COLONIALISM and

INDIAN ECONOMY

AmiyaKumarBagchi

OXFORD
UNIVERSITY PRESS

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In grateful memory of Maurice Herbert Dobb (1900-76)
and Joan Violet Robinson (1903-83)
 Contents

List of Tables viii

Preface xi
Acknowledgements xiii
Introduction
ColonialRule as StructuralAdjustment:
Expropriation,Agency,and Survival xv
1. An Estimate of the Gross Domestic Material Product of 1
Bengal and Bihar in 1794 from Colebrooke's Data
2. Reflections on Patterns of Regional Growth in India 13
under British Rule
3. De-industrialization in India in the Nineteenth Century: 57
Some Theoretical Implications
4. De-industrialization in Gangetic Bihar: 1809-1901 89
5. A Reply (to Dr Marika Vicziany) 106
6. Relation of Agriculture to Industry in the Context of 115
South Asia
7. Indian Demography and Economy in the Long 136
Fin-de-siecle.1876-1914
8. Land Tax, Property Rights, and Peasant Insecurity in 194
Colonial India
9. Markets, Market Failures, and the Transformation of 242
Authority, Property, and Bondage in Colonial India
Bibliography 264
Index 293
 Tables

1 Land Revenue of Different Presidencies of xxvii

British India (in £s), 1792-1811
2 Proportion of Population Dependent on Secondary xl
Industry in Four Districts of the Madras Presidency,
in 1901
3 Population of Lucknow (1857-81) xl

2.1 Five-Yearly Averages of Total Exports of 18

Merchandise from the Four Major Regions
oflndia
2.2 Five-Yearly Averages of Export Surplus 19
(Export minus Import of Merchan,dise)
of Different Regions of India
2.3 Percentages of Provincial Trade Passing 20
Through Different Major Ports
2.4 Area Irrigated in Madras, Punjab, and the 39
United Provinces by Government Works,
Annual Averages
2.5 Percentage Change in Acreage and Yield per Acre in 41
Different Regions of India
2.6 Acreage and yield of crops in Greater Bengal 44
2.7 Total Growth of Population in Three Provinces 49

3.1 Population Dependent on Secondary Industry in 62

Gangetic Bihar around 1809-13
3.2 Population Dependent on Secondary Industry in 1901 63
 Tables ix

4.1 Numbers of Population, Spinners and Industrial 95

Workers other than Spinners, Buchanan's Survey
Districts 1809-13
4.2 Family Size in the Survey Districts of Buchanan 96
1809-13
4.3 Industrial Population in Selected Bihar Districts 96
around 1809-13
4.4 Population Dependent on Industry in 1901 98
in Selected Bihar Districts
4.5 Industrial Population Dependent on Cotton 99
Weaving and Spinning 1809-13
4.6 Relative Weight of the Cotton Industry in the 100
Total Industrial Population in Selected Bihar
Districts, 1901

5.1 Estimated Population and Population Dependent 111

on Secondary Industry in Gangetic Bihar, 1809-19
5.2 Total Population and Population Dependent 112
on Secondary Industry (Including Construction)
in 1901 in Six Bihar Districts

7.1 Landed Cost of Jute per Maund in Calcutta, 145

1879-80 to 1882-3
7.2 Index Numbers of Retail Prices of Major Food 147
Crops in India, 1880-1 to 1900-01
7.3 Intercensal Percentage Changes in Population in 148
Major Provinces and States in India, 1872-1921
7.4 National Income and Foreign Disbursements, 150
India, 1900-05
7.5 Indian Jute Mills, 1879-80 to 1909-10 161
7.6 Exports of Raw Jute and Jute Manufacturers 162
from India, 1879-80 to 1909-10
7.7 Area under Tea and Av1::rageAnnual Production of Tea 164
in British India, 1886-1910
7.8 Average Annual Production, Exports, and Imports of 167
Coal in British India, 1886-1910
7.9 Annual Averages of Exports of Cotton Twist and 173
Yarn to Foreign Countries from India, 1871-89
7.10 Annual Averages oflmports of Cotton Twist and 174
Yarn into India, 1871-9
"
X Tables

7.11 Annual Averages of Values oflmports of Cotton 174

Manufacturers (other than twist and yarn)
into India, 1866-89
7.12 Net Imports of Cotton Piece-goods into Different 175
Provinces of India in 1888-9
7.13 Value oflmports of Cotton Twist and Yarn into 176
Different Provinces of India, 1888-9
7.14 Decadal Rates of Growth of Employment in 177
Indian Provinces: Cotton Mills, 1879-1910
7.15 Progress of Cotton Mills in Bombay and India 185
between 1880 and 1915

8.1 Tillage, Land Revenue, and Prices, Indapur Taluka, 208

1818-37
8.2 Dry-crop Tillage, Total Revenue Paid, 209
Revenue Unpaid, and Prices in Karmala
Group of Villages, Sholapur, 1822--42
8.3 Tillage and Revenue in the Ropla Group of Villages, 210
Sholapur 1822--41
8.4 Bijapur: Tillage and Land Revenue in the 475 Villages 211
of Badami, Bagalkot, and Bijapur Segments, 1820--44
8.5 Tillage and Revenue, Ahmadnagar, ·1821-51 212
8.6 Tillage and Revenue in the Poona District, 213
1839--40 to 1882-3
8.7 Indapur, Tillage, 1838-59 214
8.8 Population of the Four Bombay Deccan Districts, 217
1872-1921
 Preface

rom the time I began to examine the phenomenon of the low standard
F of living of the vast majority of the Indian people, I was repeatedly
forced to ask questions about how it came about. The answers almost
always required delving into history. Very often that delving required
me to throw away the false arguments that covered up the real reasons.
Most of the papers that have been collected in this volume arose out of
that quest for the basic reasons for the emergence and perdurance oflow
human development in a country that gave rise to one of the ancient
civilizations of the world.
The papers have been written over a period covering a quarter of a
century. Naturally, their writing has involved incurring a debt to very
large numbers of economists and historians. Some of that debt has been
acknowledged in specific cases. But I should record my debt to those
institutions in particular which facilitated my researches. They include
the Centre for Social Sciences, Calcutta; the State Bank of India and
especially the team of researchers in the History Cell of the bank, ably
led by Abhik Ray; the Maison des Sciences de !'Homme, Paris; and the
Institute of Development Studies Kolkata (IDSK). Many friends helped
stimulate my thinking and dispel cobwebs of confusion. They include
Samir Amin, Maurice Aymard, Debdas Banerjee, Himani Bannerji,
Sabyasachi Bhattacharya, Terry Byres, Nirmal Chandra, the late Pramit
Chaudhuri, Amalendu Guha, Irfan Habib, John McGuire, the late John
Martinussen, Saugata Mukherji, Prabhat Patnaik, Utsa Patnaik, Peter
Reeves, Manoj Sanyal, Mark Selden, Amartya Sen, Sunanda Sen, Marika
Vicziany, Immanuel Wallerstein, and David Washbrook.
I am lucky that practically all the members of my immediate family,
Barnita Bagchi, JasoclharaBagchi, Tista Bagchi, andAditya Bhattacharjea
xii Preface

have, at various times, acted as sounding boards for my ideas. At the

IDSK, Ramkrishna Chatterjee, Madhusri Ghosh, Sanchari Guha
(Samanta) and Kakoli Banerjee and all members of the devoted non-
academic staff have helped in the production of the book. Juliet Yee of
Monash Asia Institute helped find a critical reference. At the Oxford
University Press, I would like to thank the team for their untiring effort
to produce a presentable volume. Their perseverance in the belief that
this selection would become an independent book was critical in
producing it.
None of the above-mentioned persons bear any responsibility for the
blemishes of this offering.

AMIYA KUMAR BAGCHI

 Acknowledgments

join the publisher to gratefully acknowledge the publishers of the

I journals and publications cited below for permission to publish the
following articles in part or in full:
BIBLIOGRAPHICAL RESEARCH CENTRE
'An Estimate of the Gross Domestic Material Product of Bengal and
Bihar in 1794 from Colebrooke's data', Nineteenth Century Studies,
No. 3, Indian Peasants,(Calcutta, 1973).
BENGAL pAST AND PRESENT
'Reflections on Patterns of Regional Growth in India under the British
Rule', Bengal Past and Present, XCV (1), January-June, pp. 247-89
(Calcutta, 1976).
ROUTLEDGE
'De-industrialization in India in the Nineteenth Century: Some Theo-
retical Implications', Journal of Development Studies, Vol. 12, No. 2,
pp. 135-64, Ganuary, 1976).
'Land Tax, Property Rights, and Peasant Insecurity in Colonial India'
Journal of PeasantStudies, Vol. 20, No. 1, pp. 1-50, (October, 1992).
PEOPLE'S PUBLISHING HousE
'De-industrialization Gangetic Bihar 1809-1901' in B. De et al. Essays
in Honour of ProfessorS. C. Sarkar (New Delhi, 1976).
SAGE PUBLICATIONS
'A Reply (to Dr Marika Vicziany)', originally published in 1he Indian
Economicand SocialHistory Review, Vol. 16, No. 2, [Copyright© The
Indian Economic and Social History Association, New Delhi. 1988,
xiv Acknowledgments

all rights reserved]. Reproduced with the permission of the copyright

holders and the publishers, Sage Publications India Pvt. Ltd. {New
Delhi, 1979).
FRONTIER
'Relation of Agriculture to Industry in the Context of South Asia',
Frontier,Vol. 8, Nos 22-4, pp. 12-27 (Calcutta, 1975).
 Introduction
Colonial Ruleas StructuralAdjustment:
Expropriation,Agency, and Survival*1

Global Competition for Empire and the

Perspective of Imperialism

H ow did the British create an empire in India (today's South Asia)?

The idea that the British empire in India was created in a fit of
absent-mindedness has been perhaps buried. But the idea that it was
really the unforeseen result of British, and more generally European,
intervention in local conflicts is still floating around. Marxists and
world-system theorists have long claimed that imperialism was a driv-
ing force from the time Europeans 'discovered' the Americas and an
oceanic route to Asia (Dobb 1946; Baran 1957; Bagchi 1972a, 1972b;
Wallerstein 1980), and that furthermore, it had generally had a negative
impact on the fortunes of the conquered people.
Only recently, historians have recognized the creation of the empire
as the outcome of a series of deliberate acts and 'empire' has become a
respectable category again. The Oxford University Press has come out
with a five-volume history of the British empire (Canny 1998; Marshall
1998; Porter 1999). From the late fifteenth century, there was active
competition among major European powers such as Spain, France, and
England, and even smaller powers such as the Netherlands and Sweden

*Non-incriminating thanks are due to Jasodhara Bagchi, Arun Bandopadhyay,

Himani Bannerji, and David Washbrook for their searching comments on earlier
versions of this essay.
xvi Introduction

for carving out an empire, especially in lands overseas (Pagden 1995;

Armitage 1998, 2000; Bagchi 2006(2005]. Harvey (2005) has distin-
guished between territorial and capitalist logics of power. However, in
the history of actually existing capitalism and imperialism since the
late fifteenth century, the two logics were inextricably intertwined. If
Portugal and Spain seemed to be keen on territorial expansion, search
for bullion as the main item of trade with Asia was a driving force in
their case. On the other side, the Dutch fought successfully to take
over the major trading posts in the Indonesian archipelago from the
Portuguese and proceeded to impose a coercive monopsony on the spice
trade of Indonesia.
Even some analysts claiming to be Marxists, Bill Warren (1980)
being a notorious example, have lauded imperialism as a progressive
force. They regard any growth of large-scaie industry or trade or what
they regard as capitalist enterprises as positive for a territory without
inquiring into their relative magnitudes in relation to other activities
such as last-resource or subsistence farming and their actual impact on
the social structures and the standards ofliving of the people concerned.
They also ignore the phenomenon of primitive accumulation (Marx
1886(1887]: Chapters•26-32; Dobb •1946), which has been styled by
David Harvey (2003) as 'accumulation by dispossession'. Under that
process, while the,peasants of 'pioneering capitalist countries suffered
greatly, the non-)Vhite colonies-'of.Furope suffered demographic and
economic disasters extending from the early sixteenth to the middle of
the twentieth century (Bagchi [2006(2005}: Chapters 13-18).
The British•empire was the largest territorial empire ever known in
history and 'thaBritish Indian empire was its most important component
in terms.of the number of colonial subjects and in terms of the resources
extracted from it, from at least the beginning of the eighteenth century
to the First World War. So Indian colonial history is an integral part
of global history in the age of imperialism; conversely, global history
has to be an overarching framework for writing Indian history. There
has, th~refore, been a strenuous attempt on the part of pro-imperialist
historians and publicists to portray British rule in India as an unmixed
or at least strongly positive blessing for India. On the other side were
Indian nationalist historians, among whom R.C. Dutt wrote the most
systematic discourse (Dutt 1963a[l 906], 1963b[l 906]), who challenged
the view of British rule as a benign presence in India.
The pro-imperialist discourse re-surfaced in Indian historiography
with a paper by Morris David Morris (1963), who argued that India had
 Introduction xvii

clearly benefited under British rule and most arguments contradicting

that view were both theoretically and empirically unsound. 2 Many of the
contributions in 7he Cambridge History of India, vol. 2, on the period
ofBritish rule (Kumar and Desai 1983) have followed Morris's lead in
this respect, with utter disregard for some of the basic facts of economic
clevelt>pmentin that period.
1h'e Oxford History of the British Empire includes the writings of
historians who have found that many phases of British rule in India
were attended with enormous dislocation and decline (for example, Ray
1998; Washbrook 1999). In the first volume of the New Cambridge
History of India, Bayly (1990: Chapter 5) recognized that there were
phases of absolute economic decline in India and that the establishment
of the l?ritish empire led to a greater degree of authoritarianism and the
exalting of the (alien) 'executive over local liberties' (Bayly 1989: 8), and
the downgrading or decimation of local elites with the metropolitan
officials lording over them. Nonetheless, recently, there has been a
gloating celebration of imperialism by many publicists (for example,
Ferguson 2004). Others, while admitting that Britain possessed an
empire, have denied that it benefited Britain in any fashion (for example,
O'Brien 1982, 1988) or that it could have harmful effects on India or
other non-white colonies.
In my own work, I have been concerned to analyse (a) the rise of
capitalist imperialism' as an inevitable outcome of competition among
capitalists and the states backing them with arms (Bagchi 2006(2005];
(b) the mechanism generating and sustaining the resource flows that
catapulted Britain and other capitalist powers to global dominance
(Bagchi 1972a, 1972b, 1982a, and 2006(2005]); and (c) the economic
and social consequences of colonial rule in India. Some of the articles
collected here shed light particularly on this last area of operation of
British imperialism.3

The Mirage of Emergence of a Civil Society

under Colonialism
It is necessary first to be clear about some of the terms used in discourses
o~ economic development and underdevelopment. Celebrants of capi-
talism and capitalist colonialism claim that Western powers introduced
the notion of equality before law and introduced and protected the
right of private persons to possess productive assets, including land.
These measures are alleged to have laid the foundations of a civil society
in India.
xviii Introduction

In the pre-colonial era, however, in both India and China, private

property in land and its heritability and transferability were legally pro-
tected. Ironically, in British India and other colonies, the British (and
the French) deliberately made such property insecure for the non-white
peoples, for the sake of extraction of a surplus, and in order to provide
the white settlers both practically free land and command over the
labour power of the dispossessed people (Chaeter 8 in this volume and
Bagchi 1982: Chapter 4; Bagchi 2006(2005): Chapters 9-10; Bagchi
2009). In these countries, land was the very basis of existence for most
people; the deprivation of access to that asset struck at their very survival
prospects. This was all done by codifying that deprivation, so that racial-
ism became part of the fabric of colonial rule.
A civil society as conceived by theorists of the bourgeois or capitalist
order should have a clear separation between private and public spaces.
The latter should not be differentiated between different groups on
the basis of religion, ethnicity, or gender, and no person should be
prevented from using the public space because of non-market coercion.
The abolition of private coercive power, which was bound up with
feudal institutions, was a precondition for the creation of a civil society
in Europe. In continental Western Europe, it required the onslaught of
the French revolutionary and Napoleonic armies for the grossest forms
of feudal privilegc;sfo be exorcized.
A civil SO!;:ie~,couldnot emerge under colonialism because the rulers
used various formsi of ethnic discrimination, often deliberately encour-
aged patriarchy in property rights, routinely practised non-market
coercion, and discriminated between the rulers and the ruled on a racial
basis. On the other side, the colonialized people routinely used various
forms of patriarchy and ethnic or religious ascription to strengthen or
invent their own identities. That does not mean that particular groups of
the ruled did not try and create their own civil organizations that tried
to do away with the ascriptive gender, ethnic, or religiously sanctioned
hierarchies. But the repressive nature of the colonial order ensured that
such organizations could never become dominant.
To illustrate the problems of creating a truly civil society, let me
start with the case, of the civil freedom enjoyed by labour under
colonialism. Pre-colonial India did not have the chattel slavery used by
the European capitalists in the tropical plantations and mines. When
south Indian kings still had independent power in their territories, they
disapproved of the kind of chattel slavery the Dutch tried to introduce
there (Raychaudhuri 1962; Washbrook 1993a). Except in some pockets
 Introduction xix

of south India and Bihar, 'slaves' were rarely used for productive,pur-
poses (Dhar 1973; Washbrook 1993a). In Thanjavur and some other
regions of wet paddy cultivation, the bonded 'slaves' often belonged to
a community rather than to individuals; they were often sold with the
land and could not be sold otherwise (Hjejle 1967). This was really akin
to servitude of the East European variety than to plantation slavery of
the Caribbean or Mauritius in the eighteenth century. As in the case of
the servitude imposed by the Romanovs on the Russian peasantry, this
was an indication of the scarcity of la~our (Kliuchevsky 1960(1906];
Domar 1970; Bagchi 2007). Such bonded workers could often turn an
increased scarcity to their own advantage, until the East India Company
could use its power to exclude all competitors to impose a condition of
monopsony, or throw the bonded labourers, who had enjoyed the right
to subsistence, on to the labour market in the name of freeing them
(Washbrook 1993a). There is a mistaken notion that the British abol-
ished slavery in India in 1843 (Hjejle 1967). Actually, what they did was
to legislate that a slave could attain freedom by appealing to a court: it
is this device of non-recognition of slavery that they also used in their
African colonies such as Nigeria (Lovejoy and Hogendorn 1993; Bagchi
1999). Agrestic serfs were essential for the cultivation by landholding
groups in many parts of south India (Sarkar 1985; Washbrook 1993a),
and the colonial rulers could not afford to abolish that kind of bondage
for fear of provoking a drastic decline in land revenue.
,.Moreover, the British state repeatedly intervened in order to restrict
the freedom of weavers working for the East India Company, to recruit
forced labour for public works, to allow plantation owners to indenture
labour, and to criminalize the breach of contract on the part of workers
and give the planters the power of arresting workers who were s\lpposedly
guilty of a breach of contract (Sarkar 1985; Ahuja 1999, 2002; Bagchi
1999). The British rulers continued to use the coercive provisions of the
Masters and Servants Act for a long time after they had been given a
quietus in Britain (Bagchi 2009).
When an absolute compression of incomes from both agriculture
and industry led to the rise of vast masses of people living on the verge
of subsistence and underemployment and became an endemic phenom-
enon, it led often to the strengthening of old ties of bondage or emer-
gence of new ties of casual bondage (Bagchi 1973b; Breman 1974). Of
course, very often landlords faced with falling incomes and the burden
of maintaining agrestic serfs sought to get rid of them. These freed serfs
often then became victims of indenture in distant lands (Baak 1999).
xx Introduction

Several myths were constructed by the ruling power in order to sus-

tain the ideology of continued occupation. One was that there was no
private property in land in pre-British India, and all land belonged to the
sovereign. The right of the sovereign to claim a portion of the produce
of the land was converted into the proposition that land belonged solely
to the sovereign. Another presumption that justified usurpation of all
land outside the cultivated areas was that if there was no documentary
evidence of occupation ofland by any group, such as forest-dwellers or
pastoralists who moved regularly from one ecological niche to another,
depending on the availability of pasture and shelter, then that could
be treated as waste land or disposable public domain. Except for the
areas that European planters or railway companies were interested in,
the British did not allow land to be held un&r fee simple tenure or even
under long leases. What they did was to create property rights in land
revenues to be paid to the state, and rendered landed property highly
insecure for actual cultivators ofl:ufq_(Bagchi 1982a: Chapter 4).
Take two other aspects of reform' the British rulers sought to intro-
duce. The attempt of the British to disallow distinctions of caste and
community }n courts of criminal justice and to give some recognition
to women's autonomylwithin the family, certainly resonated with the
awakening of people of the so-called lower castes such as Jotirao Phule
(2002) and die figkters for women's rights such as Pandita Ramabai
(2000) and Rokeya•Sakhawat Hossain (Barnita Bagchi 2009). But in
their attempt to find the least-cost structure of administration and' jus-
tice, the Britisli'in fact accepted many of the caste taboos and the basic
laws and customs sustaining the subordination of women. Hence the
fighters foi women's freedom and the rights of Dali ts and other lower
castes had to fight both the conservative nationalists and the colonial
government. In south India and elsewhere, the colonial courts often
delivered judgements that recognized the rights of particular castes,
excluding others from the enjoyment of what should have been in the
public domain (Appadurai 1981; Susan Bayly 1999).
Of course, the colonial interaction with the local people was not a
one-way affair. In parts ofKerala, a tradition of matriliny had prevailed
among the Nairs from pre-colonial days. This appeared to be anomalous
to the colonial rulers with their strong traditions of patriarchy, who
smelled polyandry and worse, in this system. They were joined by
Nair men who felt oppressed by the power of the older people over the
disposition of the property and 'other rights. The colonial authorities
elevated the karanavan, an elder man of the household, who acted as
 Introduction xxi

the intermediary between the property-owning collective and the ou!-

side world, to the position of the head of the household, and eventually
took away the rights of the elder women, including their property rights
(Arunima 2003).
Similar transformations through the interactions of the changes
brought about by colonial rule and the response and resistance of differ-
ent sections of the community can be traced in both Hindu and Muslim
revivalism, especially from the late nineteenth century. There were two
different paths to Muslim revivalism taken in Uttar Pradesh and Bengal,
In Uttar Pradesh, while Sir Sayyid Ahmad Khan of the Aligarh move-
ment wanted the Muslims to follow Western education and gain equal-
ity in that sphere with the Hindus, the founders of the Deoband school
wanted Islam to be purged of its supposedly impure accretions from
local practices, and thereby resist the cultural onslaught of colonialism
(Metcalf 2002). Both cases were ashrafinitiatives, but they were able to
convince many poorer Muslims of the need to forge a separate Muslim
identity. In Bengal, the movement for purifying Islam and properly
Islamicizing the illiterate Muslim masses in the difficult terrain of the
Brahmaputra Gangetic delta was conducted by itinerant preachers mov-
ing among the peasantry. It is only from the early twentieth, century that
the elite, often Urdu-speaking Muslims, recognized the political utility
of these reformist movements and incorporated them in their own
agenda. Faced with the rise of a Congress-led nationalism under mostly
Hindu leadership, the colonial rulers began to favour the Muslim sepa- .
ratist tendencies (Ahmed 1981). In the case of Bengal, the background
of the later success of the movement for partition of the country owed
much to the discontent of the impoverished Muslim peasantry who
saw the mostly Hindu zamindars as their main enemy (Bagchi 1972a:
Chapter 14). The rise of Hindu fundamentalism, for example, as ex-
pressed in the so-called cow-protection movement, had as its background
,similar interactions between the dominant Hindu landlord groups and
their professional spokesmen and a Hindu peasantry suffering multiple
deprivations and oppressions (Sarkar 1983: Chapter 3; Pandey 2006).
Some of the Enlightenment theorists of civil society and their latter-
day followers had claimed that the spread of the market and the rule
of law would lead to the emergence of a civil society, in which distinc-
tions of religion or ascribed status would not matter in determining
the contours of human existence. In all the cases sketched above,
colonialism-by imposing its impoverishing and degrading rule, by
codifying caste and community distinctions that had been much
xxii Introduction

more fluid in pre-colonial. days, and circumscribing many of the prop-

erty rights of wo~en among the Nairs and Muslims-precluded the
emergence of a secular, civil society, let alone a human society, in which
everybody would enjoy both formal and substantive freedom. Apart
from these macrosocial departures from the ideal of a homogenized civil
society under colonial rule, the cellular relations between labour and
capital remained very different from owners of the means of produc-
tion facing a mass of free workers. The latter remained semi-servile even
in many apparently 'capitalist' enterprises and racism remained the
norm rather than the exception in enterprises controlled by Europeans
(Bagchi 1988b).
Washbrook (1993b) has rightly associated the 'traditionalization' •
of south Indian society under colonial rule with the long depression
extending from 1820 to 1855 (Raghavaiyangar 1893; Thomas and
Natarajan 1936; Mukherjee 1962; Bandopadhyay 1992). The price
depression from the 1820s to the 1840s affected practically all of India,
and led to major structural changes that tended to increase the power of
the local landlords and their castes (Narain 1929; Siddiqi 1973).
However, we must remember that India underwent the equivalent
of a two-century long IMF-style structural adjustment programme
(SAP) in major parts of India. There could be price depressions and on
some occasions price inflations, such as the periods of the American
Civil War, two World Wars, and the years between 1896 and 1913,
superimposed on the long-term downward trend in income and living
standards. Under the impact of the colonial SAP, hundreds of thousands
of artisans lost their livelihood, productivity-increasing investment in
agriculture shrank, and business communities in many parts of colonial
India were pushed out of the most profitable avenues of trade or became
subordinate collaborators of European businessmen. India witnessed
some of the biggest famines in history, in Bengal from 1769, in south
India from the 1780s down to the 1830s, and again between the 1870s
and early 1900s in western and southern India, apart from many smaller
famines that were not officially recognized (Arnold 1999; Klein 2001;
Bagchi 2006[2005]: Chapter 18).
The phenomenon of de-industrialization, to which I have paid con-
siderable attention, is only one component of this depression of the
long-term trends of the economy. 'De-industrialization' of a country in
current usage, and as used in my essays included here, means a decline
in the proportion of workers deriving their income from secondary
 Introduction X)cjjj

industry, and also a decline in the proportion of GDP derived from sec-
ondary industry. A stronger definition, appropriate for the major tin;ie·
period of colonial rule in India, would also include a fall or stagnation
of income per head.
Capitalism and its constant companion, colonialism or imperialism,
have always been riven with contradictions, as has been argued most
canonically by Marx and Engels and their eminent followers. The gap
between the promise and the reality has shown up in the strengthening
and the global spread of slavery just as capitalist industrialization was
maturing; the strengthening of male-centred property rights even as
equality between sexes was proclaimed; and the use of racist laws and
conventions to consolidate European hegemony even as Enlightenment
thinkers such as Rousseau and Condorcet were attacking the phenom-
enon of human inequality sanctioned by social and political institutions.
Thus the creation of'civil society' which lies at the heart of the professed
ideology of capitalism remained an ever-receding dream, especially in
the non-white colonies. As Marx (1976[1845]: 617) proclaimed in his
tenth thesis on Feuerbach: 'The standpoint of the old materialism is civil
society; the standpoint of the new is human society, or social humanity'.
The celebrants of capitalist colonialism have failed to recognize that the
material and legal conditions for attaining a semblance of a civil society
were totally lacking in the colonial societies.
While the colonialized peoples' response or resistance often led to the
strengthening of patriarchy, caste, or religious divisions, the search for
'social humanity' was also led by some of the great thinkers searching
for models transcending the boundaries of colonial culture. Mahatma
Gandhi's rejection of the kind of modernity preached by the Western-
izers is well known. To my mind, the much more interesting case is that
of Rabindranath Tagore, who accepted many aspects of that kind of
modernity, but sought to decolonize the whole culture of Indians. He
rejected a narrow form of political nationalism, because he found that
its incarnation in the imperialist countries led inevitably to a struggle
for mastery over others and generated genocidal wars. But his creative
energy was directed towards educational projects teaching the equality
of all human beings, releasing their imaginative energies and getting rid
of the stigmas of gender and comrriunal discrimination. That creative
urge of the ruled for decolonizing and secularizing the Indian society
was incompatible with the colonial political order (Jasodhara Bagchi
1996; Bannerji 2008).
xxiv Introduction ,

The Spoils of Monopoly: East India Trade from the

1690s to the 1750s
We will see later that the tribute extracted from India was a crucial
support for the British victory against the French in th~ir century-long
competition for acquiring a hegemonic position in Europe and the,
world, especially in the critical phase of war against first Revolutionary,
and then Napoleonic, France. In the meantime, let me briefly glance at
the relation of the emergence of the cotton textile industry, the leading
industry of the In.dustrial Revolution in Britain, and the fortunes
of the Indian cotton textile industry during that period. Trade with
the 'East' and 'West Indies' proved to be increasingly profitable over,
the seventeenth century for the East India Company (EIC) and. the
interlopers who traded from England in brtach of the mon,opoly of
trade granted to the EIC and the Royal Afriq Corµpap.y...,While the
main 'commodity' traded by the Africa Company~ ,enslavedAfricans,
manufactures, partict.ilarly \extijes,.w~re,tjie main ~tap\e o~ the import
trade of the EI C. Com;emporai;iessuch as Charle~Pavenant,(1496/ 1771)
and Hen,ry M3irJ:yi;i~(l,701)argi.i.edtnJ~vour of c,optinuipg t;o enga~ in
the East Indja, q~de,, contradicting the argum!!i;its,of those who saw it
as a-threat,to tl;i~
woolleQ m~ufacturtrs,of Engljllld, on, the ground. that
the re-export of Indian textiles was highly profipble, that it.promoted
s,hipgi~g~d ship-building, thereby benefitir:igpie n~val strength of,the
British and mreding Britain towards the l?rd~hip of all the oceans. Most
of the gamphl~,reersof the time also agreed that the EIC should enjoy a
monopoly of' the East India trade because only then would it be able to
maintain expensive.fa,ct~rjesand troops to defend them and ships that
coµld d~fend tb.emselvesagainst competitors. Thus they had no, doubt
that the trade would be defended and expanded with arms, whenever
the,occasion demanded.
Between 1660 and 1700, while the imports and exports of England
grew fast, re-exports of the imports from the Americas and Asia consti-
tuted 30 per cent of the total imports (Davis 1954). Further, re-exports,
of Indian textiles in the years 1699-1701 probably formed 40 per cent,
of the corresponding imports into England. Indian imports grew in spite
of a continual iqcre<l5ein the duties on Indian textiles from the 1660s, as
P.J.1homas in his strangely neglected classic documented (1926: 65-6).
Then in 1700, the import of all Indian textiles, except for, purposes of
re-export was banned (Ibid.: Chapter 5).
 Introduction

However, in the meanwhile, the English, the French, and other

Europeans had become used to wearing Indian and Chinese textiles,
which were much lighter than the heavy English woollens (Thomas 1926:
Chapter 2; Tilly 1994). An active process of import substitution, with
imitations of Indian printing and dyeing methods and the invention
of new designs to suit the changing European tastes, was in operation.
In 1720, in response to an agitation by weavers of woollens, even the
wearing of locally printed 'calicoes' was banned in England. There
is little doubt that imitation and emulation of Indian textiles greatly
stimulated the eventual rise of the mechanized cotton spinning industry
as the leading sector of the English Industrial Revolution.

Colonial Rule as Structural Adjustment:

The First Phase
The economy that EiC conquered was not a barter or so-called
natural economy, but was a thriving exchange economy with strong
links of trade amongst different regions and with the rest of the
world. The majority of the people eked a livdihood from agriculture,
but it was als0 a manufacturing economy. It has been estimated that
in 1750, India accounted for almost a quarter of the manufactures-
products of handicraft industries and China for another third of the
manufactures-products of the world (Simmons 1985). The political
economists of seventeenth-century England referred to their own
country as a trading, manufacturing country. India and China were
also trading, manufacturing countries until the British conquest of
Bengal and the defeat of the Chinese in the first Opium War. They
were following a pattern of growth, which, following Bin Wong (1997),
I have characterized as Smithian growth. The difference between that
pattern and capitalist growth was that while in China and India, private
property in movables and in land was recognized, the transfers, sales, and
inheritance of land were regulated by state laws or local usage that had
the force oflaw; in Britain and the Netherlands, such restrictions were
done away with. Moreover, in Britain as in the Netherlands, stat1..power
came to be concentrated in the hands of a property-owning oligarchy,
whereas .in China, property-holders as such never acquired that kind of
power (Bagchi 2006[2005]).'
India, then the second largest manufacturing nation in the world,
was seen by the emerging capitalist powers first as a region who1:etrade
was to be monopolized by a particular nation, and then as a rich country
xxvi Introduction

to be conguered for the sake of profit and glory. In the competition

between the French and the English for obtaining control over the
subcontinent, the latter won. As we will see, the tribute extracted from
India played a critical part in sustaining the British war against the
French, and in facilitating the building up of the overseas settlements of
the Europeans through the process of European migration and British
foreign investment from the 1870s to the First World War. Moreover,
the migration of indentured Indian labourers to European-controlled
plantations stretching from the Caribbean to Malaysia provided sugar,
tea, and other plantation products much needed by the global capitalist
economy. Thus Indian history is a critical part of global history, as
indeed, conversely, global history is a part oflndian history.
Within sixty years of the defeat of the last independent Nawab of
Bengal by the British, India was reduced to the status of an agrarian
and underdeveloped economy. This was noted by contemporary British
observers themselves, and evoked protests against the policy that led to
this retrogression from some ot the top colonial administrators such as
Henry St,~eorge 'IuckerJ,Thdprocess,of colonialization of the Indian
economy involved ,the extraction roLa tribute from the economy at an
unprecedented-rate. That1 extraction, in turn, required the structural
adjustment:Of the economy in the sense that the domestic absorption of
commodities ·produ~ed, by India had to be continually squeezed so as to
yield an' exportable surplus that would be remitted to the ruling country.
That structural adjustment involved the severe depression of investment
in both·,agricultpre and industry and also required radical alteration of
the •modes' of-extr:tction of the tribute. De-industrialization in India
was accomp)U'liednot by reallocation of normally growing resources
to agriculture but the depression of growth rates of both industry and
agriculturf. 5 Structural adjustment also, of course, required some basic
changes in property rights and legal institutions.
This '.cortinual drain of resources acted as an endemic, relentless
depressanh>re botli. the demand and supply sides of the economy, and
involved massive market failures all over India (See Chapter 9 in this vol-
ume). People·su~ived by sheer determination to negotiate the hazards
posed b'yoppt;ession and deprivation. Many artisans became cultivators
or landless labourers, or simply starved to death in famines, while some
others shifted to coarser.varieties of products meant for an impoverished
domesti'" market. Forest-dwellers were uprooted to become plantation
labourers in India and abroad, or became the advance army for open-
ing up land. Free peasants with secure occupancy rights to their land
 Introduction xxvii

became dependent on landlords in semi-servile bondage. Business com-

munities were decimated; some adapted to the colonial conditions, and
even prospered in regions in which British domination came later. But
all this enormous human energy could not stop Indians from becoming
impoverished in most regions. Human agency was not enough to stop
India from sliding into the status of one of the poorest societies under
imperial rule, with very high mortality rates, almost universal illiteracy,
and with various ties of bondage often becoming tighter even after
'enlightened' legislation sought to free Indians from the extreme oppres-
sions of patriarchy, casteism, and religious bigotry. 6
During the days of the Company Raj, the EIC realized the dividends
by exacting a tribute in the form of land tax and erecting a coercive
monopoly of trade (and production in the case of opium and salt)
for the Company or, after the abolition of the Parliament-sanctioned
monopoly of external trade, through the intermediary of the so-called
agency houses controlled by a clique of British businessmen.
The conquest and 'pacification' of India bttween 1757 and 1818
involved a long-drawn out depression, effective de-monetization of
large parts of the economy in the interior, and repeltted famines and
emergence of new types of bondage around the production of indigo,
sugar, and-from the l 840s-tea and coffee plantations.
Pre-British India had a thriving exchange economy moving along the
path of Smithian growth. Under such a regime, markets in commodities,
as pointed out above, labour and land functioned, but the activities of
capital and the exchangeability of land were strictly regulated by the
state. These markets co-existed witn many varieties of non-market
coercion exercised by the ruling classes. But the British did not free
markets--apart from the dependence that is often induced by endemic
unemployment and insecurity of subsistence, the British rulers curbed
the freedom ot workers by specific legislation. In place of a free market
of land, they made landholding conditional on tl1e prompt payment of
an often-exorbitant land tax. At most, they created a market in revenue
farming rights. Avenues for the advance of the emerging capitalist strata
were blocked by explicit and implicit racial discrimination.
The resurgence of a neocolonial view that somehow India thrived
under British rule is based on wilful illiteracy and total insensitivity
to the deaths of tens of millions of Indians in famines and indirectly,
of several hundred millions in avoidable malnutrition and epidemic
diseases and a structural retrogression of the economy that squeezed
both the base of and incentives for domestic investment in industry
xxviii Introduction

and even more, in agriculture. The neocolonial, largely phantasmagoric,

perspective utilizes the supposed lack of systematized data on the Indian
subcontinent for most of the period and picks out some features that
seem to favour their view. 7
The complex of causes and effects of this colonial mechanism, working
through the economy and society, can be summarized in the following
sketch: From the 1820s there was a massive decline in the exports and
domestic demand for Indian textiles, both spun and woven; conquest
led to a decline in demand for services and domestically produced com-
modities; rigorous collection of a land t.ax only in high-powered and
remittable money led to further depression of demand and investment
in agriculture and non-agricultural sectors (and in neoclassical language,
a continual pushing of the production frontier inward). Demonetiza-
tion of all earlier media of exchange, including those circulating in
local exchange.s and,,oft~q a~cepted earlier for public payments, turned
the terms of <,xi;:hanges1v;igely again.st poorer people. Apar~ from the
bondag,e, that was, indus;ed by this complex of iI.J.security of life and
employm~nt,. va,rious non-m;,rrk<rt rest,raints were imposed both by the
state .ap.d t;he .superior power-holders,of Indian society anQ. led to the
fixa,t~OIJpf t,b.eRroquction basket furth<;t a}Vayfrom the shrinking pro-
duction frontier, 3.\ld choice of unproductive assets by th,e Indian wealth-
hqlJlers. <;:olqnialism started with the market faiJute that has been the
birthm.Jrk of capitalism emanating from Europe, namely, the use of
a,rms,.tl?grjl]:>)tp.a,t could not be earned in peaceful trade. The colonial
~rder <;ontinued with both induced and state-imposed market failures. ,
, lJntil:J 756, the EiC had to imp.ort several hundred thousand pounds
of 1i,ilverinto India in order to finance their trade in the country, because
the balilfice,qf trade was always in favour of India. (In the year 1716,
thi:;:,va)µe of,silvi;r imported amounted to as much as £746,890. UJS:
P~liamenta,ry Papers, House of Commons 1812-13, vol. 8\ as quoted
in llior,+Q08: J\nnexure 1). But there was no import of silver into Bengal
at all from 1757 to 1797. Moreover, the import of silver into Bombay
and MadrllS also never reached a six-figure amount between 1758 and
1796, except in 1790 and 1791. There was a sudden jump jn imports
into the three presidencies together between 1797 and 1805, and that
was almost certainly for financing Wellesley's wars against Tipu Sultan
and the Marathas.
From 1757 to 1764, the EIC's 'investment' was financed entirely
by the funds extracted from the collaborators, including the generals
and their kin who had betrayed Sirajuddaulla in the battle of Plassey:
 Introduction xxix

From 1765, the EIC obtained the Dewani of Bengal and Bihar from
"theMugh:il emperor in Delhi, and the land revenues of Bengal financed
not only the EIC's 'investment' but also the wars of conquest that the
EIC officialswaged. Table 1 shows that when Cornwallis and Wellesley
were waging war against Tipu Sultan and the Marathas, it was Bengal's
revenues that supported those assaults.

Table 1 Land Revenue of Different Presidencies of British India

(in £s), 1792-1811
Year Bengal Madras Bombay

1792-3 3,091,616 742,760 79,025

1800-01 3,218,766 957,799 45,130
1810-11 3,295,382 1,071,666 437,108

Source:Banerjea (1928: 187).

Many neo-imperialist historians have claimed that the so-cllled

Plassey Revolution was not a revolution at all, but the continuation of
the same social and governance structure with the British, rather than
the Mughals, as the suzerain oflndia. It is true ili.at despite their various
experiments, the British relied, as had the Mughals and post-Mughal
,nawabs, on land revenue as the major fiscal resource. But the British
replaced all senior administrators and judges with their own men, thus
blocking all official avenues of advancement for the Indians, as many
British observers themselves noted (Colebrooke and Lambert 1795).
Even more damag!ngly, they remitted most of the land revenue as an
'investment' of the EIC.
In 1973 (Chapter 1 in this volume), I had estimated the gross domes-
tic material product (GDMP) of Bengal and Bihar as Rs 474,250,000 or
£47,425,000. Cuenca Esteban (2007: Table 3) gives an annual average
of net inflows from India to Britain over 1793-1807 to be £3,354,000.
This does not take into account another million or two pounds the
British were spending every year to conquer other parts of India, using
the Bertgal-Bihar revenues for the purpose (for an alternative estimate
of the gains made by Britain from its empire, see Patnaik 2006). This
meant that 7.07 per cent of the gross domestic product of Bengal and
Bihar was sent out of the country without any return. We should
remember that the industrializing economy of England was not invest-
ing much more than 7 per cent of its GDP during precisely the decades
that India was fast changing from aneconomy with a substantial share
(ranging ·from 15 to 20 per cent) of the manufacturing sector in the
XXX Introduction

GDP and employment of the economy to one in which that share fell
well below 10 per cent over the course of the nineteenth century. The
continual disinvestments or drain, to use a word that both early British
observers and nationalists used, meant that the production function was
being continually pushed inward, and people survived, when they did,
by mining the land.without replacement of its nutrients, by adapting to
lower value-added products that had a domestic but no international
market, and in some favourable situations and conjunctures, competing
successfullywith the privileged Europeans.
Colebrooke and Lambert (1795) pointed out that the drain of sixty
millions sterling in forty years (a figure which falls only a few millions
short of the estimate by Cuenca Esteban [2007]), had greatly impov-
erished the inhabitants of Bengal and Bihar. After noting that Sayers,8
which used to be collected by the earlier zamindars, who regulated
and protected the markets from which the tolls were realized, had been
abolished, they continued:
Numerous 9 markets by promoting intercourse, contributed to general prosperity.
The discontinuance of many markets in the short space of four years, and the
decline of the existing marts, is an alarming circumstance. (Colebrooke and Lambert
1795: 4~)

Recent work by Patnaik (2006) and Cuenca Esteban (2001, 2007) has
shown that the drain from India to Britain was very large in absolute
values. Further, Cuenca Esteban also uritlerscores the extremely critical
role the Indian tribute played in sustaining the British in their final
tussle with the French for a~quiring European and global hegemony . .As
Bayly (1989: 2-3) has pointed out:
' ... the 1770s and 1780s were a British recessional ... In 1783, the First British
Empire of American settlement and oriental trade seemed to have foundered into
ruin. Worse, it seemed to attract resources and energy away from the more pressing
problems of domestic development. Fresh military and diplomatic disasters dogged
the years of war against revolutionary France.
By 1815 the,,nation could celebrate an astonishing, indeed providential recovery
of fortune~.,~reat Britajn had finally managed to engineer a coalition of European
powers to opyose French po~er within Europe.'

