. Sinha (1982): "1981 Census Economic Data - A Note", Economic and

Political Weekly, Vol. XVII, No. 6, February, 1982.

S. Sivasubramoian (1977): "Income from the Secondary Sector in India 1900-47",

Indian Economic and Social History Review, Vol. XIV, No. 4, 1977.

K. Sundaram (1977): "The Structure of the Work Force in Rural India: 1950-51

- 1971", Indian Economic Review, April, 1977.

P.A. Yotopoulos and L.J. Lau (1974): "On modeling the agricultural sector in

developing economies: An integrated approach of micro and macro-

economics", Journal of Development Economics, Vol. I, No. 2,, September,

1974.

P.A. Yotopoulos and J.B. Nugent (1976): Economics of Development - Empirical

Investigation, (Harper and Row, 1976).

DLD/AR-078/7/23/84 -22-

H. R. Varian (1978): Microeconomic Analysis, 2nd. -ed. (Norton, New York,

1978).

P. Visaria and L. Visaria (1981): "Indian Population Scene after 1981 Census -

A Perspective", Economic and Political Weekly, Vol. XVI, Nos. 44-46,

Special Number, 1981.

DLD/AR-078/7/23/84 -23-

Table I: WAGES, AGRICULTURAL OUTPUT, PRICES, LABOUR FORCE AND ACERAGE

All India Indices 1867 - 1980

MW RLW P X L X/L dlnN

Year (1) (2) (3) (4) (5) (6) (7)

1867 71 '86 17 88

1868 62 90

1872 89

1873 75 108 15 66 90

74 75 99 16 90

75 75 112 14 90

76 83 120 15 90

77 79 88 19 90

78 /9 82 20 90

79 88 99 19 90

80 88 115 16 90

81 88 126 15 90

82 88 128 15 71 91 99

83 88 126 15 92

84 88 117 16 70 93 95

85 88 117 16 74 94 100

86 90 124 15 70 95 94

87 88 121 15 76 96 101

88 88 113 16 78 96 103

89 88 107 17 74 97 97

90 92 112 17 81 98 105

91 90 107 18 66 99 85

92 88 95 20 76 99 98 5.20

93 88 98 19 79 99 101 0.56

94 92 108 18 81 99 103 4.40

cont.

DLD/AR-078/7/23/84 -24-

TABLE I (cont.)

MW RLW P X L X/L dlnN

Year (1) (2) (3) (4) (5) (6) (7)

1895 88 105 18 76 99 97 -5.53

96 100 110 19 64 100 81 -6.45

97 100 93 23 89 100 113 9.81

98 108 124 19 89 100 112 -1.66

99 94 110 18 75 100 95 -9.36

1900 100 100 21 79 100 100 10.47

01 20 64 101 80

02 19 85 102 106

03 18 85 103 105

04 19 83 105 100

05 20 79 106 94

06 24 84 107 .99

07 25 73 109 84

08 26 76 110 87

09 27 97 111 111

10 22 99 112 112

11 24 94 112 107

12 25 91 112 103

13 133 109 26 83 112 94

14 27 92 112 104

15 30 96 112 109

16 34 104 112 118

17 39 102 112 116

18 47 71 111 81

19 260 105 52 101 111 115

20 300 117 54 77 111 87 -9.63

21 293 130 48 95 112 108 8.61

22 307 138 47 100 113 112 1.03

23 327 150 46 92 113 103 -2.06

Cont.

DLD/AR-078/7/23/84 -25- 4

TABLE 1 (Cont.)

