CREDIT, INFLATION AND DEFLATION - SOME THEORETICAL COMMENTS IN THE INDIAN CONTEXT

Since inflation in the Indian context is widely accepted as involving a squeeze on workers, especially the large numbers of unorganised workers whose wages are not indexed to cost of living increases, it is often suggested that controlling inflation through a tightening of credit availability has ipso facto the opposite effect of making the workers' position relatively more comfortable. This paper argues against this proposition and suggests that both inflation and deflation can harm the relative share of workers.