That providential !recovery was largely financed by the Caribbean and

Indian surpluses extr.tcted by British rulers. From Cuenca Esteban~s
(20071Table 3,we'get !u\estimate of the cumulative surplus transferred
from India to Britain ovel;.tlie,years 1765-1812 that comes to £122.8
million. Using a methodology that admittedly underestimates the trans-
ferred surplus, Patnaik (2006)"gets a figure of £87 million over the years
 Introduction xxxi

1765-1814 transferred from Asia to Britain. 10 Patnaik's figures are in

constant official values and so do not take account of the price inflation
from the 1790s reflected in Cuenca Esteban (2007). 11

Structural Adjustment: The Phase of

Direct Parliamentary Rule
It has sometimes been argued (for example, by Washbrook 1981) that
the change-over from the rule by EI C to direct rule by the Parliament led
to the replacement of the British state by European capital as the main
exploiter oflndia, and that required legal changes facilitating the growth
of a more civil society. It is true that private European capital played a
more important part in the economy oflndia after 1858. But the major
source of the surplus earned by the metropolis still remained the tribute
extracted by the state. To land revenue was now added a debt process as
loans were raised for exacting the self-ransoming payment for the cost
of suppressing the Indian revolt of 1857, as loans were raised in London
on India's behalf for financing railway construction, irrigation works,
ports, and meeting any emerging deficits in the budget. As before, the
Indian army, whose cost was paid by the Indian people, was deployed all
over Asia and beyond, not only to defend the British empire in India but
to extend that empire elsewhere (Washbrook forthcoming).
Marx (1853) had pointed out that the East India Company had
imitated the earlier rulers of India in extracting a tribute from the
people and engaging in wars, but unlike the earlier governments, it had
spcmt very little on public works (see also Washbrook, forthcoming).
From the early 1850s, this deficiency was repaired by the British Indian
government, but the cost-both financial and, of course, ecological-
was borne by the Indian people.
It is useful to figure out how much tribute was transferred from India
in this phase of colonialism. In Bagchi (2002b and 2006(2005]: Chapter
17), I provided alternative estimates of the tribute and profits transferred
from India and Burma from the 1870s to 1915-16. According to those
estimates, the annual surplus extracted from India and Burma by the
British state and European businessmen rose from a minimum of £21.4
million and a maximum of £28.9 million in the 1870s to a minimum
of £52.9 million and a maximum of £65.3 million on the eve of the
First World War.
The usually accepted figure of total British investment worldwide in
1913-14, namely, about £4000 million, is composed very largely of the
reinvestment of returns on accumulating balances of those investments
 Introduction

and compounding them at the normal rate of interest or profit

(Pollard 1985). For comparing that total to the accumulating balances
of Indian surpluses, for which the Indians received no recompense, we
have also applied compound interest rates to the accumulating surpluses
up to the year 1914. Compounding the Indian surpluses at 4 per cent,
we obtain figures from £3,199,320 to £3,779,264 as the value of the
surpluses taken by the British from South Asia, including Burma.
Thus those surpluses alone would have financed anywhere between
75 per cent and 95 per cent of the total British foreign investment
worldwide. That foreign investment was absolutely criti<;alin financing
the massive European migration during the period in question and
in building up the prosperity of especially the English-speaking
overseas settlements in the USA, Canada, Australia, and New Zealand.
Moreover, the despoliation of the native peoples of those countries
also contributed to the prosperity of the immigrants (Bagchi 2006(2005] :,
Chapters 13-17).
In this phase also, ivarket f.µlµres occurr,ed not just because of the
unemployment caused by lea)<agefor tripute to the metropoli~ coµntry
and the endemic depr 1s~ton resulting fi;p~ it, but also from ,deliqerate
suppr~siop pf fr<;em3[.ket,sfor the workers and artisans tlmt were gr9wing
up in the highJx c9mmercialized economx of those rs::giopso(.India
involyf.9-in long-d,i.~tanc:e
trade, inland and abroad. Most administrators
professed t~nets of political economy with property rights vested in
individuals,_but they regularly violated those tenets under the imperative
of reyentfs:-collectionat low cost. For example, in many parts of Punjab
and, t;he,North-West ..:frontier Provinces, the administrators conjured
up a village community where none had existed and ma~e it responsible
for collection of the land tax (Van den Dungen 1972; Chapter 9 in this
volUII}e).12
In all the regions of India, from the beginning of British rule to its
end, peasants were highly indebted to moneylenders, were on insecure
tenure, with little support of public expenditure on irrigation or other
growth-enhancing investments. They were continually subject to the
threat of crop failure through drought or floods or of price depression,
because of troughs of domestic demand or international trade cycles.
Most attempts to show that peasants prospered, except for a small sec-
tion and brief periods in the Krishna-Godavari delta and in Punjab and
Sind after 'productive' irrigation works were opened up in those areas
(Chapter 2 in this volume), have proved to be futile. 13
 Introduction xxxiii

Agricultural Productivity and Agrarian Change

George Blyn's detailed work on Indian agricultural growth posed
a problem because if his data were to be believed----and they were all
official-then during the last fifty-five years of colonial rule, Indian
agriculture had stagnated and foodgrain output growth had fallen clearly
behind even the moderate population growth of those years. Then
began an assault on the reliability of the official data by Clive Dewey
and Alan Heston, whose objections were blown away by the critiques
of Ashok Desai, Satish Mishra, and Sumit Guha. When the dust
settled, it was found that given all their limitations, the data culled by
Glyn from 1891-2 to 1945-6 are the best we have (for a selection of
the articles, see Guha 1992a; for a summary of the arguments, see
Guha 1992b).
The neocolonialist writers could not seriously impugn the findings
of Blyn and Sivasubramonian (2000) about the stagnation, or worse, of
per capita incomes of Indians during the last forty-six years of British
rule. They then turned to proving that India had after all done well
in the nineteenth century. Alan Heston, after a laborious scrutiny of
available data, decided to make the assumption that 'yields of princi-
pal crops did not change' over the last half of the nineteenth century
(Heston 1983: 390). I will presently scrutinize the validity of th,e assump-
tion of constant yields. The quality of Heston's estimate of income from
manufacturing can be judged by comparing it with Sivasubrarnonian
(2000). The two estimates agree closely when it comes to the growth of
large-scale industry: Heston (1983: Table 4.3B) gets the value of output
(at constant prices) of 1946-7 as 7.29 times that of 1900-01, while
from Sivasubramonian (2000: Table 6.4) we obtain a figure of7.28. But
when we come to the ratios of the value of output (at constant prices)
of cottage and small-scale industries in the two years, Heston's Table
yields a figure of 1.55 as against Sivasubramonian's of 1.24. This appar-
ently small difference makes a large difference to_the estimate of growth,
because the value of the output of cottage and small-scale industries
exceeded that oflarge-scale industry in 1900-01, and continued to do
so almost until the beginning of the Second World War.
In the case of yields, Heston's assumption flouts not only Blyn's
figures of productivity growth of foodgrains from 1891-2 to 1945-6
but also the few we have for the nineteenth century. These few esti-
mates are decisive in refuting Heston's ungrounded claim of a growth in
xxxiv Introduction

agricultural production per capita. Ashwani Saith had shown in his

doctoral thesis submitted in the 1970s that in the two districts of
Muzaffarnagar and Bareilly, the intrinsic yields of wheat per acre both on
irrigated and unirrigated lands were lower at the end of the nineteenth
century than in the 1830s and 1840s, and even with extension of irriga-
tion, the average yield in Bareilly fell by 11.3 per cent in 1878 compared
with 1828-31 (Saith 1992: Table 16). We have to bear in mind that
population growth was slow but positive between those years.
Currently, the understanding of Indian economic change during
colonial times is being damaged, especially among scholars with no
first-hand knowledge of Indian data, by the apparently authoritative
estimates of growth of GDP and per capita GDP produced by
Maddison (1995, 2003). Maddison (2003: Table A3-c.) puts the per
capita income of India (in 1990 Geary-Khamis dollars) as 533 in 1820,
533 in 1870, and 673 in 1913. The implied growth in the estimated
per capita income between 1870 and 1913 is totally without any basis.
Agricultural productivity per capita in•most regions of India stagnated
or declined as did real w.iges ·of labour; 14 hundreds of thousands of
artisans became unemployed :md had to shift to either low-paying
employment in agrictilture or produce coarser varieties of their products
with lower ·value ad'ded1 Plantation workers, miners, and Indians
employed in clte~few large-scale industrial units that came up earned
pitiful,wages, with little growth. Of course, when we shift to estimates
of p'et'capita inct>mesof Indians from GDP per capita, the picture was
even md'febfeak, since all the better-paying jobs in the public sector were
virtuallycfosed to the 'natives'; implicit and explicit racial discrimination
barretl, the(lhtry of. Indians as owners or managers into large-scale
industiy. ahtl·foreign trade, with the partial exception of western India
and sqrtit, sectors of trade with Ceylon, Burma, and Malaya.
O'n tht: basls oflthe Colebrooke and Lambert (1795) data referred to
earJi~;rhad estimated the per capita GDMP of Bengal and Bihar as Rs
47.4 ilt 1794 it\ 1900 prices; using similar methods I calculated the per
capita GDMP of,British India as Rs 33.2, at the same prices (Chapter
1 in this<volume). From Sivasubramonian (2000: Table 6.1), we get
an estimate of ,net value added generated in India by the primary and
secondary,'Sectors, in 1900-01, at current prices as Rs 9,679 million.
With a total Indian population of 284 million in 1901, this works out
as a per capita incorµe of Rs 33.7. Thus there is a close correspondence
of this figure with that of the figure in Chapter 1 of this volume. We
must remember that by 1794, Bengal and Bihar had already suffered the
 Introduction

Jmpoverishing tributary extraction for almost forty years. Even then we

get a decline of more than 25 per cent in per capita income over the next
century of British rule.
Many of the 'optimists' about Indian productivity or income growth
tend to be casual about the processes that would sustain their optimism.
How would productivity growth have taken place?As I had argued more
than thirty years ago (Chapters 2, 3, 5, and 6 in this volume), an increase
in population dependent on agriculture, whether it occurs through a
natural growth or through a shift from industry or some other non-
agricultural. occupation to agriculture, would require some investment
in agriculture. In pre-British times, the peasants could maintain produc-
tivity by utilizing the manure of the cattle because pasture was either not
taxed at all or taxed very lightly; often the cultivators would regularly
invite shepherds to graze their livestock on their land and fertilize it.
Second, many cultivated two or three crops, one of them a leguminous
one, in the same plot, with a slight spacing according to the season of
growth. Third, they were given liberal tax conce&.sionsfor opening up
new land. Fourth, they would be given large taccavi advances for culti-
vation, especially for valuable crops. After the British take-over of south
Indian districts, collectors were apparently horrified by the amount of
taccavi loans that earlier tax farmers or renters had given to the farm-
ers (Washbrook, 1993b: 75). Finally, either the peasants themselves
or the local political authorities or superior right-holders to the land
constructed and maintained local irrigation works.
Under British rule, all land that anybody claimed as his own paid
a tax, whether he cultivated it or not. Second, huge territories were
declared waste land because nobody could produce written documents
of possession. Forest-dwellers lost their rights and so did peasants who
had used forests for grazing livestock and foraging that added to their real
income and often to land productivity. Third, in Permanent Settlement
areas the tax-farmers, the new zamindars, had no longer any authority
over the peasants' work and had no incentive to maintain old irrigation
channels, which silted up and became malarial swamps or dried out
altogether (Mukherjee 2009[1938]; Chapter 2 in this volume; Gupta
1984). In raiyatwariareas, the colonial government did not assume any
responsibility for maintaining old channels or giving adequate advances
to peasants for capital formation. The assessments of land tax were
generally too high to leave the peasants any surplus to spend on capital
formation (Chapter 8 in this volume). Large-scale irrigation, except for
the Cauvery and part of the Godavari works, were not undertaken until
xxxvi Introduction

the 1860s, and they were meant to yield profits to the government after
paying for their construction.
Most of the so-called Ceded Districts in south India, that is, those
ceded by the Nizam as well as the,districts of Bombay Deccan, which
were conquered from the Peshwa in 1818, were extremely drought-prone
and subject to frequent famines. S. Srinivasa Raghavaiyangar (1893),
one of the shrewdest defenders of British rule-who did not try to de-
fend every act or phase of British rule but relied on trashing the record of
pre-British rulers and attempted to show that the record of British rule
had been fur better after 1854 or so---had to report that British assess-
ments of land tax in the raiyatwari districts of south India continued td
impoverish peasants for most of the first half of the nineteenth century
(Ibid.: 26-33). In 1807, Thomas Munro, the supposed father of the
raiyatwari settlement, had recommended that in order to encourage
cultivation and give land a positive sale value, the government demand
should be reduced from half of the gross produce to 25 per cent on dry
and wet lands and to one-third on the so-called garden lands. But the
Madras government' could flot accept the recommendation because
orders were 'received from England fot the remittance of an additional
sum of a million sterlitfg anmrally, accompahiecl by a threat from the
Court of Directots, that unless this were done they would take the ques-
tion of reducing the establishments in their own hands' (Ibid.: 27).
Raghavaiy:ingarnoticed that there was a.huge depression of prices in
south India and in fact all over India between the 1820s'and early 1850s.
He attributed this primarily to the decline in the stock and flow of media
of exchange because of the drain of coins. A later, more detailed, analysis
of the' depression in the south Indian context used similarly monetar-
ist language (Thomas and Natarajan 1936), but like Raghavaiyangar
(1893), it also took account of the drain of the surplus remitted abroad
by the colonial regime as a principal determining element. Drain of
bullion was only.part of the problem-it was the consequence of tribu-
tary demands of the colonial state, but it was also caused by the huge
decline in exports of manufactures, especiallycotton textiles, and a surge
in the imports of machine-made goods that took away the markets of
Indian producers. The twin developments naturally reduced the differ-
ence of exports and imports, but th.e colonial policies ensured that in
the long run, the export surplus of India needed to finance the tribute
would remain positive, however costly that might be for the current
incomes and investment potential of ordinary Indians. 15
 Introduction xxxvii

The1Indian economy was depressed not only in the years from the
1820s ~othe early ~850s but practically throughout the period of British
rule, except for the period 1898-1914, when terms of trade turned in
favour of agricultural commodities globally, and during the two World
Wars, when inflation of prices resulted from the British extraction of an
even larger surplus from India than in other years.
All the official accounts of south Indian districts point to the utter
distress of the peasantry under the operation of the colonial regime.
Raghavaiyangar (1893: 30), referring to the condition ofBellary district
states:
The incidence of land revenue assessments, notwithstanding Sir Thomas Munro's
reductions, continued, owing ~o the heavy fall in the prices of produce, oppressive,
while this district enjoyed no special privileges like Cuddapah in regard to good
subsoil water-supply, and extension of indigo cultivation. Mr Mellor, the Collector,
reported in 1845: 'The universal complaint and request of the ryots is to be allowed
to reduce ~eir f:~rms,a ,convincing proof that cultivation is not profitable. (p. 30)
Land has never been saleable ... were it not for the aid of the Collector through his
revenue' subordinates, one-half, or at least one-third of the highly assessed lands
would ere this have been thrown up .... The number of pattah holders has increased,
but they are' a' poor class who seek 'a maintenance only husbandry with poor spirit
and by no means to be compared with the substantial farmers who have fallen into
difficulties and disappeared from the rent roll of the district. With regard to food
and raiment the malorlty of t~em are poorly clad and ill-fed, and it is impossible to
arrive ai any other conclusion than that poverty is the cause ... '

According td 1the report of Pelly, the collector, in 1'851, only 17 per

cent of the Bellary raiyats were'in good circumstances and 49 per cent
had to mortgage their crops and 34 per cent had to sell their crops at
harvest time in order to pay their kists (Ibid.: 30).
In Rajahmundty, later Godavari district, 'of the ten years between
1831-40, 1831 and 1832 were'famine years, in 1835, 1836 and 1837,
the season"isdescribed'as '!unfavourable", and in 1838, 1839 and 1840
as"c:tlamitous". The populatioh which in 1830 had been 695,016 had
decreased in 1840'to 533,836' Raghavaiyangar (1893: 30). This shows
that the usual· accounts of famine years vastly understate the desperate
condition of a large part of the peasantry in most years. Further, 'the
closing of the Government weaving factories in consequence of the
abrogation of the Company's trading privileges had thrown large num-
bers of weavers out of employment, and money to the extent ofTlakhs
of rupees per annum, which was in circulation in connection with the
maintenance of the factories, was withdrawn' (Ibid.).
xxxviii Introduction

The tendency towards equalization of patta-holding (I do not call

it proper landholding) was caused not by the prosperity of the smaller
peasants, but the distress of the peasantry in general. A similar situation
of a trend towards equality in oppression was also observed in Java after
the re-introduction of Dutch rule in the Indonesian archipelago when
the British handed the islands back to the Dutch after their victory in
the Anglo-French war in 1815. This tendency towards equalization of
patta-holding in Bellary was arrested in two periods: first, when the
American Civil War raised cotton prices and made it profitable for
the bigger farmers to 'diversify into cotton production, and secondly,
when between 1905 and 1915, cotton prices rose relatively to those of
foodgrains (Washbrook 1994: 133-41). In the black soil of Bellary or
Cuddapah, cotton cultivation required deep ploughing with large num-
bers of bullocks and watering to produce a good crop ·and only large -
farmers could make a profit even when prices ruled high (Ibid.: 137;
Rao 1999: 27). It was also labour-intensive, 'sothe, 1
big farmers would
hire more full-time farm servants'. But when cott 0.0::l
! t \.
prices were bad ..or
"'_ .. ,,. ht~
the sho1;t-staple cotton fell out of favour as it,iqcre;isin_gly di~,a.fter,the
First World War, ~ey hired less labour :µ,id1,heselandlessJapourers took
up the pattas for land th1tt the bigger farmets gave~p.!The~e po<?rfarm.-
ers in turn became bonded to focally m9~opolistic',purc,h.asiµg ,houses
and were forcel:.Hnto cultivation of a cash'crop; 9ffert ~'t the ex~ense of
their subsjstence. This subsistence was"p1rtitaji8-Iy'·2tidangerdf ~ with
the)oosenjng qf older ties of dependeqc~ ~d prpt.ec;rjpµ,.:µi,d openi.ng
up of facilities, for selling grain in dist~q,~;µa,-ks:.ts, th~ bigger farmers.
ceased to keep large stocks of grain (WasJibrQok 1994: 141~).
The analysis for Bellary indicates that there are no ~asy ways pf g~ner-
ali'.?ingapoµt the impact of penetration 9f markets ~r exteµ~!Pll!O(nil-
ways in the late colonial period on the coq4iti0,!1Sofliving pf th<tipeople.
On the one hand, from the 1880s, the gro~h,9f agricu}.tura,l,ti;~e led
to more diversified cropping patterns in many regipns ,of"Indi;i.:,this has
often been regarded as a positive development, especiall1:by ~conomists
(cf Rao 1999). On the other hand, it also meant lower sec1,ujty,f9r the
poor in most regions, because scarcity not only rai~ed pries:~ for them
but also diminished their employment and earnings. It is not accidental
that the period witnessed some of the biggest famines in Jndian history.
Moreover, these, developments may also have increased the power of
merchants and moneylenders, especially since the state removed many
of the earlier prohibitions against dispossession. Of course, in Bombay
and Punjab, the state tried, rather ineffectually, to restrict the alienation
 Introduction xxxix

of land to what it styled as ineffectual classes. In the United Provinces

and Oudh, it bolstered the power of the taluqdars at the cost of most
peasants, as a way of ensuring the loyalty of the big men in the coun-
tryside. So grand narratives of expansion of markets and the upward
movement of indices of economic development, let alone human devel-
opment, are out of place in India's colonial history, in any macro-region
or in any phase.

Living Standards and Survival

One of the ways in which we can try and gauge how people's incomes
and productivity fared in an era in which prophylactic measures or
improvement in sanitation as such did not save lives is their record of
survival. We do not yet have good assessments of population changes
in diff~rent regibns· of India before 1872, when the first comprehensive
census was
1
caine"d''but in British India. Bhattacharii (1987: 67-72) has
compared 'die'pbpulatidn figures given by Hamilton (1815) for districts
adjal::ent t~ fv.1uia£!~.n\igarand Bareilly, what Bhattacharya calls tlie
Agta•:llitl'tne~lahatidPfovinces. As in most other early accounts, the
populafftins of these''territories were almost certainly underestimated.
Oveffperiod of alm6si: suety years (1815-72), the populations of these
distt1as'fncreased'by 63:38 per cent (in the case of Agra Province) and
67·.60~per cent (i~ die' cise of Allahabad Province). That Hamilton's
fi~res· of «million and ·I 'million were almost certainly underestimates
i; inaicated by ihelact thaYchiring the next fifty years c18n-192I), the
popillation of Agra Province increased only by 8.29 per cent and that of
Allahabad Province actually declined by 3.16 per cent. How reliable are
thesengures of population growth over 1815-72? According to Visaria
andl~saria (1983: Appetizlix 5°.2)in the,North-West Provinces (as most
6f>th1Y'at'eas,~6vered .by'Agra and Allahabad Provinces of Hamilton were
knowrt:.offu;ially),.lthete were famines in 1819-20, 1833---4, 1837-8,
l860..ul1•'v.lrt'a1'8,Sg;..:7-0'.
We must remember also that many districts
suffert:tlufrt>fh·,fam\ties,,but the British administrators styled them as
seasons1Hf•sc!m:1ty :or used, some such dismissive phrase. Among ten
districts,'G'fthe North-West Provinces and Oudh, for example, between
the yeal-91:186-ii-5 and 1873---4,there wasno district that did not have
very poor'harvests (meaning harvests that were 6:16, or even a lower
ratio to the normal) running for two crop seasons (kharif and rabi) or
more. Benaras, for example, had poor harvests every season from kharif
(1872-3) to rabi (1873---4), Sitapur reaped poor harvests from kharif
(1870-1) to rabi (1871-2) (Whitcombe 1972: Figure 1). But the North-
xi Introduction

West Provinces do not figure in Visaria and Visaria's list of famines for
these years.16 Hence almost certainly, the pre-census population growth
figures derived from Hamilton (1815) and Bhattacharya (1987) are
gross overestimates.
The only major region oflndia to have experienced sustained growth
of population over the period 1872 to 1946 was the eastern region, con-
sisting primarily of Bengal, Bihar, and Assam. This growth was, however,
based largely on the clearing of new land in the lower Gangetic delta
and the Brahmaputra valley to which people migrated as the older parts
of the delta became moribund. The decreasing productivity of the older
delta was caused by the shifting of the branches and tributaries of the
Ganga and the Brahmaputra, and the ecological damage and spread of
malarial swamps resulting from construction of rail~-?-Ytthat paid scant
attention either to ecology or public health (Mukhetjf.e 70.09(1938];
Zachariah 1964). Moreover, in the wake pf thf;)~~rlJ!..aneflt. ~cmlem~nt,
the zamindars were absolved of all responsi~iliJY-.f2fk~t~piP.K iq~-
gation and drainage channels or tempqrag ,Sll19a!J~Iw·ntsfqr lzi'?.1£\,\lg
flood waters.~ This 1I.ad
l~ <Jparticularlv
,~, ...dam:10-ing
,. :rt,J effect m~,the~distrirts
,1. ;ii1-.~'.l·rr
1
of Gange,tic Bihar, which were *o badJy ·affected by d,e .pro<:ess.of
de-industrialiption s~t in motion l;>y,..,Briti~h rule -(!:::i1ap~ers 2-,~A13
this vo!}1me).The agrarian relations yrnj~rrwhich peasant~ had littj~
incentive pr re~ou~cesto.invest.in land and; proprietors, qr rath.~rf3(:!t\t
farmers became thoroughly impoys:ri.~hg!'?"alsoren.der inqedibl~- ~y
narrative of,i111provementover the p~r.i,oq;pfcolonial rule (Chap5e~.q
in this volµme) 1 ,. , 1
)J J _, • . ~fl .
De-industriali~a#on
The early imperialist administrators as well as:rhenationalis,:s rec,ogni'le,cl
that British imports of machine-made goods· hacl severdy d.!Ju~d
the Indian handicrafts, decimating their o;tp11t anp.,.imp,o¥erishjng
the artisans who clung to their occupations', Altholigb; th~ov,ctrcb.lde-
industrialization' was not used by them, Charles M<':t.oaift:(iitu.th:tater
alongwith Ramesh Dutt (1963a[1906]: Chapters 14--:-1~-;l~~b(l,906]:
Book I, Chapter 7, Book II, Chapter 8) both argued.that India..'Yas,de-
industrialized under colonial rule. However, two economicdtistorians
with two very different ideological bents launched an assault on
this view. The first was Morris David Morris (1963), who stands at
the fountainhead of neocolonial history in th~ post-independence
period. The second was Daniel Thorner, who was more of an Indian
nationalist than many Indian economists and economic historians.
 Introduction xii

Thorner argued that despite colonial rule, India had been undergoing
a process of industrialization in the late colonial period. In extension
· of this argument, he also argued that if de-industrialization occurred in
India, it had happened before the 1880s (Thorner 1962/2005}.
All the available evidence points conclusively to the de-industrializa-
tion of India on a massive scale over the course of the nineteenth cen-
tury (Habib 1975a; Bagchi 1976, 1989: Chapter 1; Clingingsmith and
Williamson 2004, 2008). In Gangetic Bihar, for example, the propor-
tion of population engaged in industry declined from18.6 per cent in
1809-13 to 8.5 per cent in 1901 (Chapters 3-5 and 7 in this volume).
The officially commissioned surveys of Francis Buchanan Hamilton
(BH, from now), provide the data for Chapters 3 and 4 of this volume,
relating to the districts of Gangetic Bihar. If it is assumed that BH
overestimated the total population of those districts, we obtain an even
higher figure, namely, 21 per cent for the proportion of population
dependent on secondary industry in the early nineteenth century
(Chapter 5 in this volume). We must remember, in this context, that !he
Bihar districts in question, and Bengal had already suffered a decline
both, in,.export sales and domestic demand at the time BH had con-
ducted his survey, and as BH and Dutt (1963a[1906]) had noted.
It has been argued (for instance, by J. Krishnamurty 1985), that
Gangetic Bihar or Bengal proper may have been exceptional in suffering
de-industrialization over the nineteenth century and that regions in the
interior regions, not so closely connected with export trade, did not suf-
fer it. But this argument does not bear up to serious scrutiny;.To take an
example at random, ip--thedistricts that the Nizam of Hyderabad ceded
to the British in 1800, all of which were in the interior with low rainfall
and little irrigation, the proportion of craft workers to the total popula-
tion in 1810 was estimated as 19 per cent (Ludden 2005: 24). In four
districts, namely, Cuddapah, Kurnool, Bellary, and Anantapur, which
were included in that ceded territory, the proportions of the populatio1'
dependent on secondary industry had been halved over the nineteenth
century even if we count 'partially agriculturists' among the secondary
as
sector workers, Table 2 would indicate. 17
In every case, soon after the British occupation of a province or
region in India, the proportio~ engaged in secondary industry declint:d,
the reason being not just the abolition of restrictions on the entry of
foreign goods, but also the decline in local demand for products of
secondary industry. This is what happened in the Bombay Deccan after
the conquest of the Peshwa's territories by the British. The whole of the
xiii Introduction

Table 2 Proportion of Population Dependent on Secondary Industry

in Four Districts of the Madras Presidency, in 1901
District Percentage of Percentage of workers,
actual workers including partially agriculturists,
to total population to total population

Cuddapah 7.81 8.58

Kurnool 7.85 8.80
Bellaty 8.90 9.48
Anantapur 9.02 9.51
Source:Table XV, 'Occupations', Censusof India 1901, Vol.XVA, Madras,Part II, Impe-
rial Tables,by W. Francis, Madras: Superintendent, Government Press, 1902.
Note: The figures of secondary sector workers have been taken as those pertaining to
Class D, 'Preparation and supply of material substances'.

Bombay Deccan was seized by depression, which was reflected in the

increased unemployment of the people, the figures of which were not
recorded. Agricultural prices began falling from 1822 and except for the
years of high prices such as 1824-5, 1833-4, and 1845--6, caused by
acute harvest failures, they continued falling tilU 853-4. Thetlisbruiding
of the Peshwa's army ana retainers; and inipoh of Britisltmanufktures
led to de-industrialization as well as tlistress·of fan;n-ers(Guhi 1985:
1
Chapter 2). .. ' ~·::

Three and a half decades on, in 1856,the British occupadon 0£Oudh

(which,was.orle of the,proximate causes of the-great rettoleof J857)'i:ied
to a drastfc de'dine in• the population of Lucknow (Table 3), primarily
because of the decline of craft industries catering to the court of the
erstwhile Nawabs:of-0udh.

T;ible 3 Population of Lucknow (1857-81)

1857 5j0,670
1869 357,712
1881 261,303

Source:Taban (1995).

In the mainstream literature as flagged by Clingingsmith and

Williamson (2004 and 2008), it is now accepted that there was massive
de-industrialization of India between 1760 and 1860. However, the
implicit assumption that de-industrialization ceased in the 1860s
repeats the fallacy of Daniel Thorner's assertion that by 1881, India's de-
industrialization story was over. As Chattopadhyay (1975) demonstrated,
 Introduction xliii

the decline in the proportion of industrial workers to the total workforce

continued down to 1931, even after the growth of large-scale industries
such as cotton and jute mills (Chattopadhyay 1975); the data given in
J.Krishnamurty (1983) also lead to the same conclusion (see also Bagchi
2006 [2005]: 153-4).
Large-scale production units, using mechanical means for process-
ing agricultural products such as cotton and jute, grew up from the
1850s in India. Mining enterprises for extracting coal and other miner-
als also grew, but slowly. Many of the enterprises depended on export
markets, and except in Bombay, until 1914, the major modern firms
were controlled by Europeans (Bagchi 1972a; Chapter 7 in this volume;
Ray 1979; Tyabji 1995; Chakrabarti 2003; Mukherji 2005). But even
though the value of output of large-scale units in the secondary sector
grew much faster than that of the cottage and small-scale industries over
1900-40, the latter exceeded the former (Sivasubramonian 2000: Table
4.43). The large-scale units were much more capital-intensive than the
cottage and small-scale units, moreover, the former grew partly by dis-
placing the latter. Hence the growth in employment in large-scale units
was not enough to compensate for the slow growth of employment in
the cottage and small-scale units ·even in the late colonial period.
Even when mainstream economists and economic historians recog-
nize the fact of de-industrialization, they factor out the endemic depres-
sion caused by colonial exploitation when analysing its causes. Both
unjustified assumptions about income ·growth and the inability to get
out of the maintained assumption of all neoclassical economics, namely,
that the economy always works with full capacity and full emplbyment,
are responsible for such elimination of the most important causal chains
in the process. The leading unjustified assumption is that somehow
or other, Indians experienced a growth in real incomes under British
rule. That assumption has a long genealogy, starting explicitly with F.J.
Atkinson, and then percolating through the efforts of Alan Heston to
the seemingly authoritative estimates of Angus Maddison (Bagchi 2006
[2005]: Chapter 17; Chapter 7 in this volume).
' The depressing effects of de-industrialization on the incomes of
women of all classeswere already noted by BH (Chapter 5 in this volume;
see also Gupta 1984: Chapter 5). As Tilly (1994) suggests, since spinning
was the most important source of earnings of many women, especially
for those who for social reasons could not work outside their homes,
the effect of the drastic decline of spinners' numbers had a deleterious
effect on the women's autonomy within the family and society.18 Many
xliv Introduction

weavers adjusted to the situation by weaving coarser varieties of cloth.

But the net earnings from such work fell, and a declining market made
them more indebted to the merchants and moneylenders. When the
weaver happened to be a Muslim and the moneylender was (typically)
a Hindu, weavers' rebellions appeared to outsiders to have a religious
tinge and gave rise to the British officialstereotype of the 'bigoted julaha'
(Pandey 2006).
Clingingsmith and Williamson (2008) attribute India's de-industri-
alization to a rise in the prices of non-tradables and agricultural goods,
relative to those of Indian manufactures. 19 The .ll).OSt severe process of
de-industrialization probably occurred in the long period of falling
agricultural prices lasting from 1821 to 1854. Moreover, they also
implicitly attribute it to the growth of agricultural output exceeding
the growth of the workforce. As usual with such analysts, they totally
ignore the virtual cessation of investment under the demand-depressing
regime maintained by colonialism (Chapters 2-5 in this volume; Habib
1975a).
In Bagchi (1,972a: Chapter 6), I had discussed how the survival of a
strong Indian business community in western India as against its virtual
decimation in the Beng;u and Madras Presidencies was greatly facili-
tated by the fact that the,British did not manage to finally conquer the
Peshwa territorie§,4n.til.18I8. It was al1iof~cilitated by the cessation of
the EI~' s m,onopoty'of wide. with India in 1813, a date at which western
Indian mercha,nt§had still retained contact with oceanic trade. In Bagchi
(2Q06[1987]), I discussed the legal and situational reasons for the deci-
mation of the ~engali business community in the three capitalist crises
from 1825-6 to· 1847-8 -and the different fate of the Parsi and Gujarati
business communities in the crisis following the cotton boom caused
by the US Civil War. Paradoxically enough, the gradual marginalizing
of the Indian business community in foreign trade in cotton induced
them to invest in the cotton {'1illsmore intensively from the 1870s
(Vicziany 1979a).
Within the limited choices offered by imperial rule, in some situa-
tions, the strategies and attitudes of Indian and European businessmen
could be surprisingly similar. For example, the Ahmedabad cotton mill
industry, controlled almost exclusivelyby Indians was primarily oriented
towards the domestic market. In Kanpur, most of the cotton mills and
big leather goods factories were controlled by European businessmen.
The latter depended primarily on government patronage and the domes-
tic market, and their attitudes towards the economic policies pursued by
 Introduction xiv

the colonial government were surprisingly similar (Manali Chakrabarti

2003).
When south India recovered from the terrible famines that devastated
it in the nineteenth century, and the colonial government constructed
the irrigation works in the Krishna-Godavari delta, an Indian industri-
alists' group grew up in Andhra Pradesh and Tamil Nadu and began
investing in oil mills, cotton gins, leather-processing units, and cotton
mills. The relative lack of business opportunities in the export sector
also induced European businessmen to invest in industrial enterprises
with the domestic market as its main target. A more positive Madras
government policy for fostering some economic enterprises in leather
and textiles also helped in this matter, even though that policy had to
be reversed soon under the pressure of the local European business com-
munity (Bagchi 1972a: Chapters 6 and 8; Tyabji 1995).
Fortunately, the raiyatwari system that had earlier devastated much
of south India through the extortions of the government proved to be
conducive to this development, because big farmers, especially in the
irrigated regions, aided in the process of capital accumulation. Moreover,
the capital accumulation of south Indian business communities such as
the N attukottai Chettiars was facilitated by their extensive trading and
moneylending activities in Sri Lanka, Burma, and South-east Asia.
South India also underwent a fertility transition from the end of the
nineteenth century, much earlier than the rest oflndia. But not all regions
of the peninsula participated in this. Class structures and prospects
of rural growth influenced the patterns of family limitation. During
1891-1931, the proportion of single women to women of reproductive
age was 15 per cent in the Madras Presidency, and was the highest such
figure in British India. On top of that, marital fertility was lower than in
the rest of India. Both these factors caused a lower total fertility in the
Madras Presidency than in the rest oflndia (Gopinath 2005: 79-81).
Ecological conditions such as high or low land productivity influenced
fertility but other-socially conditioned-factors influenced choice and
fertility outcomes. The districts of Cuddapah, Kurnool, Bellary, and
Anantapur had high mortality and moderate fertility, whereas the more
fertile districts in the Krishna-Godavari delta had a high fertility and
high demographic growth. On the other hand, 'The agriculturally secure
west coast and the dearth-prone Deccan both had the lowest proportion
of married women, while north and south Madras had much higher
proportions' (Gopinath 2005: 81). In drought-prone areas, a low rate of
nuptiality was chosen as a strategy of risk aversion, whereas on the west
xlvi Introduction

coast, it seems to have been influenced by considerations of social status.

Thus peasants exercised choice as mediated by custom, but there is no
reason to believe that those customs were invariant relatively to changes
in material conditions.

Conclusion: Agency and Survival

One peculiar argument of neocolonial historians is that Indian artisans
and peasants did not lose their agency under colonialism and, therefore,
colonialism is an irrelevant category in economic or social history.
This is based on the presupposition that human beings en masse can
lose the will to act independently for long periods. They never do
so----evenas slavesin the Roman Empire or as chattel slavesin the islands
an_d the seaboard of the Atlantic Ocean-as the record of repeated
slave revolts in both settings demonstrates. We need to pinpoint the
constraints under which human beings exercise their agency, and
delineate the structures that grow up as a result of the interaction of
different agents, including, of course, the superior power-holders. The ·
question of agency cannot be confined only t~ actions of individuals or
particular firms as economic agents. Their acts as political animals have
also to be considered.
The. chronology of imperial rule .and its fiscal compulsions strongly
infl)-lencedpatterns ofland relations throughout the subcontinent. Since
the Be~gal Presidency was the main source of the tribute and the sinews
of wa, for the colonial state, the British, in their anxiety to stabilize that
source, introduced the so-called Permanent Settlement ofland revenues
~in.thauegion., This quickly led, through successive processes and layers
of subcontracdng, to a primarily rentier landlordism, with little respon-
sibility for productivity-enhancing investment in agriculture (Chapters
2 and 6 in this volume).
Usurious moneylenders prospered when the colonial regime reduced
most cultivators to the status of insecure tenants; and in most regions
of India, the residual surplus (after the colonial state had extracted its
pound of flesh) was concentrated in a few hands, even if the nominal
title remained with the cultivator {Whitcombe 1972; Rothermund 1992;
Bose 1993; Sanyal 2004). This happened even in the so-called areas of
land abundance such·as Assam (Mukherjee 1979). The conditions of
the indebted peasantry in East Bengal deteriorated further in the depres-
sion of the 1930s, and the Hindu zamindars and professionals refused
to alter the oppressive tenure conditions of the peasants. These factors,
along with the propaganda of fundamentalist preachers supported by
 Introduction xlvii

the Muslim elite, pushed them towards the Muslim League and the
political partition of Bengal in 1947.
Within raiyatwari regions, different patterns of landlord-tenant
relations grew up in different parts of the Madras Presidency, depend-
ing on ecological conditions, which were themselves partly shaped by
state policies regarding irrigation and the use of forests and so-called
waste lands (Baker 1984; Bandopadhyay 1992). Peasants with different
degrees of control over land grew up in different parts of the Presidency,
but the prosperity of the superior layers of peasantry could be observed
only in late colonial times, and only in the few pockets in which the
colonial state had invested in 'productive' irrigation projects.20
The different degrees of presence that the Europeans had in industry
and business in Bombay and Calcutta also shaped labour relations. In
Bombay, they came to approximate the bargaining relations between
capitalists and workers in typical capitalist enterprises. In Calcutta, on
the other hand, they approximated the coercive relations between a
racist oppressor and a worker without any rights in the presence of the
employer. Of course, the semi-feudal relations created under British
rule in typical regions from which labour was recruited also partly
influenced both capital-labour and worker-worker relations (Bagchi
1972a: Chapter 4; Bagchi 1999; Ghosh 2005). While Indian capital
gradually grew in the interstices of the colonial regime, it had always
to reckon with the hostility of a state that was unwilling to allow the
competition of Indian manufactures to eat away a' niche market for
British manufactures (Bagchi 1972a: Chapters 2 and 7). In fact, the
policies of the colonial government also proved to be unpalatable to
those European capitalists who were dependent on the domestic market
for their business, such as owners of cotton weaving mills in Bombay or
Kanpur (Chakrabarti 2003: Chapter 7).
The colonial order in India was a very complex system and changed
over the 190 years from its beginning. It tried to dominate the social
system it found-but it had also to adapt to that system for securing
low-cost governance and revenue extraction. Both the rulers and the
ruled in their different ways invented traditions, which were in turn used
to re-define their mutual relations. There was a churning of classpositions,
with some business communities coming up as others declined, or-as
in the irrigated areas in the late colonial period-rich farmers sought
to advance their own interests by using both economic and political tools
of the major· raiyatwari regions in south, west, and north-west India.
New energies for social activism were released among the women or
xlviii Introduction

Dalits or people belonging to so-called backward castes who came in

touch with new ideas of civil freedom as well as gender equality and
human equality in general. But in none of these cases did the activists
begin from scratch nor did the rulers bring those gifts freely or ultimately
deliver them to the oppressed, because the imperatives of a tributary
regime constrained their choice. The papers in this selection seek to
shed light on the tributary compulsions of the colonial state and their
outcomes.
How constraining the colonial incubus was for the outcomes is
indicated by the fact that in spite of all the obstacles posed by a highly
inegalitarian social system, growth in Indian national and per capita
incomes underwent a structural break almost immediately afrer in-
dependence, even though the population grew at much faster rates
than under the colonial regime (Sivasubramonian 2000; Hatekar and
Dongre 2005). Recognizing the role of agency at different levels does
not mean that we reduce it to a voluntaristic romanticism and in the
process exculpate colonialism in all its unappealing manifestations.
In analysing the outcomes of economic and human development
and processei:shaping tliem, it is always necessary to link the processes
to the·overarching political stl'uctt.ire'arid•the class relations shaped, by
it, and the way tho~e class an'd·polltical relations might influence the
processes and thlfoutcon'l.es. This ~pplies to colonial India'.'M much as to
the outcdntes' in any other soci~ty. This might be illustrated by a propo-
sition put folwat'd·by David Ludden, one of the more careful students
oflndran economic history. In a recent paper, Ludden (2010), arguing
tliat Cutzon, afrer all, wanted the good of the people of East Bengal and
Assam,when he effected the partition of Bengal, writes:
In 1911, Calcutta lost its status as India's capital but returned to its former supremacy
as capital of Bengal. Along with this came renewed underdevelopment in the east,
which appeared in dark form in 1943-44, after which the Famine Commission
lamented that the Bengal government was uniquely unable to protect food security
in rural are.ts:After 1911, Dhaka lapsed back into relative stagnation, until it revived
in 1947 and then more so in 1971. (p. 20)

It takes a very bold historian indeed, a new Oswald Spengler or Arnold

Toynbee, to predict that there would have been no famine in Bengal in
1943 if the province had been partitioned on Curzonian lines in 1905.21
Let us look at the more serious parts of Ludden's proposition. In what
sense was East Bengal more underdeveloped than West Bengal? By 1905
all of Bengal had become an agrarianized economy, with more than
65 per cent people dependent on agriculture. So agricultural growth
 Introduction xlix

was the base of whatever incomes ordinary people enjoyed. Accord-

ing to the work of George Blyn (1966: Chapters V-VII) supported
by the later work of Sugata Bose (1986, 1993), Manoj Sanyal (2004)
and others, the central and southern West Bengal districts witnessed
stagnation or decline in absolute agricultural output between 1901 and
1931 whereas the deltaic region of East Bengal continued to display
a growth in acreage which was the main source of growth during the
period. The intern.al migration figures also show that throughout the
early part of the twentieth century, it was East Bengal and Assam that
witnessed the largest flow of immigrants, who niostly cleared land and
set up as landholding, though poor and indebted, peasants (Davis 1951:
Chapter 14; Zachariah 1964). Landlessness was virtually absent among
the cultivating peasantry in deltaic East Bengal (Bose 1986: Chapter 7,
this chapter has been included in Ludden 1994).
Both in West Bengal and in East Pakistan, after independence, power
passed into the hands of a conglomerate class of landlords, merchants,
lawyers and other professionals, and economic and human development
suffered in both parts of Bengal. East Bengal developed a high degree
of landlessness and no attempt was made to carry out pro-peasant land
reforms (Khan 1972b; Bose 1983; Bagchi 1998; Sanyal et al., 1998).
Boyce (1987) famously characterized the situation on both sides of the
as
border an agrarian impasse. So fascinated is Ludden by the Curzonian
rhetoric that he pays no attention to the developing class relations in
Bengal after 1905-relations that no imperially initiated administra-
tive tinkering would have corrected. Those class relations defeated A.K.
Fazlul Huq's attempts from 1937 to reduce the indebtedness of the
peasantry or reduce the power of the landlords (see Ahsan 2002). But
even without enquiring more closely into what happened in East and
West Bengal after the revocation of the Bengal partition in 1911, we can
ask what happens in Bihar and Orissa which became a separate province
from 1912, with Patna as the capital. The condition ofBihar agriculture
did not improve after that (Blyn 1966), nor did Patna become a major
centre of trade and investment (Bagchi 2006[1987], 1997).
Apart from the question of whether the establishment of large-scale
industry by the British offered to the Indian worker more choices than
dying from overwork or from starvation (Bagchi 1990; Ghosh 2000),
it is clear that establishing an administrative capital at a place as such
did not promote investment, and especially Indian investment centered
on that city. To take a striking example, the Bank of Bengal branch at
Lahore, the capital of Punjab, remained valuable to the bank not as a
 Introduction

focus of investment but as a centre for deposit mobilization, and those

deposits were primarily used to finance the British companies operating
from Calcutta or London and increased the flow of remittances of
European profit overseas (Bagchi 2006[1987], 1997).
I have made these brief observations to show that assigning causes of
development of underdevelopment in colonial India requires a careful
tracing out of the processes of that underdevelopment rather than mak-
ing startling ex cathedra revisionist pronouncements.

Notes
1. When a chapter is mentioned, without giving any further reference, it refers
to a chapter in this book (for example, Chapter 2, to differentiate references to
chapters in other books). It may also be mentioned that, in the case of Chapters 4,
5, 6, and 7, several pages have been omitted in order to eliminate facts and analyses
that are included in other chapters.
2. The acme of neocolonial historiography is reached with Tirthankar Roy
(2000), who with no new evidence and no new arguments, simply denies that de-
industrialization or stagnation characterized the colonial economy. For a thorough
critique of this brand oflndian historiography, see Mukherjee (2007).
3. I have not asked or answered the question whether pre-colonial India had
the potentiality to develop into a capitalist economy. This issue was addressed in
a canonical paper by Habib (1969). My own view is that pre-colonial China and
India were undergoing a Smithian growth in which markets had a big role to P,lay,
bµt the capitalists did not control the state apparatus (Bagchi 2006[2005]). This
~as also the situation in most of the European countries until ~e beginning of the
nineteenth century, and without the crippling impact of the French Revolution on
Western European feucfalismand the spread effects of British industrialization on
the closely linked but formally independent states, most of these other countries
would also have found it difficult to industrialize.
4. For example, Henry St George Tucker-who was effectively the finance
minister of die East India Company's government in India in the early 180Qs,and
rose to be the Chairman of the Company-wrote in his Memorialsoj the Indi(ln
Government(1853: 494) that because of the commercial policy followed by the
British government, 'India is ... reduced from the state of a manufacturing to that
of an agricultural country' (quoted by Dutt 1963a[1906]: 180). See also H.H.
Wilson's trenchant comment on the British in his edition of James Mill's Historyof
India (as quoted by Dutt 1963a[1906]: 180-1).
5. Samir Amin in his doctoral thesis (1957: 615) had writte~: '(Le sous develop-
pement) c'est le mecanisme de l'ajustement structurel des pays sous developpes aux
besoins des economies·developpees dominantes', that is, 'Underdevelopment is the
mechanism of the structural adjustment of underdeveloped countries according to
the needs of the developed and dominant countries'.
6. W.W. Peter, a US public health expert, compared the Indian health care situ-
ation unfavourably with the Philippines, Malaya, and Singapore. A major problem
 Introduction Ii

was the meagreness of government expenditure on health and education. Moreover,

the officialsin charge of health complained about the paucity of funds. The outcome
was that, according to the report of the Public Health Commissioner of Bombay
Presidency, for example, for 1920 (even in the city of Bombay, among Parsis, by no
means a poor community), the infant mortality rate (IMR) was 199, and the average
IMR for the city was as high as 500 (Peter 1923: 630).
7. The beginning of the neocolonial historiography can be dated to Morris
(1963); it was continued in several essays of Kumar and Desai (1983) and has
reached its acme (or nadir) in Roy (2000). For a thorough critique of this brand of
Indian historiography, see Mukherjee (2007).
8. As mentioned in Hobson-Jobson, 'The term Sayer in the eighteenth century was
applied to a variety of inland imposts, but especially to local and arbitrary charges
levied by zamindars and other individuals, with a show of authority, on all goods
passing through their estates' (Yule and Burnell 1903: 799).
9. In a foomote Colebrooke and Lambert (1795) add: 'Not fewer than 12,000 in
Bengal and Behar, but now greatly reduced in number'.
10. During these years, the surplus from the West Indies, as estimated by Patnaik
(2006) came to £104 million, so that during these years the Caribbean plunder was
even more important than the Indian tribute for the preservation of the British
empire. On the other hand, a significant part of the Indian plunder was used to
finance further expansion of the empire in India and protect it from the French.
11. The British Governors-General of India, especiallyCornwallis and Wellesley,
were fully aware of the importance of preventing the effective linking up of the
French revolutionary regime with that of Tipu Sultan, who with his effective
absolutism posed a serious alternative to British misrule in Madras Presidency
(Stein 1989: Chapter 2).
12. Many varieties of apparently ancient institutions, such as the jajmani
system, were largely adaptations to changes brought about by British rule (Mayer
1993).
13. See, for an analysis of the conditions of the peasantry in Bengal, Bose (1993)
and Sanyal (2004); for Maharashtra, see Mishra (1985); for Tamil Nadu, Baker
(1984); and for Andhra Pradesh, Washbrook (1994).
14. To take two examples from two regions at random, the wages of labour,
including those of artisans, fell in the district of Bareilly in today's Uttar Pradesh
between the 1820s and 1870s (Bagchi 1976b: 145). In the Bombay Deccan districts,
in the period 1874--1922, Sunanda Krishnamurty (1987) found little growth in
irrigation, a stagnant cultivated area continuation of the trends from the 1820s to
the 1870s recorded in Bagchi (1992), a sharp rise in the share of uneconomic hold-
ings and declining real wages oflabour. Guha (1985: 141-2) found stagnant wages
of field labourers in the Bombay Deccan districts in the twentieth century. See
also the_,wage data from villages, regions and industries given in Sivasubramonian
(2000: Tables 4.29-4.40).
15. For data on the exports and imports of Tamil Nadu and a critique of the
monetarist argument explaining the price depression of the 1820s-I850s, see
Bandopadhyay (1992: Chapter 5).
Iii Introduction

16. That the officially cognized incidence of famines is smaller than the actual
visitation is indicated further by the fact that Raghavaiyangar (1893: 27) claims that
'from 1834 down to 1854 there was no famine of a severe type', and Visaria and
Visaria (1983) seems to concur in this as far as south India was concerned, except
for signalling a famine in Madras in 1853-5. But Thomas and Natarajan (1936: 67),
pointing to a spike in prices in 1838-9, tag it as a year of famine.
17. I am indebted to Subhanil Banerjee for computing the figures. The method
followed in re-classifying and aggregating the census categories is the one I had
indicated in Bagchi (1976a).
18. In the poor agrarian society that India was reduced to, the earning oppor-
tunities of women confined to the domestic sphere or working as pluckers of tea
leaves or at other menial tasks, continued to be further constricted by technical
or legal changes. For an insightful discussion in the context of Bengal, see Bose
(1993: 99-103).
191Income compression resulting from the factors mentioned earlier would also
mean that there would be not only.an absolute decline in demand for manufactures
:tlortg with that for foodstuff and servicesi•lrut also that the demand for manufac-
tures would fall relatively to those of agricultural goods at the income levels we are
talking about. So even a rise in the prices of agricultural goods relatively to those of
manufactures and hon-tradables would only indicate impoverishment ,rather than
a movement along a pre-colonial production frontier. Many weavers shifted to the
production of coarse goods, especially when cheap yarn of low counts produced by
British mills flooded the market. But this would not have protected the earnings of
the skilled weavers, since value added per rupee of gross output would be lower. It
would not also protect employment since the labour-intensity of coarse manufac-
tures was much lower than that of finer textiles. )
20. These projects were meant to,yield surplus revepue after meeting the cost of
the imputed or actual charges for servicing the debt or"the opportunity cost of the
public expenditure.
21. See Sen (1981) for a cogent analysis of the causes of the Bengal Famine of
1943 and numerous studies preceding and succeeding that.
 1
An Estimate of the Gross Domestic
Material Product of Bengal and Bihar
in 1794 from Colebrooke's Data*

Introduction

HT •
Colebrooke wrote, at the end of the eighteenth century,
• one of the most interesting books ever written on the
economy of Bengal and Bihar. 1 It is no exaggeration to say that for
clarity, and sense of organization and relevance, this work is still
unrivalled in its field. It computes the population of Bengal and checks
it by various alternative methods; it gives the output of the important
agricultural products; it calculates in detail the cost of production of
various agricultural products (including sugar, indigo, opium, and
hides); it' gives estimates of the consumption of cotton cloth, and
of salt; it gives figures of prices of various products, and of wages of
labour. It compares the situation of a wage-labourer with that of a
share-cropper, finding the latter worse off than the former. It refutes the
canard that Indians are not suited by their social organization or values
to the conduct of commerce, and so on. After reading Colebrooke, one
begins to wonder whether the eighteenth-century British buccaneer
or civil servant was not altogether a more honest and straightforward
person than his nineteenth-century successor, trying desperately to
rationalize the naked exploitation of the country by an alien power and
an alien class.2

*Reprinted from 1973, Nineteenth CenturyStudies,No. 3, Indian Peasants.Calcutta:

BibliographicalResearch Centre, pp. 398---412.
2 Colonialism and Indian Economy

Colebrooke was, of course, not above his times or his group ethos as
a middle-class Briton; while wanting free trade in those Indian products
which his country did not produce, he could not deplore the growth of
cotton manufactures in Britain behind high tariffs and other restrictions
against import of foreign-particularly Indian-cotton goods (Appar-
ently, the British manufactures could not even then rival the finer prod-
ucts of the Indian cotton industry). He passes without comment the
very high rates ·of profit on turnover realized by Eµropean private traders,
and even more, by the East India Company, when the Indian producers
of these products could barely survive on their earnings. He also does
not touch 6n the widespread chicanery and oppression in the name of
commerce practised by the servants of the East India Company and by
private European traders (one reason being perhaps that the fruits of
oppression had been legitimized in the form of fantastically high salaries
and commissions through the reforms of Governor-General of India,
Lord Cornwallis). But one can form a rough idea of the total material
output of Bengal and Bihar and of some mechanism of its expropriation
by Indian landlords and the Europeans from the concise descriptions
of Colebrooke.
In the sequel, we shall confine ourselves to the estimation of the gross
domestic material product (GDMP) of Bengal and Bihar. There are
two different reasons for this. First, the -data provided by Colebrooke
on internal trade and commerce is more incomplete than the data on
the output df tangible products. He provides an estimate of the long-
distance grain trade of the area (not less than two crores of rupees3),
and of;the cost 0£ transport over land or water, but this does not add
up to an,estimate-of income from what is now called the tertiary sector.
The second reason for omitting the income from the tertiary sector is
more fundamental. It is difficult to separate the earnings of the banker,
middleman, or trader for services rendered from his earnings through
exploitation because of his class position vis-a-vis the peasant or the
artisan. Increase in 'trade' often means increased payments to a parasitic
class with no genuine economic function: this is reflected in an inflation
in the price of the final product, of which the real producer gets a smaller
fraction than before. Hence, if we cannot form an idea of the degree of
inflation of earnings of the tertiary sector through an increased degree
of exploitation while we suspect that such change has taken place, we
shall be in danger of overestimating any increase in real national income
over time. Since I shall compare the estimate of material output derived
from Colebrooke with estimates relating to the period 1895-1900, I
 An Estimate of the Gross Domestic Material Product 3

thought it better to leave out trade altogether (It is to be noted that in

the estimates of British-Indian national income by later authors also, the
figure for income from trade is far more conjectural than the figures for
output of agriculture or industry).