MW RLW P X L X/L dlnN

Year (1) (2) (3) (4) (5) (6) (7)

24 327 149 46 94 114 104 3.58

25 360 197 43 92 114 103 -2.54

26 353 189 40 92 115 101 -2.08

27 313 167 40 90 116 99 1.05

28 327 178 39 95 116 103 3.08

29 320 179 38 99 117 107 -1.02

30 300 205 31 98 118 105 1.02

31 247 204 26 99 120 105 0.00

32 233 203 24 99 121 104 -2.04

33 227 206 23 98 122 102 3.05

34 213 189 24 98 123 101 -4.60

35 200 174 24 98 125 99 0.52

36 200 174 24 108 126 109 4.08

37 187 145 27 104 127 104 -0.50

38 187 155 26 95 129 93 -1.01

39 193 141 29 101 130 98 0.00

40 193 127 32 102 132 98 0.03

41 193 115 36 100 133 95 -0.99

42 213 104 43 105 134 99 1.97

43 320 114 60 111 136 103 0.97

44 520 168 66 107 137 99 1.44

45 633 202 67 101 139 92 -1.92

46 693 202 73 100 140 91 -1.47

47 81 108 142 96

48 100 100 143 89

49 104 103 145 90

1950 728 141 109 102 146 88

51 120 103 150 87

52 108 104 154 86

DLD/AR-078/7/23/84 -26-

TABLE I (Cont.)

MW RLW P X L X/L dlnN

Year (1) (2) (3) (4) (5) (6) (7)

1953 115 114 158 91

54 102 104 163 81

55 93 107 167 81

56 828 132 110 121 172 89

57 115 114 176 82 -2.03

58 915 139 124 130 181 91 4.03

59 1062 143 128 129 186 88 0.66

60 129 139 191 92 0.00

61 1009 156 129 140 194 91 1.94

62 1015 153 136 136 196 88 0.64

63 147 140 198 89 0.00

64 1216 133 172 153 201 97 1.27.

65 1363 139 187 130 203 81 -2.55

66 1550 132 213 128 206 79 1.28

67 1757 141 260 149 208 91 3.75

68 1770 154 264 151 211 91 -1.86

69 1977 161 255 161 213 96 2.47

70 1984 166 268 172 216 101 1.21

71 2050 162 271 171 221 98 -0.60

72 298 160 226 90 -1.83

73 367 172 231 94 4.82

74 2778 121 461 169 237 90 -3.59

75 440 190 242 100 .4.18

76 415 179 248 92 -2.37

77 466 200 253 100 2.49

78 4635 203 461 203 259 99 1.18

79 501 179 265 86

DLD/AR-078/7/23/84 -27-

Notes to Table I

MW- - money wage index numbers Base 1900=100

RLW - real wage index, Base 1900=100

P - agricultural output price series Base 1948=100;

X - agricultural output series; Base 1946=100;

L - male rural labour foce; Base 1900=100

X/L - agricultural output per male rural labourer; Base 1900=100

dlnN - percentage changes in gross sown area.

Sources:

Column (1): Derived from the data in Appendix Tables A.1-A.4, as described in

the text.

(2): Derived from the data in Appendix Tables A.1-A.4, and the price

indices in column (3) till 1946.

(3): Till 1949 from M. Mukherjee, Table A2.11, p. 94. From 1950 to

1964, the index numbers for all food articles (base 1950=100)

from Basic Statistics Relating to the Indian Economy (Planning

Commission, Dec., 1968) Table 9; for 1964-70, the same series

with base 1961-62=100, from the Statistical Abstract of India

1972, Table 164; and for 1970-79, the same series with base

1970-71=100, from the Economic Survey 1980-81, have been linked

to the Mukherjee series.

(4) Till 1946, the series is derived from the data given in Heston,

Table 4.3A, p. 397; for 1947-49, the data given in Maddison Table

B02 has been linked to the index numbers derived from the Heston

series. For 1950-1979, the data for net domestic product in

agriculture at factor cost (which is also the definition of

.agricultural output' in the Heston and Maddison series) is that

DLD/AR-078/7/23/84 -28-

given in Basic Statistics..0p.cit, Table 88; National Account

Statistics 1960-61 to 1973-74 (CSO, Feb. 1976) Table 4, and the

data for net domestic product in aggregate and agriculture's

percentage share in it given in the Economic Survey 1980-81. It

should be noted that the data before 1946 refers to undivided

India.

