Incomes Policy in India

The biggest problem facing a developing economy is one of reconciling rapid economic development with reasonable price stability. This demands that the rise in various incomes, such as wages and salaries, company profits, personal incomes from interest and dividends, personal incomes from rent, the income of farmers, the income of those engaged in personal services and so on should be moderated and they should bear the right relationship to each other. In other words, there should be an incomes policy. Supplementing the more familiar instruments of monetary and fiscal policies, incomes policy should seek to hold the growth of incomes in line with the growth of output. The wage income in particular should not advance at a faster pace than gains in productivity.