Colebrooke' s Estimate of the Produce of the Land

In para·20, Colebrooke gives the value of the gross produce of the land
in the form of crops as Rs 329,130,000 and after making an allowance
for seed for the following season, he obtains Rs 300,750,000 as the
income earned from the land in the form of foodgrains and other crops.4
He estimates the cultivated area of Bengal and Bihar.to be 95 million
standard bighasor about 32 million acres. As the physical base of his
value estimate, he assumes the output of rice, wheat, and barley to be
150 million maunds, of millets and other foodgrains to be 90 million
maunds and that of pulses to be 60 million maunds. Taking the net
cropped area devoted to these crops to be about 30 million acres (the
other crops are sugarcane, indigo, opium, and so on), this works out to
an average total cereal yield of about 10 maunds per acre or a little more
(after taking account of multiple cropping), which does not seem to be
excessive(particularly ifwe remember that Bengal and Bihar had a much
lower population than now, and hence the proportion of submarginal
land in the total cropped area was much lower).
Land also adds to the income of the people in the form of livestock.
Colebrooke estimates the number of cattle (including buffaloes) as 50
million. 5 Part of the services of these cattle is already included in the
gross value of agricultural produce (excluding their services in the form
of carriage of goods overland, which we will not discuss here). But it
is still necessary to separate the working animals from milch animals
and young stock. The Indian Livestock Cemus,1956, volume 1 (issued
by the Economic and Statistical Adviser, Directorate of Economic and
Statistics, Ministry of Food and Agriculture, Delhi, 1956), 6 gives the
proportion of working animals in the population of kine and buffaloes
as 35.6 per cent in Assam, 40.7 per cent in Bihar, and 41.2 per cent
in West Bengal; the proportions of breeding cows as 25.8 per cent in
Assam, 21.5 per cent in Bihar, and 29 per cent in West Bengal; and the
proportions of breeding buffaloes as 2.9 per cent in Assam, 8.3 per cent
in Bihar, and 1.1 per cent in West Bengal. In 1794, there were large
uncultivated areas which could be used as pasture for cattle-this would
mean that the proportion of working animals to the total stock would
tend to be lower. Furthermore, with more abundant pastures, female
4 Colonialism and Indian Economy

buffaloes would be kept in larger numbers because of their higher milk-

yielding capacity. But on the other side, one might contend, transport
would absorb a vety large number of animals, since roads were bad,
mechanical transport of any kind was unknown, and wheeled carriages
could travel only on some roads and during some seasons. Balancing
this drawback, the rivers of Bengal were far more navigable and in fact
for long-distance transport, water carriage was the dominant means.7
We assume, in the tradition of guessers of such numbers, that in
1794 the proportion of working animals was 40 per cent of the total,
and that the proportion of milch-cows to milch-buffaloes for Bengal
and Bihar was dose to the Bihar situation of 1956 (that is, eight milch-
buffaloes and twenty-two milch-cows for a hundred of kine and buf-
faloes). In fact, while the numbers of adult male and female buffaloes in
1956 were about equal in Bihar, and males far outnumbered females in
West Bengal, Colebrooke assumed fully two-thirds of a typical herd of
buffaloes to consist of milch-animals. So we may be underestimating the
number of female buffaloes, and thus, as we shall see, underestimating
the contribution oflivestock to GDMP in 1794.
Colebrooke estimated the profit per female buffalo to be Rs 7.8 We
take the profit per cow to be half of that per female buffalo. Thus we
have:
Number Contribution to output (Rs)
Milch-buffa4>es 4,000,000 28,000,000
Milch-cows 11,000,000 38,500,000
66,500,000

Livestock added' to- the national product also in the form of an

increase in •the stock of animals every year. Colebrooke estimates it at
30 per cent of the value of the herd. 'f o keep our estimate on the low side,
we take only the value of the adult livestock and assume that additions
to the 'stock account for only 10 per cent of that value. The value of a
milch-buffalo is given as Rs 20: we take the value of a ·cow to be half
of that. The price of a working animal is taken to be Rs 5;9 this gives
Rs (20 x 5 + 4 x 20 + 11 x 10) million= Rs 290 million as the value of
the adult livestock. Hence the income through the increase of livestock
is Rs 29,000,000. 10
Thus a very conservative estimate (conservative, because we exclude
all livestock other than cattle and buffaloes, the value of fish, the value
of hides, skins, and so on) of the income generated by the primary sector
is Rs (300,750,000 + 66,500,000 + 29,000,000) = Rs 396,250,000.
 An Estimate of the Gross Domestic Material Product 5

This income was, of course, not all appropriated by the people of

Bengal, rich or poor, for the East India Company in its dual role as
trader and ruler appropriated a large chunk of it and another large share
went to private European traders. But still, in order to get an idea of what
might be called the potential income per head of the ordinary people of
Bengal and Bihar, one needs an idea of the total population. Colebrooke
himself took 27 million as the probable population of Bengal and
Bihar. 11 But in the next paragraph, on the basis of a survey in the district
of Pur'niya, he arrived at an estimate of abut 30 million. While one
cannot be dogmatic about either figure in the absence of more compre-
hensive data, there are reasons to believe that the early enumerators in
India-particularly those who took large regions as their units-tended
to underestimate the human population. 12 Hence we have used the
larger figure. In order to compare the potential level of living of the
people of Bengal and Bihar in 1794 with that of their descendants after
a century of British rule, I have used Atkinson's estimate for 189513 and
Sivasubramonian's estimate for 1900-10. 14
Prices changed greatly between Colebrooke's time and 1900.
Colebrooke does not specify the exact area in which the pric~s given by
him (rice at 12 annas per maund, pulses at 10 annas per maund, and
so on) prevailed. We assume that since he had an intimate knowledge
of the Purniya district, he used the prices of that district. The cereal
prices in Purniya, Kishanganj, andAraria in 1900-01 were at least three
times as high as those given in Colebrooke. 15 If, however, Colebrooke
had actually used the general average of prices in Bengal and Bihar
(in particul.ar, giving proper weight to the prices in Calcutta and the
neighbouring districts) our assumption will lead to a downward bias in
the estimate of the rise in prices.
The potential income per capita derived from agriculture and allied
activities by the people of Bengal and Bihar in 1794 in the prices of
that year comes to Rs 13.1; in the prices of 1900 it comes to Rs 39.3
approximately. In 1900-01, the population oflndia was 284.5 million,
and according to Sivasubramonian, the total agricultural income in
that year at current prices was Rs 7,822 million; 16 hence the income
per capita derived by the Indian people from the primary sector was
Rs 27.5.
There are some points to be noticed about this comparison. First,
assuming that the value of agricultural produce is correctly stated by
Colebrooke, our estimate of income from livestock in 1794 is almost
certainly an underestimate, for it bears about the same proportion to
..6 Colonialism and Indian Economy

income from agriculture as the corresponding income from animal

husbandry (Rs 1,832 million) bore to the income from agriculture
(Rs 5,873 million) in 1900-01, 17 which flies against our general observa-
tion that with population growth; (a) the number of working animals
to the total livestock population probably increased, (b) the proportion
of farm animals to human population declined, 18 and (c) the milk.-
producing capacity of cows declined over time. 19
Second, the two figures are.not exactly comparable since Colebrooke' s
figure relates to Bengal and Bihar, whereas Sivasubramonian's relates to
the whole oflndia. In 1900, Bengal must have been among the highest-
income regions in India; but to counterbalance this, Bihar, which has
failed to secure even some of the marginal improvements of the British
period, was a ruralized province, with most of its industry gone, and
with its traditional irrigation system in a state of decay. Whether the
Bengal-Bihar average income in 1900 would approximate to the Indian
average remains conjectural at this stage of the enquiry. But one can
say that the average Indian of 1900 had not come up to the standard
of the average inhabitant of Bengal and Bihar in respect of his potential
income after a century of British rule.

Estimate of the GDMP of Bengal and Bihar ·

In order to compute the 'GDMP of Bihar and Bengal, we can take the
consumption of agricultural goods (including products of animal hus-
bandry) and manufactured goods, add domestic investment and throw
in the current balance of trade to obtain the gross national material
product. U nf6rtunately, Colebrooke' s data do not permit us to construct
this esdtnate ih· a' pure form. He gives the data for the consumption of
the most important manufactured goods, namely, cotton cloth (Rs 60
million 20), but clbesnot provide data on the consumption of other locally
manufactured goods (a figure for the consumption of salt is given but
a large amount of this commodity was imported). Further, he does not
separate the exports of agricultural produce from local consumption-so
we make an estimate of the following composition:
(Exports + consumption) of products of the primary sector + consumption of cloth +
an unknown figure for consumption of other locally manufactured goods + (exports
of producrs of the primary sector) + exports of manufactured goods - total imports
of goods.

Now obviously there is double counting of exports of the products of

the primary sector in the above formula. But if we assume that exports
 An Estimate of the Gross Domestic Material Product 7

of products of the primary sector at least equalled the consumption

of manufactured goods other than cloth (including consumption of
processed agricultural produce after deducting the value of the raw
material), for which we have made no allowance, then our estimate
comes very close to the gross national material product (we neglected
domestic investment other than additions to livestock because we have
no information·about it). However, in 1794, Bengal and Bihar had a
surplus of exports over imports and this surplus was not appropriated.by
inhabitants of this country but by foreigners. Hence, departing slightly
from standard usage, we callthis figure a minimum estimate of the
GD MP of Bengal and Bihar. The objection might be raised that our net
export figures include some invisible services, and we thereby get figures
of income from trade mixed up with the figures of our material output.
In actual fact, since export figures were on a free on board (£0.b.) and
import figures on a cost including freight (c.i.£) basis, and since practi-
cally all shipping was foreign-owned, our way of measuring it would
again under- rather than over-estimate GDMP.
We have taken this GDMP rather than the minimum estimate
of actual Indian consumption for later comparisons, for neither
Sivasubramonian nor Atkinson deducts the full incomes of Europeans
resident in India. Atkinson does not seem to make any deductions at
all and Sivasubramonian takes account only of actual remittances made
by foreigners, with some adjustment for interest on foreign investment.
Atkinson, for example, includes Rs 81 million as the income of civil and
military officers, and a scrutiny of the detailed figures revealsthat at least
Rs 64,855,200 (being the sum of the pay of covenanted·civil officers,
staff corps, the British army and marine services, plus the exchange
compensation allowance} must have been primarily the income of
Europeans in India. 21
For the sake of comparability, we add to Sivasubramonian's estimate
of the total income derived from the primary and secondary sectors, his
estimate of the income sent abroad and obtain the sum of Rs 7,822 +
1,438 + 191 million = Rs 9,451 million as the GDMP produced by
Indians in 1900-01 from the primary and secondary sectors together.
This gives an Indian GDMP of Rs 33.2 per capita at 1900-01 prices.
Atkinson divided the population into three groups for the purpose
of computation of national income of British India. In the first group
(Section I) he included the population dependent on agriculture. He
divided the people who were dependent on occupations other than
agriculture into ordinary people (Section II) and people of ample means
-8 Colonialism and Indian Economy

(Section III). We have taken the whole income of Section I, the incomes
of labourers and industrial population included in Section IL and the
incomes of agents, managers, and others included in Section III, to
represent the gross national output. (This is, in fact, likely to exaggerate
such output through the inclusion of some incomes derived from trade,
commerce, and transport). Thus we have d1e GDMP of British India
(excluding native states) in 1895, according to Atkinson:

(Figuresin Rs)
• Income from agriculture 5,014,694,470
Income oflabourers 416,288,400 •
Income of the industrial population 1,504,364,480
Income of agents, managers, and others 206,400,000

7,141,750,350

With a population of222 million in British India in 1895 (according

to Atkinson), the GDMP per capita comes to about Rs 32.2. Even if
we throw in the 'Miscellaneous' group in Atkinson's Section 11, this
raises the GDMP per head to Rs 33.2 only. There is thus a remarkable
closeness in the estimates of GDMP per head derived from Atkinson
and Sivasubramonian although neither the year nor the area was exactly
the same in the two cases.
We now turn:back to the derivation ofGDMP in Colebrooke's time.
For this we need an estimate of the export-import gap around 1794.
According to bunbert, the total exports of Bengal (meaning Bengal
and Bihai;; to other parts of India and to foreign countries in 1794 was
Current Rupees22 4,fr7,-S0,000.23 The total imports into Bengal from
different parts in the same year came to sicca Rs 2,03,37,615. 24 We
shall take the difference between exports and imports to be roughly
Rs 20 million.
We have a rough idea of the composition of the East India Company's
'investments' during the 1790s. The Company kept up an annual average
'investment' of current Rs 66 lakhs in the piece-goods of Bengal. 'In
1795 investment allotment was to amount to Rs 92.68,770-cotton
piece-goods Rs 47,74,591, raw silk Rs 17,24,137, sugar Rs 19,41,213,
saltpetre Rs 3,37,875 being the principal items. In 1799 investment
amounted to Rs 90,51,324-piece-goods Rs 59,59,724 and raw silk
Rs 17,25,000.' 25
The composition of major private exports from Calcutta.to the rest of
the world in 1795-6 and 1801-02 was as follows (in sicca Rs):26
 An Estimate of the Gross Domestic Material Product 9

1795-6 1801-02

Indigo 62,51,424 38,48,139

Grain 9,11,365 22,59,618
Sugar 8,20,186 12,01,798
Silk 5,81,183 13,65,882
Piece-goods 94,83,284 1,65,91,309
Opium 13,08,360 27,51.915

Although our list is incomplete, it seems clear that the major part
of exports-whether on the East India Company's account or on pri-
vate accouµt--consisted of either manufactured or semi-manufactured
goods, and that raw agricultural produce formed only a minor part
of total exports (In the case of products such as sugar, silk, indigo, or
opium, the processing cost accounted for a major fraction of the total
value). Moreover, there were many locally manufactured goods, for
example, wild silk of various kinds 27 which entered international trade
only marginally, but which were consumed in Bengal in vast quanti-
ties. Hence we are probably on safe ground in assuming that the value
of the locally manufactured products retained in Bengal and Bihar for
consumption (or investment) was greater than the value of the raw agri-
cultural produce exported. Since the Current Rupiyasused by Lambert
in estimating export values might be less valuable than SiccaRupiyas, we
take the export-import balance to lie between (Sicca) Rs 18 million and
Rs 20 million.
We get the minimum figure of Rs 18 million by adqing the totals
of net private remittances of European traders and 'investments' by the
East India Company, and thereby estimating the annual drain of wealth
from Bengal and Bihar in the 1790s.28
Thus, we get as the minimum estimate of the GDMP of Bengal and
Bihar in 1794: .

(Figuresin Rs)
Agriculture and animal husbandry 396,250,000
Consumption of cotton cloth 60,000,000
Export-import balanc~ 20,000,000
or (18,000,000)
476,250,000
or (474,250,000)

Taking the figure of Rs 474,250,000 as the basis of our calculations

we get Rs 15.8 asthe GDMP per capita of Bengal and Bihar in 1794.
10 Colonialism and Indian Economy

Again, multiplying the figure by three to approximate the price-level of

1895 or 1900, we have Rs 47.4 as the GDMP per head in 1794 at the
prices of the year 1900.
The objection might be raised here that prices of manufactured goods
did not rise as much as the prices of grains and hence we might over-
estimate the general rise in prices if we take the index of grain prices
as the general index number. On the other side lie the following facts
and suppositions: (a) prices of many agricultural goods-such as pulses
and oil seeds-and of products· of animal husbandry probably rose
more than prices of grains; (b) foodgrains and agricultural products in
general continued to dominate both output and consumption in India;
(c) many varieties of manufactured goods, which were earlier produced
and consumed in India, practically vanished and became unattainable
to Indians between 1794 and 1895, and conversely, many new types
of manufactured goods remained beyond the buying power of the vast
majority of Indians, and (d) Atkinson's and Sivasubramonian's figures
include trade margins to a greater extent than Colebrooke's, since we
took prices of an interior district for 1794 whereas the later figures are
probably regional averagesor figures at ports.
Thus making the ·mc1st<\
conservative· assumptions possible, which
impart a strong dowm\lard bias to our 1794 figures, we find that an
average Indian' in 1895 or 1900 was producing less than an average
(• 1 ,

inhabitant of Bengal and Bihar in 1794. If the average income of

Bengal and Bihar together at all approximated the average incom~
ofrndia ln, 1895 or 1900, a century of British rule had impaired the
productive capacity of the country. Such a conclusion would knock the
b6ttom 'out of most colonialist apologetics-in however attenuated a
form (since 1794 had seen the end of the Bolts, Barwells, and Grants
and Co'rnwallis29 had just brought in 'order')-and would also make
nonsense of those development theories which see the history of under-
developed countries as a slow progression from medieval poverty to
modern prosperity.

Notes
1. Henry Thomas Colebrooke, 1795, Remarkson the Husbandryand Internal
Commerceof Bengal,first ecln, Calcutta; second edn, London, 1804; reprinted, from
the edition published by Robert Knight in 1884, in Censusof India, 1951, vol
VI, WestBengal,Sikkim and Chandernagore, Part I c-Report by A. Mitra (Delhi,
1953, pp. 180-231). All references are to this last reprint. It appears from the
'Advertisement' by the author that most of the calculations relate to 1794; hence
that has been taken as the base date throughout.
 An Estimate of the Gross Domestic Material Product ll

2. Of course, the successful debasement of the Indian businessman to a subordi-

nate position or to the life of an idle rentierhelped this rationalization enormously.
3. See Colebrooke, para 200.
4. Ibid.: para 20.
5. Ibid.: para 232.
6. The relevant data have been reproduced in A.V. Desai (1965: 329-38).
7. See Colebrooke, para 190-3.
8. Colebrooke, para 131.
9. Ibid.: para 113.
10. While it is impossible, without some independent evidence relating to
Colebrooke' s time, to check the reasonableness or otherwise of our assumptions, we
shall compare the number of working animals as estimated by us-20 millions-
with (a) the total number of working animals in Bihar in 1966 and (b) the total
number derived from another part of Colebrooke' s book. In 1966, the total number
of working animals in Biharalone (data for West Bengal for 1966 are not available)
was 7.6 million (see Table 20 in Statisticalabstractof the Indian Union, 1967, 1968,
Delhi). Assuming that the total number of working animals in the area comprising
Bengal proper (before 1947) was at most twice this number, the total could come
to 22.8 millions for a cultivated area, which was at least double the area (95 million
bighas) given by Colebrooke. Hence our estimate of 20 million would appear to
be on the higher side. But presumably, the working animals were used to a greater
extent for transport in Colebrooke's days. On the other side, Colebrooke states: 'A
plough, with the usual yoke of two or three pairs of oxen assigned to it, is equal
in common m:lnagement to the full cultivation of fifteen bighas of land.' Thus
according to this estimate, at least 25 million animals would be required 'to work
95 million bighas. But working animals owned by a large farmer would also be used
by the farm servants, who would usually be given 2 or 3 bighas of land to cultivate
as a tenant. This would bring down the figure nearer to our estimate, making our
crude estimate not outrageously improbable.
11. See para 15.
12. I have discussed the early population figures of Bengal in greater detail in
Bagchi (1976a). Also see Chapter 4 in this volume.
13. F.J. Atkinson (1902: 209-83).
14. Sivasubramonian (1965)
15. See Colebrooke, para 26.
16. See Sivasubramonian (1965) Tables 2.10 and 3.24.
17. Ibid.: Table 3.24.
18. For observation from another part oflndia corroborating this, see Catanach
(1970: 16).
19. As the Reporton the Marketingof Milk in India and Burma (1941) put it,
' ... the general consensus of opinion seems to be that the milking capacity of
Indian cattle has deteriorated in as much as it is not easy now-a-days to obtai'l
good quality cows and she-buffaloes as was the case some twenty or thirty years
ago. The opinion is also strongly held that the deterioration in cows has been gen-
erally greater than in she-buffaloes'. (Quoted in Sivasubramonian[1965: 118))
12 Colonialism and Indian• Economy

20. See para 201.

21. See F.J. Atkinson (1902: 236---7).
22. Current Rupees were an accountant's fiction worth 2 shillings; because of
exchange fluctuations they could be either more or less valuable than Sicca Rupiyas.
We shall treat them generally as equivalent to Sicca Rupiyas.
23. Tripathi (1956: 36---7).
24. This figure is obtained by adding values of imports from various ports given
by Lambert and reproduced in (Ibid.: 37-8).
25. Sinha (1970: 1).
26. Tripathi (1956: 79n).
27. See Colebrooke, para 178.
28. The average annual total balance (exports-imports) of private remittances
from Calcutta to Copenhagen, Lisbon, Hamburg, America, and London over the
years 1795-6 to 1797-8 amounted to Sicca Rs 78,73,073. Adding the annual
average balance for the private trade from Calcutta to China, Penang, the Gulfs
and so on, amounting to roughly Rs 400,000 over the years 1796---7to 1798-9,
the private drain amounted to Sicca Rs 82,73,000 ,(see Tripath} 1Q56: 44n and
77n). If the 'investment' out of the surplus revenue by,the,E:J;st,Ipdia Company
amounted to even Rs 10 million, we get a minipmm 'estipiate of the drawM> Rs 18 .3
million annually. See Tripathi (1956: 2.56n) for an.estimate o(the,tlrain by other
authorities; andJor an account of 'investm~nts' by the Easnlndia Company up to
1793, see Sinha (1961: 230-1)., ( • , ) '
29. William Bolts was a Dutchman who came ,;15 a faccor.,of the East India
Company in the 1760s and was expelle.d from the Corrl.pany's.tc;rritoryfor engag-
ing-in private: trade, against the condition, of his. em'ployment (a practice in which
fn.anyothc;rfactors alsoJn"dt;}ged).Afrer going back to England, he wrote a blistering
attack' on cite malpractice's,of the Company and its covenanted servants. Richard
0

Bacwell,was a member of the Governor's Council when Warren Hastings was the
Governor and supported Hastings in his squabble with Philip Francis. Charles Grant
was an influential member of the Governor's Council in the 1780s and wanted
Protestant missionaries to be allowed to proselytize in India.
 2
Reflectionson Patternsof
Regional Growth in India under
BritishRule*

Introduction
J\ lthough there exist several regional or subregional histories of
J"\J:ndiaduring the British period, there has been little systematic
attempt to compare growth patterns as between different regions.
Such an attempt is worthwhile for several reasons. We are interested
in the dynamics of the regional societies on their own, but it is not
possible to get a perspective on such dynamics if we do not have some
standard of comparison. That standard of comparison normally makes
much better sense if it comes from India than if it is derived from a
German palatinate or a Turkish satrapy. Secondly, the macroeconomic
constraints can be better understood when we can see their impact on
smaller entities. In particular, regional stratification can be an aspect
of the general processes of uneven development under colonialism. In
fact, region-specific predictions can provide a test for transregional or
supraregional hypotheses.
At the moment, the most thorough account of the location of large-
scale industries before independence starts explicitly with a Weberian
perspective. 1 That account, however, does not even begin to explain the
rate of growth of different industries or the timing of their establishment

*Originally published as 'Reflectic~,son Patterns of Regional Growth in India during

the Period of British Rule' in, J J JengalPastand Present,XCV(l), January-June,
pp. 247-89.
14 Colonialism and Indian Economy

in the different regions of India. The usual W eberian requirements

of the availability of raw materials and a market merely provide the
necessaryconditions for the survival of an industry, once established, in a
colonial context, but do not at all explain the failure of many industries
to be established at all or to grow. The regional dimensions of the Indian
market have hardly been explored anyway. The Weberian approach does
have the merit of explicitly bringing in the geographical constraints on
development. But those constraints are subject to alteration through
government policies, behaviour of social classes, and so on.
One question we shall be concerntd with in this essay is how the basic
mechanism of colonial exploitation of India revealed itself regionally,
and how the working of that mechanism was modified by region-specific
factors. In particular, how did the colonial set-up facilitate or thwart the
survival and growth of capitalist classesin different parts oflndia? 2 How
did land relations conjointly with other colonial policies, in different
parts of the country, influence (a) the formation of a capitalist class, (b)
the pattern of public investment, (c) the relations between agriculture
and industry, and (d) relations between capital and la.Eour?'Although
we raise these questions, we do not pretend to answer them within the
compass of this essay, leaving aside limitations of data; We do not have
inter-regionally comparal:,le data on the growth or decline of small-
scale industries. W C"'dohave· Blyn' s-work on regional ,growth rates in
agriculture from 1891--'2onwards,3 but these have to be 'supplemented
by detailed analyses of agricultural growth rates. In the latter part of this
essay I have used the work of M.M. Islam and Saugata Mukherji on
growth rates in agriculture'in Bengal. But for other regions, similar work
is yet to be accomplished.
These data gaps are evidence of lacunae not only in empirical work,
but also in the conceptual apparatus employed-most of the available
work concentrated only on large~scaleindustries. 4 While such work is
extremely valuable, it still can depict only the peaks of the structure of
domination in the Indian economy: the moyements lower down --can
alter the positions of the peaks and can, so to speak, elevate or depress
the whole mountain range. Our partial and impressionistic account of
the structure of the capitalist class and of relations between agriculture
and industry are to be seen as preliminary sampling work for delineating
the dynamics and the structure of economic development in colonial
India. This attempt will hopefully provoke others to collect and analyse
relevant data bearing on the questions raised.
 Reflections on Patternsof Regional Growth in India under British Rule 15

Differential Rates of Colonial Penetration in

Western and Eastern India and their Impact on
Export Surpluses: Processes of Export-led
Exploitation
Bengal (that is, Bengal, Bihar, ancf Orissa) was the original stamping
ground of British colonialism in India. The resources of eastern India
provided the wherewithal to the British for the conquest of the rest of
India. From this point of view, it is the aggregate output of the region
of exploitation and the part that the government could squeeze out for
maintaining an army and engaging in warfare that is crucially important.
We do not have comparable data on the outputs of Bengal, Madras, and
Bombay Presidencies in the eighteenth century, 5 or, for that matter, for
the nineteenth century. But we know that Bengal's surplus revenue was
regularly utilized by the British government to meet the deficits of t'h.e
Presidencies of Bombay and Madras in the late eighteenth and early
nineteenth centuries. 6
The British, however, were not a 'country' power but a transoceanic
imperial power. They were not interested in carving out an empire in
India simply because they could have a masnadin Delhi-they were
interested in taking the tribute out of the country. From this point
of view also, Bengal provided much the biggest b'ase of exploitation,
particularly before the crushing of Tipu Sultan in the south and the
Marathas in the west and north of India. Even after the British had
established their hegemony over the rest of India, Bengal continued to
provide the biggest export base to the British.7
We can go a little further and say that even more than the total
volume of export, it is the surplus of export over imports, particularly
of merchandise, that provided the bacterial culture for the fattening
of the colonial interests. When Lambert enquired into the trade and
commerce of Bengal, he had no difficulry in arriving at a figure of the
drain of the annual product of Bengal.8 The contemporary observers
realized easily that under the general umbrella of protection provided
by the East India Company, private European merchants were earning
vast profits: whatever quarrel there was, was about the sharing of spoils.
Prinsep divided remittable 'private accumulation' (apart from dividends
on the securities of the East India Company earned by Europeans, and
surplus public revenues) as between Bengal,.Madras, and Bombay as
follows (figures in Rs lakhs):9
16 Colonialism and Indian Economy

Bengal Civil 21.5

Military 19.0
Commercial 33.5
Law 4.0
Retail-trade 8.0
Indigo-workers 4.0
Mortgage, houses, etc. 5.0
Total 95.0

Madrasand Bombay Civil 11.,0

Military 19.0
Commercial, etc. 12.0
Total 42.0

It is only in days of greater sophistry that the fact of the continual

extraction of a political and mercantile tribute from India could be
glossed over and denied altogether. 10 It is partly because of this lying
sophistry that our use of the export surplus on merchandise account as
a first approximation to the degree of exploitation has to be defended.
lp,or,q.inazy .i\].ter9ational accounts, if a country shows a persistent
surpJ~s?f exgorts-oxi.i:j.gipons1 then the balance accumulates as·claims
jlgajnst foreign cqumri~ plus reserres of goJd or of foreign currencies. If
we,scruJinize .Jlre lndiaf\,baJance o(trade accounts (excluding 'invisibles'
fo,r.th.e .ni.o.ment}l;n:fqi;eir_idependence,,we ,find that while India had
a pfr§,i;5t<;nf,ba.);mc;eof trade surplus, Europeaqs were all the time
,ac:;:i;urp,J,µ.:\!jng
clairos against India in the forms. of ownership of private
<;:il-J?,ital
aqd.hoJdings of public securities of varipus kinds. How did this
happen? The stock answer is to point to the payments for invisible
S(if\:kesand to. imports of gold and silver as the items that more than
coµnterbalanced the favourable balance of trade accounts. However, as it
has be{jnaptly put, payments for invisibles are often difficult to compute
because no serviq:s were rendered in the first place. In the Indian case,
the invisibles would.consist of those parts of home charges, military
expen,d,itures.-ibroad, and so on, for which no goods were received in
India~These were.straight political tributes and covered up an unrequited
export surplus,. Thel).there were the charges for banking, insurance, and
shipping s~rvict;s,and finally, there were the remittances on profits of
busine~~,apd employment. It is difficult to accept these payments also
as quidpro,q110 for straight commercial transactions, for the Europeans'
position was built up .µid bolstered J,Jy the political arrangements
of colonialism: Indians were simply denied entry into most of these
profitable fields on one pretext or another. 11 The accumulation of capital
 Reflectionson Patternsof Regional Growth in India under British Rule 17

by British businesses in India consisted almost entirely of ploughed back

profits. The initial base for that capital, as in the case of tea gardens, was
generally control over land and labour conferred almost gratuitously on
the Europeans by the British government.
It would at first appear that imports of gold and silver are on a
different footing altogether. However, most of the imports of silver,
at least since 1850 (and probably earlier too), were for the purpose
of silver coinage. 12 By refusing to introduce currency notes on a large
scale, the Government of India imposed an immense burden on
Indians, and this burden increased greatly during the years 1872-92
when silver depreciated continuously. 13 Gold imports were for the
most part for hoarding purposes, but in the nineteenth century at least,
they accounted for considerably less than half of•the total imports of
bullion and treasure. The motives for hoarding were connected with
the dominance of zamindars and princes among the men of property
in India, the unfavourable climate for private industrial investment
in India created by British colonialism, and the great uncertainty
associated with fluctuations in harvests and agricultural prices in an
underdeveloped, ana retrogressive, agrarian economy. It would take us
too long to analyse these motives in this paper and would amount to a
digression from the main theme.
The real argument against the use of export surplus as an index
of exploitation is that it is almost certain to underestimate its effects.
Among the items of import figure the consumption by Europeans
resident in India and the import of military stores for purposes. of
imperial defence. Furthermore, many of the imports-particularly of
government stores and railway engines and material-were virtually tied
to Britain as a source, and were overpriced. For similar reasons, there
would be a downward bias in the figures oflndian exports. We would
have to add the true value of imports springing only from the needs of
the colonial rulers to the tni.e value of the export surplus in order to
arrive at a proper measure of exploitation.
On the other hand, the use of the export surplus as an approximate
index of exploitation has the virtue of emphasizing that in a colonial
context, the mechanism for expansion of exports is that of export-led
exploitation rather than that of export-led growth. It is the need for
remitting the increased spoils earned in the colonized country that
provides the drive for increasing exports. In an imperial payments
framework within which India had a crucial role to play, the export
surplus further provided the wherewithal for balancing accounts within
18 Colonialism and Indian Economy

those countries with which Britain happened to run a deficit. Both

these objectives were abundantly clear to British policy-makers and
merchants when China was 'opened' to trade in opium, but the imperial
strategists never lost sight of them when the payments system became
more tangled. 14
Export and import figures are available separately for the major ports
of British India: Calcutta, Bombay, Madras, and Rangoon. Figures of
total exports and imports of the littoral Presidencies of Bengal, Bombay,
and Madras and the province of Sind are also available. We have taken
these figures to represent the exports and imports of the hinterlands of
the four major ports (excluding Rangoon) and their subsidiary minor
ports. Plotted in Tables 2.1 and 2.2 are the five-yearly averages of
exports, and of the surplus of merchandise exports over merchandise
imports, respectively.

Table 2.1 Five-Yearly Averages ofTotal Exports of Merchandise from

the Four M,:ijor Regions oflndia
(Rs '000)

PJ!riod,, Bengal Bombay Madras Sind

1871-2.to ltf75--G '241,510 ,220,962 67,230 10,969,

1876--7 to 1880-1 '301,708 225,443 76,240 13,363
1881-2 to 1885--6 340,591 319,71 i., 83,486 33,244
1886--7.to 1890-1 375,250 369,856 l 02,853 38,118
1891.:':2to 1895--6 432,511- 384,7io II6,3ll 61,669
1896--7 to 1900-1 484,468 326,220 II6,467 54,355
1901~2 to 1905--6 589,400 437,654 141,017 ll9,152·
190q--;:7to 1l9I0-ll 770,956 510,123 190,032 173,445
19ll"-l2 to 1915,-16 924,299 580,092 240,502 240,926
1916--17 to 1920-1 1,291,319 879,693 262,711 239,235
1921-2 to 1925--6 1,301,795 1,026,661 347,084 345,260
1926!-7 to ·1930.:..1 1,304,679 705,441 412,343 253,722
1931-2 to 1935!..6 630,490 313,425 254,045 144,620
1936--7 to 1938-9 807,199 402,803 367,689 225,283
(3-yearly averages)

Sources:Annual Statements of the Trade and Navigation of British India (Computed in

the Statistical Bureau, Director General of Statistics, Government oflndia) and Annual
Statement; of the Trade and Navigation of the Bengal, Bombay, and Madras Presidencies
and of the province of Sind (separately for each region), and Government of India,
Commei;cial Intelligence and Statistics Department, Annual Statements of the Seaborne
Trade of India, vol. IL

If there are limitations to the use of aggregate data on export surplus

as a rough index of exploitation, there might be even greater reservations
 Reflections on Patterns of Regional Growth in India under British Rule 19

Table 2.2 Five-Yearly Averages ofExpon Surplus (Export Minus

Import of Merchandise) of Different Regions oflndia
(Rs '000)

Period Bengal Bombay Madras Sind

1871-2 to 1875-6 73,123 101,612 31,568 5,955
1876--7 to 1880-1 109,819 71,302 39,496 2,896
1881-2 to 1885-6 119,106 109,532 36,528 13,033
1886--7 to 1890-1 118,716 95,302 43,308 -3,l 83
1891-2 to 1895-6 155,955 102,802 52,775 1,478
1896--7 to 1900-1 166,726 -21 ,470 53,701 1,897
1901-2 to 1905-6 214,400 105,626 60,300 33,433
1906--7 to 1910-11 272,776 82,204 85,520 37,200
1911:...12to 1915-16 303,256 58,120 83,924 8~,693
1916--17 to 1920-1 275,331 40,744 103,945 37,381
1921-2 to 1925-6 399,914 118.437 143,845 55,221
1926--7 to 1930-1 502,749 -99,691 167,267 -61,224
1931-2 to 1935-6 269,338 -208,923 95,566 17,873
1936--7 to 1938-9 336,967 -214,488 136,634 45,087
(3-yearly averages)

Sources:As in Table 2.1.

against the use of regional data on export surplus as rough indices of

the regional burdens of exploitation. First of all, there might be abrupt
or long-term changes in the hinterlands of the different ports brought
about by changes in communications networks, particularly railways in
the case of India. While this danger would be considerable before the
1870s, by the end of the nineteenth century, this had been considerably
minimized. Already by 1878, most of the arterial railways connecting
the major ports with the hinterland-such as the East Indian, the
Great Indian Peninsular, the Madras, the Bombay, Baroda, and Central
India, and the Sind, Punjab, and Delhi lines-had been laid down. 15
Between 1878 and 1901, the railway lines had been extended from
about 8,500 to about 23,000 miles, but much of the new mileage was
in the nature of military lines as in north-west India, or were meant to
connect gaps between lines, or connect famine-prone areas with the rest
of the country. In the course of these changes, the most important shift
probably occurred in the hinterlands of Karachi and Bombay, the former
gaining at the cost of the latter. But it is most unlikely that Calcutta
and Bombay-the two most important ports--could have gained in
relation to each other. By 1914, the hinterlands of the different ports
were supposed to have been fixed enough for a government publication
to compute Table 2.3:
20 Colonialism and Indian Economy

Table 2.3 Percentages of Provincial Trade Passing Through

Different Major Ports
Province Calcutta Bombay Madras Karachi

Bengal 64
Madras 2 l 70
Bombay 41
United Provinces 20 10 12
Bihar and Orissa 42 l
Punjab 2 3 42
Central Provinces and Berar 5 49
Assam 35
Sind and British Baluchistan 75
Rajputana and Central India 2 16
Nizam's Territory 31 6
Mysore ... 4 21

Source:Shirras (1914: 51).

Of course, the hinterlands might be changing continually, and so

might the importing population served by the different ports. A priori, it
would seem that changes in relative freight rates would induce, changes
in actual flows of goods along ~fferent lines. But the Indian railways
worked :under explicit or implicit collusive arrangements or under
government regulations or rates; much of the time there were also
shortages of wagons. While the delineation of the effective hinterlands
of the ·different ports should be the subject of detailed research, our
guess·abbut relative stability of the outlines of hinterlands of major ports
caonot be dismissed out of hand. 16
A second complication would seem to arise from the fact that the
exploitative mechanism of the British government was a supraregional
one: while military• and civil establishments would be distributed
regionally, their expenseswould be paid out of a central pool. This would
have contradictory effects on the export surplus figures. If the salaries
of some government.bfficers stationed in Calcutta were paid out of the
revenues 6£ fhe Central ~rovinces, and if these officers imported goods
for their own consumption; these would swell import figures and
understate.the export surplus generated in the hinterland of Calcutta.
On the other si,de, if these officers remitted their savings to England,
this would have a tendency to swell the export figures. It is difficult
to judge a priori which would be the dominant pattern. Until 1910,
Calcutta was the capital, of India. It could be argued that unless the
spending-saving patterns of Europeans in eastern India were widely
 Reflectionson Patternsof Regional Growth in India under British Rule 21

different from the spending-saving patterns of, say, Europeans in Madras

or Bombay, and/or unless there were systematic flows of subsidies as
between different regional administrations and between the central
administration and the regions, the regional export surplus figures could
be used as first approximations to the burdens imposed by colonialism
on the different regions. 17
With these preliminary remarks out of the way, we can briefly analyse
the figures in Tables 2.1 and 2.2. Between 1871-2 and 1895-6, the rates
of growth of exports of Bombay, Bengal, and Madras are remarkably
similar, although Sind grows fastest during this period. But ifwe take the
period from 1896-7 up to 1915-16, the rate of growth of exports from
Bombay lags considerably behind the rates of growth of exports from
Bengal and Madras, and, of course, Sind. After a short flurry of growth
between 1916-17 and 1925-6, Bombay again falls behind Calcutta and
Madras. Sind's relative rate of growth decelerates after 1915-16. In the
agricultural depression, which really started in India·after 1925-6, all
the regions lose, but Bombay loses most heavily in proportionate terms,
followed by Sind, Bengal, and Madras.
The behaviour of export surpluses as between different regions is even
more disparate. With the sole exception of the initial five-year period of
1871-2 to 1875-6, Bengal generated the largest export surplus among
all the regions in every period: In fact from 1896-7 onwards, Bengal's
export surplus exceeded the export surpluses of all the different regions
put together. While Bengal and Madras never had an import surplus,
Sind and Bombay produced import surpluses in several quinquennia. In
fact, Bombay had an import surplus over the whole period from 1926-7
to 1938-9. The origins of the import surpluses in Sind and Bombay
are different: in the case of Sind they were caused by heavy public
expenditure on railways (in the late nineteenth century), primarily
for military purposes and irrigation works. For the period 1896-7 to
1900-01, the import surplus in Bombay was caused ht the effects of the
famines of 1896-7 and 1899-1900, and of the plague which•caused a
decline in the exports of cotton yarn from Bombay to China. But the
import surpluses of Bombay in other periods are organically connected
with the growth of an Indian capitalist class undertaking industrial
investment in thi,:western region.
Even during the period when the exports of Bombay were expanding
almost as fast as the exports of Bengal, part of the buoyancy was caused
by the exports of crude cotton manufactures in the shape of cotton twist
and yarn and coarse cotton cloth, particularly to Japan and China, and
22 Colonialism and Indian Economy

later on mainly to China. Although Greaves Cotton were large exporters

in the field, most of the exports originated from Indian mills. Mean-
while in Ahmedabad, an exclusively Indian-owned cotton mill industry
was expanding to supply the home market in cotton cloth. After the
plague disaster at the end of the nineteenth century and the beginning
of the twentieth century, Bombay mills also began to turn towards the
home market, supplying cotton yarn to handloom weavers and weaving
coarse cotton cloth themselves.18
By contrast, in eastern India, all the major exports were controlled
by European businessmen: they invested irt tea plantations, jute mills,
jute exporting businesses, and controlled the export trade in hides and
skins, shellac, and other commodities. Cotton mills in eastern India
remained primarily spinning mills, either exporting abroad or catering
to the needs of the handloom weavers. While this concentration on
exportables would explain the continued buoyancy of exports in eastern
India and in Madras after 1895-6, this would not explain why export
surpluses exp.anded as fast as, or even faster than, exports. The hypothesis
here is that since-business in all parts of India other than western India
was dominated .by Ellropc:;ans>~ .e4 ports, rose, overseas remittances
also went up, thus wid!:!nih~-·the gap hetw.een -exports and imports,
pari passu;witb,inc.r~asing.5xports. By cont~ast, .i.n'western India, since
businesS1was co.n,trol)ed.by Indians, the profits would be reinvested in
India-.,thus leiiaingfo increases in imports~ Furthermore, because of the
'strusture,of,control of business in European-dominated regions, which
p.recluded the; employment of Indians in managerial or supervisory
positions ana also thwarted the growth of labour organizations, there
was no trickling down-of-increasing-incomes to lower-income groups. By
contrast, there may have been a greater degree of diffusion of increases
in.incom~s i,n western India, leading to an increase•in importables and
contractidn in.the supply of those exportable9which could be consumed
at home.
We have already.pointed out.,5ome of thdimitations to the use of the
export surplus .figures as·.even rough indices,of the regional burdens of
colonial-exploitation. We should point 't:o'arrother possible reservation.
Our interpretation of the origin ,,ofthe.export-import gaps and their
movement would be vitiated if it happeneq that.Indian traders or other
Indian (or for that matter foreign} capitalis,,tsinvested their profits from
eastern (or southern) India.in,industries''i.ri western India. Although the
capital flows.within India in the Bfitish period have not been analysed,
whatever crude .e;idence is ayailable ipd4:ates that this did not happen
 Reflectionson Patternsof Regional Growth in India under British Rule 23

on any large scale before 1939. If, for example, the Birlas with their
trading base in eastern India invested in Gwalior in western India, the
Tatas, with their base in western India invested in the iron -and steel
complex, in and near Jamshedpur; most other capitalists tended to
invest in locations near their trading bases.19

On Some Characteristics of the Capitalist Classes in

Different Regions of India and their History during
the British Period
We have postulated that some at least of the difference between the
burdens of exploitation as between eastern and western India can be
attributed to the fact that the dominant capitalist class in western
India had a very large Indian component, whereas the capitalist strata
dominating manufacturing, plantations and mining, and large-scale
banking and external trade in eastern India was almost entirely European,
particularly before the First World War. I have anal~ed elsewhere the
behaviour patterns of European capitalists, and of the Parsi capitalists
in western India and the reasons for their success.20 There is besides a
large literature on the Parsis.21 There are also books on Ahmedabad 22
and valuable articles on the industrial growth of Ahmedabad and the
socio-cultural influences on such growth. 23
But these studies are still incomplete because they do not delineate
the structure of the Gujarati capitalist class nor do·t'hey indicate the
linksof the big Gujarati capitalists to the Gujarat region as a whole. The
different volumes of the Gautteers of the Bombay Presidency contain
materials which throw interesting light on the composition of the
capitalist class in Gujarat at the beginning of British rule (that is, in the
beginning of the nineteenth century) and help to establish that there
was already a capitalist class in Gujarat in a discernible sense at that
time. Furthermore, this class managed to survive into tl.e third quarter
of the nineteenth century when modern, large-scale, cotton mills began
to grow up in Bombay and Ahmedabad.
In the latter part of this section I shall turn to a detailed analysis of
the functional composition of the Gujarati capitalist class. Before I do
that, I mention some of the important contrasts betv.,een.the histories
of the capiµlist classes in eastern and western India. In Bengal, just
prior to the British conquest, the external trade and shipping were
controlled by Gujarati merchants and shipowners, and much of the
wholesale trade and organized banking were in the hands of upcountry
24 Colonialism and Indian Economy

traders and financiers, such as the house ofJ agat Seth. 24 With the British
conquest, Indian merchants and shipowners were quickly eliminated
from external trade, and more slowly but no less surely, from wholesale
trade as well. 25 Some Indian merchants thrived as collaborators of the
British but in this game in which Europeans held all the political cards,
the Indians were quickly worsted. The failure of the Agency Houses in
1830s sealed the fate of most of the big Indian merchants and financiers
as businessmen; the failure of the Union Bank and the winding up of
the business enterprises of Dwarakanath Tagore marked the end of
large-scale Indian business in eastern India for quite some time. It has
been hypothesized that the elimination of Indian business from eastern
India was not difficult, because big Marwari or Gujarati merchants had
other areas oflndia to fall back upon. However, this hypothesis does not,
explain why Bengali merchants who had nowhere else to go also failed
to put up much resistance. Political control by the British seems to be
the decisive factor in this phase of struggle of Indian capitalists to keep
themselves alive as capitalists.
In '.Ahmedabad . .ruid Cujarat, a local ,business class, some of whom
may .have been immigrants from· Rajasthan, had developed and came
to .J6minate 'the. Gujarat econom}" and much of the external trade of
Gujarat by the' end of the seventeenth and the beginning of eighteenth
century. 26 While Asian shipping was virtually t:liminated from the Bay
of .Bengal even before the formal conquest of Bengal by the British,
Indian anaArab shipowners continued to control the shipping and much
of. the ,aternal trade in Gujarat even up, to the end of the eighteenth
century. In fact;Indian traders were in control of a considerable part of
the external trade"irr:western India, including Gujarat, throughout the
nineteenth.century, although both Indian shipping and shipbuilding
dedit1etl ttnder frre impac\:,of colonialism. The ability of Indian capital-
ists,td' suPlive in:westein India is to. be ascribed to several factors: the
comirruecl:need bf the British for collaborators until the first quarter of
the;pineteenth century.:,27 the resistance of the Marathas until 1818, the
survival of some principalities like ,Baroda, Gwalior, and Indore, and
perhap"Sthe refative:smallness of,tli.e expon base of Bombay and Gujarat
c6mparea witlrthat·of Be.ngal.
Along with the·c.1pitalist strata, •handicrafts also survived to a greater
extent 'in Gu)arat ana.western Irrdia than in Bengal: in Bengal, handloom
production had become.very greatly dependent on external trade and on
organization by the.East.India Company. When the external trade in
handlooms collapsea,.and.thc: int;ernal market was invaded by British
 Reflectionson Patternsof Regional Growth in India under British Rule 25

manufactures, hand.loom weavers had no alternative but to cut their

prices in a desperate attempt to survive, and when that failed to work, to
fall back upon agriculture. There were no indigenous capitalist strata who
in their own interest might have tried to put up some resistance against
this process of de-industrialization. 28 We shall see later that the survival
of some of the artisan groups in Ahmedabad into the late nineteent)i
century had important implications for the growth of industry and
labour relations in Ahmedabad.
By the time the Gazetteersof the Bombay Presidency came to be
written, many of the features of the Gujarati capitalist clas~ had been
eroded or obliterated by the action of colonialism, so that we have
to resort.to a kind of 'commercial archaeology'. in order to decipher
the distinguishing mar~ of the surviving elements. 1he Gazetteersare
themselves eloquent on the decline of the capitalist strata. We learn, for
instance, that in the Navsari division of the Baroda state, the bankers
(were) a declining class.29 Many of the old banking houses of Baroda
city also had declined, partly owing to the cessation of the ptactice of
bankers lending to the state in anticipation of revenue.30 ·

In Surat, bankers had declined from the position of discounting

and cashing bills of exchange, and acting as deposit banks f~r small
savers, to that of having to invest their funds in money lending or, much
more rarely, in the few joint-stock companies that had sprung up:31 In
Broach, fifty years ago (1820), savings were to a large extent placed in
the hands of private bankers, who ,allowed interest at the rate of three
per cent on such deposits. Since that time the practice would seem to
have fallen into disuse. Even with the Bank of Bombay the amount
of deposits was small, while the credit of the native bankers had not
recovered from the shock of the failures that took place between 1864
and 1867.32 The Broach Gazetteeralso records how the operations of
the Bank of Bombay, which was subsidized by the interest-free deposit
of the treasury balances, had favoured the Europeans and Eurasians at
the expense of the Indian dealers in cotton, so that 'the greater part of
the cotton trade is now [1875] carried on by Europeans.and Eurasians,
only about one-eighth remaining in the hands of the:local capitalists.' 33
However, in Ahmedabad, and to a lesser extent, in Surat and Broach,
and even in the rural Kaira district, functional specialization among
bankers and financiers survived to a remarkable degree. ·
First of all, bankers were disdnguished from money-changers. Then
the bankers themselves were divided into several classes, the dearest
demarcation being perhaps observed in Ahmedabad:
26 Coloniolism and Indian Economy

At present, it may be said, that the first class banking firms of the district employ their
capital chiefly in loans, but also in buying and selling bills of exchange in insurance,
and in gambling. They also act as agents in the purchase of cotton for firms in
Bombay and elsewhere, and at times speculate in that article on their own account.
A few in Viramgam and Dholera make advances on cotton to large landholders,
and even keep agents, gumastas,to tour through the villages of their connection
to collect outstanding debts and obtain new constituents. The majority, however,
chiefly confine their loan transactions to a second class of bankers such as are to be
found in all the towns and many,of the larger villages, men who work beyond the
limits of their own capital and who, to money lending and a small exchange business,
add an export trade in produce for which their intimate business relations with the
agriculturalists afford especial facility. They advance money on cotton crops and at
the same time buy for forward delivery. Large sums are withdrawn by these persons,
when the Government assessments are fulling due, from the first-class banking
houses in Ahmedabad with which they have credit. Lowest of all in the::ladder of
professional moneylender is the village shopkeeper, who is generally a vania but
sometimes a Bohora, a Brahman, a Bhatia, a Luhana, or a Kanbi.' 34

Along with the functional specialization of bankers went the

generally thrifty habits of the rich people, and a low level of interest
rates at least for the more 'cre.di~orthy' class of borrowers. The rates
of interest may, of c~urse, have been pulled down by the closing ~f
opportunities of investmentli: the compilers of the Gazetteersvacillate
between attributing it to ~ low marginal return on investment and
0

to the supposed improvement in 'law and order' brought about by

British rule.
Owing to the contraction of former outlets for capital and the conservative
disinclination of old houses to turn thei~ money into new channels, a resident
merchant or banker of unblemished repute can raise a loan in the city of Ahmedabad
for a short period a~ four and sometimes as low as two per cent per annum. That
is the rate he would also allow for deposits. The second class banker or merchant
can obtain advance from one of the first class at from three to six per cent if he is a
known and approved client ... 35

As for rur:tl clients,

the most substantial of the rural classes borrow, not from their village shopkeeper,
but from the banker in the neighbouring town. From such clients no mongage
or even bond or security is ordinarily required. A sufficient guarantee. is to the
honourable position in his village which has been transmitted to him by generations
of ancestors. Small advances are merely entered in his current account like an
ordinary shop debt, and even if the suni. be l~rge, the only additional precaution is
to cast up ~e account and take an admisiion </the correctness of the balance upon
a receipt stamp. The average rate ofinterest is 71h per cent but occasionally it runs as
high as nine or as low as Sit percent. Tue·great mass ofKanbi cultivators and others
 Reflectionson Patternsof Regional Growth in India under British Rule 27

on a similar footing, being already encumbered with debt up to, though not, as a
rule, beyond their assets, are not considered so·perfectly trustworthy .... Generally it
may be said that this class can only obtain loans on,starnped bonds with or without
securities, but that they are left free to realize the produce of their fields as they
please. The rate of interest they pay varies from twelve to eighteen per cent exclusive
of a premium . . . . Finally we come to the lowest order of landholders, including
notoriously insolvent Kanbis and the great majority of Kolis, who fail to get more
favourable treatment, not only because of their almost invariable poverty, but
because of the stigma which still attaches to them as a caste. Such
persons at the opening of the cultivating season Oune-July), if the rains are
favorable, obtain grain for seed and subsistence, repayable when the crop is reaped
at an enhancement of twenty five to fifry, and in extreme cases even 100 per cent of
the quantity advanced.36

Thus we have ,crossed the whole terrain from the •gentle slopes of
credit relations among the upper income groups to the steep gradient
of extreme exploitation; the extreme is not really reached with the poor
peasants, but with the landless, who were not terribly indebted- since
nobody, except perhaps their employers, would lend to them.
Naturally too much should not be made of the capitalist relations
prevailing in the Gujarat towns and villages, certainly not relations
that are supposed to conform to the absurdly simple axiom of competi-
tive capitalism. Although credit relations were well-developed, capital
markets were grossly imperfect; although labour had become a com-
modity, the 'supplier' could not sell as much as he liked in any market
he liked. Various forms of debt bondage, and nearly servile relation-
ships, bound the landless labourers or artisans to traders, moneylenders,
and landlords. 37
With these qualifications out of the way, we can concentrate on some
of the more interesting features of the capitalist class. The functions of
banker, trader, and landlord were still sufficiently distinct for them,to
have group specialization. The fusion into an unholy exploitative trinity
burdening the cultivator was extremely incomplete, if the process had
begun at all. The wealthiest bankers were still powerful enough in many
regions to offer effective competition even to the state-backed Bank
of Bombay. Artisans, in many cases, were still considered sufficiently
creditworthy to be charged moderate rates of interest, and land certainly
was not the predominant asset of interest to the wealthy.38
The functional differentiation between the different classes of village
moneylenders, town sowcars,and rich bankers in Ahmedabad or Broach
was preserved during the period of Maratha rule by the severe restrictions
that were placed on the acquisition ofland by outsiders and by anybody
28 Colonialism and Indian Economy

at all without the consent of the village panchayat and the patil With
the imposition of British rule, the authority of the village panchayat was
gradually undermined, individual ownership of land became the norm
even when, formally, revenue assessments might be made on a collective
basis, and moneylenders or bankers found it much easier than before
to acquire land. The abolition of laws against usury and the gradual
disintegration of handicrafts in towns and villages hastened this process
of greater involvement of bankers and moneylenders with landownership
at various levels and the blurring of the distinction between the village
vania and the town sowcar.39
But thfa distinction dia survive to a greater extent in Gujarat than
in most other parts of India. This may be attributed to the greater
degree of development of capitalist strata in that region. In the next
section, we take a look at the land relations in different parts of India
in order to see whether a significant role can be attributed to them
in explaining the development of capitalist classes in different regions,
and ulti,mately, in explaining the differences in regional patterns of
economic growth.