(5): Till 1900 the data is for males in agriculture estimated by

Heston, Table 4.1, p. 394. From 1900 onwards the series is

derived from the following estimates we have made of the compound

rates of growth of the male rural labour force and of male

agricultural labourers, between census years from the data

contained in Krishnamurthy, Sinha, Sundaram and Visaria.

Estimated compound rates of growth(percent per annum)

male agricul. male rurallabourers labour force

1901-1911 1.3605 1.1945

1911-1921 -1.1829 -0.0680

1921-1931 2.4563 0.5595

1931-1951 0.8102 1.0654

1951-1961 1.7940 2.7321

1961-1971 0.8313 1.2178

1971-1981 1.6114 2.1300

DLD/AR-078/7/23/84 -29-

column (6) Derived from columns (4) and (5)

(7) Derived from the data on acreage for all crops in British India

given in Blyn, Appendix Table 4.c, p. 316-17, for the period till

1946-47. Till 1963 in the post Independence period, the series

is derived from data on gross sown area contained in Basic

Statistics, thereafter, Statistical Abstracts 1972, 78. From

1976, the series is derived from data on acreage under

foodgrains, given in Economic Survey..p.70

DLD/AR-078/7/23/84 -30-

Table 2: (I) AUTOCORRELATION FOR RESIDUALS FROM RLW SERIES (rk)

Lag,k rk

0 1.00

0.75

2 0.56

3 0.45

4 0.33

5 0.32

6 0.25

7 0.26

8 0.16

(II) The Partial Autocorrelation Function (PACF) from Successive AR model

fitting to residuals of RLW series

AR model al a 2 a3 a4 a 5

AR(1) 0.75AR(2) 0.76 -0.15AR(3) 0.80 -0.35 0.27-AR(4) 0.82 -0.38 0.33 -0.08AR(5) 0.83 -0.44 0.40 -0.24 •0.20

Note: The diagonal contains the PACF values.

DLD/AR-078/7/23/84

Table 2: (III) -- REAL WAGE TRENDS

Years a b p1 p2 R2 F DWS n

1. 1867, 1873-1900, 1911, 108.40 *1.004 1.96 1.19 0.80 218.34 0.78 58

1919-46, 1950, 1956, [20.70] [1.16] [5.64] [1.52]

1958,1959, 1961, 1962,1964-71, 1974, 1978.

2. 1873-1900 114.37 0.998 1.72 0.83 0.24 7.7 1.9 26

[49.61 [0.5] [2.73] [0.96]

3. 1919-1946 229.92 1.0047 2.87 0.72 0.70 56.8 2.0 26

[7.33] [0.4] [5.6] [1.9]

4. 1950-1978 101.48 1.004 8.67 0.19 0.62 39.9 2.7 27

[NA filled with [14.38] [1.08] [9.90] [7.05]

NAITERP]

5. 1964-1971 2.18 1.042 1.15 0.49 0.93 53.8 2.4 6

[1.9] [10.28] [0.43] [2.39]

6. 1867-1979 97.4 1.005 3.084 0.73 0.86 645.6 2.0 113

[NA filled with [46.3] [3.61) [12.07] [3.31]

NAITERP]

Note: Figures in brackets are t-statistics.

NA - not available

NAITERP - not available filled with linear interpolation

DLD/AR-078/7/23/84 -32-

Table 3: (I) AUTOCORRELATION FUNCTION FORRESIDUALS FROM X SERIES (rk)

Lag,k rk

0 1.001 0.702 0.613 0.534 0.475 0.466 0.427 0.408 0.31

(II) The Partial Autocorrelation Function (PACF) from Successive AR modelfitting to residuals from X series

AR model a, a2 a3 a4 a5

AR(1) 0.70

AR(2) 0.18 0.46

AR(3) 0.11 0.43 0.16

AR(4) 0.10 0.41 0.15 0.05

AR(5) 0.09 0.39 0.11 0.04 0.12

Note: The diagonal contains the PACF values.

