On prices and economic power: Explaining recent changes in intersectoral relations in the Indian economy

Two contrasting views about the relationship between agriculture and industry and in particular about the optimal level of the terms of trade between these two sectors are identified and first set in the context of the political economy of contemporary India. Methodological issues relating to the correct measurement of intersectoral price shifts are taken up and it is shown that these have considerable bearing on current controversies. It is argued in particular that single factor explanations of the behaviour of the terms of trade lack credibility, and that these have to be analysed in the context of wider issues of growth and imbalance in developing economies.