Production Relations in Agriculture ,in Different•·

Regions of India and their Bearing bn the '
Dev~lopment of Capitalist Strata ·
The bearing of production relations in agriculture on capitalist (or
any other kind of) growth in India is a vast and complicated subject.
We need to know the relations of the state to the revenue-payers; the
relations of the revenue payers to other superior right-holders (if any)
and to ~ultivators exercising some ownership rights; the distribution of
ownership of land where such ownership is unambiguously determined;
the distribution of operational holdings ofland; the relations of owners
to tenants with various degrees of security of tenure; the conditions of
agricultural labourers and their relations to 1:heir employers or maliks.
We need to know the relations oflandlords, cultivating owners, tenants
with superior rights, and tenants-at-will, and agricultural or other kinds
oflabourers, bonded or free, to moneylenders, traders, and bankers. We
need to determine the proportions of the outputs of land and village
industries going to the different classes of people. We need to determine
the access·to information, markets, and cltannels of investment open
to classes with some investable surplus at rheir command and the
alternative rates of return to be obtained. ftom ownership of land, its
 Reflectionson Patternsof Regional Growth in India under British Rule 29

operation, moneylending, trading, and real capital formation, or any

combination of these activities. We have to know the relation between
agricultural development and industrial growth, both regionally and
over India as a whole.40 And we have to be constantly aware of the way
the colonial system and its changes affect the different components of
this network of relations.
Here what we shall do, in conformity with the perspective in the
rest of this essay, is to concentrate on the contrast between histories of
land tenure and revenue in eastern and western India. Hunter could
write as late as in 1881: 'As the land furnishes the main source of
Indian revenue, so the assessment of the land tax is the main work of
Indian administration.' 41 The obsession of the British with land revenue
settlements started with their conquest of Bengal. It was from the
proceeds of the plunder of Bengal that they derived the wherewithal for
the conquest of the rest oflndia, besides sending anywhere between£ 1.5
million and over £4.70 million annually abroad as the political booty in
the last quarter of the eighteenth century. 42 Lambert had already exposed
the pretence that this was simply a redirection of the tribute that had
been sent to Delhi. 43 The amount of the tribute was more than doubled
by the British and no part of it came back to stimulate internal trade or
economic activity. In achieving their ends, of course, the British turned
the whole system of land relations several times over: the Permanent
Settlement of Cornwallis was merely setting the seal of approval on a
system which promised in perpetuity a much higher level of revenue
than had ever been extracted by the Mughal emperors or the nawabs
of Bengal. By the haptam and pancham laws of 1799 and 1812, the
East India Company gave almost unlimited powers to the zamindars.
But since there was no restriction on the subleasing of the rights of
zamindars, intermediary rights between the cultivating peasantry and
the zamindars grew apace. By the Bengal tenancy laws of 1859 and 1885,
the hands of the so-called occupancy ryots (who might or might not be
actual cultivators or even supervisors of cultivation) were strengthened.
But the lot of the poor peasantry and the agricultural labourers was not
improved by such legislation.
The legal forms of land tenure arrangements in Gujarat were very
different. 44 The East India Company classifiedGujarat villages into three
classes, talukdari or landlord villages 'owned' by gi.rasiasor landlords,
sharehold villages where land was held jointly by bhagdars,narwadars,
or patidars, and peasant or 'simple' (senja)villages, where a co-sharing
community did not exist. In all the cases, the line ofleast resistance was
30 Colonialism and Indian Economy

adopted and older types of rights were respected as fur as practicable.

The all-consuming drive that the Company in Bengal displayed towards
raising land revenues at all costs, partly because of the need for finding
revenue to conquer other parts oflndia, no long(;r existed. This does not
mean that the government let go any opportunity of increasing revenue
on any pretext. As the land settlement chapters ofR.C. Dutt's Economic
History make abundantly clear, the drive was always towards more
revenue: the government recoiled only when this drive miscarried, and
total collection fell or a disastrous famine occurred. But this recoiling
was also a temporary affair.
Whatever the intentions of the government may have been in
preserving old forms of village management, whether in Gujarat or
in Madras, the insistence of the government on realizing revenue even
at the cost of depriving owners of their land, the increased power of
the moneylenders and traders over the peasantry, and the revocation
of ancient rights of pasture on communal or semi-communal land or
on waste land, resulted in the breakdown of communal authority in
the villages.45
- Sev~ral features continued, however,· to distinguish the ryotwari
11reasfrom·zamirrd~i areas. Sinc.e the state'had to realize revenues from
indivitlual. ·o«rners,.and·assessments hatl ,to be based on some principle
(however arbi'traril~it was applied in practice), cultivators generally pos-
sessed some record of rights so that intermediaries-could not aggrandize
themselves arbitrarily. In some native states such as Baroda, the cultiva-
tor was protected to a considerable extent against dispossession of land
or eviction for failure to repay a moneylender's debt. 46 Probably the
older structure•of.authority in Gujarat or the ryotwari areas of Madras
survived to a greater extent than in Bengal, although such authority was
now derived from connection with the central or provincial government
administration rather than with the hereditary or semi-hereditary head-
ship of a village or a clan.47
The rise of a rich..peasant class in some pockets at least of ryotwari
areas has probably something to do with the lack of a stratum of pure
rentiers lording it over them. Large parts of the ryotwari area became
subject also to legislation against transfer of land to non-agriculturists
and tended to limit the power of pure moneylenders over both landlords
and cultivators. 48 This also probably strengthened the position of rich
peasants and landlords vis-a-vis moneylenders. Some of the men from
a rich peasant background entered Indian industry at a later stage.
However, no direct connection can be established between the survival
 Reflectionson Patternsof Regional Growth in India under British Rule 31

and growth of the rich peasant class in a region and growth of large-
scale or even small-scale industry in that region. How much of a mark
such a class could make in modern industry depended on several factors:
the degree of dominance of the region by European businessmen, the
position of the Indian economy in the international capitalist-colonial
framework, the strength of competing indigenous capitalist groups in a
particular region, and the size of the internal market as determined by
the productivity of the land, the degree of colonial exploitation and the
degree of poverty or degradation of the lower income groups. While
it will not be possible here to gelineate the interconnections between
all these factors, we shall provide some examples to show the kinds of
influence we have in mind.
In both Gujarat and Madras, some people with a peasant background
entered the cotton mill industry. But in Gujarat this was ~ready
.happening in the third quarter of the nineteenth century, when Rao
Bahadur Becherdas Ambaidas, who was a Patel, set up· the second
cotton mill. By 1920, four out of 51 cotton mills in Ahmedabad were
owned by Patels.49 In the Kistna and Guntur districts in the north and
in Coimbatore in the south of Madras, by the First World War, rich
farmers who also often controlled local trade were wanting to invest in
industry. 50 But their entry was restricted to rice mills (which were partly
financed by the Bank of Madras), cotton gins and presses, and such other
small-scale industries. It was only in the 1930s that local businessmen,
among whom figured persons with backgrounds in farming, made an
entry into the cotton mill industry which 'was the major large-scale
industry of the region.
It is not unreasonable to suggest that this variance is due to the basic
difference between the timing and the intensity of colonial penetration
into the two regions of India and the degree of survival of e~lier
capitalist strata in the two regions. Some connection with trade and
markets and some command over capital were essential for entry into
modern industry: the later the date of entry, other things remaining
equal, the larger would be the degree of command over capital needed.
Since the British businessmen dominated the Madras economy to a
much greater extent than the Gujarat economy, the barriers against the
entry of native businessmen into large-scale industry would be greater.
Even within the Madras Presidency, Indian businessmen from the so-
called dry areas would enjoy a slight advantage over businessmen from
irrigated districts, for the latter were penetrated to a greater extent by
British businessmen with their concentration on exportable crops. 51 But
32 Colonialism and Indian Economy

this advantage would be partly counterbalanced by the lower base of

accumulation in the dry districts.
After we have analysed all the factors and weighed them properly it
may turn out that the history of European domination of the perma-
nently settled areas of Bengal is the crucial variable explaining the failure
of a peasant proprietor class to emerge strongly and to enter large-scale
business. Any surplus of the peasantry would be skimmed off by trad-
ers, moneylenders, and zamindars. The rich peasantry could not make
its entry into trade on a large scale in the nineteenth century because
the European businessmen were always there either to beat them off
or subordinate them. It had to be an external trading class, such as the
Marwaris, who could gradually creep up on the Europeans, beat them at
their game of vertical control of channels of trade, and challenge them
in modern industry.
But for this challenge to materialize, the position of the Indian
economy had to shift in the mesh of capitalist-colonial relations. I
Rave pointed out elsewliere52 'that over the period 1900-39, there were
'always' s8me 'gr~ups' of cap}\alisi:;
1
~ither ~ritiih or Indian, who had
'capital to invesl wneneve\ oppottupitiel f6r investment were opened
1
liip. X·sdutiny c:ifthe evidence pre'sentea·oy R.S.'Rungta'.53·leads to a
~imilar cohclusion for'much of the nineteenfh ce11iury,'particularly in
the case of eastern India before 1~30 ancl wes'tern'India after -1860 or
so. Taking only ode field of investment, the cotton mtll ihdustry, the
opportunities at different stages and in different regions, were presented
in the form of a residual internal market for cotton cloth or yarn (by
1870, such a market had disappeared in eastern India to a much greater
extent than in westernlndia or in the interior parts of southern India),
an external market opened up by relative movements of international
costs, or access to a new country which imperialist countries could not
entirely monopolize (as in the case of China) or, finally, in the granting
of 'tariff protectio'n.
Apart from the tiverall constraints imposed by the colonial regime,
there were the otlier ubiquitous features of the Indian economy in the
sh'ape of a universal degradation of small peasants, agricultural labourers,
and aitis~s. In southern India, there was widespread agrestic slavery or
serfdom at the time of British conquest. 54In eastern India, there was
agrestic serfdom or slavery, although on a small scale, in the beginning
of the nineteenth century when Buchanan Hamilton conducted his
surveys. In Gujarat, too, th'ere were agrestic serfs called ha/is in the
southern districts.55
 Reflectionson Patternsof Regional Growth in India under British Rule 33

The formal abolition of slavery by the British cannot be credited

with much improvement in the position of the labourers. A law of
1859 enacted in the interest of European tea planters, more or less
made employees indentured serfs of the masters. With the increase
in the power of the moneylender (who might be the employer), debt
bondage often replaced formal serfdom. In the traditional structure
of exploitation, there was often discrimination against particular
communities, particularly from tribal backgrounds: for instance, the
so-called kali paraj communities, such as the Bhils in Gujarat, were
typically charged higher rates of interest than the ujliparaj communities.
This discrimination survived at least until 1929-30. 56 In eastern India,
the process of de-industrialization and population growth threw literally
millions of artisans on to the mercy of the landlords, and various forms
of agrestic serfdom survived unabated. 57
In these forms of degradation, it is difficult to know how important
the relative roles played by tradition, illiteracy, structure ofland control,
and the threat of unemployment were. But I suspect that the last threat
both aggravated the dependence of formally free labourers on their
employers and emphasized the servile nature of bonded labour. In the
case of south Gujarat, there is some evidence that increased opportunities
of employment in the cities of Surat and Navsari after the end of the
nineteenth century and seasonal migration to the environs of Bombay
were partially responsible for the decline of the hali system.58
In Gujarat, in spite of the processes of de-industrialization, the arti-
san strata had survived to a greater extent up to the last quarter of the
nineteenth century. These provided a pool of skilled labour to the cotton
mills of Ahmedabad. Some of the handicraft processes, such as bleaching
or dyeing of clofh, were directly integrated with the cotton mill industry.
The linguistic homogeneity of the labour force among thems,elves and
with the owners and managers also contributed to the establishment
of industrial labour relations along capitalistic lines. Further, Spodek
has attributer! a special role to the traditional guild system in making
possible a situation in which real wages of mill workers in Ahmedabad
increased at a faster rate than in Calcutta from 1900 to 1939, and than
in Bombay after the First World War, without the workers actually
resorting to a strike. The traditional financing system of Ahmedabad,
including the practice of the public entrusting bankers with their funds
at low rates of interest, also served the Ahmedabad industry well.
By contrast, capital-labour relations in the more intensely colonized
parts oflndia were characterized by the degradation of the labour force to
34 Colonialism and Indian Economy

semi-servile status, with little prospect of increases in wages. There may

have been a period in the history of Bengal jute mills (in the last half of
the nineteenth century) when European owners had to woo labourers. 59
But in the twentieth century, the relations between European managers
and supervisors and Indian workers were strongly tinged with racialism:
the failure to appoint Indians in supervisory posts was often rationalized
by the claim that Indian workers would not respect a black or brown
supervisor.60 The working force was fragmented by the ability of the
British Managing Agency houses to draw labour from the poorest parts
of India, far from tea plantations, coal mines, or jute mills. This labour
force was again differentiated from the local population by linguistic,
and sometimes religious, barriers. Altogether colonialism perfected the
arrangements for keeping a subjugated people ~ divided as possible.
We have found it difficult enough to summarize the problems of
agricultural labour, insofar as they had an impact on production
relations, even as 'stylized' facts. It is practically impossible to attempt
such a summary in the case of the middle peasantry, because no
comprehensive work on the stratification of the landowning peasantry
is available. instead'! shall 1iere mention a trans- or supraregional factor
which affected both the·productivify of the land and the standards of
livi'.ngof the peasantry: this is the depletiorr of the livestock wealth of
the peasantry in relation to the total amounts of land cultivated and
in relation to the human population. This depletion in turn constricted
the internal market.
Under the British land tenure system, all land that a person claimed
as his own, and not ju~t the cultivated portion of it, became subject
to taxation by the state. The cultivators were forced to raise crops that
would enable them to pay rent in money and they could no longer afford
to treat pasture as an untaxed capital asset. Furthermore, the ordinary
cultivators were left with very little surplus to maintain their livestock
properly. Livestock formed both their major consumer durables and their
main capital goods (in the form of draught buffaloes and oxen). As far
back as 1875 the Deccan Riots Commission had noted: 'A consequence
of the payment of assessment by registered holdings instead ofby actual
cultivation is the discouragement of fallows. The ryot having nothing
to pay for his wastes c6tild well afford to let his land rest and cultivated
portions in rotation. During the early period of our administration,
the lands of this region [the Bombay Deccan] were largely devoted to
grazing purposes, and there was no direct Government demand upon
the wastes so used. The encouragement given to cultivation by the survey
 Reflections on Patternsof Regional Growth in India under British Rule 35

was accompanied by a discouragement to grazing, through the right of

pasture being made subject to purchase from Government. The supply
of manure from flocks and herds, the demand for which should have
increased with this increase in cultivation, diminished, and doubtless
with it must have diminished the fertility of the soil.' 61 The evidence
on this is not only inferential. There is direct evidence of decline in the
quality of the cattle in most parts oflndia and of a drastic decline in the
proportion of cattle to human beings. 62
There were certain additional features which were exaggerated, par-
ticularly in the Permanently Settled areas of eastern India, that tended
to lower the productivity of the peasant-cultivated land. Initially there
were many minor irrigation works in eastern India, which it was the
responsibility of the zamindars to maintain. As the superior government
lost all interest in the management of the land and as the zamindars were
stripped of most of their earlier functions (such as those of maintaining
a police force and administering justice in small local matters), the lat-
ter began to neglect their duties, particularly since they could coerce
the peasantry directly to pay their rent. After an attempt to maintain
these irrigation works through contractors, they were allowed to be
neglected in many places (the systems of share rents were maintained
in some places partly as a device to hold the landlords to their parts of
the bargain). 63 This neglect of irrigation works, starting from the begin-
ning of the Permanent Settlement, was going on into the twentieth
century. The irrigated area in Bihar and Orissa was declining even in
the twentieth century; the same thing probably happened also ·in the
western parts of Bengal proper. 64 We shall take up the other causes of
decline in agricultural productivity later on.
The Government of India and European businessmen, and along
with them, Indian zamindars, treated the peasant-cultivated land of
eastern India as a kind at exhaustible resource. Peasant agriculture with
traditional techniques had already reached a high level in most parts
of India; there were no obvious ways of raising productivity without
putting in a good deal of industrial and research inputs, in the form of
state-sponsored agricultural research, and chemical fertilizers. The only
type of agricultural investment the government was willing to execute
was large-scale irrigation works; until almost the end of the nineteenth
century such works had to be 'productive', that is, commercially profit-
able. Even then the government generally passed the unintended and
harmful side-effects of irrigation on to the defenceless peasantry. 65 In
any case, neither large-scale nor small-scale irrigation works were on the
36 Colonialism and Indian Economy

cards as far as eastern India was concerned. Instead, the change in the
traditional cropping pattern, decay of minor irrigation and flood control
works, swamps created partly by unplanned railway construction, and
soil erosion brought down the productivity of the land.
The government found that since its revenue did not depend directly
or indirectly on the prosperity of the peasantry in the Permanently
Settled areas, it was not interested in investing in these areas in any
form; not only irrigation works but also takkavi loans for agricultural
improvement were conspicuous by their scarcity or total absence.66 The
European planters and Indian landlords found that, given the structure
of exploitation, it was more profitable to control the land and let the
peasant carry out cultivation under some kind of metayage(bargadarz)
system, than to invest in land directly as a capitalist farmer.67
For all practical purposes, the landlords or businessmen of eastern
India became completely divorced from any interest in the improvement
of agricultural productivity or of the conditions of peasantry in their
region of operation. This would,again seem to be in contrast.with the
structure in western India, where at least as (¥ as the rural -cooperative
movement is concerned, businessmen and industrialists of the stature of
Vithaldas Thackersey and Lalubhai Samaldas (Mehta) took an active p;ur
iri founding and running the provincial·co-'Operative bank.68 However,
while this kind of enterprise may have helped in the growth of a rural
oligarchY'of substantial farmers, this in itself did not lead to a high
rate of growth,in agricultural output in western India, particularly in
Maharashtra; for while many administrators such as Keatinge·thought,
that the lack of 'capital' was the real bottleneck on agricultural growth
in western India, agronomists of the calibre ofVoelcker pointed out that
without the provision of controlled supply of water private investment
in agriculture could not be profitable. 69
The differences·in the social structures, patterns of domination,Alld
composition of economic activities as between eastern and western India
were significant enough to produce the differences in the degrees of
external exploitation that are displayed in Tables 2.1 and 2.2. It might
be supposed that the fact that the Indian zamindars took a larger share
of the land revenue in eastern India than the British government did in
western India would tilt the balance of burden of exploitation towards
western India. But this was massively counterbalanced by the ability
of British businessmen in eastern India to force larger export surpluses
out of the peasantry,7° and by the inability of the Indian businessmen
to penetrate the fields of external trade or industry until after the First
 Reflectionson Patternsof Regional Growth in India under British Rule 37

World War. Even after that date, the basically export-oriented nature
of the output of eastern India, combined with a massive presence of
foreign businessmen, continued to drain resources out of the country.
One effect of this can be seen in the export surplus figures for the 1930s:
unlike in most other countries of the world, where the Depression
coincided with large balance of payments deficits, India and particularly
eastern India and Madras, produced export surpluses which financed
a massive repatriation of British-owned capital. Much of this debt had
been incurred during and after the First World War in the interests of
defence of the British imperial system.
However significant the differences in the processes of formation
of capitalist classes in eastern and western India, they are not enough
to make any tall claims for industrial growth in western India, for the
colonial regime shaped the growth patterns of all regions in certain
fundamental ways. Out of all the possible tableaux that are conjured up
by the constellation of class forces in British Gujarat, for instance, the
colonial constraints ultimately allowed only one to surface: many of the
important bankers and traders emerged to form the core of a tightly knit
industrial bourgeois class in Ahmedabad (and Gujarat in general), either
directly as pioneers or in collaboration. But their growth was limited by
the low level of development of productive forces in agriculture, by the
low level of innovative ability built into the industrial organization, and
by the overall lack of dynamism of the home market.

Agricultural Growth in Madras, Punjab, and

the Rest of India and Lack of Articulation of
Agricultural and Industrial Growth
We have already indicated that the impact of capitalist colonialism was
adverse on most regions of India: under its impact all regions of India
were underdeveloped, but some more than others. After the destruction
of handicrafts in India, the stance of many spokesmen of the British
government was that they were promoting agricultural development
so as to fit India better into the pattern of international specialization
which sprang up in the wake of the Industri:il Revolution in Britain.
But in fact, practically the only instrument wielded by the government
for promotion of agricultural growth was the promotion of large-scale
irrigation works which were directly revenue-yielding. Its record in
the field of agricultural research was anything but brilliant. 71 The total
accumulated amount spent on all 'productive' irrigation works in
38 Colonialism and Indian Economy

British India up to 1938-9 was Rs 114 crores. This was less than the
accumulated export surpluses of India for even five years in the first
decade of the twentieth century. The annual expenditure on irrigation
was a minute fraction of what was spent on defence or on railways.
Naturally, if one or two provinces oflndia, such as Punjab or the Madras
Presidency, received substantial amounts for irrigation, the rest of India
went without any expenditure. Whatever the limitations of irrigation as
carried out on a large scale by the British, an assured supply of water was
a sine qaa non for agricultural growth. So we look at the same factors
of the relations between agricultural growth, industrial change, and
irrigation in the best-irrigated regions and in the rest oflndia.
Our comparisons and contrasts will, however, remain impressionistic
only since our information remains very sketchy. For the comparison in
respect of agricultural growth, we rely largely on Blyn's work, supple-
mented by Islam's and Mukherji's on Bengal. Blyn provides figures for
Bombay-Sind, which is a composite of the hinterlands of the ports of
Bombay and Karachi,,so for:our-purpose these figures are not directly
useful:!F-I,,ence, ,eveI1in the easel of tomparisons of agricultural develop-
rfiel'lt,we "'arelimited •to Bengal,•Madras, and Punjab.
There' fare similaritjes '~ well :n. important differences between the
rwo·regions•of•Pun'jab and Madras in respect of the characteristics we
are inter~ted'ln:>Punjab came under British rule relatively late in the
day, whereas parts of Madras had been occupied by the British even be-
fore they had conquered Bengal. Foreign trade, organized banking, and
much of the internal wholesale trade in both Punjab and Madras were
effectivelymonopolizefl by the British before the First World War. Both
Punjab and Madras had other traditional trading groups and handicraft
industries, but the handicrafts were probably better developed in at least
some,parts>of Madras,than in Punjab. The Madras trading groups, par-
ticularly_thf: Chettiars, haa overseas connections and were prominent
in the, trach: of Burtna; Indonesia;and Indo-China. 72 There were more
cotton mills in.Madras than in Punjab by 1939, but both were industri-
ally backward by the stand¥ds of Calcutta or Bombay.
The two prbvinces resembled each other in one important respect:
the}'\,,along' with' the United Provinces, witnessed the most intense
development of large-scale irrigation in British India. Madras already
had an extensive .network of irrigation based on the Cauvery (Kaveri),
going back at least a thousand years, and Punja!>had some inundation
canals. But the British improved and extended the Cauvery network
and created new irrigation systems based on the Godavari and the
 Reflectionson Patternsof Regional Growth in India under British Rule 39

Krishna rivers further north. In Punjab they created one of the most
extensive perennial irrigation systems in the world. In neither case can
the whole of the apparent addition to the irrigated area by the large-
scale government canals be regarded as a net addition to the effectively
irrigated acreage. For, apart from problems of water-logging and salinity
brought in by neglect of drainage requirements and the almost universal
practice of flow irrigation, the new canals often replaced older minor
irrigation works, such as tanks and wells in south India and inundation
canals in Punjab. Hence, one must be cautious in interpreting the pub~
lie outlay on irrigation works as an index of irrigation capacity created
by the government, and in interpreting the increase in the apparent
area commanded as a net addition to the effectively irrigated area. With
these caveats we present the figures in Table 2.4 to illustrate the relative
magnitudes of irrigation work carried out in Punjab, Madras, and the
United Provinces.

Table 2.4 Area Irrigated in Madras, Punjab, and che United Provinces
by Government Works, Annual Averages
(figu= in acres)
Madras Punjab United India
Provinces (excluding Burma)

1915-18 7,339,008 8,646,495 3,121,834 24,415,215

1918-21 7,276,257 9,273,009 3,501,848 25,305,835
1921-4 7,151,988 10,465,404 2,433,595 25,842,501
1924--7 7,178,457 10,349,121 2,678,178 25,962,751
1927-30 7,277,967 11,200,550 3,639,867 27,959,738
1930--3 7,484,466 10,995,258 3,805,205 28,052,645
1933-6 7,448,100 11;007,800 3,977,400 28,868,800
1936-9 7,396,100 12,195,800 4,769,200 31,648,500

Sources: Government of India (GOI), Public Works Department, Triennial Review of

Irrigation in India, 1918-21 (Calcutta, 1922); GOI, Department of Industries and
Labour, Triennial Reviews of Irrigation in India, 1921-4, 1924--7,and 1930--3 (Calcutta,
1925, 1928; and Delhi, 1935, respectively);and GOI, Department of Labour, Triennial
Review of Irrigation in India, 1936-9 (Delhi, 1942).

Further, Madras and Punjab both threw up substantial farmers. My

hunch is, however, that whereas in Punjab the fanners were throughout
dominated by trading castes in all the regions, in Madras the farmers
in some areas could control much of the trade themselves. But for a
successful entry into industry they had to become camp followers of the
big traders who emerged as industrialists in the 1930s.
40 Colonialism and Indian Economy

The figures in Table 2.4 show first that out of the total area irrigated
in India by government works, more than three-quarters were accounted
for by the three provinces of Punjab, Madras, and the United Provinces,
and more than three-fifths were accounted for by the two provinces
of Punjab and Madras. They also show that while the area irrigated
by government works in Madras had become stagnant from the First
World War onwards, it continued to increase in Punjab in the inter-
war period. The total capital expenditures made by the government on
'productive' irrigation works in the three provinces by the end of 1938-9
are as follows

(figuresin Rs)
Madras Punjab United India
Provinces (excluding Burma)
155,571,994 366,662,679 259,344,66 1,140,049,650

It is obvious that there is no one-to-one relationship between the

total areas irrigated and the total capital expenditures made (this would
remain true even if we deducted the figures for areas irrigated by the so-
called 'unproductive works; from the figures 1n Table 2.4). The irrigated
acre.agein,Maciras w~ cr,e~tedconsiderably more' cheaply' than either in
the United Provin~s or in Punjab, probably because Madras had started
with a mon; extensivf irrigation network, and partly, of course, because
the bulk of the Madras works was carried out in the nineteenth century
when costs were lower. The irrigation works of the United Provinces
seem to have been more 'expensive' than the average for India as a whole.
All these statements·are: of course, only approximate, and they have
to be qualified by detailed information on the true productivity of the
different irrigation systems.
Coming back to our specific problem-that of comparing patterns
and rates of growth of Madras and Punjab--it is interesting to see
how far the extension of irrigation works was reflected in the growth
in acreage and yields per acre of these provinces, as measured by Blyn
(Table 2.5). 73 Comparing the figures for Greater Punjab and Madras,
we find that while the extension of acreage was far higher in Greater
Punjab than in Madras, the growth in productivity per acre is far higher
in Madras than in Greater Punjab. But in Madras. most of the gain
in acreage and in productivity had been made over the first thirty-
year period with both the productivity per acre and acreage of
foodgrains registering a decline ,between the quin-quennium 1921-6
 Reflections on Patterns of Regional Growth in Indio under British Rule 4~

and the quin-quennium 1941-6. This was also the period when irrigated
acreage in Madras was expanding, especially in the areas which had
been prone to drought earlier on. 74 Furthermore, we notice that Greater
Punjab is very much of an exception among the regions as far as the rates
of growth of productivity and acreage of foodgrains between 1921-6 and
1941-6 are concerned: for British India as a whole, and for Greater Bengal,
Madras, and the United Provinces, the productivity per acre offoodgrains
declined; there was a small rise in the acreage under. foodgrains in
Madras, but declines in Greater Bengal, the United Provinces and
British India as a whole. But Greater Bengal differed again from all the
other regions included in Table 2.5 {but probably not from the Central
Provinces, which is not included in our Table) in that the decline in
acreage under foodgrains and in the productivity of foodgrains per acre
had been going on also over the first thirty-year period, whereas for
the others some gains at least had been registered for the earlier period,
which were often more than offset by the decline over the later twenty-
year period.
We shall pause here to look a little more closely at the record of
Greater Bengal in respect of agricultural growth. 75 It was suspected

Table 2.5 Percentage Change in Acreage and Yield per Acre in

Different Regions oflndia
Acreage Yield per acre
All Food- Non- All Food- Non-
crops grains food crops grains food
(1) (2) grains (1) (2) grains
A. Total change between 1891-5 and 1941-6
1. British India +16.27 +25.55 +19.84 +6.45 -7.3 +52.96
2. Greater Bengal -3.37 +0.79 -29.54 -12.85 -22.17 +54.55
3. Madras +16.45 +3.89 -t;82.95 +46.02 ,+30.35 +79.84
4. Greater Punjab* +51.69 +46.42 +94.38 +35.60 +19.24 +74.20
5. United Provinces +28.18 +27.93 +29.12 +2.62 -8.63 +29.32

B. Total change between 1921-6 and 1941-6

1. British India +5.54 +7.08 -.87 -1.45 -9.69 +25.24
2. Greater Bengal +4.87 +6.47 -9.71 -7.86 -12.96 +24.45
3. Madras +3.51 -1.66 +23.61 +.92 -4.99 +9.45
4. Greater Punjab* +7.25 +7.09 +8.48 +13.58 +4.91 +39.'64
5. United Provinces +5.00 +4.39 +7.41 -2.10 -14.47 +28.88
Source:Computed from Blyn (1966: Appendix Table 4C).
Note: *Greater Punjab includes Punjab and North-West Frontier Province.
42 Colonialism and Indian Economy

earlier, from qualitative evidence on the eastward shift of the rivers of

the' Gangetic delta, the extensive soil erosion through deforestation in
the Chotanagpur plateau of Bihar and Orissa, and other indications
that most of the decline in productivity of crops-particularly field-
crops-in Greater Bengal occurred in Bihar, Orissa, and the western
part of present West Bengal.76
Recent studies by Saugata Mukherji covering the period 1900-01
to 1920-1, and by M.M. Islam covering the period 1920---46, confirm
most of the earlier hunches and provide firm quantitative bases for the
qualitative hypotheses. 77 Mukherji analysed the trade flows, outputs,
and yields per acre in the four trade blocks of Bengal proper-the Dacca,
northern Bengal, western Bengal, and eastern Bengal blocks. He found
that yields per acre declined in all the blocks over the twenty-year peri0d,
except for the eastern Bengal block, consisting of 24-Parganas, eastern
Nadia, Jessore, Khulna, and Barisal and thus including the major part
of the 'active' delta of the Ganges. Islam found that the annual rate of
growth of all crops taken together for Bengal proper between 1920 and
1946 was 0,3 per cent per year; w~er~as the rate of growth for Greater
.Bengal.as estima,ted by Blyn wa.c;-0:2per cent. 78 ,

I( we assume that the total output of Bengal proper formed 60

per cent of the output of Greater Bengal, then we get the rate of
'change 'of output' of all •crops in Bihar and brissa from the following
.equ;ition:

100 -.2 = 60 X 1.003 + 40 (l+r),

or 99.8 = 60.18 + 40 (l+r),
where r, the annual rate of change of output of all crops in Bihar and
Orissa, turns out to be -.95 per cent per year. How this is divided between
the rate of change of acreage and the rate of change of productivity per
acre, of course, cannot be found until one knows one of the two rates.
If acreage rem~ned stagnant or declined slightly, then productivity per
acre would have declined a little less than 1 per cent per year: if acreage
increased by a significant percentage, then productivity per acre would
have declined even more drastically. 79
Whatever may be the final outcome of rigorous calculations of output
growth in the agriculture of eastern India, there is little doubt that
peasants in eastern India suffered a drastic decline in their real incomes
during the last fifty years of British rule. This conclusion follows from
the statistics of agricultural change quoted above and from the fact that
the population of Bengal, Bihar, and Orissa increased from about'77
 Reflectionson Patternsof Regional Growth in India under British Rule 43

million in 1901 to about 97.5 million in 1941, while the proportion of

population depending on agriculture did not decline. The conclusion is
reinforced when we remember that in Bengal proper a very significant
percentage of the rise in the yield per acre of non-foodgrains was
accounted for by the phenomenal rise in productivity per acre of tea,
which was entirely a plantation crop.
Table 2.6 reveals that there was a substantial fall in the acreage under
non-foodgrains in Greater Bengal in both the sub-periods 1891-6 to
1921-6 to 1921-6 to 1941-6 (compare columns 7 and 9), and that
tea accounted for a significant fraction of the measured growth in yield
per acre of crops other than foodgrains (although tea acreage formed
only about 1.2 per cent of acreage under crops other than foodgrains
to begin with, it rose to form more than 3.5 per cent of the acreage
under non-foodgrains, and its productivity rose much faster than that
of other crops). Furthermore, Table 2.6 also shows that the productivity
per acre of foodgrains in Greater Bengal fell in both the sub-periods.
The most important cash crop ,raised by peasants-jute-experienced a
mild growth in the area sown, but a decline in productivity in the last
sub-period.
Taking all these indicators together, it is safe to conclude that the last
fifty years of British rule were attended by a steady deterioration in the
peasant agriculture of eastern India, whose effects on industrial growth
were masked by the growing protectionism of the inter-war years and
by the general crisis in the primary sector during the late 1920s and
practically the whole of the 1930s. It was only after independence that
the full impact of the agricultural crisis was felt on industrial growth in
eastern India.
Going back to Punjab and Madras, we find in the agricultural
development of these provinces a contrast not only with Greater Bengal
but also with most parts of the rest oflndia. In both Madras and Punjab,
apart from execution oflarge-scale irrigation works, the government also
encouraged the use of modern or improved implements in agriculture.
In Madras, Alfred Chatterton, with the cooperation of the Public
Works Department (around 1903-04) tried to popularize the use of
oil-engines and pumps for the purposes of lift-irrigation; this work was
facilitated by government loans under the Land Improvements Act for
the purchase of oil-engines and pumps. It was soon accompanied by the
boring of wells with the help of tools and mechanisms maintained by the
Government of Madras. The Industries Department of the Government
of Madras helped also in the installation of rice mills. The Department
 Table 2.6 Acrea~e a'nd Yield of Crops in Greater Bengal
- Percentage change •Percc:ntagechange
between between
1891-2.co lp95-6 1921-2 to 1925,-6 1941 to 1945-6 1891-6 to 1941-6 1921-6,to ,1~41,-6

Acreage Yreld Acreage

- Ykld Acreage Yield Acreag~ '(ield Acreage, Yield
(thousand
acres)
per acre (thousand
acres)
. per acre (thousand
acres)
per acre (thousand
acres)
per acre (thousa11,d pei;acre
acres)
(1) (2) (3) (4)
,, (5) (6) (7) (8) (9) (10)
¥'
Greater Bengal
All crops 267,400 371.2 246,400 351.1 258,400 323.5 -3.37 -12.85 +4.87 -7.86
Foodgrains 227,000 353.7 214,900 316.3 228,800 275.3 +0.79 -22.17 +6.47 -12.96
Non-foodgrains 40,380 470.0 31,500 583.7 28,450 726.4 -29.54 +54.5 -9.71 +24.45
Tea 497 1,571.0 9,18. 2,127 1,024 3,638.0. +106.04 +131.57 +11.54 +71.04
2,?47 1 +41.62 +42.60 +18.09
Sugarcane 5,173 9,666.0
..
~
11,592.0 3,632 13,689 -29.79

British India '

J
Jute 10.211 4,885.0 .11,853' ,5,784.0 12,435 5,664.0 +21.78 +15.95 +4.91 -2.08

Source:Computed from Blyn, (1966: Appendix Tables 3A and 4C).

Notes: (a) The rupee values are at constant prices. .'...
(b) Blyn gives figures only for jute acreage and output for whole-of British India, and not separately for Greater Bengal. However, Greater Bengal
accounted for 80 to 90 per cent of the area uncle~J.ui:ein British India.

~
~
--a - ..
{-~
 Reflections on Patternsof Regional Growth in India under British Rule 45

of Agriculture also tried to push iron ploughs and iron cane mills as
part of the regular propaganda work. By the late 1920s, 1,600 to 1,800
iron ploughs were being sold in the Madras Presidency, which of course,
is not a large figure for a province with a population of more than 42
million in 1921.80
In Punjab, the governmental efforts towards the introduction of
improved machinery began in some earnest in 1907, when Mr Milligan,
the first Deputy Director of Agriculture, in collaboration with a firm
of agricultural implement manufactures in Scotland, evolved the Raja
(furrow-turning) plough, which became very popular and served as a
model for later improvements. The variety of more modern implements
introduced into Punjab was apparently greater than in Madras and in
other provinces of India: apart from Raja and Meston ploughs, reapers,
fodder-cutters, harrows (presumably British types), and cultivators were
also manufactured, often by local blacksmiths.
In 1924- 5, according to the statistics of the Agriculture Department,
832 furrow-turning ploughs (Raja ploughs and others), 1,234 imported
Meston ploughs, 3,263 locally manufactured Meston ploughs, four
reapers, 65 hoes, harrows and cultivators, 941 fodder-cutters and 3,549
miscellaneous implements (including 3,311 cane-crushers) were sold in
Punjab. In fact, it was by then 'becoming increasingly difficult to keep
in touch with the sales of modern implements that [were] finding their
way into the Province through various agencies and local manufacturers,
Therefore, it [was] probable that far more [had] been purchased of late
by farmers than the departmental records [showed]'.81
One can legitimately dispute that the use of modern, capital-intensive
implements in Punjab necessarily. indicated a higher potential for
agricultural growth than in other parts oflndia. But it certainly indicated
the existence of farmers with relatively large amounts of capital and land
at their command, and the emergence of capitalist.'farmers, though
capitalist relationsmay not have become general yet in the Punjab
countryside. In fact, some policies of the government strongly favoured
the emergence of relatively rich farmers. From the 1880s onwards, the
government planned canal colonies in the areas which were rendered
cultivable through the introduction of large-scale,·perennial irrigation.
In these colonies, plots of land with minimum sizes varying from 22Y2
to 271hacres were distributed to colonists (usually 'people of substance'
who wanted to move to better lands). By the beginning of the 1930s,
over a sixth (about 5Y2million acres) of the total cultivated area of
Punjab was in the canal colonies.82
46 Colonialism and Indian Economy

One other measure of the British government-the enactment of the

Punjab Land Alienation Act-was also meant to encourage the growth
of prosperous peasant farming and diminish the power of moneylenders;
but since the root of the problem lay in the inequality of distribution
of income and a fiscal system which demanded the regular payment
of a rent calculated in money, the place of professional moneylenders
was soon taken by 'agriculturist' moneylenders. This happened in both
the more prosperous western Punjab districts and in a district such as
Gurgaon, which had little irrigation but the advantage of administration
by F.L. Brayne, the civil servant turned missionary.83 However, along
with growth in irrigated acreage and area under cash crops in Punjab,
tenancy. also grew both in absolute and relative terms. Furthermore, in
many cases there was a shifi:from cash rents to share rents. 84
But in spite of counteracting forces, breeding usury, and impover-
ishment of the smaller peasantry, the growth in agri&:ulturaloutput in
Punjab and its concentration in the h,ands of relatjvely prosperous
farmers 9id stimulate tqe .growth of .a,.small-scale inc;l.ustryproducing
agricultural implements; in the 1920s artp1930s.85 ,

Some of.yiis w;as reflected-in the, comparatively,Jarge fraction ,(66

earrrers and dependants iJ;ievery;1000 of popujas;ipq),0£the Jabour force
engaged in industry (including small..:scale·-andcottage)ndustries) in
Punjab; this fraction was apparently greater than in 5eogal (25 in 1000),
and.Bombay (46 in 1000). Of coum;, the·initial complement of people
occupied ii:;ic;ottage industries prob;i.bly acco.¢lted' fQr the majority
of the industrial population. 86 But in 1930 the number of workers
~mployed in, the fa~tories of Punjab was 44,724 as against 381,349
ip Bombay and 4§0,349 in Bengal (the populations of {a) Punjab, (b)
Bombay {including Aden) and (c) Bengal in 1931 were {a) 23,581,000,
(b) 21,931,000 and {c) 50,114,000 respectively.87
This preponderance of small-scale enterprise in manufacturing
industry in Punjab continued even afi:er independence, when Punjab
was divided into West and East Punjab. But that story falls outside our
chosen pe.riod.
To, turn. pack to the problem of relative stagnation of agriculture
particularly peas,qn~agriculture in eastern India, we have stressed mainly
the agrarian:-,relations inhibiting real investment in land. The most
imp9rtant ;ingle item of capital formation in agriculture in the ·more
dynamic regions. 9.(P;,mj.,~band Madras was the extension of public
irrigation wor~. ,For varjous reasons, which we have discussed above,
 Reflectionson Patternsof Regional Growth in Indio under British Rule 47

the state found it unprofitable to invest in large-scale irrigation works

on a large scale in eastern India. It may also be speculated that in the
predominantly rain-fed agriculture of eastern India, large-scale irrigation
works w~th little control over fieldwise distribution of the flow of ware~,
on the pattern of Punjab and Sind, could not be terribly productive.
This may account for the predominance of unproductive works in Bihar
and Orissa when the construction of such works was permitted under
revised Government of India fiscal regulations. The 'unproductiveness'
of such works was, however, more a function of the kind of excessive
centralization practised by the colonial government than of any inherent
nature of the hydrological system. The inefficiency of the colonial
system in controlling water systems of monsoon agriculture in eastern
India is also revealed by the decay of the indigenous systems of minor
irrigation, drainage, and flood control. However, it must be emphasized
that formal freedom from colonialism does not in itself remove the basic
curse of the malady, which is the attempt to control micro-hydrological
systems by methods of remote control when such control is unsuitable.
The formal end of colonialism does not also terminate the factors that
deprive the peasant of both the means and the incentive to improve the
productivity of the soil.
It is obvious that some growth oflarge-scale industry in eastern India
or Bombay did not stimulate the growth of agriculture as a whole in
these regions.88 On the other side, growth of agricultural output as a
whole did not lead to any substantial growth of large-scale industry
in Punjab before independence. Thus the colonial economy imposed
a dual disjunction between the growth of agriculture and the growth
of industry. In this situation, with some exceptions, the industrial
entrepreneurs of note emerged neither from the ranks of large farmers
nor from the ranks of artisans, but from those of traders, who seized
upon various opportunities for import substitution and exploited them
up to the limit imposed by a rather stagnant home market. In some
ways, the easy mobility of trading capital as between different fields
of profitable investment was also translated into a mobility between
different regions of India. This interregional mobility of capital in
a situation of abundance of labour in most parts of India thwarted
the emergence of sub-economics in which agricultural and industrial
growth stimulated each other. 89 This also partly explains the failure of
the surplus-producing regions to act as nodes of cumulative industrial
growth in the perio? after 1939.
48 Colonialism and Indian Economy

Population Growth and Productivity Growth

In this essay, I have neglected that hardy perennial of conventional de-
velopment economics-the influence of population growth on changes
in output and productivity. The reasons are, first, that in general the
relations between population growth and output change have proved to
be much too complex for the skill of demographers and demographic
historians, 90 and secondly, that in the Indian context, the hypotheses
that are formulated on the basis of conventional economic theory and
aggregative data (including provisional data) turn out to be quite
unhelpful in explaining the facts. .
On an earlier occasion I had discussed the connection between popu-
lation growth and growth of yields per acre during the period 1901-41, 91
primarily concentrating on the hypothesis that an increase in the ratio
of rural population to land cultivated would lead to a rise in the amount
of labour applied to a given area of land, and thus an increased level
of productivity per acre. A crude analysis of the provincial population
changes in the relevant period failed to reveal any systematic relation
between growth in population and growth in productivity, but a crude
hypothesis of 'diminishing returns' following from population growth
w~ not confirmed either.
· The crucial hyp6thesis can be formulated as follows: Traditional
techniques ofprbductibn had reached their·highest level of development
in the ctiffereri.{parts o( India, 'and population growth could not in
faci: affect actual labour-intensity on land already cultivated. However,
population growth, by eating into the surplus availableto peasants, could
force them to effectively decumulate the capital applied to land, thus
leading to a fall in productivity per acre. A subsidiary factor working
in the same direction would be an increase of acreage under foodgrains,
thus lowering the effective quality of land under cereals and pulses and
decreasing the average productivity of foodgrains per acre. A full-scale
test of such a hypothesis is beyond the scope of this paper. We here
concentrate on a pair-wise comparison of population growth, changes in
acreage (total and under foodgrains), and productivity growth in Greater
Bengal, Greater Punjab, and Madras in the sub-periods 1891-1921 and
1921-46 (see Table 2.7). 92
A n;mgh comparison between the figures of Tables 2.5 and 2.7 fails
to reveal a one-to-one correspondence between the rates of population
growth and changes in acreage (total or under foodgrains only), or
between rates of population growth and rates of change in yield per
acre..In Greater Bengal, while population increased by about an eighth
 Reflectionson Patternsof Regional Growth in India under British Rule 49

between 1891 and 1921, acreage under foodgrains and total cultivated
acreage actually declined. Since acreage declined, no simple hypothesis
of too· many people working on the same land would explain the decline
in yield. It is possible to argue that acreage declined because some land
became submarginal through soil erosion, and other factors. But then
we come back to questions of exploitation of the peasantry, spoliation
of forests, protecting the land, silting up of rivers, of malarial swamps
created by unplanned railway extension, and so on. 93

Table 2.7 Total Growth of Population in Three Provinces

Figures in Percentage
1921 (between 1941 (between
1891 and 1921) 1921 and 1941)
Greater Bengal (cmpprising Bengal, 12.1 27.3
Bihar, and Orissa)
Greater Punjab (comprising Punjab and 11.8 37.1
North-West Frontier Province)
Madras 18.7 23.0
Sources:For comparisons between 1891 and 1921, Census oflndia, 1931, vol. I, India,
part II ImperialTablesby J.H. Hutton (Delhi, 1931), and for comparisons between 1921
and 1941, Census oflndia, 1941, vol. l,Jndia, part I, Tables by M.W.M. Yeatts (Delhi,
1943), pp. 6--4.
Notes:For Greater Bengal, the figures for the twO periods are not exactly comparable since
the areas covered were slightly different. Native states are excluded from the respective
provinces.