DLD/AR-078/7/23/84 -33-

Table 3 (III): AGRICULTURAL OUTPUT TRENDS

Years a b pi P2 R2 F DWS n

1. 1885-1900 64.82 1.0063 0.714 0.586 0.35 6.52 2.34 14

[56.65] [2.32] [1.38] [2.19]

2. 1919-1946 68.22 1.0055 0.753 0.703 0.54 27.65 1.04 26

[108.17] [9.45] [1.87] [2.49]

3. 1950-1978 14.05 1.0238 1.144 0.991 0.91 264.01 1.99 27

[16.06] [14.22] [0.67] [0.04]

4. 1867-1978 58.26 1.0089 1.456 1.389 0.92 1203.53 2.08 111

[68.88] [10.42] [4.13] [3.52]

DLD/AR-078/7/23/84 -34-

Table 4: SUMMARY OF TRENDS

(I) Based on End Point Comparisons

1873 - 1979-80 Per cent per annum

Real rural wages 0.6

Agricultural output 1.4

Agricultural labour force 1.1

Agricultural output/man 0.3

(II) Based on AR(2) 'Models' (per cent per annum)

Rural Agricultural Male Rural

Real Wages Output Labour

1875-1978 0.40

1867-1978 0.89 1.05

1873-1900 0.00 0.63 0.38

1919-1946 0.47 0.55 0.90

1950-1978 0.40 2.38 1.90

Note: Except those marked by an I, significant at 1% level.

DLD/AR-078/7/23/84 -35-

Table 5 REGRESSION RESULTS FOR WAGE-DETERMINATION MODELS

REAL WAGE (RLW) AS THE DEPENDENT VARIABLE (Dln RLW (t))

Years

I. Model I Constant din X(t-1) dln N(t) R2 F n DWS

(a) 1892-1900 -0.35 0.66 0.01 0.93 28.5 7 0.39

(1.21) (0.07) (0.04)

(b) 1921-1946 0.33 0.36 0.05 0.08 0.96 24 1.97

(0.71) (0.55) (0.24)

(c) 1958-1978 8.43 0.27 0.07 0.93 106.3 19 1.36

(3.77) (0.10) (0.05)

(d) 1892-1978 0.30 0.44 0.08 0.15 3.24 40 1.93

(0.42) (0.17) (0.10)

NAINTERP 1.29 0.09 0.05 0.37 24.3 85 2.00

(0.40) (0.05) (0.04)

(e) 1892-1900 0.17 0.61 0.03 0.82 29.6 16 1.4

and 1958-1978 (0.30) (0.08) (0.04)

II. Model II

Constant din X(t-1) dln N(t) dln RLW(t-1) .R2 F n DWS

(a) 1892-1900 0.33 0.45 -0.19 -0.74 0.99 80.72 7 0.77

(0.12) (0.07) (0.05) (0.13)

(b) 1921-1946 -0.03 0.82 0.31 0.71 0.17 1.38 24 2.08

(0.34) (0.62) (0.33) (0.18)

(c) 1958-1978 -0.55 0.28 0.15 1.12 0.92 54.68 19 1.98

(0.29) (0.17) (0.11) (0.09)

(d) 1892-1978NAINTERP -0.21 0.23 0.02 0.43 0.31 12.16 85 1.93

(0.09) (0.06) (0.11)

(e) 1892-1900 0.33 0.57 -0.03 -0.27 0.86 23.9 16 0.95

1952-1978 (0.30) (0.08) (0.06) (0.14)

Notes: 1. The Cochrane-Orcult procedure for second order serial correlation has been

used in deriving the above estimates.

2. Figures in brackets are standard errors.

DLD/AR-078/7/23/84 -36-

APPENDIX TABLES

Table A.1

Wage Series for the Pre-Independence Period

Year R.K. Mukherjee PWA series Sivasubramoniam

Base 1900=100 Base 1900=100 Rupees per day

(1) (2) (3)

(Real Wage) - (Money Wages) (Money Wages)

1857 134 441856 711870 1121873 75

74 7575 7576 8377 7978 7979 8880 121 8881 8882 8883 8884 8885 8886 9087 8888 8889 8890 97 9291 9092 8893 8894 9295 8896 10097 10098 10899 94

1900 100 0.1501020304 05 1160607

Cont.