In fact, we can turn the hypothesis round and look at the influences
on population growth itself, and then look at the consequential effects
on acreage, taking the yield per acre to be determined by an overlap-
ping but not identical, set of influences. For instance, the population
in Greater Bengal increased very slow1y over the period 1900-21, and
acreage under foodgrains declined; population growth speeded up over
the period 1921-41, and acreage under foodgrains also increased. For
determining the influences on population growth, economic historians
such as Ira Klein and Elizabeth Whitcombe are beginning to look at data
on mobility, epidemics, frequency' of natural calamities, and so on. 94
These, along with more quantitatively specified work on the growth or
erosion of private or public capital stock in agriculture, and on changes
in techniques and crop patterns, should illuminate the interactions
between population growth and economic change in India: imperial-
ist abstractions on this subject are a definite stumbling block against
such work.
50 Colonialism and Indian Economy

Coming to pair-wise comparisons among the three regions, we

observe that during the period 1891-1921, Madras experienced the
highest rate of population growth, but the rates of growth of pro-
ductivity of foodgrains and of all crops together were also the highest
there. The positions of Madras and Punjab were reversed in the period
1921-46, when the rates of population growth, growth in crop acreage
and growth in yields per acre were the highest in Punjab. However, as
we have indicated earlier, the explanation for these changes is not to
be sought in terms of increase in man-land ratio on the basis of tradi-
tional techniques, but in terms of growth of public irrigation supporting
more private capital formation on land.
If naive hypotheses relating to population growth and productivity
growth perform so badly in the'field of agric~lture, there is no sensible
way of even formulating similar hypotheses relating regional population
growth to regional industrial growth.We conclude then that any attempt
at a rigorous explanation of differences in regional growth patterns must
take into account the production relations and the behaviour of the
colonial state apparatus in determining the levels of public and private
investment, and the disjunction or disarticulation of growth of industry
and agriculture created by the integration of the Indian economy in the
international colonial system of inter-dependence. This may be seen as
a tentative attempt at indicating; what factors are 'relevant in beginning
such an analysis.

Concluding Remarks
To repeat, this paper.has been a strictly exploratory enterprise. There are
some areas, such as the differential rates of growth oflarge-scale or small-
scaJeindustries, which we have hardly touched at all.We have attempted
to show that the determinants of growth are complex, but in spite of that
co,mplexity,.,sometentative concl4sions are possible, through a process
o.f elimination: Th~ supply-demand or saving-investment categories of
economists can be helpful in eliminating nonsensical formulations, but
'Ye h,ave to go behind these apparatuses and explore the processes of
formation and behaviour of classes under colonialism in order to get at a
really causal explanation. Such explanations will also destroy the purely
idealistic (and .very often, ra<::ialist)formulations, by showing up their
superpciality and a temporality. It is hoped that this essay can serve at
least as a fentative research programme in laying bare the differences and
similarities oft regional growth patterns in colonial, or even politically
independent, India.
 Reflectionson Patternsof Regional Growth in India under British Rule 51

.
Notes
1. See 'Introduction' in Sharma (1946). Even such a sophisticated book as Spate
(1957), employs a Weberian framework.
2. I explored this problem in Chapter 6 of my book, Bagchi (1972a, Indian
edition, 1975). This essay is partly a continuation of that work.
3. Blyn (1966).
4. See, for example, Sastry (1947) and M.M. Mehra (1955).
5. I have attempted to compute the gross domestic material product of Bengal in
1794 from H.T. Colebrooke's dara in Nineteenth CenturyStudies, 1973.
6. SeeC. Northcote Parkinson (1966 [1937): 86-7), and Furber (1951: Chapters
VI and VII).
7. G.A. Prinsep (1823) in the Appendix, gives figures of expons from Bengal,
Bombay, and Madras over the years 1813-14 to 1822-3. For Bombay and Madras,
the figures were not as complete or derailed as for Bengal; furthermore, we do not
know exactly how the discrepancies between custom house returns and true values
of exports and impons would affect comparability between the different regions.
But still, one can assert that merchandise expons from Bengal during this period
probably equalled or even exceeded the merchandise expons from Madras and
Bombay together. This situation does not seem to have changed until raw cotton
expons from Bombay and Madras boosted the export figures after the middle of the
century. For regional export figures between 1834-55 and 1849-50, see R.C. Dutt
(1963b[l906]: 114).
8. Colebrooke and Lambert (1795) especially, pp. 221-2.
9. Prinsep (1823: 63n).
10. Alfred Marshall, who may be considered the real begetter of English neo-
classicism, formulated the sophists' argument with unconscious humour, inciden-
tally anticipating the latter-day ideology of the 'human capital approach': 'England
exports to India a good many able young men: they do not enter in India's list of
impons; but it is claimed that they render to her serviceswhose value exceeds that of
her total payments to them. They return to England (if they come back at all) after
their best strength has been spent: they are unreckoned expons from England. But
that part of their incomes, which they have saved, is likely to come sooner or later in
the form of material goods which enter into her impons. On the other hand, India
counts these material goods among her expons to England: but of course she makes
no entry among her imports for the expensive young men who have been sent to
her.' A. Marshall (1923: 134-5).
11. For evidence of political and racial discrimination against Indians, see Bagchi
(1972a: Chapters 5 and 6).
12. For figures of imports of silver and silver coinage in India, see Gold and
Silver Commission, 1888, Final &port of the Royal CommissionAppointed to Inquire
into the &cent Changesin the Relative Valuesof the PreciousMetals;with Minutes of
Evidenceand Appendixes.Eyre and Spottiswoode for Her Majesty's Stationery Office,
pp. 4-6; and Reserve Bank oflndia (1954: 673 and 940).
13. For an incisive analysis of the issues, see De Cecco (1974: Chapter 4).
52 Colonialism and Indian Economy

14. On the China-Britain-India triangle, see Greenberg (1951); Singh (1966:

Chapter 3); and Chung (1973). For the later period, see Saul (1960: Chapter 14).
See also KN. Chaudhuri (1971).
IS. Encyclopaedia Britannica,ninth edition, 1881, vol. XII, p. 755.
16. We have neglected coastal shipping as a means of interregional trade; in my
full analysis, changes in the tonnage, network, and freight rate of coastal shipping
must be taken into account.
17. We have not tried to allocate imports or exports of treasure as between
regions, because Bombay was the bullion market of India, and Bombay imported
treasure on behalf of all the different regions.
18. For a short account of the cotton mill development in Bombay and
Ahmedabad between 1900 and 1939, see Bagchi (1972a: Chapter 7).
19. See Ibid.: Chapters 6 and 14.
20. Ibid.: Chapter 6.
21. See, for example, A. Guha (1970a) and (1970b). See also AV. Desai (1968)
and Kulke (1974).
22. See, for example, Gillion (1968). See also Pavlov (1964).
23. See Spodek (1965) and (1969).
24. On the domination of external trade and shipping by Gujarati merchants in
the early eighteenth century, see Prakash (1967)quoted in A. Guha (1969). See also
Little (1967); Sinha (1961) and (1970: Chapter 5).
25. Trade in foodgrains seems to have been an exception. See Colebrooke (1804:
169).
26. See Gokhale (1969: 187-97); Spodek (1969). The Gujarati Muslims had
come to dominate much of the trade of the Indian Ocean when Vasco da Gama
arrived in India, and Gujarati sailors and merchants remained indispensable to
European traders for a long time. See Boxer (197;3:45, 57, 73-4).
27. The British utilized Indian financiers for attaining political and commercial
hegemony in western India. See Nightingale (1970: Chapter 2).
28. A detailed analysis of the magnitude of the process of de-industrialization in
eastern India will be founcl'in Bagchi (1976a).
29. Gazetteersof the BombayPresidency(GBP), (1883: 109).
30. Ibid.: 125.
31.GBP(1877: 187).
32. Ibid.: 448.
33. Ibid.: 446.
34. GBP (1879b: 64); on functional specialization among Surat bankers and
moneylenders, see GBP (1887: 185-90); for Broach, see Ibid., for Kaira, see GBP
(1879a: 57-60).
35. GBP (1879b: p. 68).
36. Ibid.: 69-70.
37. See, for example, GBP (1879a: 58-60); GBP (1887: 185-202) for Surat and
(1887: 449-52) for Broach, especially p. 452 (on 'mortgage oflabour').
38. GBP (1879b: 68-9).
39. See Ravinder Kumar (1968: Chapters 1 and 5) for an analysis of the rela-
tionship of moneylenders to landholding in Maharashtra in 1818 and in 1875, at
 Reflectionson Patternsof Regional Growth in Indio under British Rule 53

the time of the Deccan riots. Qualitativdy, the same kind of analysis could apply
to Gujarat, although it is probable chat the process of disintegration of the older
structure proceeded much further in Maharashtra than in Gujarat.
40. I have essayed a very brief analysis of some of these problems in Bagchi
(1975b).
41. EncyclopaediaBritannica,ninth edition, vol. XII, p. 769.
42. IrfanHabib has estimated the 'drain' at chis higher figure in Habib
(1975a).
43. Colebrooke and Lambert (1795: 232, 218-19).
44. This very brief sketch is based on the following, Dun (1963a[l906]:
Chapters 20-1); Dutt (1963b[l906]: Book I, Chapter 4, Book II, Chapter 6, Book
III, Chapter 6); GBP (1879b: 126-33); Imperial Gazetteerof India;Provincial Series,
1909, BombayPresidency, vol. I, Calcutta: Superintendent of Government Printing,
pp. 259-60; Nanavati and Anjaria (1951: part II, Chapter 8); Fukazawa (1974);
and Breman (1974).
45. CE Dutt (1963a[l906]: 35).
It is a lamentable fact chat both these ancient institutions, the Village Community
and the Mirasi tenure, virtually ceased to exist before the first generation ofBritish
administrators had closed their labours in the conquered territories [belonging
earlier to the Marachas--A.B.]. A fixed resolve to make direct arrangements with
evety separate cultivator, and to impose upon him a tax to be raised at each
recurring settlement, necessarily weakened village communities and extinguished
Mirasi rights. See also Fuka7.awa (1974).
46. See GBP (1883: 127-8, 133).
47. On the character of social change in the ryotwari areas in Madras, see Frycken-
berg and Mulcherjee (1969); and Washbrook (1973).
48. See Nanavati and Anjaria (1951: part II, Chapter 12), for a summary of
anti-moneylender legislation enacted during the British period.
49. Spodek (1969: M-28).
50. See the evidence ofKopalle Hanumancha Rao, Headmaster, AndhraJacheya
Kalasala, Masulipatam in Indian Industrial Commission, Evidence,vol. III, Madras
and Bangalore,UK Parliamentary Papers, 1919, vol. XIX), op. 78-88; Washbrook
(1973: 162-9).
51. Washbrook in his otherwise incisive analysis in (Ibid.) seems to overlook
chis point.
52. Bagchi (1972a: Chapters 1-3 and 6). Besides the evidence cited in chis
book, the curious reader may also refer to Jacomb-Hood (1929: vol. II, 'History
of the Jute Mills Department'). In a letter dated 7 Septe:r.ber 1903, Ernest Cable,
who controlled Bird & Co. in its most prosperous and dynamic years, wrote, after
floating the Dalhousie Jute Co. with money 'from a small group' of wealthy friends
of Bird & Co. and their auditors and from Bird & Co. itself:
I could do the Clive Mill extension through the Allahabad Bank at once, but
to do so would be to break faith with the Alliance Bank who have taken up
the whole of the debentures and preference shares of the 'Dalhousie', and they
would strongly object to a rival bank offering similar stock on the market at
54 · Co1onialism and Indian Economy

the same time, therefore, the Clive extension should be done in London.
(Ibid.: 193)
Again, Ernest Cable's policy with regard to the capital component for the com-
panies he floated later was to have a preponderance of debentures and preference
shares with a small ordinary share issue, and it was these latter which both he, and
Messrs. Bird & Co., took up, on their own account, leaving the former for the banks
and the investment companies (Ibid.: 198). On the same page, Cable is quoted as
writing in 1903: 'In the prosperous times of a boom, we can, "off our own bat", float
a jute mill in three hours'. All this throws interesting light on the"supposed scarcity
of capital for industrial investment in India and on the supposed unwillingness of
banks to finance fixed capital. But, of course, you had to have the right connections
and your skin the right colour.
· 53. Rungta (1970) especially Chapters 2, 5, 7, and 9.
54. See Hjejle (1967).
55. Breman (1974: parts 1 and 2).
56. See the evidence of B.D. Patel, Deputy Director of Agriculture, Gujarat,
before the Banking Enquiry Committee, quoted by Choksey (1968: 105-06n).
57. See Cemusof India, 1901, 1902, vol. VI. Bengal Part I, p. 475; BengalDistrict
Gazetteers,1906, Gaya/pp. 153-4; and BengalDistrict Gazetteers,1909, Monghyr,
pp. 129-30.
58. Breman (1974: 75-6).
59. I am indebted for this point to Dipesh Chakravarty.
60. See the evidence included in De et al. (1912).
61. Extract from the Reportof the DeccanRiots Commission,1875, reprinted in
s.c.Ray (1915: 9).
62. Colebrooke in 1795 estimated that while the human population of Bengal
(including Bihar and Orissa) was about 30 million, the cattle population (includ-
ing buffaloes) was about 50 million. The total number of bovine stock (including
cattle, bufFaloes,and yaks) in Assam, Bihar, Orissa, and West Bengal together was
50 million in 1961 which was much less than half the population of the area in
that year. See Indian LivestockCemus, 1966, Summary Tables,1971. Data on cattle
population provided in the Gazetteersof the BombayPresidencyreferred to already,
generally indicate a declining or a slowly growing cattle population between the
1850s and 1870s. There is no reason to believe that the trends were very different
in other decades in these or in most other regions of India. Deterioration in the
milk-yielding capacity of cows is alleged in the authoritative Reporton theMarketing
of Milk in India and Burma (1941).
63. Fbr accounts of the deterioration of the indigenous system of irrigation, see
Bengal District Gazetteers,1906, Shahabad, Chapter 6; Bihar and OrissaDistrict
Gazetteers,1942, Shahabad;BengalDistrict Gazetteers,Monghyr,Chapter 5.
64. See Narain (1965: 128-31).
65. For a brilliant analysis of the government's irrigation policy and its effects
on the productivity of th~ land and on the social structure, see Whitcombe (1972:
Chapter2).
 Reflections on Patterns of Regional Growth in India under British Rule 55

66. European (and Indian) traders had a definite interest in keeping the peas-
antry weak financially. See evidence cited in Bagchi (1972a: 269).
67. On rural credit relations and debt bondage, see B.B. Chaudhuri (1969),
(1970a) and (1970b). The survey and settlement Reports of the indigo-growing
districts describe the methods by which indigo-growers were bound to the planters.
On European planters and businessmen as landlords, see the references cited in
Bagchi (1972a: 200 and 363). Our formulation is a partial answer to the puzzle
(about why the zamindarsdid so badly in terms of productive investment) posed by
Ray Chaudhuri (1969).
68. See Catanach (1970: 78-87). See also the evidence of Lalubhai Samaldas
Mehta in BombayProvincialBankingEnquiry Committee,1929-30, vol. III. Evidence,
1930, pp. 1-32.
69. See Keatinge (1913: 267-73); and comment by Dr J.A.Voelcker, p. 276.
70. Saugata Mukherji (1970: Chapter 2, Tables 2, 8) has shown that the British
jute mill owners and jute exponers got much the larger share of the surplus extracted
from the ultimate producer.
71. See Bagchi (1972a: Chapter 4).
72. Mackenzie (1954).
73. 'Greater Punjab' in Table 2.5 includes the Nonh-West Frontier Province,
but this will not affect the main points of the comparison.
74. The irrigated acreage in the Madras Presidency was about 6.35 million acres
in 1898. See Enr.yclopaedia Britannica, tenth edition, 1906, ankle on 'Irrigation',
p. 599.
75. In 1901 the population of Bengal, Bihar, and Orissa, roughly coterminous
with Blyn's 'Greater Bengal', was about 77 million out of an all-India population of
285 million. See Bagchi (1972a: 113, 118).
76. See Dharm Narain (1965: 128-32); Narain (1967); Blyn (1966: 138-41,
197-200); and Bagchi (1972a: 107-8), and the works cited therein.
77. Mukherji (1970: vol. I, Chapter 4); and M.M. Islam (1972: Chapters 1-3).
78. M.M. Islam (1972: Table 2.1).
79. It is interesting to note that our guess about the annual rate of change of
crop output in Bihar and Orissa is very nearly the same as Islam's estimate of the
annual rate of change of crop output (-1 per cent) in the Burdwan division, the
westernmost division of Bengal proper.
80. See the evidence of R.D. Anstead, Director of Agriculture, Madras, and of
M. Bazlullah Sahib Bahadur, Director oflndustries, Madras, in the Royal Commis-
sion on Agriculture in India, vol. III, 1927, Evidencetaken in theMadrasPresidenr.y,
London, pp. 48 and 446-7, respectively.
81. See the evidence of D. Milne, Director of Agriculture, Punjab, in Royal
Commission on Agriculture in India, vol. VIII, 1927, EvidenceTaken in the Punjab,
Calcuna, pp. 191-4 on p. 194.
82. Darling (1932: 119).
83. On the failure of the Land Alienation Act to effect its desired purpose, see
ThePunjabProvincialBankingEnquiry Committee,1929-30, vol. I, 1930, Calcuna:
56 Colonialism and Indian Economy

Government of India, Central Publications Branch. Note H: 'Punjab Village

Surveys: Borrowing and Debt', (pp. 221-34); and Barrier (1965: 144-5), especially
p. 161.
84. See Calvert (1936).
. 85. See Census oflndia, vol. XV, Punjab and Delhi, part I, Report,1923, Lahore,
pp. 78, 352-5; Census of India, 1931, vol. XVII, Punjab, part I, Report, 1933,
Lahore, pp. 41-2.
86. See Census oflndia, 1931, vol. I, part I, Report,1933, Delhi, p. 307.
87. Ibid.: 35; and Government oflndia, Commercial Intelligence and Statistics
Department, StatisticalAbstractsfor British Indiafrom 1922-23 to 1931-32, 1933,
Calcutta.pp. 812-13.
88. The growth of large-scale industry was preceded and accompanied by mas-
sive destruction of traditional handicrafts. For those regions for which reasonable
quantitative data are available, there is a dear trend of de-industrialization through-
out the nill$!teenthcentury. See Bagchi (1976a).
89. In the international context, Ricardo, the most effective advocate of free
trade among economists, had welcomed international immobility of capital as con-
ducive towards the prosperity of nation-states. 'Experience, however, shews [shows]
that the fancied or real insecurity of capital. when not under the immediate control
of its owner, together with the natural disinclination which every man has to quit
the country of his. birth and connexions, and intrust himself with all his habits
fixed1 tQ a strange government and new,Jaws,check the emigration of capital. These
feelings, which I should be sorry to see weakened, induce most men of property
to be;satisfied with a low rate of profits in their, own country, rather than seek
;i more advantageous employment for their wealth in foreign nations.' Ricardo
(1966: 136-7).
90. For a convenient selection of views on the relation between population
growth and economic change, see Drake (1969).
91. Bagchi (1972a: section 4.4).
92. There is a slight hiatus in the terminal dates for population and output
estimates: we use the populat1on of 1941, but output during the period 1941-6 as
estimated by Blyn.
93. Besides the references cited in note 76 above, on soil erosion see Gorrie
(1938) and (1953).
94. See Klein (1972, 1974), and Whitcombe (1972).
 3
De-industrialization in India
in the Nineteenth Century
Some Theoretical lmplications*1

T he 'naive' idea current among many of the older nationalists of

the Third Worlq. regarding the de-industrializing effect of Western
capitalism on their countries is confirmed by the analysis of occupa-
tional data relating to the state of Bihar in India. Similar evidence is also
available for Egypt and China. If we shift from models of what can
ideally happen under capitalism in its international aspects and look
at what ~ctually happened until, say, 1914, we find that it often had
opposite effects on the advanced capitalist countries and their overseas
offshoots, and on the colonial or semi-colonial economies of the Third
World in respect of industrial employment, investment in productive
assets, and distribution of income. Technological change, even today,
often carries highly disruptive and inegalitarian consequences for
Third World countries. In the light of such experience with market-
orientated growth, an alternative model is suggested in which develop-
ment proceeds by localized economic activities, distributing incomes
and opportunities equally and keeping out 'backw'ash' effects on other
regions. One major task of the economist in the future will be to explore
the inner logic of such a 'paradigm', suggest the means of implement-
ing the model, and ferret out possible contradictions. The Chinese (and
perhaps Vietnamese) experience may serve as an example or laboratory
for such explorations.
*Reprinted from, 1976, journal of DevelopmentStudies, 12(2), January, pp. 135-
64.
58 - Colonialism and Indian Economy

Introduction
Although the Indian nationalists of the nineteenth century counted
among the evil effects of British rule the complete or partial destruction
of many of the indigenous industries in lndia 2 neither the facts of the
case nor their import for economic development have been thoroughly
investigated yet. Either evocative descriptions or mere assertions serve as
surrogates for a systematic analysis of the existing data. 3 •
Daniel Thomer was one of the first scholars to investigate the alleged
phenomenon of the de-industrialization oflndia. 4 He implicitly defined
de-industrialization as a decline in the proportion of the working popu-
lation engaged in secondary industry, or a decline in the proportion
of the total population dependent on secondary industry, and we shall
also adopt this definition. (The two versions of the definition will yield
different results if the proportions of workers to the total population
behave differently over time in the case of secondary industry and in
the case of the economy as a whole). Thomer comes to the conclusion
that a meticulous analysis of the censusdata alone provides no ground
for believing that de-industrialization occurred in India over the period
1881-1931. But even such a careful ipvestigator suffers from precon-
ceptions regarding the process of de-industrialization. He says: 'There
a
s:anbe n9 di;put~ ~fth flat statement tp.at India's national handicrafts
havi: ~eclin.e~,,sadlyfrom .their pristin~ glory. This falling-off, however,
was not a phenomenon pec,uliar to India but a world-wide develop-
ment affecting different countries at different times. The ruin, sooner or
later, of the old-style craftsmen was as integral a part of the Industrial
Revolution as the coming of the factory system' .5
The statement ignores the difference in the impact of the Industrial
Revolution of the metropolitan and the colonial countries, pushes asiqe
questions of relative numbers of men and lengths of time involved in the
two cases, and assumes a peculiar doctrine of historical inevitability-a
doctrine it is fair to say, which has embedded itself in orthodox textb.oQks,
and in some so-called Marxist works-on economic development. ·In
Britain and Germany it 'Vas their own industrial revolution which led
to the destruction of handicrafts so that employi:nent was being created
in one branch of secondary industry while it was declining in anqther;
after a point, the rate of creation of employment in the ne,w branch
of seconJary industry was 'far higher than the rate of loss in the older
branch. By contrast, for a very long time, the impact of the industrial
revolution of other •countries on the employment and income irt .tlte
 De-industrialization in India in the Nineteenth Century 59

secondary industry of today's underdeveloped countries was almost

entirely destructive.
It is pertinent to quote here the remark of Sir John Hicks:
The English hand.loom weavers, who were displaced by textile machinery, could (in
the end and after much travail) find re-employment in England; but what of the
Indian weavers who were displaced by the same improvement? Even in their case
there would be a favourable effect, somewhere, but it might be anywhere; there
would be no particular reason why it should be in India. The poorer the country,
the narrower will be its range of opportunities; the more likely, therefore, it is that
it will suffer long-lasting damage, now and then, from a backlash of improvements
that have occurred elsewhere.6
This essay may be seen as partly an empirical commentary on, and
partly an attempt at the extension of, the arguments of Hicks and
Ricardo to the case of the underdeveloped countries.
Second, even in England, the first industrializing country of the world,
the initial effect of the technological r~olution, in the cotton spinning
industry (that is, until the powerloom was introduced on an extensive
scale) was to increasethe employment and wages of the handloom weavers.
Further, it took a long time for the woollen industry-the traditional
staple industry of England-to feel the impact of the technological
revolution in other spheres of the economy. The destructive effects of
the Industrial Revolution were considerably cushioned by absolute
growth in demand and by various protective devices fashioned in the
mercantile era (the protective devices in England were not effectively
dismantled after all until the middle of the 1840s, eighty long years after
the conventional dating of the beginning of the Industrial Revolution).
The use of protective measures was even more general in other European
countries than in England. By contrast, protective devices were used-
perversely-to further cripple the indigenous industries of India, and
practically no state help was rendered to the modern Indian ·industries
until the end of the First World War. 7 Third, in the British case the
most important carrier of the Industrial Revolution-the cotton mill
industry-was a relatively new growth, and the destructive effects
were not felt by a very large section of the industry. In the Indian case,
handloom weaving and hand-spinning constituted the largest traditional
industry and the numbers involved were enormous, both absolutely and
in relation to the rest of the population. Hence destructive effects on
this sector had a generally depres~ive effect on the rest of the economy.
Finally, the doctrine of the inevitability of the ruin of traditional
handicrafts was born out of the experience of capitalist expansion. In a
60 Colonialism and Indian Economy

situation in which other types of social order have come into existence,
and in which the largest socialist country of the world has adopted the
policy of 'walking on two legs', there is plenty of room for envisaging
other types of development which keep traditional industries alive until
sodety as a whole (and not just the private businessman-at home or
abroad) finds it rational to replace them by other methods or products.
It may be considered unfair to read so much into a single statement
of Thorner, but a very e~tended meaning is often given to even such
an innocuous-looking proposition, which is why I have analysed the
possible interpretations in such detail.
For the purposes of this essay, we have used a decline in the proportion
of the population dependent on secondary industry as evidence of de-
industrialization. Such a criterion is used in order to contrast it with
the requirements of a positive process of industrialization. Speaking in
terms of national economic arithmetic, capitalist industrialization up
to at least the phase of maturity is attended by three developments:
(a) an increase in the proportion of national income generated by the
secondary sector; (b) an increase in the proportion of the population
engaged in secondary industry; and' (c) a continual rise in the degree of
mechanization in industry (and to a lesser extent in agriculture). 8 For
the fulfilment of the third condition, it is not necessary that the degree
of mechanizatiop o(new techniques should rise all the time; it is only
necessary that the degree of megianization of new techniques be higher
than that o( old techniques on an average.While these changes are going
on, per capita income must be rising. Bi.itper capita income may rise
even without industrialization, so that a rise in income per head is only
a necessary condition for a positive process of industrialization and by
no means a sufficient one.
The mere lack of fulfilment of any of the three conditions can be
characterized as non-industrialization (if income per capita is also stag-
nant) or stagnation. The reversal of any of the first three conditions
over the long period is here characterized as de-industrialization. India
witnessed the reversal of the first two conditions for most of the nine-
teenth century.
In the next section, direct evidence bearing out the case for the re-
versal of the first condition is presented. What happens to the second
condition then depends on the productivity of the relatively declining
labour force engaged in secondary industry, and on the behaviour of
the income generated by the primary and tertiary sectors together. We
know that in India, until the end of the nineteenth century, the cottage
 De-industrialization in India in the Nineteenth Century 61

industrial production made up the bulk of the income generated by

the secondary sector.9 We know further that there were few innova-
tions of any importance within the cottage industries until the gradual
introduction of fly-shuttle looms starting about the end of the nine-
teenth century. 10 So with the major component of industrial production
declining and the growing component remaining very small in relation
to the total, there is a presumption that total industrial production could
have grown, if at all, only very slowly and may actually have registered a
declining trend, for most of the nineteenth century. If we assume then
that the income generated by the primary and tertiary sectors together
grew faster, or declined more slowly, than the income generated by the
secondary sector, the reversal of the second condition associated with
industrialization also follows. If it in fact turns out that the primary
and tertiary sectors grew even more slowly, or declined faster, than the
secondary sector (from the point of view of income generated), then
the second condition will not be reversed. But then we can legitimately
characterize the whole process as one of absolute economic retardation
with de-industrialization in the sense of a decline in the proportion of the
population dependent on secondary industry being one aspect-though
a very important aspect-of such a process of economic retardation or
stagnation.

The Proportion of the Population Dependent on

Secondary Industry in Gangetic Bihar in
1809-13 and in 1901
Until now most of the discussions on the extent or reality of de-
industrialization in India in the nineteenth century have been based
either on impressionistic observations or on aprioristic arguments
alone. However, there is a unique set of observations by Francis
Buchanan Hamilton, who was specifically commissioned by the East
India Company to make a survey of the resources of south India, and
then of a major portion of eastern and northeastern India. From the
data compiled by him, after making certain obvious adjustments, it
is possible to compute the total population dependent on secondary
industry and also the share of the population dependent on secondary
industry around the years 1809-13 in the tracts designated as Bhagalpur,
Patna-Gaya, Purnea, and Shahabad by Buchanan Hamilton, making up
what may be called Gangetic Bihar in modern India.11
In arriving at the total population dependent on industry, the
assumption was made chat spinners of cotton or silk yarn supported
62 Colonialism and Indian Economy

only themselves (since their earnings per head were low) whereas other
artisans working full time supported normal-sized families (of five).
Table 3.1 summarizes the results of the computations.

Table 3.1 Population Dependent on Secondary Industry in

Gangetic Bihar around 1809-13
District Number of Number of Total Percentage of
spinners industrial population industrial
workers or dependent on to total
artisans other secondary population
than spinners industry
.
Patna-Gaya 330,396 65,031 655,551 19.5
Bhagalpur 168,975 23,403 ,286,0~0 14.2
Purniya 287,000 60,172 587,860 20.2
Shahabad 20.2' !"l
159,500 25,557 287,285'
':fotal 945,871 174,163 1,816,776 18.6

Source:Buchanan (Hamilton) F'.,1809-1813, StatisticalTables/orReportson Bhagalpur,

'Patnaand"Gaya(Bihar)Purneaand Shahabad.London: India Office Library, Mss. Eur:
G.14, 15, 17, l8, l9,and20.

:•·,W~t-tlf~190L~ atllOther benchmark date to compare·with the

sJt~atiQD
.~t the beginning of the twentieth century. It. was a census
}'..~,and th~c~s~. ;".asmethodologicallf as sound as an Jpdfan census
~er w~. 12 Bui:r:lri arriving at· the total numbd of
P:?f!e ?ependent
o.n industry, I deducted from the number of p.eople'deperfJent on the
provision of food, drink, and stimulants, the nurriber:ofJ>Uresellers, and
from the population depeni;il!nton. ,the making and selling of cloth, the
number of piece-good~ sellsr~~£orJpeir occupations obviously belonged
to the tertiary sector, But sr;:Jler~
of many other goods are still included
in the category of seconc,la!}'industry and to that extent, the figures
for populatiop dep~ndent on.secondary industry in 1901 are likely to
be inflated. We have chosen the districts of Patna, Gaya, Shahabad,
~fonghyr, Bhagalpur, and Purnea as corresponding most closely to the
tracts included in Table 3.1. Any slight discrepancies between the two
regi9ns would not matter since there are no reasons to believe that the
relevant tendencies in the contiguous tracts were widely dissimilar.
Comparing Tables 3.1 and 3.2, it can be seen that there was a drastic
fall in the percentage of population dependent on secondary industry
between around 1809,-13 and 1901. In fact, the percentage at the later
date was less than half of what it had been at the earlier date. If we
take absolute numbers, it turns out that while the total population was
 De-industrialization in India· in the Nineteenth Century 63

larger in 1901 (the total population in the tracts included in Table 3.1
was 9.7 million), the absolutenumber of the population dependent on
industry had come down by almost 50 per cent between the two dates.
The major component of this decline was, of course, the decline in the
largest traditional industry, the textile industry. It had declined not only
absolutely and in relation to the primary and tertiary sectors together
but also in relation to other types of secondary industry: whereas around
1809-13 the percentage of the population dependent on cotton weaving
and spinning to the total industrial population in Gangetic Bihar
had been 62.3, by 1901, the percentage of population dependent on
spinning of cotton yarn, the weaving, sizing, and so on, of cotton cloth
to the total industrial population had come down to 15.1.

Table 3.2 Population Dependent on Secondary Industry in 1901

Districts Total Industrial Percentage of
population population industrial to
total population

Patna 1,624,985 179,695 11.1

Gaya 2,059,933 187,016 9.1
Shahabad 1,962,696 228,051 11.6
Monghyr 2,068,804 155,439 7.5
Bhagalpur 2,088,953 115,618 5.5
Purnea 1,874.794 121,933 6.5
Total 11,680,165 987,752_ 8.5

Source:Census, 1902, (Census, 1901b) Censusof India, Pacts I, II, and III, Reportand
Tables,Calcutta: Superintendent, Government Printing.

These quantitative results ·are supported by qualitative accounts

contained in the StatisticalAccounts of the Bengal District published in
the 1870s and in the Gazetteersof the districts concerned, which were
published in the first decade of the twentieth century. 13 In the districts
of Patna, Gaya, Purnea, Shahabad, and Monghyr, we meet very similar
stories of a decline in cotton and silk manufacture. The manufacture
of certain coarser varieties of doth catering to the needs of the poorest
people survived. The condition of weavers deteriorated very greatly both
absolutely and in relation to other skilled workers. Most of the displaced
were probably absorbed in agriculture, but vast numbers migrated
towards Calcutta and the industrial centres on the Hooghly in search
of employment. · ·
There is a continuity between the stories told by the StatisticalAccounts
and the District Gazetteers:what had already been a well-established
64 Colonialism and Indian Economy

trend towards decline in the 1870s had been consummated by virtual

extinction by the beginning of the twentieth century. This was true,
for example, for the hand-made paper industry and, again, for bidriware
in Purnea.
Thus there is reason to believe that the results obtained from a
comparison of the data on employment in secondary industry in
Buchanan Hamilton's time and in 1901 are not freaks but refle·ctcertain
deep-seated processes of change-processes that we have characterized
as de-industrialization.

De-industrialization in the All-India Context

To what extent was the de-industrialization a phenomenon peculiar to
central Bihar?Were there any special reasons favouring the concentration
of traditional industry there in the first place, so that de-industrialization
occurred in an exaggerated form? Were the effects of the death of the old
industry in respect of employment more than made up by the growth
of modern industry?
To begin with we shall answer the first two questions. It has been
claimed that the degree of concentration of traditional industry was
unusually high in the districts south of the Ganges because a large
number of Muslim nobles with an essentially urban culture settled there
during the disturbed years off.the eighteenth century. It must be noted,
however, that (a) the Gangetic Bihar districts in Buchanan Hamilton's
survey also included Purnea, which- lies wholly north of the Ganges;
and (b) that Buchanan Hamilton's observations came fully fifty years
after the effective displacement of the Indian rulers by the British: thus
the degree of de-industrialization as measured between 1809 and 1901
was additional to rather than the immediate result of the elimination or
impoverishment of traditional patrons of luxury manufactures through
the coming of British rule. Turning to another possible reason for the
concentration of manufactures in Gangetic Bihar, we note that this area
was also not a major seat of manufacture for export. It was situated too
far inland, and although the East India Company had a 'factory' in
Patna, its 'investments' in (purchases of) local manufactures formed only
a small fraction of both the total doth 'investments' of the company and
of the total output of the districts themselves. Thus it cannot be claimed
that the de-industrialization was merely a decline from a development
which had been specially stimulated by the activities of the. European
merchants themselves in buying Indian doth for export to& other
countries. Hence the major part of the de-industrialization, must ,be
 De-industrialization in India in the Nineteenth Century 65

attributed to the displacement of traditional manufacturers as suppliers

of consumption goods to the internal Indian market. This makes the
case of the Gangetic Bihar perhaps typical of the major cotton goods
manufacturing districts of India.
Turning to the question of whether the growth of modern industry
resulted in providing employment in lieu of traditional industries, we
notice first that within the Gangeti.c Bihar districts, in l 9Q1, only at
Jamalpur in the Monghyr district was there a railway workshop which
could be termed a modern large-scale manufacturing establishment in
any sense at all. But the employment generated there was totally inad-
equate even to make up for the loss of employment in the traditional
industry of the Monghyr district, let alone the traditional industries of
the other districts of Gangetic Bihar.14
As far as other parts of India were concerned, by 1900 some modern
industry had grown up around Calcutta and Bombay: but even if we
include mines and plantations along with factories, in 1901 the total
employment in 'modern enterprise' would not exceed one million. The
annual addition to this total was generally inadequate to absorb even
the growth in the labour force of India. On the other side, agriculture
proved to be a diminishingly profitable activity in much of eastern
India. 15 This was revealed at the source in a tremendous pressure for
migration in the districts surveyed, and in a practically unlimited supply
of labour for jute mills, coal mines, and even tea plantations. Thus, for
many workers who could neither ply their old trades nor make a living
out of agricultural labour, nor find employment in the distant factories,
mines, or plantations, the process of de-industrialization must have been·
a process of pure immiserization. 16
What was the situation in the other parts of eastern India, and in
other parts of India as a whole? For eastern India, excluding Assam
(Bengal, until the creation of the province of Bihar and Orissa) the
phenomenon of de-industrialization must have been a pretty general
one for at least the first fifty years of the period we are studying. (The
first jute niill did not come up until 1855 and the growth of jute mills
was quite slow until the 1870s). The East India Company had come
to monopolize the·export trade in cotton piece-goods, but b-etween
1813 and 1830, 'Bengal piece-goods practically disappeared from the
investment list (of the Eastlndia Company). Private trade followed the
same trend' .17 N .K. Sinha estimated that taking cotton weavers, cotton
growers, spinners, dressers, embroiderers, and so on, together, one
million people of Bengal (including Bihar and Orissa) were thrown out
66 Colonialism and lnd)an Economy

of employment by 1828.' 8 In the light of our computations for tlie

districts of Gangetic Bihar, this appears to be rather a low estimate in
fact. Sinha provides a Table of centres of production and procurement
of cotton piece-goods with the respective values of the output procured
there in 1793. 19 From that Table we find that Patna (the chief city of
Gangetic, and in fact, of the whole of Bihar) accounted for current
Rs 414,287 and Benares for current Rs 448,866 out of the total
'investment' of current Rs 6,553,753. Thus these western centres of
Bengal accounted for at most 12 per cent of the total cloth export on
the East India Company's account. Assuming that Patna alone was the
centre of collection for the Gangetic Bihar districts and that production
for export formed roughly the same proportion of total output
everywhere, and the extent of the fall of cloth export provides a rough
index of the degree of de-industrialization, then the fall in employment
in traditional industry for Bengal as a whole was about sixteen times that
for the districts of Gangetic Bihar. But, of course, the exact extent of
the estimated fall by 1828 would depend on how the total displacement
from traditional industries was distributed over the major part of the
nineteenth century.
The. disproportion between the employment creation iti Britain and
the destruction of employment in 1:he rest of the'world is shciWhby the
fact that while in Bengal aione, as early as 1828, at least amillion persons
employed in cotton 'trades lost their jobs, the total number of cotton
workers of every kind together in Britain in 1851 was 527,000. 20 And in
1851, Britain was indisputably th<: leading industrial nation, and may
have alone accounted for something like half of the cotton textile
production of the countries for which there is data available.21 It is this
kind of global balance as well as adjustments within the underdeveloped
countries that I want to draw attention to in this essay.
The results obtained for these districts ofBihar cannot, of course, be
generalized for the whole of India without similarly intensive enquiries
for each tra\:t ,taken separately. We are not equally fortunate in respect
of usable data for other parts. But extensive data can be culled from
other surveys by Buchanan Hamilton and from the proceedings of the
Government of India whose officials collected enormous quantities of
statistics and other types of data in the course of their routine work.
These data can be pieced together to provide at least a general picture
of the state of employment and wages of weavers, spinners, and other
artisans in different parts of India on different dates of the nineteenth
century.
 De-industrialization in India in the Nineteenth Century 67

To illustrate this last point, I now cite some data on the North-
Western Provinces (the United Provinces of Agra and Oudh in the later
British period and the U ttar Pradesh of today). In the early 1860s at the
time of the American Civil War, the Bengal Chamber of Commerce
complained to the Government of India that the demand for English
cotton goods in the North-Western Provinces had fallen off and that
this was due to the revival of handloom-weaving. The government
had an intensive enquiry instituted into the facts of the case and their
probable causes in every district and the results of these enquiries were
published. 22 The Secretary to the Sudder Board of Revenue summarized
the most important finding in the following words:

First, then, it may be stated decidedly that the diminished demand for English
cotton has not been caused by increased Native manufacture. With few exceptions,
there has been nowhere any such increase. On the contrary, there has, speaking
generally, been a marked and distressing contraction oflocal manufacture. This ... is
less observable in the western districts, where perhaps from a sixth to a fourth of
the looms in the cities and towns (though not in the outlying villages) have stopped
working. But in the eastern districts the trade has altogether decayed, and within
two or three years the falling-off is shown to have reached a third, and in some
districts, a half of the looms; and even of the remainder a large portion is only
worked occasionally. The weavers have be-taken themselves to agricultural or other
menial labour, to menial service, emigration to the Mauritius and elsewhere, and
even to begging.23

In most cases, the published extracts from the officers' reports

contain only comparisons for the years 1860 to 1863, and as such it is
not possible either to form an idea of what went before 1860 or what
came after 1863--4 or thereabouts. But from the nature of the
damage caused to weavers-loss of capital for the purchase of cotton,
abandonment of looms, loss of usual trade connections-it is not
unreasonable to infer that part of the loss of employment by weavers
and spinners was permanent. In fact, the further spread of railways
probably accentuated that alipect of the de-industrialization process,
for even in the case of some of the western districts which contained
several thousand looms each in 1860, the official Accountsof the North
WesternProvinces,24 written barely thirteen or fourteen years later, record
contemptuously that the districts contained very few industries worth
mentioning.
Some, however, of the reports made at the time of the 'slackness of
demand for European goods' enquiry specificallycompared the situation
in the 1860s with earlier years.25 After recording a large increase in the
68 Colonialism and Indian Economy

percentage of people wearing Manchester cloth over a period of twenty-

five years, Colonel Baird Smith comments: 'I am inclined to believe that
less than one-third of the field open to its operations (i.e., to Manchester
trade) has as yet been taken possession of; and I am confident that, when
the comparative plenty of ordinary seasons is restored, and the march
of internal improvement can be resumed, there lies before the trade a
growth as steady and perhaps even more rapid than it has previously
known' .26 Colonel Baird Smith's prediction came to be largely true, and
the import of English cotton piece-goods into India increased steadily
until the beginning of the First World War, when India was importing
3,104 million yards of cloth from the UK. 27
There is little doubt whatsoever that the number of cotton spinners
declined drastically all over India. 28 and as we have seen above, cotton
spinners far outnumbered the cotton weavers in the traditional industry,
and whatever evidence exists points to either stagnation or decline in
the numbers of handloom weavers at least until the last decade of the
nineteenth century. The· overall effect on employment in rural areas
cannot be judged in aggregate terms: the impression of excessivepressure
on the land by the end of the nineteenth century is widespread among
government officials in many parts of India. One index of a gradually
worsening employment situation would be a downward trend in real
wages. Where part of the wage was paid in kind, it is difficult to assess
the trend of real wage without knowing both the trend of the cost of
living index and the way in which ~e real part of the wage was changing.
Where wages could not be reduced any further, all the pressure would
take the form of open or hidden unemployment, and the real wage
would show no trend. But again, there are some indications that in
pars of India real wages fell over much of the nineteenth century. Thus
the compiler of the first District Gazetteerof the Bareilly district in the
then North-Western Provinces noted that while the wages of various
classes of workers (such as field labourers, herdsmen, tailors, masons,
and others) were very nearly the same as they were in 1826, prices had
risen substantially between the two dates.29
Turning now to another kind of evidence, we find that whereas
at the time of Buchanan Hamilton's survey, weavers belonged to the
aristocracy of artisans, by the end of the century, in many areas of
Bengal, Bihar, and the United Provinces, their wages were even lower
than those of the agricultural labourers. 30 (Economic distress had often
converted many a master artisan into a mere wage-earner working fo~ a
merchant). Although this evidence admittedly relates to sectional wage
 De-industrialization in India in the Nineteenth Century 69

movements, on the basis of plausible assumptions one can conclude that

the downward drift of the wages of weavers reflected a persistent gap
between the supply of and demand for hand-weaving labour.
There may have been some areas in India, such as much of the Deccan,
which were partly protected against the erosion of the indigenous
hand-weaving industry by: (a) their relative inaccessibility at the time
when coarse cloth predominated in the Manchester exports and, the
indigenous handlooms producing coarse cloth would have been most
vulnerable; (b) their relative lack of exportable products which would
otherwise have created strong trade channels bearing cotton piece-
goods up from the ports; and (c) their lack of 'westernization' which
kept the upper classes also attached to Indian modes of clothing. 31 But
such areas did not account for the maior part of cloth consumption:
in 1900-01, out of a total Indian consumption of about 2,830 million
yards of cloth, net imports accounted for fully 1,875 million yards. 32
Easy communications seem to have been the greatest friend of foreign
cloth--even in Kathiawar, which is associated with the survival of a
strong mercantile conservatism, but is easily accessible from the sea. As
early as 1842, Captain Le Grand Jacob, political agent of Kathiawar,
wrote 'that the local arts and manufactures had been early annihilated by
the united power of English capital and steam machinery'. The compiler
of the Gazetteer(published 1884) continued: 'Since 1842 these forces
have been still more actively at work' .33
Thus the fragmentary evidence does suggest the working of a general
process of de-industrialization in India over much of the nineteenth
century, caused mainly by the decline of the traditional cotton weaving
and spinning but not confined to such decline. Pending further enquiry,
it is useful to see whether this is a peculiarly Indian phenomenon or
whether analogous experience is recorded in the history of other under-
developed countries; and, if ·so, '}'hat lessons this would have for our
understanding of the process of what Kuznets has called 'modern
economic growth'. 34

Technological Changes in the Nineteenth Century

Viewed from t~e Underdeveloped Cquntries
Although it is now generally agreed that some of the 'backwash effects'
(to use a phrase popularized by Gunnar Myrdal) of the industrialization
of advanced capitalist countries may have retarded the industrialization
of the underdeveloped countries of today, there is no general agreement
either about the extent of this .retardation or on the implications of such
70 Colonialism and Indian Economy

retardation for growth of incomes. Connected with such divergence

of views (some of which are only vaguely articulated and are therefore
difficult to pin down) about the interaction between advanced and
underdeveloped countries, there are also disagreements about the nature
of the development process. The conventional picture is best summa-
rized in the Clark-Fisher scheme of the pattern of industrialization, 35
economic development proceeds from a situation where a very large
part (say between 60 and 80 per cent or even more) of the population is
dependent on agriculture towards a situation in which the agricultural
population has fallen to, say, 20 per cent or even less of the total. There
is now a general recognition that many underdeveloped countries may
be in a situation where the perspective in the foreseeable future is only
a very slow change or no change at all in the proportion of population
dependent on agriculture. 36 But apart from economists of a radical or
Marxist persuasion, very few investigators have been prepared to accept
that the Industrial Revolution in the advanced capitalist countries may
have meant systematic de-industrialization of large regions of the world,
which may, in fact, account for the majority of the population of the
underdeveloped countries and, very nearly the majority of the popula-
tion of the world as a whole.
However, there does exist some work by economists and economic
historians that points in this direction. Albert Feuerwerker has argued in
a recent paper that in China betweern87I-80 and 1901-10, while the
output of handlooms increased, the yarn spun by handicraft methods
drastically declined.37 He estimates that while the increase in handloom
output may have meant an fhcrease of 200,000 man-years per year
employed, the decline inyarn output meant a fall in employment by two
million man-years per year.38 In Burma, the Philippines, and Thailand
rural industry also gave way on a large scale to production for exports-
mainly of food-under the impact of colonialism and expanding world
39
trade in the nineteenth century. Egypt under Mohammed Ali presents
a dramatic example of an attempt at industrialization through deliberate
state patronage of industry an~ deliberate de-industrialization under the
pressure of Western powers, particularly Britain, 'in forcing free trade
on her. More generally, ertforcemt!nt of the Anglo-Turkish Commercial
Convention of 1838 led to,a massive destruction of handicrafts through-
out the Ottoman Empire, and tthe diversion of the employed popula-
tion to agriculture. Of course, handicrafts in the Ottoman Empire had
begun to suffer already under t:Qeimpact of competition of European
manufactures during and after the ·en&ofthe Napoleonic Wars. 40
 De-industrialization in India in the Nineteenth Century 71

Thus although the quantitat~ve structure for the world as a whole is

still to be built up, a long phase in the history of the major countries
of Asia (excluding Japan, the USSR, or the Middle East) of a process
of de-industrialization (as defined in the beginning of this paper) can
be sketched in outline. This process was not compensated for by the
simultaneous rise of modern manufacturing industry offering an equal
amount of employment. The theoretical possibiliry of a fall in employ-
ment as a result of the introduction of more capital-intensive technology
has been realized at least since the time of David Ricardo41 and Hicks
has revitalized this possibility through his recent writing. 42 But neither
its global nature nor its possible significance in changing the develop-
ment perspective of the underdeveloped countries of today has been
even considered by the vast majority of economists.
To be more specific, I have argued elsewhere43-largely on the basis of
the work on capital flows and international migration done by Kuznets,
Thomas, Easterlin, Williamson, Deane and Coie, and Imlah-but partly
also on the basis of some rough computations of the magnitude of the
capital outflows from India over the nineteenth cenrury=-that in the
century and a half before 1914, the movement of capital and labour
was essentially a one-way traffic. Real capital moved mainly from the
colonial or semi-colonial economies oflndia, Indonesia, China, and most
economies of Africa and Latin America to the metropolitan countries
of Europe and hence to the 'new' colonies, settled mainly by migrants
from Europe, and European labour moved to take advantage of the
economic opportunities opened up through the investment of capital
in virgin (or, in areas populated by American Indians, not-so-virgin)
land. The new technology enabled the European nations to use the new
capital more fruitfully than the colonial and semi-colonial countries
could have done. But the process of mopping-up of that capital destroyed
many traditional technological complexes it. the underdeveloped
countries of today, without bringing in new industrial technologies
on an adequate scale.
The mechanisms of transfer of surplus can be broken down into
several components. There was firstly the straightforward political device,
which took the form of charging to the coloniei,the 'costs' of conquering
them and keeping them under subjugation. It also generally meant the
exclusion of all 'natives' from the superior administrative posts. Then
there was interest on the public debt floated by the colonial governments.
Along with it went the profit made on public utilities financed by
private capitalists. Then there were the profits made on the mines and
72 Colonialism and Indian Economy

processing industries and plantations selling their products mainly to

the advanced capitalist countries. (The cultivation of opium in British
India for sale to China was an exception). Finally there were the profits
made on the sales of mass manufactures of the metropolitan countries
to the colonies, which generally expanded simply by taking over new
territories or displacing yet another branch of traditional manufacture.
The 'expansion' of the market in the fast-growing European-settled:areas
and in the non-European colonies have very different meanings, and the
problem of finding markets for manufactured products can be seen as
only part of the problem of transferring surpluses from underdeveloped
to advanced capitalist economies. Looking at the world economy as
a whole, one can say that a significant part of the 'saving' (generally
involuntary) of the colonies was invested overseas.44
Similarly, many economists just assume that the process of 'modern-
ization' would take place along a smoothly ,curving frontier of produc-
tion opportunities without any permanent loss to the invaded economies
of the Third World. Even those economists who did not start with• a
m:.odassicalbias towards the assumption of continuous full employment
ap.clSIJldQthtransition to any new equalizers generated by changes in
data,.assu):ned;t:hat·a surplus existed in the countries of the Third W odd
which'.couldahe tapped without.any loss to anybody and with, in fact,
a~tre~nqou~·gain., to ,the indigenous people through the opening of
the~e~countrjes'tp .the.expancjing trade drive of the Europeans}~ It was
nut realized·that.the surplus- had generally to be created by destroying
the earlier economic struCJ:ure,which often included a large amount of
artisan production for the market, and that this de~truction w~ noti
automatically compensated.
When the creation of markets overseas for the manufactures of
Europe led to a contraction in employment and incomes of ihe artisans
in the underdeveloped countries, the losses in employment suffered by.
the latter were not fi,illycompensated by the gains made in the advanced_
countries either. The artisans in underdeveloped countries p.a'd been
working with techniques which were. much less mechapize'd:-than-'tpe
techniques tliat came to be used in the advanced ccmntries,~~o,arguipg
in a rough and ready.fashion, if a given arnount·of investabl<;reso,u'r~e~
had to be transferred from the underdeveloped to the advab<;ecJ 'cbunt.ries:
then the gain in employment wquld be mucli smaller 'than thp Ms.~·
that.led to the release of those resources in the firwplace: .fp fa~t, ·the'
purely technological unemployment (assuming the'same Jeve1of effecpve,
demand in the situation before and after the change} was ·probably
 De-industrialization in Indio in the Nineteenth Century 73

aggravated by a fall in total effective demand. This may well have lasted
in underdeveloped countries such as India until the expansion of trade in
primary commodities i:n the 1870s: even then, we must remember, the
expansion was in quantities rather than in prices. The general problem
of depression in prices of primary products was aggravated in the case of
India·and China by the demonetization of silver.
The above sketch is still a conjecture in parts; but it is still a
concrete, and to my mind, plausible, alternative to the Panglossian
syllogism which works as follows: It is possibleto think of a sequence
in which technological change in the advanced countries leads to a
smooth transition in underdeveloped countries characterized by full
employment throughout, but with the gradual adoption of superior
techniques both in agriculture and industry, and an attendant shift of
the working population towards agriculture (in order to exploit the
new comparative advantage thrown up by the changes in the advanced
capitalist countries) and therefore, this is what happened in the case of
-the underdeveloped countries. 46 In such a syllogism there is no place
for such questions as, where did the capital for employing the workers
in underdeveloped countries displaced by technological change come
from? Who actually carried out the needed investment? How long did
the adjustment process take? In the absence of a government with a fully
fledged planning apparatus, who ensured that there was no un~ecessary
deflation of effective demand and that investment in the needed
directions and quantities at the right times was carried out? But these
are precisely the questions that must be raised both for understanding
actual processes of history and for moving towards a•socially acceptable
solution of the employment problem in today's underdeveloped world.
It can easily be seen that we are suggesting that although Ricardo
and Hicks have considered some aspects of technological change, they
are not the aspects that interest us most. Among the economists of the
nineteenth century, Marx was aware of both the effective demand and
the labour reallocation aspects of technological change; furthermore, he
explicitly mentioned the international repercussions of the introduction
of modern machinery into industry. 47 It woul\f, however, be easier for
me here to try to bring out the differences between the Ricardo-Hicks
framework and the problems I have in mind than to develop a fully
articulated model of technological change for a group ofinterdependent
economies along Marxian lines.
First, in the Ricardian case, the root of the problem is an increase in
the degree of mechanization in the sense of a rise in the proportion of
74 Colonialism and Indian Economy

fixed to working capital (the latter is supposed to consist mainly of wages)

and the failure of the rate of actual saving (=ex ante saving=investment)
to rise sufficiently to compensate for the fall in employment in the
consumer goods industries. In the case we have been considering, the
problem arises because of technological changes occurring abroad and
causing a drastic fall in the prices of the basic manufactures of the
country. Whether the technical change occurring abroad also involves a
rise in the degree of mechanization is not very important, except when
we consider problems of the import of the more mechanized technology
into the underdeveloped country.
Associated with the assumption that planned savings are invested and
the problem is essentially one of inadequacy of saving rather than of
incentive for investment, there is the assumption, in the Ricardo-Hicks
model, that a fall in the incomes of the wage-earners in the consumer
goods industry in the wake of technological change does not lead to
any contraction in the market for consumer goods. 48 Whether this
assumption was really valid in the case of the British home demand
for British consumer goods, say around 1830, has ..not,been, as far as I
know, rigorously tested. Certainly, many of the economists of the utili-
tarian school-particularly those, of whom J.S. ,Mill was the outstand-
ing example, who were influencecl by E.G: Wakefield-thought that
colonies served an extremely useful purpose in postponing the decline
of• profitabiliry of. investment and improving the working conditions
and employment prospects of the British working class.49 In any case,
because of the simultaneous development of other modern industries
(and railways) and because of the fact that cotton textiles never occu-
pied the dominating position among the manufacturing industries of
Britain that they did (together with silk textiles) among the traditional
industries of India, the Ricardian assumption could be maintained as a
first approximation without arousing total incredulity. 50 In the Indian
case, a drastic decline in cotton manufactures could not be treated as a
marginal change and since the decline of cotton manufactures involved
interests other than those of the artisans (such as the local producers of
raw cotton, and traders and merchants in cotton and cotton goods) the
income effects of such a change cannot be ignored.
Finally, in the case of India and other Third World countries, the
technological change could not simply be taken as a factor complicating
a transition to a predetermined equilibrium, with the distribution
of employment between different sectors remaining more or less
unchanged in the new position. The Third W odd countries did not
 De-industrialization in India in the Nineteenth Century 75

have any machine-making industry nor did their governments have

any programme for developing such industries within the country. So
no new skills or capacity in machine-making replaced the skills and
the capacity for building the traditional capital goods. The merchant
or trading class which might have gone in for in. estment in the new
types of machinery and which might have exerted political pressure for
changing government policy had either dwindled greatly in power or
numbers as a ,resultof the operations of the European rulers and traders
(the East India Company and private European traders in India) or
had not developed sufficiently at the time when these economies were
exposed to penetration by European machine-made goods. (Ironically
enough, the monopoly of trade organized by Mohammed Ali in Egypt
had also the effect of thwarting the growth of a capitalist class; thus
when de-industrialization came, no internal resistance was offered to
the process). So there was not much pressure on the state apparatus
to fill any gaps in information, coordination, or investment except in
areas where the interests of European businessmen were directly or
indirectly involved, and there was hardly any pressure to counteract or
cushion the consequences of destruction of traditional handicrafts. In
this situation, there was no obvious stopping point before the nearly
complete elimination of major branches of traditional industries, and
the new 'normal' pattern of activities of the economy came to acquire a
completely different character. The absence of conscious action by the
State also made the re-employment of the displaced workers a needlessly
long-drawn-out process, and rendered the average income of a cultivator
much lower and much more precarious than could be justified even on
the basis of a crude doctrine of comparative advantage. I shall return to
this point a little later.
Let me nbte here that even if the Ricardo-Hicks approach neglects
the problems of effective demand ancl incentives, for, and agents
of, necessary investment, it does have the advantage of making our
attention rivet on what happens to employment as a direct result of
technological change. This is in contrast with the usual neoclassical
approach, which tends to ask much too refined questions before even
the crude facts of the case have been established. For example, take the
question of improvement in consumer 'welfare' as a result of cheapening
of goods made by machines or by new techniques in general. Before
such questions can be answered in the aggregate, surely some estimate
must be formed of the total money income and the total employment
level before and after the change. And that in its turn must involve
76 Colonialism and Indian Economy

questions of balance between output flows and expenditure flows, and

over a longer period, the amount and the pattern of investment in the
economy. Only after such broad questions have been answered can we
ask questions involving the slope of the demand curve or the elasticity
of demand for the commodity which has become cheaper as a result
of technological change. In fact, as is well known, price elasticities
are notoriously difficult to measure, even when some agreement has
been reached about the specification of the model for estimating the
demand functions. In the Indian case, for example, Meghnad Desai,
after examining the usual a priori arguments about the elasticity of
demand for cotton cloth,in the nineteenth ce'h'tury in conjunction with
the available.data tm doth iinpott~·ancf theft pittes,:condcicleci: ' ... it
,is.,difficult to "S:1.7.'ftmch"af>tmnhe''el:t}tkity'bfthe' ddtlalfcl curve for
cotton cloth in Irttlia,~':In fact;ilie' el.tl:ticit}"ofthe "d~milid"'Cl.ir*'isa
fuhctidtt'of the elastic:iryofthe"domestic stlpply curve and nbt the"'other
way rdund'_5l~Jna way,, our argttment·centres precisely on the necessity
of lo<5kingat the· parameters other than price on· which the demand
curve·depends and at the total bahmce of income and expenditure which
determines the levels of demand ctinres for indivitlua,ls.lh other contexts,
econometriciarts ha'9'eno red the relative irfsignifi~nce of price ~lasticities
in compariso'h with total income (expehditure). in 'e,tplairiing demand
for ccfnsumer goock 52 1£..thc:analysisstart:dtOm"die itriSllpposition that
cheapening of cotton cloth led to large intrase iri'thi::!"dctua/ real income
of consumers tn.:i:he Third World, then it'reaily is begging the basic
qilestion: Even ihotal purchases of cloth could be shown to have gone
up much".m6re than the increase in population and income per head
coald '!3.ccountfor~ reasonable sbcial welfare judgements would have to
be based on judgements about changes in the distribution of incomes.
There is considerable evidence that in India at least the poorer people
stuck to the products oflocal handlooms much longer than the rich did.
This evidence would have to be accommodated in any comprehensive
explanation or judgement.
Apart from measurement of improvements in consumer welfare,
neoclassical theorists (and others) are also likely to raise questions about
increases in real income resulting from reallocation of resources in favour
of agriculture. If the technological change occurring abroad leads to the
shift of the artisans from the making of cotton goods to the production
of agricultural commodities, will that not lead to an improvement
in the productive capacity "Ofthe economy? Let us assume heroically
that resources had earlier on been allocated so as to achieve roughly
 De-industrialization in India in the Nineteenth Century 77

Pareto-efficient distribution of economic activities (an assumption

which is no more and no less absurd about India in 1815 than about
India in 1855). Let us further assume that prices of agricultural goods
do not change, there is no augmentation of the productive capital stock
in agriculture either through investment or through technical progress,
and that the quality of the new land opened up is on an average worse
than that of the land already cultivated; then the physical output per
head of the new cultivators will be lower than average. If an average
artisan 'was as well off as an average cultivator before the change, then
the position of an artisan newly employed in agriculture will deteriorate,
except insofar as he gains through a cheapening of some of the consumer
goods he buys. Since at that stage of development in India there ,,,.;ereno
intermediate industrial inputs into agriculture, there is no question of a
gain through the cheapening of such inputs.
However, even with existing techniques the massive transfer of
artisans from textiles to agriculture in India, say in the 1820s and
1830s, would require a massive investment effort. There was certainly
no governmental planning for this at the time. What -I suspect hap-
pened was that landlords were able to get the displaced artisans or new
entrants into the labour force to clear land largely at the expense of their
own work, and then use their control of rights over land to depress the
effective earnings of the actual cultivators very greatly. By the time the
export boom in agricultural commodities started in earnest as a result
of the construction of railways and of the Suez Canal and expansion
in world trade, much of the process of de-industrialization had already
been completed, The Government of India began to invest massively
in irrigation works only from the 1860s onwards. That investment too
was largely localized in a part of northwestern India and a small part of
southern India, and did not add substantially to the irrigated acreage per
head of the cultivating population. Furthermore, there was little invest-
ment in research into new types of seeds, new techniques of cultivation,
or in the spread of fertilizers. Actual shifts in production patterns on a
large scale generally involve massive investment if such shifts are to actu-
ally improve the productive efficiency of the economy: the neoclassical
parable of movements along a given production frontier obscures rather
than illuminates the process by which transition is achieved.
For the particular tract of northern India for which I have analysed
the occupational data at the beginning and the end of the nineteenth
century, there is plenty of evidence that agriculture did not experience
much public investment in the nineteenth century; that on the contrary,
78 Colonialism and Indian Economy

traditional systems of irrigation and drainage with decentralized control

decayed as a result of the particular type ofland tenure system introduced
by the British, and that agricultural productivity per acre (and a fortiori,
with an increase in the total population and in the population dependent
on agriculture, per cultivator)tended to decline at least from the last part
of the nineteenth century onwards.53 There is also plenty of evidence
that traditional handloom workers had to migrate to other parts oflndia,
mostly to mines, plantations, and factory areas, in search of work. 54 But,
of course, a secure judgement on welfare gains and losses cannot be
passed without more intensive work on the facts of the case.

Conclusions and Implications for Development Theory

At the risk of some repetition I shall try to summarize my discussion and
draw out the general relevance of nineteenth-century experience in the
field of technical change and employment in the following paragraphs.
First, quite a part of the adjustments to technological change in the
advanced capitalist countries took.place overseas and, therefore, tended
to remain hidden from the view of most economists. One major 'frontier'
for both the digestion of the essentially labour-~aving technological
changes and the creation of markets' for the ,industries using the new
techniques was provided by the Third World countries.
Second, these processes and't>ther ma!-ketand non-market processes
set into operation ·by ·formal atid informal,enipil'es had the result of
transferring investable surp1usesfrom Third Wb"rlcl countries to Western
Europe ·ana its offshoots ,overseas. This made the transition easier in
Western Europe but much more difficult in underdeveloped countries.
The technological changes and other effects of colonial economic
regimes in the Third World countries may or may not have led to
contraction in the potential income and saving of these countries. But
the absorption of the displaced workers in agriculture, in old industries
with new techniques, or in new industries would have required massive
investment; and there was neither a government nor a business class
willing and able to carry out that investment. The neoclassical habit of
picturing reallocation of resources after technological chan~e as costless
movements along the old production frontier or a ·d~w· production
frontier (for many underdeveloped countries the ffontier stayed 'put
where it was, because of lack of information or orgartizatlon; e'Xceptthat
a part of it simply became unviable owing to foreign cothpetition) die\
hard, and conceals this simple point. The physically massive irrigation
works of Egypt and India have obscured the smallne§'s'of the total
 De-industrialization in India in the Nineteenth Century 79

agricultural investment in relation to the incomes or the populations of

the Third World countries as a group.
Furthermore, the processes we are concerned with may have set into
operation certain changes in income distribution, which probably had
opposite tendencies in the advanced and in the underdeveloped coun-
tries. Labour-saving technical change, under competitive conditions, or
more generally, wherever workers' organizations are not strong, will
tend to depress real wages of labour and depress the share of wages in
value added·. An increased degree of urbanization with an increase in
the share of industries with below average share of wages in value-added
might have the same effect. It has been recently argued that the condi-
tion of European workers was ameliorated through their migration to
empty lands (this also had beneficial effects on the workers remaining
at home). 55 In most Asian countries, there simply was not much land to
colonize. Most of the migration of workers from India to other coun-
tries in the nineteenth century took place under the indenture system,
and the wages of such workers remained very low. (It has been argued
that such immigration in fact led to a worsening of the condition of
free peasants in the Caribbean, and thus of the general distribution of
income). Within India itself, when de-industrialization drove labour-
ers to seek their living in agriculture, they faced a highly imperfect
market, the most important complementary asset, land, being already
concentrated in the hands of landlords (contrast the situation in the
USA, Australia, or New Zealand). So it is very likely that whereas the
distribution of incomes in advanced capitalist countries tended to grow
better 56 in the Third World countries they tended to grow worse. 57 In
addition to the effect of slow growth of incomes per head, the markets
for mass consumer goods in the Third World countries thus tended to
remain constricted because of the high degree of skewness of income
distribution which may have got worse over time. We shall come back
to this point later on.
This admittedly brief analysis has thrown up certain important
types of asymmetry between the growth process in advanced capitalist
countries and the process of change in the underdeveloped countries
from about 1820 to 1914. What is more, these types of asymmetry
appear to be interconnected. They may not be logically necessary in
some ideal world of continually fully employed, efficiently functioning
economies, adjusting instantaneously in an optimal fashion'to changes
in data. But they were strongly present in the only kind of capitalism we
have so far known.
80 Colonialism and Indian Economy

Those theories of development, which picture underdeveloped coun-

tries as evolving, like Leibnitz's monads, separately but very similarly to
the advanced capitalist countries through some inner dynamics given
by thetr cpnstitution, 58 miss, among other things, the asymmetrical-:-if
.110.r
..do~right"'antagonistic-nature of the interconnections between
the developed and.the-underdeveloped countries before at least 1914
(and possibly ~ontinuin .thereafter). They not only misinterpret the past
9
but failalso to grasp the full implications of capitalist-style development
in the underdeveloped countries today .•To 1$0over the ground covered
from the point of view of immediate prospects,Jet,us take some of the
likely effects of a major labour-saving technologipl chang~ on a typical
underdeveloped country. .
First, practically all the adjustrpent to.such,changes will be ,internal
(unlike in the ,case of European,countries,in the nipet,eenth century):
there are no colonies to which the people .displaq:d from traditio.t;i;tl
occupations, irn;:ludin~ag.riculture and handicrafts, can turn. In many
of the underdeveloped ,countries the wages of labour have tended to
remain stagnant even though average per capita incomes may have
risen over the same period. In Argentina, for example, since the Second
World War, after some. rise in the late 1940s, real wages tended to
remain surprisingly stagnant up to 1963 or 1964 and actually fell in the
1950s.59 At the oth~r end of th'e spectr,um of underdevelopment, in India
also, the stagnant or even falling trend of real wages of factory workers
and the worsening and deterioratipn in tp.e conditic;ms of agricultural
labourers in the 1960s have been brought out in numerous studies. 60
A highly skewed initial distribution of incomes and a rising or
unchanging deg!ee of inequality of incomes create serious problems
of narrowness ·of markets for both mass consumer goods and goods
characterized by a high degree of static and dynamic economies of scale.
Some of these problems have already been discussed in the context of
underdeveloped countries such as Argentina and India. 61 Of course, as
has been stated already, capital-intensive techniques are not the sole
cause of unequal distribution of incomes. But they become a powerful
supporting factor when th~ product composition is al,ready geared to
the needs of clie upper in,come groups, who in turn derive too large a
sqare of jncome because of the highly s~ewed distribution of owners!iip
of productive assets and extreme degrees of imperfection in product
markets apd the m;i;kets for land, capital, and labour. _
Second and much more directly, more mechanized techniques.,will
tend to limit growth of employment in industry and agricultur~ .•This is
 De-industrialization in India in the Nineteenth Century 81

now generally considered an undesirable effect even apart from its impact
on income distribution. Employment may, for example, be viewed
as a positive good because of the dignity it confers on the employed
person. 62 It has been observed, moreover, that in underdeveloped
countries the existing measures of social insurance generally benefit the
well-off and the already employed, 63 so that the only effective means of
improving the position of th~ poor is to see that they find employment.
On the other hand, in most underdeveloped countries, capitalist modes
of distribution of incomes and accumulation, combined with a high
rate of population growth, are leading to the creation of a reserve army
oflabour. 64
It has been argued that the 'services' or 'informal' sector can and
does take care of employment while production takes place in capital-
intensive enterprises. But in the Third World countries, outside the
organized sector, employment in services is very badly remunerated
and is often not better than disguised. unemployment. The prospect
of likely technological changes in the market-oriented economies does
not offer any comfort. A very large component of technological change
that has taken place in the advanced economies has taken the form of
innovations in products. 65 In the advanced capitalist countries, most of
these have ultimately filtered down to the level of the very poor, but
in the underdeveloped countries they remain the luxuries of the rich.
The prospect in the future is the further expenditure of scarce resources
including foreign exchange for the production or import of these luxury
goods, creating very little additional employment, but generating a
pattern of growth of incomes, such that output grows mainly to satisfy
the requirements of the rich. When we turn to innovations in method
the picture is no less gloomy. In the advanced capitalist countries, the
rise in real wages has been a potent goad for more and more mechanized
and relatively labour-saving innovations. 66 For a variety of reasons, very
little' endogenous technological change takes place in the underdeveloped
countries. 67 The techniques they import come from the advanced
capitalist countries and use more and more capital, whereas for creating
more employment they need more labour-using innovations and
products that generally do not involve a high degree of mechanization
but cater to the needs of the poor people. The market does not seem to
provide much of a link between the existence of cheap labour and the
·generation oflabour-using techniques and products.
A developmerit strategy for the underdeveloped countries taken as a
group then ought to spell out how it would reverse the manifold amino-
82 Colonialism and Indian Economy

mies of market-oriented development so far mentioned: the asymmetry

between employment expansion in advanced countries and destruction
of employment in the underdeveloped ones, the utilization of the surplus
for colonization of empty lands and its removal from the populated re-
gions of Asia and the Third World in general, the raising of the position
of the lowest-income groups in the advanced economies, and the further
worsening or at least lack of improvement, of income distribution in
countries where agriculture is the predominant occupation and land is
privately owned, 68 and finally, the creation of goods and techniques to
suit capitalist affluence and their transmission to countries where they
cater to the rich and further worsen the condition of the poor. It may
be that some of these antinomies are less stark today than they were in
the nineteenth century. But their presence in some form can hardly be
conjured away. And any strategy that is proposed must show itself free
from any of these antinomies at the moment of its conception.
Many commentators have referred to the Chinese experience as
proof that a development strategy can be conceived on entirely different
principles. Stress on the development of the countryside, stress on the
use of any available surph,1sfor the betterment of people employed in
agriculture, refusal to produce luxury goods before necessities have
been produced in abundance, the widespread use of techniques with
deep roots in ordinary people'~ experience, the spread of social services
so as not only to make them available to ordinary people but also
controllable by them (witness the institution of 'barefoot' doctors) and
the prevention of a high degree of inequality of income distribution by
linking production and distribution as closely as possible-all these do
suggest that a whole new programme with an inner consistency of its
own is not only possible but is eminently practicable. 69
Pondering on the difficulties and contradictions that underdeveloped
countries must face if they follow an essentially market-oriented path
(whether the particular strategy adopted along that path is that of import-
substituting industrialization or that of export-oriented development of
agriculture apd manufactures), Professor Lefeber has called for a new
'paradigm' for economic development. 70 He has emphasized the success
of China in organizing the rural manpower for development and in
utilizing communes 'as an effective means for decentralized planning
and for implementing broad social and economic policies'. By these
means China 'could locally redistribute income and, at the same time,
generate savings or food surpluses for maintaining labour engaged in
rural capital formation'. 71
 De-industrialization in India in the Nineteenth Century 83

It would be useful to enquire exactly which of the three groups

of meaning that Kuhn attaches to the word 'paradigm' Professor
Lefeber has in mind in this context. Is it a paradigm in the sense of
an organizing principle, or a mode of perception in which old facts
take on a new perspective? Or is it a paradigm in a sociological sense
in that the scientific community has accepted it as a concrete scientific
achievement? Or is it an artefact or a tool-box which gives us new tools
for research?72 It is perhaps most useful from a scientific point of view
to adopt it as a paradigm in the first and third senses, for the character
of the Chinese achievement is certainly not agreed to even by a majority
of academic economists. Our enquiry neatly fits into the attempt to
set before economists· a new organizing principle for viewing future
development, for we have tried to bring out certain characteristics of
market-oriented development such as its effects on international capital
transfers, on international transmission of technological unemployment,
and on internationally disparate changes in the pattern of income
distribution, which have tended to lie dormant so far.
The exploration of the corollaries of the adoption of the new paradigm
has hardly begun yet. Can a Chinese-style development in one locality
be grafted on to the market-oriented development for the nation as a
whole? Is there a gradualist path from the unbalanced development of
income distribution, product composition, and production techniques
under market forces in less developed countries to a balanced develop-
ment with an egalitarian distribution of incomes in widely, dispersed
locations, healthy product composition, and techniques that utilize the
full potential of human labour? A thorough-going Marxist might answer,
'No'. But a thorough-going Marxist has the duty to specify exactly what
kinds of contradictions he expects if the paradigm is tried out partially
and locally. After all, there was a path from the NEP to the first Five
Year Plan of the Soviet Union, and in the Chinese case, the economic
and social organization has certainly evolved through many phases, and
if the perspective of Cultural Revolution is to be continued, this evolu-
tion has no end. Social scientists might yet have a role in exploring the
various ways in which the different elements of the new paradigm would
mesh together, in finding out what adaptations the paradigm would
need in the context of different nations and in suggesting the evolu-
tion of the paradigm itself. They will also continue to have to analyse
the results of the alternative paradigm of market-oriented development.
But the exploration of the Chinese-style paradigm need not be a mere
utopian quest. Prices and markets constitute the controlling panel for
84 Colonialism and Indian Economy

market-oriented economies. What instruments can a society choosing

an egalitarian path of development use to carry out the functions that
markets perform in capitalist economies? How does the society prevent
any temporary maladjustment &om creating tendencies towards cumu-
lative inequality? What incentives can such a society provide for induc-
ing relevant technological change? Such questions provide a crowded
agenda for research. But I suspect that economists will have to use rather
unf.uniliar tools and resort to far more 'participant observation' with a
far greater degree of commitment towards egalitarian social change than
they have been used to in the past.73

Notes
I. The author is grateful to Tony Brewer, Pramit Chaudhuri, Barun De, Louis
Lefeber, and in particular, to Prabhat Patnaik and Michael Lipton for their helpful
comments. Any errors in the same remain the author's own.
2. Dutt (1963a[l906]: Chapters XN-XV).
3. M.D. Morris presented aprioristic arguments ~osupport the view that Indians
ha~ gained enormously from British rule in India (1963). This led to a debate
between him and three other historians, Toru Matsui, Bipan Chandra, and Tapan
Ray Chaudhuri, presented in 1he.JndianEconomicand SocialHistory Review (1968:
319-88).
4. Thorner (1962).
5. Ibid.: 70.
6. Hicks (1969: 165).
7. For data on employment and wages in old and new branches of the textile
industries of England, see Mantoux (1961: 432-4); Deane (1965: 156); and
Hobsbawm (1968: 47, 73).
8. Joan Robinson defines the degree of mechanization in such a way that an
admissible technique with a_higher investment per man than before must produce
larger output per man (otherwise, the technique would not have been admissible in
the first place, on efficiencygrounds). See Robinson (1956: 124-31). However, the
more mechanized technique may also embody superior technical knowledge.
9. Sivasubramonian has estimated that even in 1900-01, the small-scale
industries in India generated Rs 1,165 million of income, whereas manufacturing
industries generated only Rs 220 million, and mining generated only Rs 53 million.
See Sivasubramonian (1965: Table 4.19).
10. See Bagchi (1972a: 221-4), for a brief account of the spread of fly-shuttle
looms in India until the beginning of the Second World War.
11. The methods and sources used to get these esrimates from Buchanan
Hamilton's surveys have been more extensivelydescribed in Bagchi (1976a: Sections
II-V). Apart from published works of Buchanan Hamilton, the unpublished
Statistical Tables, F. Buchanan (Hamilton), 1809-1813, Statistical Tables for
Reports on Bhagalpur, Patna and Gaya (Bihar) Purnea and Shahabad, London:
India Office Library, Mss. Eur. G. 14, 15, 17, 18, 19, and 20, were also used.
 De-industrialization in India in the Nineteenth Century 85

12. See Census, 1902, (Census 1901b) Part I, pp. 461-2, 466---9,and 477 on the
methodology of occupational groupings and their limitations.
13. See, for example, Hunter (1877a); O'Malley {1906a). The other volumes
used are listed in my paper in Bagchi (1976a).
14. The total number of persons dependent on cotton spinning and weaving, and
so on, in the two modern districts ofBhagalpur and Monghyr (which accounted for
practically the whole industrial population of the 'Bhagalpur' district of Buchanan
Hamilton's survey) was 46,627 in 1901 as against 200,035 in Buchanan's time,
even though the population was larger in 1901. So we should not go far wrong
is assuming that the population dependent on this--the most important-branch
of traditional industry in Gangetic Bihar had gone down by 150,000 between the
two dates. The workers in the railway workshop formed only a part of the workers
in 'railways' for which census figures'are given: the total population dependent on
railways altogether in 1901 was only 10,516. See Census 1902, (Census, 1901b)
Table XV. This number was smaller even than the population dependent on the
rump industry of cotton spinning and weaving in the Monghyr of 1901, which
came to 23,493.
15. Sivasubramonian (1965: Table 4.2) gives the figure of 584,000 for employ-
ment in factories in 1900-01. An analysis ofBlyn's figures for productivity changes
in Greater Bengal reveals that for Bihar and Orissa alone, productivity per acre
of food crops (mainly rice) must have gone down by more than a third between
1891-2 and 1945-6 and the total acreage also went down substantially in spite of a
sizeable growth of population between the two dates. See Blyn (1966) and Bagchi
(1972a: Chapter 4). This analysis is borne out by some later work done by M.M.
Islam and Saugata Mukherji.
16. It is often assumed that an unlimited supply of labour automatically pro-
duces an infinitely elastic labour supply with no shifts over time. However, as the
experience of many African countries demonstrates, the existence of a large 'reserve
army oflabour' is not incompatible with rising real wages. See Turner and Jackson
(1970). Conversely, even in a situation of scarcity oflabour, deliberate action can
be taken by employers to keep wages depressed. The black labour market in South
Africa is an extreme example of this situation (Wilson 1972). In the Inclian case,
there is definite evidence that on the one hand, European employers in mines,
factories, and plantations were far more active in searching out new sources of
labour than their Indian counterparts and that relative absence of trade union activ-
ity in European-dominated regions helped keep wages depressed compared with
western India where India businessmen were the most dominant element. See
Bagchi (1972a: Chapter 5) and the reference cited in it.
17. Sinha (1970: 4).
18. Ibid.
19. Sinha (1965: 178-9).
20. Mathias (1972: 260).
21. Hobsbawm (1968: 295, diagram 24).
22. See Information Regarding the Slackness of Demand for European Cotton
Goods in Selections (1864).
23. Ibid.: 116.
86 Colonialism and Indian Economy

24. See, for example, E.T. Atkinson (1874) and (1879).

25. See, 'Comparative Pressure on the Same Classes of society at Different
Periods' in Geddes (1874: 389-92).
26. Geddes (1874: 391-2).
27. Bagchi (1972a: Table 7.5)
28. Ibid.: 220
29. E.T. Atkinson (1874: 633-4).
30. Bagchi (1972a: 221).
31. As far as the technological complexes represented by the Indian handlooms
and the Manchester cotton mills are concerned, a phenomenon akin to 'reswitching'
occurred over the period, say, 1790-1900. In the.very beginning of this period, in
spire of a tremendous improvement in spinning technology, the Manchester mills
found it difficult to compete with the Indian handlooms on equal terms, particularly
in the case of finer varieties of doth. As is well known, discriminatory internal and
external customs and sumptuary regulations were used by the British rulers, initially
to protect the British-made cotton goods not only at home but also in India. Soon,
however, the cotton mills proved more than a match for the handlooms of India
even without any unfair tariff advantages. By the beginning of the twentieth century,
again, Indian handlooms may have found themselves at a comparative advantage in
respect of the coarser varieties of doth. In this they were aided by several changes.
First, the wages of the mill workers ofBritaiJ.l increased steadily whereas the wages of
Indian handloom weavers reached an absolute rock-bottom; second, British cotton
mills wove progressively finer varieties of doth over time, exporting to India and
other poor countries on an average coarser doth; but by 1900, even their exports to
India excluded the coarsest varieties, in which they had lost their competitiveness.
These varieties would then be taken up by Indian handlooms, and cotton mills. As
far as spinning,is concerned, no reswitching occurred, and Indian handlooms were
supplied by spinning mills in Britain or India. However, the Indian handlooms
soon found themselves losing out to their new enemy, the Indian cotton mills.
32. Bagchi (1972a: Table 7.1).
33. GBP (1884a: 199).
34. Kuznets (1966).
35. Fisher (1935), (1939); GBP (1884a); Clark (1940).
36. Khusro (1962); Turner and Jackson (1970)
37. Feuerwerker (1970: 338-78); also see Feuerwerker (1968).
38. The reasons for the suLVivalof handloom production seem to have been: a)
genuine competitiveness with British imports (the dates may be important here: by
the 1870s, the British producers were producing increasingly higher-quality doth,
and rising wages were pushing up the costs of coarser goods; b) adherence of both
the upper and the lower income groups to traditional styles of clothing; and c) lack
of development of transport. Comparing the Indian and Chinese cases, one feels
that the railway system and xenophilia of the Indian upper classes(the poorer people
stuck to the coarse but durable, indigenous doth with remarkable stubbornness)
may have been the decisive factors making for the downfall of the Indian handloom
industry.
39. For references see, Resnick (1970).
 De-industrialization in India in the Nineteenth Century 87

40. Hershlag (1964).

41. Ricardo ( 1966).
42. Hicks (1969), (1971), and (1973).
43. Bagchi (1972b).
44. A dramatic modern analogy of the hiatus between the source of saving and
location of investment can be found in the case of East and West Pakistan before the
break-up of Pakistan.
45. See, for example, Myint (1958: 317-37).
46. C£ Kalecki (1971: 147):
'The theory ofTugan-Baranovski is in fact very simple: the author maintains that
with "appropriate proportions" of use made of national product the problem of
effective demand does not arise. This argument, illustrated numerically by means
of Marxian schemes of reproduction, is in fact tantamount to the statement that
at any level of consumption of workers and capitalists the national product may
be sold provided investment is sufficiently large ... Thus the fundamental idea
ofTugan rests on an error that what may happen is actually happening, because
he does not show at all why capitalists in the long-run are to invest to the extent
which is necessary to contribute to full utilization of productive equipment'.
See also Robinson (1959).
47. Marx (1886[1867]: parts N and VII).
48. cf. Beach (1971: 920).
49. Cf. Wakefield (1967); Mill (1967: 26-35); Semmel (1970: 77-92).
50. c£ Hicks (1971).
51. M. Desai (1971: 359).
52. c£ Houthakker and Taylor (1966).
53. For a summary of productivity trends in Indian agriculture see Blyn (1966)
and Bagchi (1972a: Chapter 4). We are assuming that the trends evident since
1891-2 could be extrapolated backwards, at least for one or two decades, in the case
ofBihar. The assumption can be justified with harder historical data.
54. On the employment prospects of weavers and spinners, it is instructive to
quote O'Malley.(1906a: 159-60):
... if all the members of the Jolaha case had to depend on the produce of their
looms, they would have disappeared long ago. Many of them have now forsaken
their hereditary calling for more profitable occupations, and others who still
work their looms eke out their slender earnings by agriculture and labour of
various kinds. Every year large numbers of them seek service in the jute mills
on the Hooghly or work as menials in Calcutta, and those that still ply the
trade have seldom more than one loom at work at a time, whereas formerly the
number was only limited by that of the members of the family who could work.
55. Lefeber (1974).
56. See Kuznets (1966: Chapter 4); Soltow (1965, 1968).
57. It is possible that the root of the problem posed by Emmanuel (1972),,may
lie in the process described here.
58. Rostow's theory of stages in Rostow (1960), is perhaps the most quixotic
example of this genre.
88 Colonialism and Indian Economy

59. Zuvekas (1966).

60. Bardhan (1970a), {1970b); Sau (1973: 26).
61. Felix {1968); Bagchi (1970).
62. Stewart and Streeten (1973).
63. Paukert {1968).
64. For a short survey of the unemployment problem in India see Sen (1973);
for a summary of the easily available facts about unemployment in underdeveloped
countries see Turnham (1970). Even a country such as Argentina, which cannot
be considered 'overpopulated' by any standards, and where the average income per
head has recently grown at a respectable rate, faces problems of increasing urban
unemployment. See UN (1973).
65. Kennedy and Thirlwall (1972)
66. Among the notable studies.of technological change in advanced capitalist
countries are Rosenberg (1971); Saul (1970); and Schmookler (1966).
67. For a recent survey of the problems and prospects of technical change in
underdeveloped countries, see 7hejournal of DevelopmentStudies, 1972.
68. The changes in the production pattern within agriculture in response to
the expansion of world trade in the nineteenth century also often went against the
interests of the poor people. Thus good land was diverted from the production of
so-called inferior food grains to the raising of superior food grains and exportable
crops precisely·when the income of the poor people remained sta_gnant.
69. For a discussion of.various aspects of chpice of techniqu~ and methods of
industrial organization in China see Riskin (1969); for fu~er discussions of tech-
nology and technical change in China see the'articles by S. h;hika~a and G. Dean in
7heJournal of DevelopmentStudies (1972). The~hint;Se seem.also to have succeeded
in ,avoiding what has beei;itermed the ;doubJe deyelopment squeeze' on agriculture
(Oweg (1966]) Jfiat has characte~ized both the capitalist and the Soviet models of
deyelopment ofl,arge-scaleindustrr. They have been able, through the d,evelopment
of rural'industries and a generally favourable rate of exchange between farm and
industrial products, to p!ough _back the benefits of industrial growth to peasants
directly. Of course, the peasants have to contribute to the cost of maintenance of
collective goods and of capital accumulation for the future, but the ratio of costs
to benefits seems to be far more favourable for rural' areas than· h'as been the case
in most countries that have achieved sustained eco~omic);o~ )n ~~•.Pi15E·,
The
economy of North Vietnam also shares many-of the, characteristics of the, Cli.inese
style of development. ' ' • • ' "' "
.,._ t ~:1 ......--
70. Lefeber (1974). -·"' , ,; .... 1
__ •,;.

71. Ibid.: 176. 'I , • , , , .• 1 •

72. 'Ihis classification is adopted from Mastermaq'.(1972: 65). See also the
articles of P.K. Feyerabend, i. Lakatos, and T.S. Kuhn in the 'same v~lume.
73. Gurley (1971), is an early attempt to contrast capitalist and Clfines~ style·
development. It is interesting to contrast both ·Gurley'i a'.ttitude'an<lthe Maoist
attitude against that of~Tobin~ (1973) who ·was baffled by-w'1arhe consid~~d
an obvious lack of rationality in the refusal of the Chinese people-to exploit tHe ·
possibility of output-raising! reallocation'of resources·between regi'ons·and ·sectors
for the sake oflocal development orfighting the tendency towards inequality: -
 4
De-industrialization in Gangetic Bihar
1809-1901*

Buchan~ Hamilton's Survey and Population Estimates

U nder the order of the East India Company, Dr Francis Buchanan

(later Buchanan Hamilton-we shall use BH to denote his name)
surveyed a large part of Bihar and north Bengal over the year~ 1809-13,
recording their population, their agricultural and mineral resources,
giving details of flora and fauna, the means of livelihood of the people,
and the land tenure systems, and going into the history of these regions.
He packed an incredible amount of information in his survey reports. It
may be objected that such a quick survey is not likely to be very accurate,
in all its details.
But BH' s methods were apparently very thorough. He covered most
of the area by road, halting at the important marts and towns, and
keeping notes all the while. As an authorized agent of the East India
Company, he had the assistance of local officials. Besides he was accom-
panied by his own assistants who acted as interpreters. He kept elaborate
journals of his travels, which are separate from his official reports, and
we are thus acquainted with his methods of work. The journals 'are
of the nature of official diaries kept by Buchanan, recording his move-
ments from day today, with the distance travelled, the features of the
country passed through the sites and objects of interest examined, the

*Reprinted from, B. De et al. 1976, Essaysin Honour of ProfessorS.C Sarkar, New

Delhi: People's Publishing House. In the present version some portions have been
removed. For complete text see the original version.
90 Colonialism and Indian Economy

inquiries: made on subjects of archaeological, historical, ethnological,

geological, etc. interest. The statistical information collected, e.g. as to
population, castes, professions, numbers of towns and villages, educa-
tion, soils and methods of cultivation, livestock, manufactures, exports
and imports, etc., all of which are dealt with at length in the Reports and
appendices thereto, is not referred to in the Journals. All this informa-
tion was dqubdess recorded by his Indian assistants; while the drawings
and copies of inscriptions, and so on. were made by a draftsman who
accompanied him.' 1 ,
1hus BH's, survey was thorough enough for those days, and all
economic historians and statisticians coming after him have used his
data as benchmarks. Hunter's Statistical Accounts of Bengal always
compared the current data with BH's whenever such a comparison
could be made. R.C. Dutt used BH's evidence extensively in his volume
on the EconomicHistory of India under EarlyBritish Rule. Hence my use
of the early nineteenth-century data will have the added advantage of
establishing a link with the investigation of the stalwarts mentioned.2
Since I shall try to determine the proportions of the industrial
population to the total population in the districts of Bihar surveyed by
BH, it is necessary fo say something about the·quality of the population
data given in his survey reports. BH' s -estimate of the total population
for Patna and Gaya (or according to the nomenclature of the time,
Patna and Behar), Bhagalptit, Purniya: (Purnea, Puraniya) comes to
9,707,620. There are no independent estimates of about the same date.
But in 1822, in a 'census' of the Bengal population,3 for roughly the
same area (Bihar, Shahabad, and Patna in the Patna division and
Bhagulpore and Pttrnea~ in the Moorshedabad division) the total
population was found to be 4,595,126 (this 'census' was contained in
the police report of Henry Shakespeare, superintendent of police in the
lower provinces in 1822). Again, in 1824, a 'census' of houses of the
lower provinces of Bengal was taken, and reproduced in Martin (1839). 4
Martin estimated the population by allowing five persons to a house;
but from the detailed tables of family sizes given by BH we find the
mean family size to be about six (this will be discussed later). Assuming
that there was one family to a house on an average, and using six for
the size of the family, the total population of about the same area as
was surveyed by BH comes to 4,698,244. Since this figure tallies with
the figure of 1822, it would appear that even assuming zero population
growth between 1809-12 and ·1822. BH overestimated the population
by almost 100 per cent!
 De-industrialization in Gangetic Bihar 91

Further there is one district at least-Purnea-for which the Statistical

Account of Bengal considered BH's estimate a gross overestimate. 5
However the reason given for such a judgement was no more than that,
if BH's figure were correct, then the population would appear to have
decreased between BH's survey year and 1872, which was thought to
be improbable. Now Purnea was a singularly unhealthy district, where
malaria was endemic. The local proverb was: 'Na zahar khao, na mahur
khao. Marna hai to Purnia jao' 6 ('Don't take poison. If you have to die,
go to Purnea'). The population of Purnea increased very slowly from
1872 to 1891 and actually declined between 1891 and 1901. Thus a
priori there is nothing outrageous in the suggestion that the population
of Purnea may have declined or at most, increased very slowly between
1809-10 and 1872. Hence BH's estimate for Purnea might not be as
gross an overestimate as Hunter and his assistants supposed.
For the other districts, actually, the Statistical Account tended to
accept BH's estimates, with only minor reservations. In the case of
Monghyr, it specifically mentioned that 'Dr Buchanan Hamilton's
estimate was, at the time it was made, at least approximately correct.' 7
The volume for Patna, after discussing the faultiness of BH's method,
had to admit: 'but the remarkable agreement between Dr Buchanan
Hamilton's figures and those obtained in 1872, compels us to pay more
weight to his estimate tha'n to the other early enumerations, which have
been proved to be very far from accurate. ' 8 In the case of Gaya and
Shahabad, the Statistical Account reproduced BH's estimates for relevant
areas without any comment. 9 In the case of Bhagalpur, the Statistical
Account comments: 'Viewed by the light of the recent census of 1872,
his (i.e. BH' s) own estimates made about 1811 possess statistical value,
only on the assumption that since his day the population has more than
doubled.' 10 The same volume however dismisses BH's estimate of the
population of Rajmahal as useless, 'owing to the diffi~ulty of identifying
the area to which his return refers, and the doubtful evidence on which
he bases his estimate of the numbers of the hill-men.' 11
Thus the StatisticalAccountcompilers did not consider BH's estimate
always to err on the high side. If their judgement was correct, how do
we then reconcile BH's estimate with the estimates of 1822 and 1824
(for the elimination of any excess in the estimate of the population of
Purnea alone will not bring BH's figure down to their level)? A small
part of the gap might be covered by including areas covered by BH' s
reports but not included in the districts of the lower provinces which
we have taken. But this would still leave a large discrepancy. A possible
92 Colonialism and Indian Economy

answer is that we do not have to reconcile the two. For it is not BH who
erred too much on the high side; it was the censuses of 1822 and 1824
which erred too much on the low side. The reason for the remarkable
agreement of the two latter figures may be simply that they were based
on similar, but erroneous, methods.
There are in fact some reasons, a priori, for considering the popula-
tion estimates of 1822 and 1824 to be on the low side. The estimates
of 1822 put the population of the lower provinces of Bengal at 37.5
million persons for Bengal, Bihar, and Orissa, the census of 1872 puts
it at 64 million. The population of Bengal, Bihar, and Orissa in 1921
was 85.6 million. 12Making deductions from the area of Bengal, Bihar,
and Orissa in 1872 of areas (mostly hilly, sparsely populated districts or
states in Orissa) not included in the lower provinces might be a little
less than 60 million. The implicit total growth of the fifty-year period
1822-72 comes to about a little less than 60 per cent on a base of 37.5
million. On the 9ther hand, the. total growth in the forty-nine-year
period 1872-192.:1 fdr Bengal.~Bihar;·anch8riss:M:Omes1to40. pes cent.
There-is no good,reason for expeciing;the rate-of·population "growth to
be higher in ·the earlier periocl. 0n the. contrary, this was a period .of
extensive de:.urbanization and, as wJ: shall:see, over a, large part:of:the
provinces at least; ,of de-iridustrialization. 13 The terrible Orissa famine
which claimed several million lives occurred withirr this period. The
population of Bengal had by 1822 fully recovered from,the •famine
of 1770 and was apparently ·pressing, against .the :margin of cultiva-
't:ion.14The period did not witness any great upsurge in. peasant exports,
which might support a. teeming population at 'however low a level
of living.
Although, until firm data are adduced, our hypotheses about the
population of Bengal before 1872 must remain mere hunches, the
following tableau seems to be consistent with the better known facts.
The period from 1770 up to, say, the end of the 1780s was one of
rather slow recovery from the famine because of continued oppression
by revenue farmers, uncertainty about the whole land tenure system
involving both the old zamindars and the peasants, and lack of any
strong incentive on the part of large zamindars to have the margin of
cultivation extended.
The population estimate by Colebrooke at 27 or 30 million around
1794 marks the end of this period. 15Then followed a period of rapid
growth of population when a strong incentive was given to the landlords
to extend the margin of cultivation within the old system because of
 De-industrialization in Gangetic Bihar 93

the peculiar provisions of the permanent settlement. We might take

1825 as marking the end of this period. The population of Bengal and
Bihar might easily have increased during these twenty years by almost
50 per cent (from 30 million to somewhere near 45 million). Then
came the final onslaught of the process of de-industrialization and the
superimposition of an oppressive plantation agriculture (in the form of
indigo, sugarcane, and opium cultivation by the European planters and
the British government) on peasant agriculture, when the population
grew slowly, from, say, 45 million in 1824 or 1825 to 60 million or so
in 1872.
If we compare this tableau with BH's population estimates the latter
appear to be distinctly on the high side. But the degree of exaggeration
might not be as much as a straight comparison with the data of 1822
or 1824 might suggest; for (a) as we have argued, the totals in the
latter have lo be revised upwards and (b) the figures of the districts
originally covered by BH may have been more grossly underestimated
by the censuses of 1822 and 1824, because the areas happened to be
remote from Calcutta, the headquarters of the reporting authorities. To
the extent, however, that the total population was exaggerated by BH,
the proportion of the industrial population (the figure for which was
apparently more firmly based than that for total population) to the total,
would seem to have been even larger in BH's time: than are indicated by
our: calculations.