DLD/AR-078/7/23/84 . -37-

Table A.l (cont.)

Year R.K. Mukherjee PWA series Sivasubramoniam

080910111213 0.23141.516 100171819 0.3920 0.45

21 0.4422 0.4623 0.4924 0.49

25 0.5426 0.5327 0.47

28 0.4929 0.48

30 101 0.45

31 0.3732 0.35'33 0.34

34 0.3235 0.3036 0.30

37 0.28.38 0.28

39 0.29

40 165 0.2941 0.29

42 0.32

43 0.4844 0.78

45 0.9546 1.04

Notes: (1) This series is from R. Mukherjee, p. 58, and is a

simple average for skilled and unskilled wrokers.

(2) This is derived from M. Mukherjee, Table A2.6, p.98

and is for able bodied agricultural workers.

(3) This is from Sivasubramoniam, Table 17, and is for

field labour in mofussil area (rural) in Bombay

province.

DLD/AR-Ub/ I/Ld/U/

Table A.2: INDICES OF MONEY AND RFAL WAGE RATES OF HALF AGRTCIII.TiIRAI. LABORERS

STATF-WISP (1956/57 to 1971/72)(Base 1956/57 100)

Andhra Madhya Puniah and littar West All

Year Pradesh Assam Bihar Cujarat Karnataka Kerala Pradesh Maharashtra Orissa flarvana TamiI Padi Pradesh Bengal India

Indices of Money Wage Rates (1956/57 1001

1956/57 100 100 100 100 100 100 100 100 100 100 100 100 100 100

1957/58, n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.

1958/59 122 97 111 110 114 107 Ill 101 47 112 QR 129 101 Ill

1959/60 121 101 100 131 1?6 114 125 92 05 110 107 249 106 128

1960/61 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.

1961/62 138 102 104 122 128 131 121 11S 127 126 108 141 114 122

1962/63 136 100 102 124 128 155 121 117 146 127 1l? 140 110 123

1963/64 n.a. n.a. n.a. n.a. n.a. n.a. n.R. n.a. n.a. n.a. n.a. n.a. n.a. n.a.

1964/65 159 105 135 139 160 170 129 144 192 144 140 178 129 147

1965/66 168 123 160 144 142 195 142 146 187 182 142 2?1 155 165

1966/67 189 138 n.a. 158 145 230 161 175 211 180 159 210 177 187

1967/68 213 n.a. n.a. 178 156 282 n.a. 189 176 229 P0 284 191 212

1968/69 217 162 196 181 156 301 179 195 n.a. 276 183 290 175 214

1969/70 233 167 n.a. 185 n.a. 308 190 217 n.a. 303 187 303 185 239 L

1970/71 261 178 n.a. 213 188 337 194 212 212 104 194 315 183 240

1971/72 239 180 n.a. 233 198 338 210 211 226 305 217 326 202 248

Indices of Real Wages Rates (1956/57 100)

1956/57 100 100 100 100 100 100 100 100 100 100 100 100 100 100

1957/58 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.e. n.a. n.a.

1958/59 119 89 98 110 112 101 104 49 98 101 97 114 92 105

1959/60 Ill 96 98 137 114 107 126 87 1 106 96 122 96 1ns

1960/61 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. . n.a. n.a.

1961/62 124 95 100 117 114 118 119 114 119 121 94 148 10 118

1962/63 122 87 94 116 Ill 136 111 107 115 121 105 144 00 116

1964/65 116 74 89 102 98 121 93 93 128 103 99 110 95 101

1965/66 112 78 89 103 74 123 92 90 110 131 97 I1, 91 105

1966/67 110 67 n.a. 101 73 134 Ri 98 105 102 90 120 40 100

1967/68 122 n.a. n.a. 109 74 155 n.a. 101 80 118 97 122 70 107

1968/69 118 72 104 111 76 146 93 108 n.a. 142 101 165 88 117

1969/70 121 83 n.a. 107 n.a. 144 93 116 n.e. M53 96 156 93 172

1970/71 139 81 n.a. 120 89 149 99 10 95 153 109 175 89 126

1971/72 119 78 n.e. 125 92 151 102 99 06 140 113 172 96 123

Note: Wage rate figures have been estimated from "Agricultural Wages in India" and also from data collected from DES, Ministry of Agriculture. The All India figure

has been derived by weighting the State figures by the number of male agricultural labor In each State in 1961 and 1971.