Buchanan Hamilton's Estimates of

the Population Dependent on Industry
For obtaining the number of people dependent on industry, I have relied
on the detailed Tables of the numbers of common artists, supplemented
by their description in the text of BH's reports, rather than on the
numbers of' artificers' or artisarls in the general popltlation Tables. These
latter figures were obviously only approximate, anti cannot be taken to
be very precise. But BH took great pains to ascertain the· numbers of
artisans and traders in all the important towns. It was his procedure
to directly enumerate the numbers of petty dealers, merchants, and
artificers at every important town or large village he passed through,
and put down these numbers under each thana in the 'Index to the
Map' of each district. 16 Further, as regards the most important'groups
of artisans, that is, weavers and spinners in cotton (and silk), BH went
to considerable trouble in getting their numbers right by comparing
the results of direct enumeration with indirect estimates from figures
94 Colonialism and Indian Economy

of production, the district imports and exports of the output, and the
material inputs.
There are major inconsistencies between the numbers of 'common
artists' thus arrived at and the numbers of artificers given in the
general population Tables. One important source of discrepancy was
the fact that when it came to stratifying the general population, BH
did not stick to an occupational grouping but shifted to a 'status' or
'class' categorization. His 'gentry' (or 'idlers', in, Montgomery Martin's
evaluative terminology) must have included a vast number of spinning
women who worked at home, and also owners of 'factories' (that is,
manufactories) or other artisans who were regarded as 'gentle folk' by
the enumerators. In view of this, it was decided to use only the detailed
figures given in the Tables of common anises.
In order to arrive at the number of artisans proper, the figures for
'personal artists' (people who rendered personal service and did not
produce commodities) were deducted from the total number of artists.
Thus painters, dancers, barbers, singers, clowns, butchers, and others
were all excluded. In general, shops were also excluded; but in some
cases, for instance, 'distillers shops' in the case of the Patna-Gaya report,
it was dear that the manufacturing establishment and the shop were
one and the same and so their number was included. 17 There were some
borderline cases in which it was not easy to decide whether to include
their numbers or riot. Many of the washermen, for example, worked as
bleachers of doth, 18 and were thus no less involved than weavers and
spinners in the making of doth. But in order to keep our estimate on
the conservative side, the number of washermen was excluded altogether
from ?1e nu111-qer p.f pe~sons wor!<lngin secondill'Yindustry. Again, in
orger to• m,ake,our. ~tima\~·,COJilpi!-fable.i with thqse, of the census of
190 I, iq,..w~iclu~qfligo.l"as~o~i~s ,}Ver.e:incj:ludc;dunder ~gric;glture, we
decide~ to oµiit in~igo,fjictor~es,alflwug!i-strictly speaking, the making
of indigo from the.plant is an industri:µ,pro,cess. ,, ,,.,... , 11 • ~.
Table 4.1 shows the total.population, •and the numbers ..engaged in
spinning jllld in other industrial 9ccupations, according to BH's survey,
after the adjustments indicated in the precetling paragrapp pave, been
made.
Since spinners had generally lower earnings than other af9.S,1!1~. and
were often upper-caste women whose families did not depend, solely
0\1 their earnings, we treated them differently from other artisans., In
arriving ,at the total number of persons dependent on secondary
industry, w~ made two alternative assumptioqs about the earning ~ta\4~
 De-industrialization in Gangetic Bihar 95

Table 4.1 Numbers of Population, Spinners and Industrial Workers Other

Than Spinners, Buchanan's Survey Districts 1809-13
District Total No.of No of industrial
population spinners workers or artisans
other than spinners

Pama-Gaya 3,3~4,420 330,396 65,031

Bhagalpur 2,019,900 168,975 23,403
Purniya 2,904,380 287,000 60,172
Shahabad 1,419,520 159,500* 25,557
Total 9,707,620 945,871 174,164
Source:Buchanan [BHJ (1811-12), Vols I and II; and Martin (1838), Vols I, 2 and 3.
Note: BH does not include the number of spinners in the table of the number of common
artists for Shahabad; the figure has been taken from the text.

of spinners, Assumption (a) was that an average spinner supported one

other person besides himself or herself; assumption (b) was that every
spinner supported himself or herself only.
Regarding the others, we assumed that an industrial worker sup-
ported an average-sized family. It might be argued that in a society
where production was mostly carried on at home, this was unlikely to
be true, since a worker would generally be assisted by other members of
his family. This would not affect the validity of our estimates unless it
could be shown that the numbers of these other members are already
included in the total number of artists enumerated by BH. As far as
weavers are concerned, BH enters only the numbers of their houses
or their homes in the Tables for numbers of artists; similarly, in the
case of the oil pressers, he enters only the numbers of their houses or
mills in the statistical Tables. 19 The numbers of houses of weavers, or
oilmen were smaller than the numbers of looms or mills respectively.
In summarizing BH' s tables, Montgomery Martin does not always
reproduce the number of looms or mills, but he does reproduce the
numbers of houses of weavers or oilmen. 2°For keeping our estimate on
the low side, I used the numbers of housesof weavers and oil pressers for
our calculations.
In the case of paper-makers also BH gives the numbers of their houses
in the tex,t and in the Tables. 21 In Shahabad there were kasis makers,22
and every kasis furnace employed several adult persons, but we have
included the number of furnaces alone. Again in the case of saltpetre
manufacture in the Patna-Gaya district, instead of giving the number
of persons engaged in saltpetre manufacture, BH gives only the number
96 Colonialism and Indian Economy

of 'furnaces for making nitre'. 23 Thus while our estimates are crude and
contain an unknown margin of error, they are likely rather to err on the
low side than otherwise.
The modal and mean family sizes in Purnea, Patna-Gaya, and
Shahabad were 'computed from either the Bihar and Orissa Research
Society. reprints of the BH reports 24 or from Montgomery Martin's
summaries and are given in Table 4.2. The relevant data for Bhagalpur
were not available from these sources.

Table 4.2 FamilySize in the Survey Districts of Buchanan 1809-13

Mode Mean*

Patna-Gaya 5 5.9
Purnea 6 6.8
Shahabad 5 6.5

Source.Same as Table 4.1.

Note. *The class limits were variable in the case of different size-classes of f.unilies. In
computing the mean, the arithmetic mean of the class limits was taken for weighing
the number of families belonging to a particular size-class.'A geometric mean would in
some respects be sliperior, but the vru-iationof the geometric from the arithmetic mean
is unlikely to be large.

We have taketi' a conservative estimate for the family size of artisans

other than spinners and put it at five. Table 4.3 gives the estimates
of the population dependent~on industry, on the assumption (a}'that
every spinner supports one 'pers'on besides himself (herself) and on the
assumption (b) that every spinner supports only himself (herself).

Table 4.3 Industrial Population in Selected Bihar Districts .

around 1809-13
District Absolute no. of the population Percentages of the
dependent on industry industrial to total populatioh

Assumption Assumption Assumption Assumption

(a) (b) (a) (b)

Patna-Gaya 985,947 655.551 29.3 19.5

Bhagalpur 454,965 286,080 22.5 14.2
Purniya 874,860 587,860 30.1 20.2 f.
Shahabad 446,775 287,285 31.5 20.2 1 t, Jitl
Total 2,762,457 1,816,776 ,28.5 18.6'

Source:Same as Table 4.1.

·,,
 De-industrialization in Gangetic Bihar 97

We now assess the effect of almost a century of British rule on the

proportions of population engaged in secondary industry in the dis-
tricts which were surveyed by BH. We chose Patna-Gaya, Shahabad,
Monghyr, Bhagalpur, and Purnea because these districts were almost
wholly included in the area surveyed by BH, and barring some thanas,
practically all areas covered in the Patna-Gaya, Purnea, Bhagalpur, and
Shahabad reports of BH are covered by the districts included for the
1901 calculations: (The Rajmahal area which was surveyed by BH in his
Bhagalpur report was in 1901 included in the Santal Parganas, but since
that district had very little secondary industry in 1901, our conclusions
would not be upset by its omission).
We decided to deduct (a) the number of pure sellers from the
number of makers, and makers and sellers, in class D, order VII, which
gives the number of persons dependent on the provision of food, drink,
and stimulants, and (b) the number of piece-goods dealers in class D,
order XII. It would seem at first blush, in view of the caution soup.ded
by Gait, that I have thereby underestimated the industrial population.
But in the first place, I left the numbers in other classes within the
general occupation of'industry' intact, and thereby many pure sellers in
other categories were included. Thus sellers of lime, chunam and shell,
stationers, sellers of bangles of glass and of other materials, sellers of raw
silk, silk cloth, braid, and thread, saltpetre sellers, and sellers of hides,
horns, bristles, and bones are still included in the 'industrial' population.
In the second place, many of the 'makers and sellers' must have been
primarily sellers, and we could not make any adjustment for that; and
in the third place, many of the actual cultivators still returned their caste
occupations, which were non-agricultural, as their actual occupations,
thus inflating the number by about a million,,but with people such as
these the traditional occupatio11 dies hard and many of the so-called
weavers are in reality n:iainly cultivators. 25 ,
Table 4.4 gives both the raw census figures and the adjusted figures
of the population gependent on industry in 1~O1 for the Bihar districts
that were cove~ed by BH's ~urvey.
A comparison of Tables 4.3 and 4.4 shows that even the more conser-
vative estimate (by assumption b) of the proportion ofi.ndustrial to total
population in BH's time is conside~ably larger than the most inflated
estimate (that is, the unadjusted census estimate) of the same magnitude
in 1901. Taking the more conservative estimate of the proportion of the
industrial to the total population around 1809-13 and comparing it
with the more realistic (adjusted census) estimate of the same magnitude
98 Colonialism and Indian Economy

Table 4.4 Population Dependent on Industry in 1901

in Selected Bihar Districts
District Total Indusuial Percentage of industrial
population population to total population

Unadjusted Adjusted Unadjusted Adjusted

Patna 1,624,985 279,093 179,695 17.1 11.1
Gaya 2,059,933 287,732 187,016 14.0 9.1
Shahabad 1,962,696 346,400 228,051 17.7 11.6
Monghyr 2,068,804 281,325 155,439 13.6 7.5
Bhagalpur 2,088,953 222,796 115,618 10.7 5.5
Purnea 1,874,794 220,506 121,933 11.8 6.5
Total 11,680,165 1,638,662 987,752 14.3 8.5
Source:Census of India, 1901, VI, VIA, VIB, Bengal parts; I, II, and III (Calcutta,
1902).

in 1901 we find that the weight of industry in the livelihood pattern of

the people was more than double at the earlier date. It has been claimed
that the districts south of the Ganges in Bihar had a larger development
of industry than those north of the river, because at the time of the
dissolution of the Mughal empire, many Muslim nobles settled in these
districts, bringing with them a large number of artisans and a basically
urban pattern of living.26 This' might perhaps explain the surprisingly
large development of industry in the districts surveyed by BH in his
time (particularly if we remember that BH had underestimated the
total p'opulation) but this does not account for their later decline. There
is no reason to believe that the artisans dispersed to other neighbour-
ing districts and set up their manufactures there. For we find that the
unadjusted 1901 census figures showing the weight of industry in the
total population in districts such as Saran, Champaran, Muzaffarpur,
Darbhanga, and Santal Parganas was considerably lower than the cor-
responding figures for the districts covered by BH. It is possible that
these north Bihar districts had been even more rural in BH's time, and
their gain in industry through the dispersal of artisans from the south
Bihar districts failed to bring them up to the level of the latter-but
this appears to be highly unlikely in view of the orders of magnitude
involved, the fact that Patna and Gaya are both included in the districts
covered by BH, and finally, in view of our general understandin~ of the
processes of agglomeration and deglomeration involved. r' ' 1 ·,
In the de-industrialization process, the destruction of i:ht!handlobin
industry played a considerable part. Table 4.5 shows the a&solufe:!
 De-industrialization in Gangetic Bihar 99

numbers of cotton weavers, spinners, and the weight of the population

dependent on weaving and spinning in the total industrial population
(using assumption b in both cases).

Table 4.5 Industrial Population Dependent on Cotton

Weaving and Spinning 1809-13
District Number of Cotton Total number Percentage of
weavers spinners dependent (3) to total
on cotton industrial
weaving and population
spinning
2 3 4

Pama-Gaya 19,900 330,396 379,896 58.0

Shahabad 7,025 159,500 194,625 67.7
Purnea 13,555 287,000 354,775 60.3
Bhagalpur 6,212 168,975 200,035 69.9
Total 46,692 945,871 1,124,331 62.3

Source.Same as Table 4.1.

Note. Assumption b of Table 4.3 was used for'estimating the population dependent on
industry, and on cotton weaving and spinning.

Table 4.5 might give an exaggerated idea of the number of people

engaged in cotton weaving and cotton spinning alone, for l]lany of the
spinners must have been engaged in spinning thread for silk, or mixed
cotton-and-silk, cloth. But there is no way of separating them from
the rest. It seems to be clear that about 60 per cent of the industrial
population was engaged in the spinning of cotton yarn and weaving of
coµ:on cloth.
Although the figures of Table 4.5 and Table 4.6 are not exactly
comparabl~, it seems to be clear. that both the absolute numbers of
persons dependent on the cotton industry and the relative weight of the
cotton industry in the secondary sector declined considerably. Thus the
main factor behind the de-industrialization process was the decline of
the handloom and hand-spinning industries, as it has been traditionally
supposed. But it was not only the handloom industry that was involved
in this cataclysm; many other traditional industries also suffered a
catastrophic decline in their output and employment. This is borne out
by the verbal descriptions contained in the StatisticalAccountsof Bengal
(relating to the 1870s) and the BengalDistrict Gazeteers(relating to the
first decade of the twentieth century).
100 Colonialism and Indian Economy

Table 4.6 Relative Weight of the Cotton Industry in the Total Industrial
Population in Selected Bihar Districts, 1901
District No. of persons dependent on Percentage of (1) to
spinning of cotton yarn and total adjusted industrial
weaving, sizing etc. of cotton cloth population of 1901
1 2
Patna 22,318 12.4
Gaya 41,836 22.4
Shahabad 25,258 11.1
Monghyr 23,493 15.1
Bhagalpur 19,034 16.5
Pumea 16,777 13.8
Total 148,716 15.1
Source:Census oflndia, 1901, vol. VI A, Bengal;part II, Tables(Calcutta, 1902).
Note: The figures relate to class D, order XII, suborder 40 in the occupational Table.

The Evidence of the Statistical Accounts of

Bengal and the BengalDistrict Gazetteers
The Statistical Account ·(SA, in brief) volume on Patna 27 records that
up to 1835 the East India Company maintained a central factory for
handloom doth there. Besides there were large numbers of tussar silk
weavers, and dyers who made a large profit from the dyeing of cloth.
By 1877 all these industries'had declined: 'the greater part of the cotton'
weavers (were) employed in making coarse cloths for country use'. The
District Gazetteer (DG, in brief) volume on Patna continues the same
story of decline, but records that cotton weaving was still carried on to a
small extent in nearly every village (this must be an exaggeration in view.
of the census figures) and more extensively in the Patna city: 'The chief
article manufactured i; a coarse cotton doth called motia or gazi'which
is chiefly used by the poorer classes in the cold weather.' 28 Silk weaving
was by then 'almost confined to the Bihar subdivision, where it (was)
reported that about 200 looms (were) at work.' 29 (BH had estimated the•
number oflooms for weaving silk and tussar at 1250.)
The story recorded by the SA and DG volumes on other districts is•
similar: finer varieties ot cotton doth had practically ceased to be woven,
except when specially ordered; silk weaving had contracted consider~bly1
(it survived in,Gaya to a large extent because of the demand for it for
religious purposes). The weaving of coarse doth survived, because it was
durable and cheap. The common people must have l:ieen prepared to
pay a higher price for certain varieties of coarse doth than for similar
imported varieties, because the greater durability and warmth of the
 De-industrialization in Gangetic Bihar 101

former ~ere believed to compensate for the higher price. For example,
the SA volume on Shahabad records: 'country Cloth cannot be made
for less than 3%d to 4Yzd per yard, but Imported sells for 3~d a yard,
and consequently the home manufacture has fallen off.'30 It is possible
that the cost disadvantage of the home-made article increased even
within the thirty-year period between the SA and DG volumes. The
DG of Gaya records, for example: 'The preference, for markin, as the
Manchester article is called, can be readily understood, as a piece of
country-cloth costs Re 1-4 and will last 8 or 9 months, whereas a piece
of markin of the same size will last only 6 months, but will be only half
the price.' 31
The decline of the handloom industry also naturally brought down
the dyeing industry which had been in a flourishing condition in BH's
time. It also ied to an enormous contraction in the cultivation of cotton
in Bihar. Certain specialized branches of the textile industry, such as
satranji-making and carpet-weaving, survived, though none was in a
flourishing state. The faint survival of the cotton cloth industry can be
accounted for by mainly three factors: (a) the continued attachment of
the poorer people to coarse cloth (called gazi or motia in Patna and Gaya
and photas and bukis in Purnea); (b) the depression of weavers' wages
to the level of those; of unskilled labourers or even lower;32 and (c) the
taking up of weaving as a part-time occupation by persons or descendants
of persons who had earlier been full-time weavers. Agriculture in the
districts concerned was generally an extremely seasonal occupation,
proper multiple cropping being very rare (the intensity of cropping
may even have declined over time). Thus people with looms and with
some inherited skills found it worthwhile-and sometimes necessary for
survival-to turn from cultivation to weaving in the slack season of the
agricultural year. Thus the DG of Gaya records: ' ... if all the members
of the Jolaha caste had to depend 'on the produce of their looms, they
would have disappeared long ago. Many of them have now forsaken
the hereditary calling for more profitable occupations, and others who
still work their looms eke out their slender earnings by agriculture and
labour of various kinds. Every year large numbus of them seek service
in the jute mills on the Hooghly or work as menials in Calcutta, and
those that still ply the trade have seldom more than one looin at work
at a time, whereas formerly the number was only limited by that of the;
members of the family who could work.' 33 • '

Thus the survival of the handloom industry is more an index of

the poverty of agriculture to which the policies pursued by the British
102 Colonialism and Indian Economy

government pushed the weavers and of the generally low level ofliving of
ordinary Indians than of any innate 'strength' of the handloom industry
under conditions of capitalist colonialism. Furthermore, the mixing of
different occupations which is often supposed to be the hallmark of tra-
ditional Indian society (c£ the remarks of various census commissioners)
may.merely have been the result of the de-industrialization process; the
'preindustrial' Indian society in many cases probably had more clearly
defined,and specialized occupations.
It, was not only the handloom industry of Bihar which declined
during 1the,nineteenth century. There were other important industries
which contracted to the point of extinction. Such, for example, was
the paper industry of Gaya and Shahabad. 34 The refined sugar industry
went through a cycle: it rose in the first half of the nineteenth century, it
flourished in Shahabad particularly up to the 1870s and then went into a
decline.35 But again the making of guror raw sugar, which was primarily
a peasant manufacture, continued to be carried on an extensive scale: it
may even have been stimulated by the introduction and popularization
of a simple iron mill by Messrs Thomson and Mylne ofBihiya. 36 But the
increasing imports of cheap sugar from 'Java and Mauritius must have
set back this branch of the sugar industry also.
The de-industrialization ptocess coinpfetely changed the character of
certain districts. Purnea, for example,.appears to have had a considerable
variety of manufattures, based on 'the military and consumption needs
of the Muslim nobles, when BH surveyed that district. Tent-m,aking,
the making of ornaments of lac, bidriware, glasswork, the making
of tooth-powder, the manufacture of sindur, blanket-weaving, not to
speak of weaving of cotton cloth (and to a minor extent, of silk cloth),
flourished in BH's time. By the time the SA dune to be written, most of
these industries had contracted considerably, and some had practically
disappeared.37 The DG of Purnea about thirty years later records the
complete disappearance of paper-making, the virtual extinction of
bidriware (with only one skilled practitioner in the art of finishing
the product surviving). Hence it appears that most of the damage
had already been done by the 1870s, but the process of destruction
continued so long as there was any industry (other than the weaving of:
coarse textiles and making of some other articles of use by the poorer
people) to destroy. It is possible that this residual destruction was more
than made up by the growth of agriculture-based industries such as oil
mills, but we cannot test that hypothesis without much finer analysis of
the data.
 De-industrialization in Gangetic Bihor 103

We have so far listed mainly consumer goods industries. At the time

ofBH's survey there was a flourishing ironware and small arms industry
in Monghyr. 38 In Hunter's time, the great variety of products produced
earlier was already a memory. 39 But guns and pistols of an inferior
quality continued to be manufactured. The requirement for licensing
of gun manufacturers seems to have further crippled the industry later
on. Thus what the lack of demand had begun was consummated by
ddiberate government interference.

Notes
1.Journalof FrancisBuchananKept during the Surveyof the Districtof Bhagalpur
in 1810-1811, edited with notes and introduction by C.E.A.W. Oldham
(Superintendent, Government Printing, Bihar and Orissa, Patna, 1930), pp. ii-iii
('Introduction').
2. These data were compiled from (a) Francis Buchanan (BH) 1811-12
(c. 1926); and (b) Martin (1838). The Bihar and Orissa Research Society reprinted
three other volumes ofBH's survey covering the Bihar districts, but they ;egrettably
decided not to reproduce the tables which had been already printed or summarized
by Montgomery Martin; and these included the tables of the number of 'common
artists' prepared by BH.
3. See Bhattacharya and Bhattacharya (1963); 'Bengal Presidency Lower
Provinces: 1822', 1832, U .K House of Commons, Appendicesto the ThirdReport
of the Select Committeeof the House of Commonsand the Minutes of Evidenceon
the affairsof the East India Company,17m February to 6rhOctober 1831, London;
reprinted in Bhattacharya and Bhattacharya (1963: 71-3).
4. Ibid.: 117-23.
5. Hunter (1877d: 241).
6. O'Malley (1911: 72). See also Hunter (1877d: 432-9.
7. Ibid.: 46.
8. Hunter (1877a: 32).
9. Hunter (1877b: 28 and 180).
10. Hunter (1877c: 45).
11. Ibid.: 273.
12. Census oflndia, 1921, vol. I, India, part 1. Reportby J.T. Martin, vol. 24,
Chapter l, Calcutta.
13. Cf. Habib (1972).
14. See, for example, O'Malley (1907: 60).
15. See H.T. Colebrooke, Remarkson the Husbandryand Internal Commerceof
Bengal(originally published, Calcutta, 1795), reprinted in Census of India 1951,
vol. VI, WestBengal Sikkim and Chandernagore, part IC,. Report by A. Mitra, 1953,
Delhi.
16. SeeJournalof FrancisBuchanan(afterwardsHamilton)Keptduring theSurvey
of the Districtsof Patna and Gayain 1811-1812, edited with nott>sand introduction
by V.H. Jackson, 1925, Patna, pp. xvi-xvii.
104 Colonialism and Indian Economy

17. See, BH (1911-12: 630).

18. Ibid.: 616; BH (1939: 582).
19. See, for example, Buchanan, An Accountof the Districtsof Bihar as 782, and
the number of their looms as 1622, and finally, the number of houses of oil-makers
or telis as 5132 and the total number of oil mills as 5466, the number of houses of
weavers who work in tussar silk as 782, and the number of their looms as 1622, and
finally, the number of houses of weavers of cotton cloth as 19,900 and the number
of their looms as 24,352.
20. See, for example, Martin (1838: vol II, Appendix of Statistical Tables, Book
I, Bhagalpur, Table K), where the numbers of weavers who work in tussar and silk,
and of weavers of cotton cloth were given as 1138 and 6212, respectively. From the
text ofBH (1810-11: 612 and 616), we learn that the number of tussar silk looms
was 3275, the number of houses of weavers of cotton cloth was 6212, and their
looms numbered 7279.
21. In Martin (1838: vol. I, p. 56 of the Statistical Tables) the number of paper-
makers in Shahabad is given as 60. In the text ofBH (1812-13: 398-9) we read:
'In Sahar opposite to Arwai'.60 beaters belonging to 40 houses were acknowledged;
and 30 beaters in 20 houses are admitted to be in the Baraong division ... '. Thi~
obviously shows that BH took the number of houses and not that of beaters, which
was considerably larger.
22. See Martin (1838: vol. I, p. 56 of the Statistical Tables). Kasis was 'an impur~
sulphate of iron, used as medicill$!,and by tanners and calico printers. Each furnace
had as managers two partners, ;ho were bound to merchants by advances. See BH
(1812-13: 416-18). '
23. BH (1811-12: 773). Every furnace was apparently worked by a whole
family.
I
24. Besides the Bihar-Patna (or Patna-Gaya), Shahabad, and Bhagalpur reports
referred to earlier, there remains BH (1809).
25. See the Remarks of E.A. Gait, Superintendent of Census Operations,
Bengal, in Census oflndia, 1901, vol. VI, Bengal Part I-Report, 1902, Calcutta,
p. 477. Cf also the remarks in (Ibid.: 470), in connection with artisan groups in
general.
26. See, for example, O'Malley (1906b: 92).
27. Hunter (1877a: 137-46).
28. O'Malley (1907: 138-9).
29. Ibid.: 139.
30. Hunter (1877b: 260).
31. O'Malley (1906b: 159).
32. I have discussed this particular factor in the context of India :llj a ..yh~fein
1
Bagchi (1972a: Chapter 7, section 7.1).
, H h • A}'..t
33. 0 Malley (1906a: 159-60). -~ ,-,, "I ti·,
34. Hunter (1877b: 113-17 and 258-9); and O'Malley (1906b: ~3).
.irl',f,.
35. See the references in the preceding footnote.
'\) 1.M'W'l'l\,l .M
36. Hunter (1877b: 257-8).
\,,,,1."\\1n·rt n ..l' \
I ' •:t....t..>..! l I 'I re!
 De-industrialization in Gangetic Bihar 105

37. Hunter (1877d: 354-60).

38. See BH (1810-11: 604-7).
39. Hunter (1877d: 137-42).
 5
A Reply(to Dr Marika Vicziany)*1

A ny serious argument about the degree of de-industrialization can

be engaged in, in the particular context analysed in my papers
only by admitting the possibility of comparison of data obtained from
Buchanan Hamilton's (BH's)2 survey and from the Census of India,
1901. The case or admission of such a possibility is unwittingly strength-
ened by Dr Vicziany. For, all that she says in criticism of BH' s surveys
is really said by the surveyor himself, who comes out as an extremely
self-critical investigator. I should have thought that, if anything, this
should inspire more, rather than less, confidence in BH's data. An
attempted critique of BH's data must confront them with some in-
dependent contemporary evidence culled from different sources. This
is what I tried to do as regards the population estimates of BH and
Dr Vicziany has nowhere attempted to do so in her lengthy citations
and paraphrases of BH's comments on his own difficulties.
When I said, by the way, 'As an authorized agent of the East India
Company, he had the assistance oflocal officials',3there was no implica-
tion that every official lovedhim. And Dr Vicziany has now shown that
many of the 'volunteers' for the census work of 1901 were conscripts
and were not very fond of their officially imposed chores either. The
arguments Dr Vicziany puts forward to suggest that BH was not a free
agent or that the local pt!ople, officials, and ruling families 'feared the
political consequences of ahy further intervention by the East India
Company in local affairs',4 I must politely decline to consider as being

*Reprinted from, 1979, Indian Economic and Social History Review, 16(2), April-
June, pp. 144-62. In the present version some portions have been removed. For
complete text see the original version.
 A Reply 107

seriously meant. The reason for Dr Vicziany's suggestion that BH might

not have been a fully free agent was that the choice of his exact route was
often influenced by the advice of his guides or oflocal people. lffreedom
is impaired by listening to the advice of guides or local people who liave
some knowledge oflocal conditions and topography, then every research
worker in the field is an unfree agent. And with the East India Company
entrenched in the Bihar districts for more than forty years, to suggest
that any kind of serious 'political consequences' of further intervention
by the Company could have occurred consciously as an additional threat
to the local people is also far-fetched. A natural suspicion of any white-
skinned man acting as an official enquirer would be adequate explana-
tion for not everybody courting that enquirer's company.
Apart from the alleged unreliability of the BH data, the other major
(and more fundamental) reason which might have been advanced for
refusing to admit the comparability ofBH' s survey results with the data of
the Census of 1901 as regards occupational distribution could have been
that, in basic respects, the degree or quality of differentiation as between
occupations was seriously changed in the concerned districts between
the time of BH's survey and the Census of 1901. The doctrine of the
lack of social division of labour in British India is rather fashionable in
certain circles. As far as major handicraft industries such as cotton or silk
weaving or associated processes were concerned, however, there is plenty
of evidence that many weavers or dyers or bleachers in India, at least from
the seventeenth century onwards, were full-time workers. 5 Buchanan
Hamilton's chapters on the 'artists' contain detailed discussions of the
earnings of various classes of artisans whose full-time occupation was the
pursuit of particular professions. In the earlier periods as in BH's time,
when for some reason it was not possible for the artisans to pursue their
usual occupation, they would adopt some other means of livelihood.
Agriculture, being the occupation of the largest number of people, and
promising some approach to subsistence in difficult times, was then
naturally embraced by the artisans for want of anything else. Such
desertion of traditional occupations in times of economic difficulty does
not bespeak the lack of a clear social division oflabour but the contrary.
I have argued that in fact, it was the destruction of handicrafts under
British rule which resulted in the mingling of different occupations, so
that if anything, professions were more undifferentiated at the end of the
nineteenth century than in the beginning.
Once we have established comparability of the data gathered by BH's
survey and those of the Census of India, 190 l, the only question that
108 Colonialism and Indian Economy

remains for some serious discussion is that of the position of spinners,

who occupy such an important place among the ranks of artisans and
the probable limits of the proportion of population at the two dates.6
Before I take this question up, it is necessary tq clear up a point about
the proper criterion to use;to, measure the degree of de-industrialization
or industrialization. While I found that the proportion of population
deet;ndent, on secondary, industry in the six Bihar districts declined
between.,11809':-13·
;
and 1901 and argued that de-industrialization
occtirtech in, those districts, I used this information in conjunction
with· ap.other -criterion-that the proportion of income generated by
-secoqdary·industry to total income also declined. As far as the Bihar
districts are concerned, the second inference is direct, seeing that there is
n6-eviderice of an increase in productivity in secondary industry, while
the numbers engaged declined both relatively and absolutely. For India
as a·whole I have argued 7 the available evidence suggests a process of
de-industrialization according to the two-fold criterion used above. So
whether an increase in the proportion of national income generated
by secondary industry alone is a suitable criterion of industrialization
is irrelevant for our debate. 8 For a number of reasons I need not go
into here, I would regard such a criterion as particularly opaque in
understanding the issues of economic development in Third World
countries. I am, therefore,,glad to find that Dr Vicziany endorses changes
in the proportion of the population engaged in secondary industry as the
more basic criterion for judging, whether de-industrialization occurred
or not.9
We turn now to the question of'dependence' on secondary industry
(or agriculture or trade for that matter). By drawing our attention to
the limitations of the data thrown up by the BH survey, Dr Vicziany
has, paradoxically enough, called into question the meaningfulness of
the census ~efinition of occupation of a person: the instructions for the
Census of 1901 laid down: 'Column 9 (Principal occupationof actual
workers).Enter the,principal occupation or means of livelihood of all
persons who actually do work or carry on business, whether personally
or by means of servants, or who live on private property such as house
rent, pension, eto.' 10
It will be noticed that no income or time criterion is provided for
determining 'the,principal occupation or means of livelihood', either
absolutely or relatively. That is, to say, it depends on the respondent's
subjective assessment (on a particular day) of what his principal means of
livelihood is as against his subsidiary occupation. There is no implication
 A Reply T09

that the principal means oflivelihood actually provided a subsistence, or

that it occupied the worker full-time. There is no implication even that
the principal means of livelihood along with the subsidiary occupation
either provided a subsistence or anything like full employment. If
anybody argues that surely the worker must have gained a subsistence,
since he and his family survived, he is unaware of the vast literature
on people living continually below the poverty line and continuing to
survive (the price is often paid in terms of shorter stature, thinner bones,
and lower levels of intelligence, since children's growth is particularly
affected by malnutrition). Furthermore, vast numbers of people in India
and among them, vast numbers of artisans, had been dying in famines
in the forty years preceding the Census of 1901.
If we now turn our attention to the data thrown up by BH' s surveys,
there is no difficulty in identifying spinning as the principal means of
livelihood or principal occupation of the spinners. Since the work of a
housewife is not recognized as an 'occupation' either in BH's survey or
in the Census of 1901 (or in modern censuses for that matter), spinning
is the only recognizable means of livelihood with a commercial value
that the spinners had. It is true that not all the spinners in BH's surveys
worked full-time. But did the 86,020 persons (male and female) working
in cotton (Class D, Order XII, Sub-order 40, in Census 1901c) in the six
Bihar districts really work full-time in the occupations of weaving, sizing,
spinning, and so on in 1901? Moreover, BH records in various places
that many spinners worked full-time at their occupation. 11 (Ironically
enough, Dr Vicziany is more severe on the BH data than on the data
of Census 1901, precisely because BH provides a lot more information
on the earnings and degree of ·employment of the workers of various
categories than the census does).
Abstracting from the problem of whether the earnings of spinners in
BH's time can be regarded as 'normal' or should be regarded as already
showing the signs of a process of decline of the handicrafts, particularly
textiles, let us compare the spinners' earnings with say, the earnings of
farm labourers or ploughmen.
In Purnea, for example, an average spinner earned Rs 10 2/5 per
month. 12 In the same district, a ploughman who was hired by the month
or the season, was supposed to make over the year Rs 4~ in money wages,
Rs 1~ in the form of food or grain allowances and another Rs 4% at
harvest time. 13 Thus altogether he made Rs 10% a year, only about 30
per cent more than an average spinner. Buchanan Hamilton accepts a
norm of Rs 24 for maintenance of a ploughman's family, attributes a
110 Colonialism and Indian Economy

considerable earning to the ploughman's wife, and still ends up with a

deficit of Rs 3%. For a labourer on daily hire, he estimates an earning
of Rs 12 and for his wife also he estimates the same earning. However,
these must be overestimates because BH stated that these labourers were
'usually extremely necessitous', and were often bonded to the indigo
works for months in advance.
Seeing that the spinner earns two thirds of the wages of ploughmen
or daily labourers and that spinning is a sedentary occupation which
requires considerably less calories for maintenance than ploughing or
field labour, our assumption that spinners support themselves is not so
unreasonable after all. Even if the spinners earned one-third the amount
of an able-bodied person engaged in hard labour, to take spinners as
self-maintaining would not be unreasonable. The standard of living of
neither the spinners nor of many of the other artisans might have been
ample, but that was the usual lot of artisans in an extremely unequal
society ruled by alien rulers.
Buchanan Hamilton took up expenditure norms for the maintenance
of families and found again and again that not only farm labourers
or ploughmen but also artisans such as weavers often failed to earn a
subsistence. Then he sometimes brought in other factors, more or less
arbitrarily, so as to balance their budget. But, as I have already noted,
living below a subsistence level was probably the lot of a large number of
workers, including spinners. Moreover, in order to regard the spinners
as dependent on spinning, it is not necessary to show that their earnings
from spinning alone could have supported them fully (here my original
phrasing is probably open to question). It is only necessary to show
that earnings from. spinning were the main cash income they had, and
they were an essential supplement to the family incomes. Moreover,
the artisans' occupations were the repositories of the skill in traditional
industry. Hence counting the possessors of such skills as integral
numbers, which indicated the industrial potential of the society of the
time, is the only natural procedure under the circumstances.
There is no logical compulsion, therefore, not to regard the spinners
as dependent on their spinning. But there is probably an element of
double counting in the original estimate of artisans in the Bihar districts
in my papers. I should have deducted the number of weavers' houses
from the total number of spinners, assuming that every weaver's home
housed at least one spinner. But as against that, as I pointed out, there
were many cases where the number of other artisans was underestimated.
However, ifl had to re-estimate the percentage of population dependent
 A Reply 111

on secondary industry (including construction as in the case of the

census data), I would bring down the populations by 25 per cent, reduce
the numbers of spinners by equal percentages, and deduct from that
number the number of weavers' houses or weavers (where the estimated
number of weavers' houses is·not available) and add to that the number
obtained by multiplying the total number of artisans other than spinners
by the average number of members in a family.14 In the case of spinners,
I follow· the assumption of BH that the number was roughly related
to the total population. But if we take the exports from these districts
to others in the same region, to other parts of India and abroad as
given, reducing the estimated number of spinners in population to the
estimated population might lead to an underestimation of the number
of spinners. 15 The revised estimates of the population dependent on
secondary industry in the four districts surveyed by BH are given in
Table 5.1.

Table 5.1 &timated Population and Population Dependent on

Secondary Industry in Gangetic Bihar, 1809-19

Estimated total Population dependent Percentage of

population on secondary industry (2) to (1)
(1) (2) (3)

Pama-Gaya 2,533,315 552,257 21.8

Bhagalpur 1,514,925 234,383 15.5
Purnea 2,178,285 505,865 23.2
Shahabad 1,064,640 238,763 22.4
Total 7,291,165 1,531,268 21.0

Sources:BH (1809-10, 1810-11, 1811-12, and 1812-13).

As I pointed out earlier, I also reclassified the census population of

1901 with occupations in class D so as to make it conform more closely
to the concept of secondary industry (including construction). I included
all categories where some processing was involved, but excluded pure
sellers (except in one or two caseswhere it seemed probable that many of
the sellers were also processing the goods sold and where no category of
sellers as such was listed by the census). None of the categories excluded
here has been included in the calculation of industrial population from
BH's survey. I verified by direct computation that the population sup-
ported by industry as given in Subsidiary Table II of Chapter 12 in
Census 1901b, is indeed o,braintd by summing up the figures for the
suborders included in class D. The groups excluded.are 76, 79-80, 99A,
112 Colonialism and Indian Economy

101, 104-05, 123-4, 128, 130, 132, 134, 149, 182, 209, 211, 261,
289,304,323,329,337, 358,360,366, 389, and 390.16 But firewood,
charcoal, and cowdung sellers (group 150), lime, chunam and shell sell-
ers (group 158) are included. So are cow and buffalo keepers and milk
and butter sellers (group 78) and ghee preparers and sellers (group 82).
The logic of inclusion of these categories is that some processing
seemed to be involved in selling these commodities and no separate
categories of makers or makers and sellers are given. The exclusion of
milk and butter sellers and ghee preparers and sellers from the data of
the Census of 1901 and correspondingly, of Dahiyar Goyalas, or
preparers of milk and butter from the BH survey data would make a
much larger proportionate and absolute difference to the population
dependent on industry in 1901 than on the population dependent on
industry in 1809-13. With these comments, I present in Table 5.2
a slightly revised estimate of the population dependent on secondary
industry in 190I.

Table 5.2 Total Population and Population Dependent on Secondary

Industry (Including Construction) in 1901 in Six Bihar Districts
District total Population dependent Percentage of
population on industry (2) to (1)
(1) (2) (3)

Patna 1,624,985 197,758 12.2

Gaya 2,059,933 211,489 10.3
Shahabad 1,962:696 268,879 13.7
Monghyr 2,068,804 183,817 8.9
Bhagalpur 2,088,953 232,199 11.l
Purnea 1,874,794 137,330 7.3
Total 11,680,165 1,231,472 10.5
Sources:Same as Table 5.1.

While this is as close as we can probably get to an estimate of the

population dependent on secondary industry on the basis of the data of
the Census of 1901, we should heed the warnings scattered in various
places of the census report 17 that many so-called artisans listed by the
census were really agriculturalists. Moreover, there is a specific warning
about such infla'tion of the figures of artisans-in particular weavers-in
Orissa and south Bihar. 18 And in the census classification of natural divi-
sions, south Bihar consists of the districts of Patna, Gaya, Shahabad, aiJ.d
Monghyr! (It is strange that with all her detailed scrutiny of the census
report, Dr Vicziany should have overlooked this very specific warning!)
 A Reply 113

If we compare Tables 5 .1 and 5 .2 now, we notice that the population

dependent on secondary industry as a percentage of total population, even
according to the revised estimates, was exactly halved between 1809-13
and 1901. I do not want to claim that these figures are sacrosanct in any
sense. Slightly different assumptions might produce different figures.
But on any reasonable assumption applied impartially to the BH figures
and to the figures of Census 1901, a conclusion supporting a massive
decline in the population dependent on secondary industry between the
two dates is inescapable.

Notes
1. This was written as a reply to Vicziany (1979b: 105-43).
2. Francis Buchanan, later Buchan~ Hamilton, i.e., BH.
3. Bagchi (1976a: 502).
4. Vicziany (1979b: 9).
5. See, for example, K.N. Chaudhuri (1978: Chapter 11).
6. Professor Nirmal Chandra had pointed out rhe problem of rhe treatment of
spinners soon after my papers were published.
7. Bagchi (1976b: 141-6).
8. There is not enough space for dealing wirh rhe question as to whether
Thorner's or Dr J. Krishnamurty's merhods for analysing rhe census data give a
proper picture of rhe post-1881 changes in occupational structure and employment.
For a critique of their merhods and a conclusion considerably different from theirs
see Chattopadhyay, 1975.
9.·Vicziany (1979b: fn 2).
10. Census, 1901a, Censusof India, 1901. vol. I. India; Patt I, Reportby H.H.
Risley and E.A. Gait, 1903, p. 185.
) l. See, for example, BH (1809-10: 537); BH (1810-11: 607-08); BH (1811-
12: 647-8).
12. BH (1809-10), p. 537.
13. Ibid.: 444.
14. The footnote added by Dr Vicziany in order to challenge rhe multiplication
of rhe number of artisans by the average size of a family assumes rhat in every case
rhe number of actual workers was counted. But we know rhat in rhe case oflooms,
for example, more rhan one worker worked on one loom (BH [1811-12:652]), and
the number of weavers' houses in turn fell short of rhe number of looms. And we
have taken only rhe numbers of weavers' houses wherever rhese numbers are given.
Similar comments apply to kasis workers, iron smelters, and others. Finally, it is to
be 'noted rhat rhe average size of a family has been conservatively estimated.
15. Dr Vicziany tries to show that exports of textile products were more important
rhan I had implied. However, she omits to mention rhat rhe major part of exports
of all rhe regions was to rhe neighbouring districts or orher parts of India. From
Shahabad, for example, only about Rs 30,000 worrh of cotton clorh was consigned
to rhe Company's factory in Patna, part of rhe total textile exports of Rs 2,09,000
114 Colonialism and Indian Economy

(BH [1812-13: 425] and Vicziany [1979a: Appendix Table I]). From Patna-Gaya,
out of total exports of more than Rs 545,000, the Company took about Rs 200,000
worth (BH [1811-12: 677]). As regards Pumea, where 'exports' apparently are so
important (Vicziany 1979b: Appendix Table I), BH comments: 'The only external
commerce which this country possesses, is with the territories of Gorkha or Nepal'
(BH [1809-10: 573)). Then he estimates the total exports to Nepal at only Rs
71,000. What all these figures and the detailed discussions ofBH prove is that there
was a flourishing interdistrict trade in all kinds of commodities-cotton yarn, cloth
and carpets, silk yarn and silk cloth, woollen blankets, paper, dyes, salts, and so on.
As in an industrially active region, one district might export one variery of cloth to a
.neighbouring district, importing another variery from the other. Such trade did not
impoverish the home market but enriched it.
16. Census, 1901 c, vol. VIA. YheLowerProvincesof Bengaland their Feudatories,
Part II, The Imperial Tables, 1902, Table XV, Part B.
17. cf. Census 1901b, vol. VI. Bengal Part I, Report,1902, p. 470 and p. 472.
18. Ibid.: 1972.
 6
Relation of Agriculture to Industry
in the Context of South Asia* 1

T he relative positions of the South Asian economy and the world

economy, of the Indian capitalist dasses to the capitalist classes of
advanced countries, and of the various strata of the South Asian societies
have altered very significantly between, say, 1793 and today. In discuss-
ing the possibilities open to the various countries, and to the various
classes in society, it is forgotten that it is often the relative strength of
the economy or of the class in relation to the other economies of the
world, and of the classes under consideration in relation to the other
classes of the same society or to the class formations in other societies
that is more important than the absolute size of these economies or
classes. For example, the domination of the pattern of world trade by
Britain in, say, 1851 (the year of the Crystal Palace exhibition) was
made possible because Britain was the only industrialized country of
the world. By the same token, once other capitalist economies had been
set on the path of industrialization, the relative position of Britain was
bound to decline, and furthermore, no other country was ever again to
achieve the same degree of dominance in the network of world trade
and payments. In the nineteenth century, first Great Britain and then
the economies ofWestern Europe and the Overseas European offshoots
(the USA, Canada, Australia,· and New Zealand) industrialized partly
by exploiting and expanding their own home markets but partly also
by turning their formal and informal colonies into markets for their
*Reprinted from, 1975, Frontier (Calcutta), 8(22-4), pp. 12-27. In the present
version some portions have been removed. For complete text see the original
version.
116 Colonialism and Indian Economy

manufactures and into sources of raw materials and cheap labour. 2 This
pattern of development cannot be repeated, at least on the same scale,
by the Third World countries, because they have few colonies in this
sense. Again, the nineteenth century growth pattern is often held up
as an ideal one from another point of view: it involved little inflation-
ary pressure for the world as a whole. However, inflationary pressures
were kept in check in the nineteenth century (a) because the working
class in the advanced capitalist countries was not yet strong enough to
erect rigid inflationary barriers against depression of their real wages, (b)
because capitalist development in the colonies (including South Asia)
was suppressed by colonialism and so the capitalist strata in the colo-
nies could not compete for resources, and (c) because the pre-capitalist
elements could be ruthlessly coerced, when necessary, by the colonial
powers if they dared to oppose the expropriation of resources and labour
by the rulers.

The 1960s
If we shifr our attention to the 1960s, we can see that the situation has
changed radically in this respect. The advanced capitalist countries are
involved in a situation of inflationary recession. The rates of accumula-
tion in some pace-setting countries like Japan and western Germany
have been fur highei; after the Second World War than before and the
other capitalist countries have also had to step up their rates of accumu-
lation. This has, however, aggravated the inflationary pressures in the
countries partly because 0£ the successful struggle of the working class
to defend their standards of living but also partly because of the mark-
up pricing policies-pursued by monopolistic and oligopolistic sellers.
Furthermore, the advanced capitalist countries have to face competition
from capitalist classes of the Third World for scarce resources. On the
obverse side of this, the capitalist classes of the Third World cannot step
up their rates of accumulation without running into inflationary, and
balance of payments, difficulties, because among other things, they have
to reckon with the formidable influence exerted on 'the world economy
by the advanced capitalist classes. Moreover, since by the very nature of
their development and their fear of the peasantry and the proletariat .of
their own countries in the epoch of the socialist revolution, the cap,itali~o
classes of the Third World have to adjust to the demands o( tlreprop!
erty-owning strata in control of sectors characterized by pre-;capitalis~
relations; the resistance of the latter against a rapid rat~ ,~f \r~sfe~ -?~
resources to capitalist accumulation aggravates the difficufties of the,
 Relation of Agriculture to Industry 117

cap.italist classes of the Third World. Furthermore, dependent as the

capitalist classes of the Third World are on the advanced capitalist classes,
they are unable to fully take advantage of any recession in the advanced
capitalist countries: for (a) their exports are often crucially dependent on
the fortunes of the capitalist countries, and (b) they lack an independent
entrepreneurial and technical base for fully utilizing the resources that
the advanced capitalist countries release. The contrast between the rates
of accumulation attained in the 1930s by the USSR and Japan on the
one hand and by countries like Argentina, Brazil, or India on the other
is illuminating from this point of view.
These admittedly crude propositions will illustrate the importance
of continually placing the relations between industry and agriculture in
Third World countries, including India, Pakistan, and Bangladesh, in
their scale, in relation to other capitalist countries, and assessing how
they have evolved not only through their own dynamics bt!t through
the dynamics and dialectics of the evolution of capital and its successor,
socialism.

Two Ways
There are at least two ways in which the evolution of agriculture-industry
relations can be described, and their import for current developments
assessed. The first line of enquiry would be to look at the change in
the relative importance of agriculture or industry in the structure of
occupations and in the structure of incomes. The second is to trace the
evolution of the different types of production relations since the time of
British conquest until today. We do not yet have full accounts of either
of these two developments. But we do have some idea of how they have
changed. In the next section, I summarize some of the evidence relating
to the change in the structure of income and of occupations in !ndia.

Changes in the Structure of Incomes and Occupations

Indian nationalists had complained for a long time that British rule had
led to the de-industrialization of India. On the other side it had been
claimed that while under the impact of 'one way free trade' in India,
handicrafts had been destroyed, modern industries had grown up to
take their place, and no de-industrialization had occurred.
Capitalist industrialization up to the phase of maturity is attended by
at least three types of changes: (a) an increase in the proportion of the
population engaged in secondary industry, (b) a sustained increase in per
capita income and (c) a continual rise in the degree of mechanization in
(18 Colonialism and Indian Economy

industry-and to a lesser extent perhaps, in agriculture. The reversal of

any of these conditions over a long period of time can be characterized
as de-industrialization. India experienced the reversal of the first two
conditions from probably 1820 up to 1914.3 We do not have detailed
and reliable national income estimates before 1900: but some idea can
be formed of the change in the proportion of population engaged in
industry in the beginning and at the end of the period. This proportion
would definitely indicate a decline. This decline was not offset by growth
of employment or income in large-scale industries on a requisite scale.
From 1900-01 onwards, we have the estimates of Sivasubramonian
relating to national income and its composition, and the estimates of the
Thorners, Kalra, and Krishnamurthy relating to occupational distribution.
According to Sivasubramonian's estimate, the manufacturing output at
constant (1938-9) prices for undivided India was Rs 387 million in
1900-01 and Rs 803 million in 1914-15 respectively, whereas the total
secondary sector output was Rs 1,638 million and Rs 2,448 million in
1900-01 and 1914-15 respectively.4 While Sivasubramonian's estimates
of income from large-scale manufacturing and mining are based on
reasonably firm data, his estimate of small-scale industry output is based
on guesses supported by fragmentary evidence. In fact, the qualitative
evidence we ·have contradicts the large increase (by Rs 394 million)
between the two dates. Even accepting Sivasubramonian' s estimate, the
share of the secondary sector in national income at current prices was
virtually stagnant between El00-01 and 1914-15. 5 Since growth in
modern manufacturing was substantial only from the last quarter of
the nineteenth century onwards, whereas output of small-scale industry
may well have been declining even between 1870 and 1900, this would
indicate that in the period before 1900, the share of the secondary sector
in national income would on balance have been declining.
The picture in respect of changes in occupational distribution is
quite clear: there was a decline in the share of the secondary sector in
the working force almost continuously from 1901 to 1931; the trend
changed probably from the middle of the 1920s onwards, and there was
a marginal increas~ in the proportion of the working force engaged in
industry between 1931 and 1951 and between 1951 and 1961. Even in
1961 the proportion was no higher than what it was in 1901.6
In India as a whole, as we remarked earlier, the decline in the share of
the secondary sector in employment was probably halted in the 1920s
and a marginal rise in this share took place between 1931 and 1951, and
under the stimulus of more active state patronage, the rise continued
 Relation of Agriculture to Industry 119

from 1951 to 1965. But after 1966 again the process of rise was halted
and the share has at best remained stagnant since 1966. The only State
of the subcontinent in which the share of the industrial sector in both
national income and employment has gone up is Pakistan (former West
Pakistan)? On the other side of the subcontinent, Bangladesh (former
East Pakistan) witnessed a decline in the already low share of industry
in the labour force between 1951 and 1961; the share probably went up
in the 1960s, but very probably declined again. The share of industry in
the total output may have increased in the 1950s and 1960s but it seems
to have registered a decline again very recently.8 It is interesting that
the regional disparity in respect of the share of the industry in national
income and employment predates the independence of the subcontinent.
In 1931, East Bengal {which, with the addition of Sylhet formed East'
Pakistan in 1947) had 4.1 male workers in industry for every 100 male
workers.9 Punjab, on the other hand, in 1931 had the highest ratio of
the occupied labour force engaged in industry (primarily small scale and
cottage industries). However, the disparity between West Pakistan and
East Pakistan was certainly aggravated by the following factors among
others, (a) a much higher rate of public investment in West Pakistan than
in East Pakistan, (b) the development of a capitalist class from among
the immigrant communities investing heavily in West Pakistan which
they came to regard as their homeland, {c) the more rapid development
of agriculture in West Pakistan on the basis of the earlier stock of capital
{in the form of irrigation works) built up under British rule and new
large-scale investment by the State in agriculture, and (d) partly as a
result of the operation of the earlier three factors and partly as a result of
the creation of a common customs area in the two wings of Pakistan, a
net transfer of resources fro~ East to West Pakistan.