Source: Jose, A. V., Trends in Real Wage Rates of Agricultural Labouirers, Economic and Political Weekly, March 1974.

DLD/AR-078/7/23/84 - 39 -

Table A.3

WAGE RATES FOR ADULT MALE AGRICULTURAL RURAL

LABOURERS AND AGRICULTURAL CONSUMER PRICE INDICES

NSS AGRICULTURAL AND RURAL LABOUR ENQUIRIES

(for Agricultural Labour Households)

(A) Money Wage Rates (Paise/day)

States 1950-51 1965-57 1964-65 1970-71 1974-75

Andhra Pradesh 97 87 (96) 121 (133) 222 265 (292)

Assam 190 154 (169) 221 (243) 378 404 (444)

Bihar 126 91 (100) 139 (153) 229 322 (354).

Gujarat (101) (87) (95) 147 (162) 193 324 (356)

Haryana (184) (198) (218) (213) (234) 446 485 (534)

Kerala 126 128 (141) 211 (232) 425 602 (662)

Madhya Pradesh 79 76 (84) 111 (122) 168 246 (271)

Maharashtra 101 87 (95) 147 (162) 228 263 (289)

Mysore 90 84 (92) 121 (133) 191 285 (314)

Orissa 72 80 (88) 133 (146) 190 264 (290)

Punjab 184 198 (218) 213 (234) 497 642 (706)

Rajasthan 123 98 (108) 176 (194) 303 364 (400)

Tamil Nadu 97 84 (92) 139 (143) 242 364 (4.00)

Uttar Pradesh 118 92 .(101) 110 (121) 247 319 (351)

West Bengal 166 143 (157) 181 (199) 257 349 (384)

Jammu & Kashmir n.a. n.a. 193 (212) 319 529 (582)

All India 109 96 (106) 143 (157) 231 324 (356)

Notes: The 1970-71 data is the average for male workers between 15-45 years

old of non-cultivating households. For the other years they are the

average wage rates for all male field laborers.

For 1950-51 and 1970-71, payments in kind were converted into their

cash equivalent at rural retail prices, for the other years the

conversion was at wholesale prices. Krishnaji has estimated that

about 50 percent of wages are paid in kind, and retail prices are

about 10-20% higher than wholesale prices, he estimates that

inflating the 1956 wage figures by 10 percent would make them

comparable with the 1950 data. This same adjustment has been made

for 1964-65 and 1974-75, and the resulting money wages at retail

prices (comparable to those for 1950 and 1970, are shown in

brackets.

Sources: 1950-51 and 1956-57 from Agricultural Labour in India - Report of

the Second Labour Enquiry; 1964-65 from "Agricultural Labour in

India: A Compendium of Basic Facts" (Labour Bureau, 1964); 1970-71

from NSS 25th Round (1970-71) State Samples (CSO, '74) 1974-75 from

Rural Labour Enquiry: Final Report on Wages and Earnings (Labour

Bureau, 1980, p.10 2 .

DLD/AR-078/7/23/84 40 -

Table A.3 (contd.)

(B) Indices of Agricultural Consumer Prices (ACI)andReal Wages (RIW) 1950-51 to 1974-75 fran NSS and RLE

ACPI RLW(1956-57=100) (1956-57=100)

1950-51 1964-65 1970-71 1974-75 1950 1964 1970 1974

Andha Pradesh 92 138. 188 354 110 101 122 86

Assan 85 142 221 372 133 101 100 71Blar 110 152 208 396 115 101 109 89Gujarat na 136 177 326 na 124 143 83Haryana na 140 196 340 na 177 104 72Kerala 96 140 228 301 94 118 131 156Madhya Pradesh 93 138 196 411 102 116 102 79Mharashtra na 154 196 371 na 110 121 81lysore 97 164 211 387 101 98 97 88Orissa 99 151 223 418 83 110 96 79Punjab 99 140 196 340 86 77 115 95Rajasthan 110 137 199 384 103 132 140 97Tamil Nadu na 141 178 413 na 118 146 105Uttar Pradesh na 162 181 374 na 74 134 93Test Bngal 92 136 206 338 114 93 72All India 96 146 196 376 108 102 112 96

Note: For the ACPI's see Lal, Table A.1 and A-2; and Satyanarayana Table 1.7. It should be

noted that in the last source All India ACPI"s for 1950-51 and 1956-57 have been couputedby using the price indices for inustrial labor for the States for which ACPI's are not

available for these years. The 1950-and 1956 All India ACPI's being derived by Teighting

the State indices by the proportion of agricultural labor in each State, given in Table

2.17 of Statistics of Wages in India.

DLD/AR-078/7/23/84

Table A.4: WAGE RATES OF MALE AGRICULTURAL LABORER IN

MID 1970 AND 1979 (STATE-WISE) (in Rs.)

Average money wage rate Real wage rate 2 (1960/61 Rs. per day)

July 1970 For the Month and Col.5State Month Rs. per day Rs. per day year given in col.(2) July 1970 = 100

(1) (2) (3) (4) (5) (6)

Andhra Pradesh June 79 5.33 3.00 1.95 1.73 12.7

Assam June 79 6.80 4.00 1.92 1.93 -0.5

Gujarat Oct. 78 5.50 3.62 1.88 2.01 -6.5

H.P. Apr. 79 5.25 3.10 1.53 1.56 -1.9

Karnataka Mar. 79 5.00 3.75 1.74 204 -14.7

Maharashtra n.a. n.a. 2.50 n.a. 1.32 n.a.

Orissa Dec. 78 4.50 2.25 1.34 1.00 34.0

Tripuna May 79 5.00 - n.a. - -

Bihar Apr. 79 7.02 2.80 2.09 1.26 65.9

Haryana June 79 12.00 6.33 3.54 3.18 11.3

Kerala May 79 7.50 3.97 2.30 1.86 23.7

Madhya Pradesh June 79 3.50 2.05 1,04 1.00 4.0

Punjab May 79 11.25 7.00 3.36 3.52 -4.5

Rajasthan Apr. 79 9.50 3.27 3.10 1.69 83.4

Tamilnadu June 79 5.00 2.00 1.66 1.69 -1.8

Uttar Pradesh 3.00 1.42

Notes 1. Figures in column (3) are the average rates of male field labour given in Agricultural

Situation in India Dept. 1979. Ministry of Agriculture and Irrigation.

Figures in column (4) for the corresponding districts and villages have been taken from

Agricultural Wages in India 1970-71, Ministry of Agriculture.

2. Figures in column (3) have been deflated by the consumer price Index for Agricultural

Labourers of the State in the corresponding month to obtain figures in column (5). The

consumer price indices have been taken from Indian Labourer Journal, September 1979.

Figures in column (6) have been obtained by deflating the figures of column (4) with the

consumer price index of Agricultural Labourer of the State in the month of July 1970 as given

in Agricultural Prices in India, 1963-1974 published by DES, Ministry of Agriculture.

FIG. I: Real Rural Wages

REAL RURAL WAGES250

200-

150-

100 -

REAL WAGE SERIES

GE19METRIC TREND

50-

1865 1875 1885 1895 1905 1915 1925 1935 1945 1955 1965 1975

FIG. II: AGRICUTURAL OUTPUT SERIES

AGRICULTURAL OUTPUT250

200-

150-

100-

AGRI. OUTPUT

GEOMETRIC TREND

5011865 1875 1885 1895 1905 1915 1925 1935 1945 1955 1965 1975