Bangladesh
Bangladesh exhibits, almost in a pure form, the resuln. of the colonial
capitalist mode of exploitation, which leaves its permanent mark on the
structure of the economy and society and on the quantum and character
of productive investment. Hence we shall spend a little more time on
discussing the country's situation.
In undivided India and in India after independence, the share of the
tertiary sector increased almost continuously. Most of the decline in the
share of agriculture has been accounted for by expansion in the share of
trade, commerce, banking, 'and services.10 In Pakistan also, the tertiary
sector has tended to expand over time at the cost of agriculture, even
120 Colonialism and Indian Economy

though industry also has expanded. The extreme is, however, reached
in the case of Bangladesh where the share of the tertiary sector in GDP
expanded from 44.7 per cent in 1969-70 to 48.9 per cent in 1972-3 at
the cost of both industry and agriculture.11
South Asia is not peculiar among Third World countries in recording
a faster rate of expansion of the tertiary sector than that of national
income or total national employment. A full explanation for this
phenomenon is, however, yet to be provided. Explanations in terms of
a growing threat of unemployment or urbanization without adequate
expansion of productive employment are not·fully satisfactory, and in
any case, do not explain much. Not only low-income employment but
also high-income employment in the organized tertiary sector in India
has expanded faster than total productive employment. 12
The explanation, I believe, has to be sought in the mode of extraction
of the surplus in South Asia and its utilization.To be more specific, before
1947 and particularly before 1914, most of the economy was geared
towards the extraction of an exportable surplus; within this economy,
however, eastern and northeastern (and to some extent southern) India
was the part which was subjected.to the most intense exploitation by
the colonia,l po;wer.,;N~tur;tlly, nq major indigenoµs capitalist strata
geareq to tqe ewlqitatiq11 .of the home market developed in ,this
region. The colonial ,exploitation was,made possible by the preservation
or ev;(;ncreatj.on of many pr~;pipitalist relations, particularly in rural
areas. Wh~n an Indian capit;pist cl~s then took over from the British,
it simply inherited the old colonial mode of exploitation based on
trade, usury, and the export of primary pro1ucts or crudely processed
manufactures. This.dass had not developed on the basis of exploitation
of home industry, as happened, for example, in western India. So when
after independence, the home market was fully protected it found it
difficult (because it would have been financially costly for it) to switch
over to manufacturing on a large scale. On top of that, there were all
the difficulties that a retarded capitalist class faced {s~ch as the inability
to generate innovation~ or borrow i.µnovations cheaply, the inability to
meet the respurce needs for increasing degrees of economies of scale
and for adapting to rapid changes in techniques and products) in
embodxing its profits in productive investment. So if a surplus
occurred through the older methods of exploitation, and it could not
be exported on tqe old scale because of a difference in the ethnic roots
of the capitalists and bequse of changes in world market conditions, it
took the shape of expansion of unproductive consumption. The latter
 Relation of Agriculture to Industry 121

took four main forms: increased consumption of luxury goods (insofar

as they were produced at home, this would have some expansionary
effect on industrial employment), increased employment of retainers
in various guises, increased provision of 'jobs for the boys' (and girls)
in unproductive sectors, and increased expenditure for the defence
services.
In Bangladesh all these factors acted most intensely. Practically
no indigenous capitalist class had developed, the State apparatus was
primarily controlled by the West Pakistani ruling classes, most of the
public investment was devoted to West Pakistan, and no major changes
in class relations took place after independence: the removal of the
Hindu zamindars did not lead to the freeing of agriculture from pre-
capitalist relations. The observed rate of saving in an economy under
dependent capitalism is almost always lower than the potential savjng
because of the severe constraints on investment. Taking the actual saving
rate, we find that East Pakistani internal saving financed practically
all of its domestic investment, whereas there was a large gap between
the investment and saving rates in West Pakistan. 13 When Bangladesh
became independent, while the new rulin,g classes inherited the surplus
extracting mechanism, no n~ capitalist class automatically emerged
to invest the surplus productively, nor of course, was th,ere a party of
the proletariat to reorient the economy. Naturally, the tendency was
to utilize the surplus for the purpose of expanding the unproductive
sector.
I have used Bangladesh to show in a dramatic form many of the
tendencies at work in the whole subcontinent.,As things are developing,
the stagnation of the economy of eastern India may also be explained
in terms of the inheritance of a colonial pattern of exploitation by a
retarded capitalist class unable to develop industries on the basis of a
, home market, and given to export of capital to other regions and other
countries when difficulties are faced in the home base.
I do not want to give the impression that political decolonization did
not change anything. It did lead to the strengthening of the indigenous
capitalist classes, a more purposive intervention of the state to develop
the economy and the capitalist class, and an increase in the effective rate
of accumulation in the economy. This is true of all the three States of the
subcontinent. However, all these developments were not sufficient to
free the growth of the economy from the constraints of a bastard social
system whose most dynamic element-the capitalist class-is in a state
of dependence on the world capitalist system.
1~2 Colonialism and Indian Economy

Changes in Production Relations

Production relations in industry and agriculture in South Asia have been
shaped both by the pre-British structure of relations and by the changes
brought about under British' rult::.rltwill not be possible here to describe
even schematically the evbfotion 'ofalhhe forms prevalent in urban and
rural areas. Instead, I shall present an extremely summary view of cenain
aspecfs ~f productive relations in-agriculture, with only sketchy citations
of evidence.. The alipects We shall touch are the structure of the village
and the relations betweell' landlords and the agricultural labourers.
I have deliberately left the structure of landownership as such out of
account. The researches•of historians such as B.R. Grover, Irfan Habib,
and Nurul Hasan, and ofN.K. Sinha, lead to the conclusion that private
propeny in land defi'nitely predated British rule, but that the sale and
purchase ofland-were limited both by the relative immobiliry of capital
'in an essentially non-capitalist economy and by various customary
'restrictions. 14 The British tried to introduce a more thorough-going
iprivate 'property in land, increase the revenue exacted by the State and
1~t the same time minimize the cost of-collection. Despite help from
the. work of an economy geared more arid more tb the working of the
•internatlona..lmarket, the three•objectives were often conflicting; this
'cbriflic:1wasgenerally resolved by making the land revenue' objectives
"paramount (subject to a minimum degree of stability of collection)
ana ailbwing private property rights of the actual cultivator to be quite
overridden by the rights of intermediate level rent-collectors. There were
very great regional differences in the-structure of rights of superior right-
holders, owing to differences in pre-British forms ofland-ownership and
to differences in the elate of conquest of the territories by the British; but
:this is not the place to discuss them. From our point of view, perhaps
:rhe'most important common denominator of all the changes was that
i:he'il.cttial cuttivator-tenant or the agricultural labourer was reduced to
the subsistence level or below, and that the retarded industrialization
·process·preserved the superior right holders in every region as a pure
taniier class.

LayersJoLControl
How the effons of the· British to build up bourgeois property relations
in land led i6 strange results and had mostly the effect of increasing
the weight' and the huniber of the pure rentiers can be illustrated. with
the case of eastern India. In eastern India after the decennial settle-
ment (1790) and, more particularly, after the Permanent Settl~ment of
 Relation of Agriculture to Industry 123

1793, several layers of control over land developed between the cultiva-
tor and the state. First, there was the zamindar who paid land revenue
directly into the government treasury. He was generally called the malik
or proprietor even though he might alienate the actual ownership of
land to other intermediaries. The malik might lease out the land to
somebody else 'in consideration of a money advance or mortgage on
loan, for example, the mukarari, which was a lease from the malik at
a fixed rental, after the payment of an installation fee called nozarana.
This lease was either permanent, in which case it, was called istimari or
.barfarzandan(from generation to generation) or it was only granted for
the life of the lease-holder, in which case it was called hinhiyati. In addi-
tion to the nozarana, the lease-holder had sometimes to pay an advance
(zar-i-peshgl)as security for the payment of the rent. Dar mukarari is
an exactly similar lease to the above, granted by the mukararidar to
a third.' 15 Such a chain might be continued almost indefinitely until
the actual cultivator is reached. The sub-lease might be of a temporary
nature, in which case the term used was thika. There might be varia-
tions in the actual number and forms of sub-tenures from locality to
locality, but both the chain of intermediary tenures and the difficulty of
ascertaining the position about the actual ownership or control of the
land would be constant.
First of all, there was a steady, legally recognized, process of sub-
division of proprietary, that is, zamindari holdings going on from the
time of the Permanent Settlement until the beginning of the twentieth
century, and probably even later. In Gaya, for example, 'in 1789 the
demand of land revenue ... was Rs 10,41,700, payable by 744 estates
with 1,160 proprietors .. .' 16 This district, which was formerly known
as Bihar, lost a considerable part of its area tq Patna, Palamau, and
Monghyr before 1870. In the much smaller district of 1870-1, 'the total
demand of land revenue was Rs 13,80,320, payable by 4,411 estates
owned by 20,453 proprietors. In 1881-2 the current demand had risen
to Rs 14,36,900 payable by 5,614 estates and 59,172 proprietors, and
in 1900-01 to Rs 14,80,700 due from 7,514 estates owned by 72,404
proprietors. The average payment from each estate has thus fallen
during the three decades ending in that year fro,m Rs 313 to Rs 2~6 and
Rs 197, and the payment from each proprietor from Rs 67-8 to
Rs 24-4, and finally to Rs 20-8.' 17
There were the results of legally registered partitions. 'Apart, more-
over, from the partitions recognized by Government, private partition
had gone to extreme lengths. In North Monghyr, for instance, (for
124 Colonialism and ln'dian Economy

which alone accurate statistics are available) though the total number
of estates according to the Collector's registers, is 4,367, the Settlement
Officers had to frame 9,730 separate records of proprietary interests.
Also it was found that-90) estates·had been privately partitioned into no
less that 5,899 patUs of shares for each of which a separate sub-record
had to be prep~ci5' 18 t"Iqe.smallest recorded subdivision of proprietary
rights in the same district was
l •
1
----- of an anna or
2,480,000,000

39,680,000,000

Most of the so-called proprietary interests had been alienated, but

some of it had been brought under the maliks' control by other means.
'Out of the total area occupied by landlords in Monghyt, 'only 619 acres
have been recorded as zirat or proprietors private lands. Under kdmat,
which is the term or'dinarily used in' this area instead"of zirat, are locally
included all lands in ·the landlord's 'c'ultivatihglpossession, as well as
lands whicli; thdugh settled witl;ifertan~,' liive at any time been bought
in by the landlord at sales of,ryoti holdings for arrears of rent. Nearly
5 percent of the total, number of tenancies; covering 10 percent of the
occupied ar'ei;'w'ere recof~ed ·a!bakashtmalik, that is to say, as in the
cultivating possession of.the proprietor, but not proprietor's land.' 19 It
can be easily s'een that in this situation, it is very difficult to interpret
data about so-called patterns of land ownership or land transfers before
1947 without detailed local information: There was the initial problem
of deciding who was the actual owner of the land; then there was the
problem of matching records with persons. A man might hold land in
several different villages or districts. There was no method of figuring out
how much land a particular person owned or controlled. This problem
persisted in the.post-independence period, and this was one of the rocks
on which land reform measures came to grie£
Zamindars' had legally been given almost unlimited powers by two
laws passed' in 1799 and 1812. Some of these powers were revoke&by
the laws of 1859 and 1885. But, as I shall have occasion to remark again,
the benefits of the legal restrictions on the powers of zamindars we&
reaped mostly by occupancy ryots who were in a substantial fra'Jtion
of the case not the. cultivators of land at all. As it was, in ~ite 1 of tlre
sub-division of the 'proprietary estates' there corttinued_to rerfia'i'nvefy
 . y

Relation of Agriculture to Industry 125

large zamindaris in eastern India, and in spite of the legal restrictions,

zamindars continued to oppress tenants almost with impunity. The
District Magisµate of Bhagalpur district, for example, reported for the
years 1907-08:
Babu Rash Bihari Mandal (a big zamindar) not only forced all his tenants to accept _
the former cash rent which was 20 to 33 per cent in excess of what the survey
fixed, but actually secured in addition in many villages a half share in 2 cottahs
in every bigha, the produce of the bigha for the purpose of levying his rent being
fixed at 12 maunds. The Maharaja of Sonbarsa similarly threw all the demands the
settlement had cut down into "miscellaneous", and forced the tenants to accept
them. I mention these names only, but I fear that many landlords not mentioned
are in a similar category. The system worked was first to get back practically all rent
receipts the tenants had, then to levy rent without giving receipts, then to demand
the illegal high rate of rent, and if a man refuses, to sue him for four years' rental and
use the decree as a threat to force him to accept.20

The total confusion in the field of land relations was perpetuated

both by the processes of de-industrialization and by a legal machinery
which would regulate the relations at the village level by remote
control methods. Redress against 'injustice' defined within that system
was extremely costly for a common man, who was often ignorant of
his supposed 'rights'.2 1 This latter aspect of the system persisted after
independence. The Indian legal system obdurately refused to confer sole
rights only on the cultivator and all attempts at land reforms aiming to
give the land to the holder of the plough were successfully defeated. 22 But
that is, of course, expected in a retarded capitalist economy dependent
on the support of pre-capitalist holders of power.

Village Community
When we come to the structure of the village economy and society,
we have an enormous amount of evidence pointing to a great deal
of occupational and social differentiation among the rural people.
The archetypal model is that of the village community; in its purest
form, with little contact with the outside world except for payment of
taxes: it certainly did not operate in the area where settled agric::ulture
rather than pastoralism, hunting or shifting cultivation was the pri-
mary source of livelihood. But in an attenuated form, in which definite
groups of artisans or other function,aries .(generallyorganized into castes)
served the village as a whole and received customary rewards, it may
have operated in some .Parts of India up to, say, the early nineteenth
century. 23
126 Colonialism and Indian Economy

Jajmani System
At the same time, it was observed, with much greater frequency, many
villages operating the jajmani system: 'Briefly, the jajmani system is a
system of distribution in Indian villages whereby high-caste land owing
families called jajmans, are provided services and products by various
lower castes such as carpenters, potters, blacksmiths, water carriers,
sweepers and laundryman.' 24 Here every serving caste had its circle
of jajmans or clients (who were really their patrons) and this circle
generally did not include the village as a whole. The jajmani system was
not confined to Hindus. In Bihar, for example, 'The exclusive right to
employment by the people in the circle constituting a man's britis so
well established, that it is regarded as hereditable property, and with
Muhammadans, is often granted as dower.' 25 The jajmani system was to
be found all over the country; however, in Bengal proper it is supposed
to have decayed pretty completely by the beginning of the twentieth
century, ifit was ever strong there. The changes brought about by British
rule led to the loosening of traditional, customary ties, but because of
the massive process of de-industrialization and population growth, there
was also a shrinkage of employment opportunities in relation to the
people seeking employment. These contradictqry tendencies, along with
certain political changes, determined the speed with which the ·jajmani
system 'decayed.
The relations between agricultural labourers and landlords have
sometimes been sought to be fitted into the general scheme of the jajmani
system. I think that such a specialization is in general inadmissible.
There was widespread agrestic slavery, or rather serfdom, particularly
in southern India, at the advent of British rule, and it survived legally
until the Slavery Abolition Law, Act V, 1843.26 Such a legal abolition
can have had but a marginal effect within the short term, for the means
of enforcing the law or making the relevant information available to
the slaves or serfs were quite limited. Furthermore, because of the
insecurity of the agricultural labourers and their dependence on loans
from the masters, agrarian bondage survived on a large scale throughout
India and persists even today. The British government itself largely'
nullified even the legal effects of the formal abolition of slavery by
enacting a Workmen's Breach of Contract Act in 1859, and later on,
enacting legislation that gave masters the right of arrest of absconding
servants. This was done mainly in the interest of British tea planters in
Assam. As is well known, Indian labourers were also indentured and
transported to Mauritius, Fiji, Guyana, Jamaica, Trinidad, and Natal.
 Relation of Agriculture to Industry 127

Thus pre-capitalist relations as such did not hinder labour mobility; they
merely intensified the exploitation oflabour.
In a recent study of the hali system in south Gujarat, Jan Breman
has traced the disintegration of the formal system of tying of specified
groups of labourers to specified families of masters (dhaniamos).27 This
has been attributed to the lessening of the need for bondage with the
growth of the population of agricultural labourers, the change in the
cropping system from labour-intensive crops to crops requiring less
labour. But Breman places the greatest importance on the renewed
growth of cities or towns like Surat, Navsari, and Baroda; this accords
well with our emphasis on changes in the structure of occupations as
strongly influencing production relations. However, with the emer-
gence if a surplus population in agriculture, labour could not really
be free: insecure labourers now entered into relations of random and
casual bondage with landlords, the degree and duration of bondage
varying from case to case. But in a situation in which traditional crafrs
vanished and employment in new industries did not expand and fast
enough, agricultural labourers became just a residual, catch-all category.
Hence it is illegitimate, apart from prior existence of agrestic bondage
on a wide scale, to fit the master-attached servant relationship into the
traditional jajmani framework. 28
The relations between landlords and tenants under colonialism were
also variegated. 'Tenants' were often superior right-holders and much
of the movement for tenancy reform boiled down to a struggle of the
nominal owners, leaving the real cultivator where he was. Share-cropping
was prevalent on a wide scale in the late eighteenth and nineteenth
centuries, and according to Colebrooke' s estimate in 1794, sharecroppers
were worse off than agricultural labourers and they often migrated from
one district to another. 29 Instead of the so-called 'commercialization'
of agriculture under British rule leading to the displacement of kind
rents by cash rents, the next movement may well have been in the
other direction. This movement has not been studied in sufficient detail
yet. As fur as Bihar in eastern India is concerned, the following factors
seem to have been responsible for the prevalence and in some cases,
growth, of the practice ofleasing land for a share (generally 50 per cent)
of the produce:

1. The indigenous system of irrigation on the basis of temporary em-

.bankments required the construction and maintenance of these works
by large landowners; unless the landowners had an interest in the
128 Colonialism and Indian Economy

exact size of the crop they would allow the system to decay. Hence a
system of produce rents was necessary to· keep their incentive alive.30
2. With closing of the opportunities oflucrative employment in the civil
and military departments of the foreign governments and growth
of population, ,a number of small landlords often came back to the
villageswhere they owned land, and leased out land on a produce-rent
basis, even for growing valuable crops such as tobacco and chillies.
3. The idea was generally prevalent, and it was also factually true, that
'occupancy erights do not accrue in lands held on produce rents' .31
Since there were no records of rights of ordinary cultivators in the
Permanent Settlement areas, it was easy to deprive the actual cultiva-
tor of even his legal rights generation after generation.
4. The tenancy reforms in Bengal-in the form of the Rent Act of 1859
and Tenancy Act of 1885-may well have paradoxically depressed
the position of the actual cultivators and reduced many of them to
the status of share-croppers.

Through these reforms many of the intermediary right holders

managed to get themselves registered as occupancy ten~ts, and many
landlords also became,legally recognized as permanent tenants, of the
land for which they hand only collected the land revenue. The actual
cultivators, who had very restricted access to a highly centralized legal
machinery, were left out in the cold and had to. accept the status of
share-croppers.
Our discussion will already have indicated how difficult it is, before
independence, to talk about a uniform growth of capitalist relations
in Indian agricult1He. Mest European 'capitalist' planters (including,
the government as the cultivator of opium) used non-market coercion
to exploit the labourers and the peasantry. When the cultivation of a
plantation crop, say, indigo, became unprofitable many of them became
zamindars in the Indian style; many (in fact, most) sugar factories found
that it ,was more costly to cultivate sugar on their .own on large-scale
'scientific' methods 'than to rent the land out to tenants on a share-
cropping basts.
Even after independence, this continual interchange between capital-
ist and pre-capitalist relations has not ceased. This is caused partly by
the low rate of capital accumulation and the existence of a permanent
state of rel¥tive over-population in the countryside. But it is also ~used
by the fact that capiralist profit-making itself utilizes pre-capitalist
methods, and that capitalist farmers (when such a category can be cl<:_a'rly
 Relation of Agriculture to Industry 129

identified) depend on other property-owing strata for maintammg

their political and social power. 32 I do not know whether we gain
much by characterizing the amalgam of usury, bondage, wage-labour,
and tenancy prevailing in the Indian countryside as 'semi-feudalism',
'semi-capitalism', 'neither feudalism nor capitalism', 'both capitalism
and feudalism'; I should be happy with any of the phrases so long as the
basic laws of motion of such a society are correctly understood.
Perhaps this way of putting it would be regarded by some as
shirking of the real issues. One major hindrance against a very sharp
characterization of the amalgam of capitalist and pre-capitalist relatioiis
that we witness in South Asia and in many other underdeveloped
countries is the immense gradation of the different types of relations
that come into being. Two,young Indian economists 33 make some very
pertinent observations on the slowness of the speed of transition from
the 'feudal' to the capitalist mode of production and on the 'phenomenal
array of forms of organization and relations of production, ranging from
pure capitalist relations on the one hand, to accredited feudal relations
on the other'. They also point out the futility of the effort to ,discover
capitalism or feudalism by verifying whether a certain arbitrary set of
characteristics are satisfied at any given moment of time.
lhen they go on to try find out how far capitalism has proceeded
in the ~rea under study. I find it difficult to follow them all the way
with their robust faith in the laws of development of capitalism,
(a) because, as I have argued, there is often a symbiotic relationship
between pre-capitalist and capitalist modes of exploitation, so that
the 'laws of development of capitalism' can hardly· be applied without
a very great deal of modification and (b) because I am not sure that
the 'transition' to capitalism can ever be complete in the countries of
South Asia. The difficulty of finding a scalar measure of the progress of
capitalism and the difficulty of discovering the laws of motion of the
complex amalgam of different relations of production, or of different
modes of exploitation are not unrelated to each other. Pre-capitalist
relations, almost by definition, are far more specific to a particular
region and a particular moment of time than capitalist relations; it is
not the least of the harmful legacies of colonialism that while it modified
the pre-capitalist relations to alter its purpose, it also preserved them.
Colonialism thus helped to impress upon the ex-colonies those peculiar
shapes of retarded capitalism and modified pre-capitalism, and made
them go in for three-legged races when the other competitors are free of
similar encumbrances.
130 Colonialism and Indian Economy

This gives us a convenient point of departure for linking up pro-

duction relations in agriculture with those in industry. The British
conquered India as a mercantile community, and the instruments they
fashioned included those of a heavy land tax, concentration of control
of the external trade, and a large part of the internal trade first in the
hands of the East India Company and then in the hands of a very small
number of European firms, the intensification of the exploitation of
the interior through plantations and through the conversion of more
and more land to the production of cash crops. At the base of this
pyramid of exploitation were at first, the weaver of cotton goods and
the spinner of silk yarn, the producers of salt and saltpetre, and finally,
the peasant. After the landside of de-industrialization had got going, it
was the peasant in India, the poorer consumers of salt in India and
the consumer of opium in China who largely bore the brunt of exploi-
tation. The machinery of exploitation was extremely hierarchical and
had a more or less capillary effect on the surplus. The development of
India as a market was achieved primarily by opening up the interior and
destroying the handicrafts. India was never considered a suitable area
for investment of capital on a large scale; she always exported a larger
amount of capital in various forms ,than she, received. Thus Britain's
position as the first industrializing country did not in itself lead to a
forward-looking revolution, in the relations of agriculture and industry
in India: most of the changes aggravated the forces of stagnation in both
rural and industrial economies. 34

Oligopolistic Structure
At the time of independence, India inherited a highly oligopolistic
structure of control in industry, trade, and finance. Most of the big
business houses had interests in all the three fields. Since a large part of
profits in both agriculture and industry took the form of profit from
alienation, and since lending to trade for various purposes was perhaps the
most important form of bank-lending, major national conflicts between
agricultural and industrial 'interests never had the chance to develop on
a large scale. But inter-regional conflicts did develop. The heat generated
by the controversy about the·terms of trade is to be attributed to inter-
regional differences in gains and losses from the Green Revolution. The
Green Revolution was made possibly by a combination of imports of
new technology and massive government investment in agriculture, and
both the government investment and productivity growth in agriculture
have been unevenly distributed. Hence a rise in the terms of trade of
 Relation of Agriculture to Industry 131

agriculture in relation to industry would tend to affect adversely the

interests of the urban dwellers in States which have not gained much
from the Green Revolution. Poor peasants and agricultural labourers
who are net buyers of foodgrains and who do not gain at all from
rationing and whose wages, particularly in the agriculturally stagnant
States, have risen less than the retail price level, also lose, but it is not
their plight which provides the political punch. However, it is doubtful
whether the capitalist class as a whole has suffered much from changes
in the terms of trade.
One could think of a 'healthier' pattern of relationship between
property-owners in industry and in agriculture, where growth in agricul-
tural productivity is fuelled by the enterprise of capitalist farmers, and
industry is controlled by capitalists who specialize in production rather
than in trade.
When capitalism develops in agriculture, trade, and small-scale
industry, without any obvious control from big capitalists in metro-
politan cities or ports, we can call it 'cellular capitalism' to distinguish if
from what may be called 'siphoning capitalism', where the control over
trade, industry, or agriculture even at the local levels is exercised by big
capital in the port or metropolitan cities. Thus trade in jute and jute
goods and the jute industry in eastern India would be an example of
'siphoning capitalism', whereas wheat production and wheat trade in
today's Punjab might be an instance of cellular capitalism.35 It is not
the degree of pervasiveness of capital relations that is the distinguishing
characteristic, but the structure of control over the surplus extracted. It
is possible that in the ultimate analysis, the major distinction as far as
agriculture in eastern India and agriculture in Punjab are concerned
may turn out to be the difference in the rates of real capital formation
in the two cases, and not the structure of control at all. However,, we
should remember that Punjab and Haryana have given rise to farmers'
lobbies in a way in which eastern India has not generated them and
these farmers' lobbies have agitated for government support not only
in the field of prices but also in the field of investment in the form
of more irrigation, more electric power, and subsidies for equipment
and fertilizers. But, of course, the development of Punjabi capitalism is
no more determined by only its own structure than that of Indian
or Pakistani capitalism is determined by theirs. National and macro-
economic constraints determine how far any internal energy can
carry a particular group of capitalists. On the Indian side, however, the
enterprise of Punjabi capitalists with interests in industry, land, and
132 Colonialism and Indian Economy

trade has been severelylimited by the enormous requirements of capital

and managerial resources of modern large-scaleindustry, and by the fact
that Punjabi capitalists have to compete with much longer established
and bigger capitalist groups on an all-India basis. On the Pakistani side,
the picture is very complex because the Punjabi elite dominated the
Pakistani state which could do far more for the development of capital-
ism in the region, since it had not inherited any very large business
groups. Even there, however, it appears that business houses with in-
terests in trade came to dominate industry, and that capitalist farmers
could rarely graduate to become big industrialists.
While it is fascinating to speculate on the regional differences in the
patterns of growth in the subcontinent, the common constraints on
growth must always be borne in mind. One constraint is the relative
stagnation in the standards ofliving of ordinary people, caused both by
the slow pace of qpital accumulation and by the structure of exploitation
built up over the centuries. Both in India and in Pakistan, for example,
real wages of ip.dustrial labour have stagnated over the years,36 and the
share of wages in value added in industry has tended to decline. In
agriculture also, real wages of labourers have. tended to stagnate with
some rise in pockets ~periencing vigorous,growth.
The constraints on th~ home market, the unevenness of capitalist
development in different parts of the country, the existence of oligopo-
listic structures of control over different fields and the fear of domina-
tion by foreign firms if the latter are allowed free entry into the internal
market-all these have led capitalists to generally rally behind various
protectionist policies adopted by the government. Those who want
relatively free trade.and.further liberalization of import export policies
are largely talking to an empty audience hall.37 .Some capitalist groups-
particularly the really big business houses-might chafe under gov-
ernment restrictions, but the capitalist class as a whole can hardly do
without government controls in various fields. .A dependent capit~ist
class, striving to retain its position, dare not hand- dver the· le'(ers:;of
control to the forces of international capitalism. We have already, irl the
introduction, pointed' to the constraints, imposed by the relative-reiru;.-
dation of the Indian dlpitalist class-andQ(the Indiru\ ec6nomy'in wliich
they operate, and we n~ed no~ elaborate•the same point,all·over again.
Furthermore, controls-ancl theit violationLprovide various sources of
untaxed income which,the capitalist·class·would·be extremely unwill-
ing to give up. But the possibility of a' more thorough-g6ing alliance of
this dependent bourgeoisie-with international ·capit'alism,on; say; the
 Relation of Agriculture to Industry 133

Brazilian pattern, when threatened with revolution or disorder inside,

should always be kept in mind.

Notes
1. I am indebted to Nripendranath Bandyopadhyay, Amit Bhaduri, Asok Sen,
and Parrha Chatterjee for commenting on the preliminary ideas embodied in this
essay.
2. For a summary of the evidence relating to capital transfers and labour migration
in the nineteenth century, with special reference to South Asia, see Bagchi (1972b).
3. The evidence and the theoretical argument have been presented in two related
articles: Bagchi'(1976a) and (1976b).
4. Sivasubramonian (1965: Table 4.20).
5. Ibid.: Table 7.3.
6. See Krishnamurry (1970) and Chattopadhyay (1975).
7. See S.R. Lewis (1970: 19).
8. C£ Griffin and'Khan (1972a: 4) and UN (1973: Table Il-2-4). There is an
apparent discr~pancy between'.the two estimates of the share of industry (and of
agriculture) in national output in 1969-70. Khan and Griffin put ifas high as 20.2
per cent whereas the UN publication puts it as 9.5 per cent. The discrepancy ls due
to the fact that Khan and Griffin's estimate includes construction and transport,
along with mining and manufacturing. In fact, according to their estimate (p. 8) the
share of manufacturing alone in national income is 8.4 per cent (5.4 per cent being
the share of large-scale manufacturing and 3.0 per cent being that of small scale
industry).
• , 9: Thorner and Tho~ner (1964: 306).
10. See for data on the period before independence, Sivasubramonian (1965);
and for the period since Independence, Government of India, EconomicSurvey
1974-75, 1975, New Delhi.
11. UN (1973: Table II-2-4).
12. See, for example, ReserveBank of India Bulletin (1975: 129-39).
13. Griffin and Khan (1972b).
14. For exaillple, in the Poona districts of Maharashtra, under Maratha rule, the
purchaser of land, in a village had to have the consent of both the patil and all the
kunbis (cultivators) who had a permanent stake in the village. See Kumar (1968:
26-7).
15. O'Malley (1906a: 179).
16. Ibid.: 177.
17. Ibid.
18. O'Malley (1909: 159).
19. Ibid.: 160.
20. Quoted in (Byrne 1911: 116). It was cyplcal of the colonial method of
rationalization that the result of a century and a half of colonial oppression was
explained away by a characteristic piece of snobbery: "'This wholesale oppression
could in my opinion only have existed owing to rent suits being decided" in the
mufassil courts and "seeing the evil their orders bring about."'
134 Colonialism and Indian Economy

21. The near impossibility of getting redress against a determined landlord

is illustrated by the following instance cited by the same District Magistrate of
Bhagalpur ' ... a Muhammadan landlord was anxious to oust some Sonthal tenants
of his district. A creature was got up to sue them on a forged bond in Purnea, and
the defendant was sold up.
'On being told of the case, I arranged for the plaintiff in the case to be made to
identify the dependant in the presence of the Munsif, and it was found he could
not. The whole proceedings had been fraudulent! Now, how is the Sontpal to ge~
justice? He cannot get it by just asking the Munsif to sanction the prosecution
of the plaintiff: the Munsif's decree, palpably gai~ed by fraud bars the way. The
Crown cannot move for the same reason, and can in fact do nothing unless the
plaintiff agrees to be used as a pawn in the game, and pushed forward to ask
for a review in one Court, to oppose an appeal in another, and ifhe secures the
review, to give evidence. Then, if he gains the review, or if he has to bring title
suit to declare the bond forged and wins that suit, still nothing can be done by
the Crown unless the complainant will put in a final petition before the Munsif,
asking for sanction to prosecute, and then move the Magistrate. Is it any wonder
that the most impudent forgery is committed every day, and that a zamindar
considers himself absolutely immune from any loss but that of his court-fees, if
he attacks an enemy in the Civil Courts?' (Ibid.: 118)
22. For a graphic account, see Thorner (1954).
23. See, for example, Eukazawa (1972).
24. Kolenda (1967: 287).
25. Census (1901b: 473).
26. See Hjejle (1967: nos 1 and 2). Scattered accounts of agrestic slavery in
eastern and northern India can be obtained from the various reports of Francis
Buchanan Hamilton.
27. Breman (1974: part 2, Chapters 4 and 5).
28. The degree and forms of bondage varied from locality to locality, but farm
servants in some forms-were found practically all over eastern India.
In Gaya the farm servant or Kamiya, takes loan from his employer and binds
himself to work for him for 100 years, or until the loan is repaid ... The same
system is in force elsewhere, e.g., in the north of Chota-Nagpur. The farm
servant is called Kamat in North Bengal and Krishan in Nadia ... He receives
less pay than temporary hands, but the fact is that he is kept on all the year
round ... (Census 1901b: 475).
The Collector of Monghyr wrote in the 1870s:
The lands in this district are chiefly cultivated by Kamiyas, who are in point of
fact bondmen to the landholder. They belong to the lowest castes, particµlarly
Mushahars and Dosadhs. I doubt whether there is a single Musahar in the district
who is not a bondman ... The kamiyas are a lean race, and the wonder is how it is
they manage to subsist with their food ... I have on many occasions urged them
to emigrate, but they pleaded that th\!ir masters will not let them go, and that
they prefer the ills they have rather than fly to others they know not 0£
 Relation of Agriculture to Industry 135

So much for the paternalism of the masters, the freedom conferred by British law,
or opportunities opened up by free markets. The situation was the same in 1909.
See O'Malley (1909: 129-30). It was officiallysound in India recently that bonded
labour survived in most of the states. See Statesman, Calcutta), 30 May 1975, 'Move
for abolition of bonded labour'. See Indian School of Social Sciences (1975).
29. Colebrooke (1804: Para 121).
30. See O'Malley (1906a: 137) and (1906b). ·": ·
31. O'Malley (1909: 125).
32. For a perceptive analysis of the class strueture in Pakistan and Bangladesh,
see Chandra (1972a) and (1972b).
33. Saith and Tankha (1972: 707-23).
34. For details of the argument, see R.P. Dutt (1949); and Bagchi (1973b).
35. The reader may feel that I am indulging in the coinage of too many new terms.
But in the context of the variegated world of today's underdeveloped countries,
'capitalism' as such seems to be much too inclusive a category.
36. See Khan (1972a); Sau (1973); AK. Bagchi (1975a).
37. I analysed the logical and ideological basis of modern economic liberalism
(as discussed by Little, Mirrlees, Bhagwati and their cohorts) in Bagchi (1971:
1.669-76).
 .7
Indian Demographyand Economy
in the LongFin-de-siecle
1876-1914*

The Presidency Banks and the Imperial Order in India

I n 1876, the three quasi-government joint-stock banks in the three

Presidencies of Bengal, Bombay, and Madras were brought within
the purview of a uniform Presidency Banks Act. 1 By this law, the
government withdrew as a shareholder of the Presidency banks, but
retained strict control over the general manner of their functioning. The
banks acted as government bankers in India (but not in Britain or any
other foreign country), and had custody of public balances up to certain
maximum limits, but were otherwise engaged in private commercial
banking. The Presidency Banks Act of 1876 was supplemented by a
series of agreements between the banks and the government. The agree-
ments were renewed and changed in periodic intervals and the Act itself
was amended several times between 1876 and 1914. However, the basic
structure and functions of the three Presidency banks remained virtually
unchanged for the whole period.
The imperial order within which the banks operated acquired a look
of tested impregnability. Gone were the early days of British rule when
many of the more perceptive members of the conquering race agonized
over their right to rule India permanently or
at least their ability to do so.
Gone was also the shadow cast by the Indian Revolt (Mutiny) of 1857:

*Originally published as, ''The Demographic and Economic Developments 1876-

1914' in 1989, 1hePresidencyBanksand the Indian Economy1876-1914. Calcutta:
Oxford University Press.
 Indian Demography and Economy 137

after all, the British had come out triumphant and had done so with the
help of loyal Indian troops and cowardly Indian princes. Lord Lytton
and Lord Curzon embodied the imperial arrogance in its most assured
form. Sporadic resistance in different parts of the country or even the
emergence of nation-wide platforms for that resistance hardly shook
the confidence and self-righteousness crystallized in Rudyard Kipling's
phrase, 'white man's burden'.2
Under the imperial' order, the British parliament acted as a despotic
ruler over the whole of British India and the Indian princely states which
acted as the 'subsidiary allies' of the British. More immediately, the
Secretary of State for India with the assistance of an advisory council and
the bureaucrats of the India Office in London, and the British Governor-
General and Viceroy in India, with the assistance of his own advisory
council and a countrywide imperial bureaucracy, exercised the despotic
authority on behalf of the British parliament. There were attempts to co-
opt 'respectable' or 'responsible' public opinion in India by nominating
non-official members to provincial and imperial legislative bodies and by
allowing some of these members to be chosen by chambers of commerce,·
landholders' associations, and so on. The non-official members of these
legislative bodies (and sometimes, even the official members) were able
on occasion to voice their differences from the policies pursued by the
government, but in case of any genuine conflict, almost without any
exception, the official view prevailed, since the Governor-General or
the provincial governor and their official advisors in charge of various
portfolios, had a veto pqwer. Similarly, sometimes there were dissensions
among the official members of the Viceroy's council or the council of.
the Secretary of State for India in London, but in every case the will
of the British parliament (enforced by the party forming a majority)
ultimately prevailed. We will have occasion to advert to such dissensions
in one or two cases, but it is well to bear in mind that for all the talk
about constitutional government, British authority, as exercised on
and through the Presidency banks and all civ..ilorganizations in India
during this period, was fundamentally despotic, and the nature of that
authority did not change in any fundamental way during the period we
are considering. .
The economic and demographic matrix on which the authority
acted, however, changed over the period. Some of these changes were
greatly influenced, if not directly caused, by measures initiated during
this period or earlier by the imperiaJ authorities, some were due to
international developments which the authorities could not or did
138 Colonialism and Indian Economy

not want to alter, and some were due to causes which have a deeper
origin or a longer periodicity than imperial measures or international
developments. Despite being acted on by the fiscal apparatus of alien rule
and the commercial forces of the international economy, most villagers
continued to lead their own lives. While brave talk about sanitation and
education was blared from public platforms, the lives of ordinary people
remained nasty, brutish and short. Commerce and finance were activated
not only by the penetration of new markets but also by exigencies of
grain movements during famines, by the spoliation of virgin forests and
by the forcible indenturing of labour in distant plantations. We turn
now to an analysis of the forces that were recognized by the authorities
and to those that were not. Only if we understand their bearing, shall we
be able to perceive how the Presidency banks aml other major financial
institutions reacted on those forces and how their choices were in turn
facilitated or constrained by them.

The Paradoxes of the Longue Duree in India

Fernand Braudel coined the concept of the longue durie in history,
to distinguish the movements captured in it from mere events, or
conjuncturesof particular circumstances, or determinate lengths such as
the short Kitchin cycles, that is, those caused essentially by changes in
stocks, the Juglar cycles of eight to ten years, the ol:1jectof analysis of
classic economic cycle theories, the Kuznets cycles of perhaps twenty
years' duration or the Kondratieff cycles that are alleged to have a forty-
to fifty-year periodicity. 3 Orthodox economists are familiar with Alfred
Marshall's 'long run', in which no costs of the competitive firm can be
regarded as fixedanfmore, and any returns of the firm over ancl above
its total costs can be competed away by the entry of new firms. Since the
1950s, numerous economists have built up life-cycle models of saving
and investment in which the individual economic agent plans not for a
day or a year but over his (her) whole lifespan.
In this [chapter], I want to borrow Braudel's phrase longuedurie but
use it mainly as a device for classifying the available information, partly
because' different movements in history do have different periodicities,
but also because we have information of varying qualities about the
different aspects of history. 4 Thereby we get away from a myopic
concentration on month-to-month or year-to-year changes without
claiming a very definite periodicity for the long-term movements, since
different types of movements may have different patterns in the long
run and we have not yet been able to determine those patterns exactly.
 Indian Demography and Economy 139

We shall illustrate the kind of problem we have in mind by tackling

the question of changes in India's national income. Changes in national
income are supposed to have an intimate relation to the use of money
and credit in the economy either via changes in expenditures and their
distribution (in the Keynesian variants of theories of national expendi-
ture and money demand) or directly via changes in money stock required
to support changes in real national income (in the 'monetarist' view
of the nexus between money and national income). Moreover, if we
want to find out the way the domestic demands for various commodities
change over time, we need to have some idea of changes in national
income and its distribution among the various income classes.

Indian National Income 1875-1914

Having set out this desideratum, we are faced with the problem that
there is no acceptable national income series covering the whole period
1876-1914. S. Sivasubramonian made a careful estimate of the national
income of undivided India (that is, the territory comprising today's
India, Bangladesh, and Pakistan) for the period from 1900-01 to 1946-
7. 5 Despite some criticisms that have been recently advanced against
Sivasubramo11-ian'sestimates,6 we can accept them as an approximation
to whatever the true growth of income may be. For earlier periods, we
generally have only point estimates for particular dates made by such
political personalities as Dadabhai _Naoroji, William Digby, Lori:l
Curzon, and government officials such as Evelyn Baring (later Lord
Cromer)7 and F .J.Atkinson. 8 Of these persons, Atkinson was a senior
official of the accounts department, and provided a virtually official
reply to the criticisms of Dadabha,i Naoroji, R.C. Dutt, and William
Digby about the impoverishing effects of British rule in India. He tried
to estimate the growth of national income in India between 1875 and
1895. All the later estimates9 of nineteenth-century growth of income
have been based on Atkinson's work, and some later students have even
managed to inject their own fantasies into the fog created by Atkinson's
methods. 10 •
Atkinson estimated that the income per capita in India (but not
necessarily of Indians, since the income-earning population included
highly-paid British officials and British merchants amassing princely
fortunes) had increased from Rs 30.5 in 1875 to Rs 39.5 in 1895 at
current prices. If we deflate this figure by an index number of Indian
prices with the average prices of a bundle of commodities for the years
1868-76 as the base,11 the income per head in 1895 turns out to be only
 Colonialism and Indian Economy

4.95 per cent higher than in 1875 (the index numbers of prices in 1875
and 1895 were 94 and 116 respectively).
But even this figure is suspect. First of all, as F.H. Skrine, an ex-
official of the British Indian government pointed out in the course of
discussion on Atkinson's paper on national income, 12 Indian statistics
related to production were fraught with a high degree of uncertainty.
But Atkinson's statistics for the year 187) were especially vulnerable.
The Estimatesof Area and Yieldof the Principal Croprin India published
annually by the Government oflndia and on which George Blyn based
his study 13 of agricultural growth in India in the period from 1891-2
give comprehensive and comparable data only from 1891-2 onwards.
Data relating to crop acreages, production of large-scale (mechanized)
industries, artisanal industries, and so on are available for years earlier
than 1891-2 but they are more fragmentary, and scattered in a large
number of publications. Atkinson did not try to fit together such
data and arrive at an estimate of the agricultural and non-agricultural
production and national income for 1875. Instead he madercertain
assumptionsabout increases in the crop acreages and yields of crops, and
in non-agricultural production, and extrapolated the figure for 1895
backward. Unfortunately,, all these assumptions are, to put it mildly,
questionable. 14
Atkinson assumed that both the area under cultivation and the
yield per acre of every single major crop increased between 1875 and
1895. While this assumption may have been valid in the case of such a
'superior' exportable grain as wheat, or a crop such as raw cotton, which
benefited from expanding markets and extended irrigation, it was almost
certainly invalid for such major crops as jowar, bajra, and ragi, -which
were mostly raised on non~irrigated land in dry areas, and for a rain-fed
arop such as ,.rice, which was the single most important field-crop in
lnqia, a(;counting for more than 25 per cent of the total acreage. As
wheat acreage expanded, for example, in the Central Provinces, it did
so artlie expeh'seof the, millets which suffered a contraction in acreage
or were driven on to more marginal lands, 15 Blyn's study for the period
begirrning ih }891'-2 often reveals declining trends in yields per acre of
mahy foodgrairis sµcp.as rice, bajra,.barley, and other crops such as jute,
rape-and mustard,,anctlihseed, for major regions oflndia, and often f9r
British India as awfiole.\6
The! decline in yields was mostly caused by environmental dete-
rioration such as deforestation, soil erosion, and soil exhaustion, with
attempts at an extenliionof perennial cultivation in areas which had b'een
 Indian Demography and Economy 141

under forests and grassland and had hitherto practised either shifting
agriculture or agriculture punctuated by long fallows. There is no reason
to believe that such factors had not acted before 1891-2. The only major
deterrent against the decline in crop yields on farmers' fields was an
extension of irrigation, which not only increased yields of existing crops
but also allowed the introduction of higher-yielding varieties. New irri-
gation canals were being constructed in the last quarter of the nineteenth
century. But generally speaking, such works had to meet the test of be-
ing 'productive', that is, they had to repay the expenditure made by the
government with the full interest cost charged on it and show a profit.
Even if an irrigation project met this test, it might not be undertaken
because of the general financial stringency under which the Government
oflndia laboured from the latter part of the 1870s. Moreover, a govern-
ment canal often substituted for private works. For example, according
to Atkinson's estimates (admittedly not entirely comparable over the
years), while the area irrigated by government canals expanded from
5.032 million to 12.081 million acres between 1884-5 and 1899-1900,
the total area irrigated by all sources expanded from 22.470 million acres
to 30.745 million acres over the same period 17 (The omission of Bengal
and Bombay from the figure for 1884-5, makes it an underestimate but
not by more than 3 million acres or so.) Thus in estimating the growth
in irrigated acreage, we must take care to adequately account for private
sources of irrigation and for possible expansion of government-financed
irrigation at the cost of private sources.
Irrigation works have often been taken as a major boon conferred
by British rule in India. For example, the brothers John and Richard
Strachey, who had served the Government of India in its highest ech-
elon, wrote in 1882: 18
Whether as a' means of increasing the necessary food supply of the people, or of
stimulating the production of the agricultural staples of commerce, the extension
of irrigation must be pronounced to be almost the greatest blessing that can be
bestowed on the country, and the construction of the great works which have
been carried out in conformity with the policy now under discussion, must
unquestionably be classed among the most truly beneficial acts of the British
government in India.

In assessingsuch claims, it should be remembered that many irrigation

works served mainly rain-fed areas, and the increases in crop yields due
to irrigation were often rather insignificant in normal years: taking good
and bad years together, they rarely exceeded 20-5 per cent; that the
government water rates were often excessive,eating up in some cases the
142 Colonialism and Indian Economy

whole of the expected increase in the value of the crop, so that force had
to be used to compel the peasant to use the irrigation water; 19 and that
badly planned irrigation works often caused long-term water-logging
and salinity, thus leading to a decline rather than increase in yields.20
Hence despite the apparently enormous amounts spent on irrigation,
they did not necessarily lead to·an improvement in the standard ofliving
of ordinary peasants.
If the bases of estimates of changes in agricultural output made by
Atkinson are rather infirm, the estimates made by him of changes in
incomes and outputs of non-agricultural incomes are not more robust
either. The major problem there is that, in the face of a large volume
of evidence to the contrary, 21 Atkinson assumed that the population
supported by non-agricultural occupations increased at least as fast as,
if not faster than, that supported by agriculture. Since the incomes per
head of the non-agricultural population were higher than that of the.
agricultural population in both years, and they were assumed to increase
at least as fast as the income of those supported by agriculture, this
lent a further upward bias to Atkinson's estimates of growth in income
between 1875 and 1895.
Suppose we now leave the issue of income growth during the last
quarter of the nineteenth century and turn to Sivasubramonian's
estimates22 of growth for the period from 1900-01 to 1913-14. At
current prices, he estimated the income per head of an Indian to rise
from Rs 42.1 in 1900-01 to Rs 62.1 in 1913-14; when converted to an
index of 1938-9 prices, the per capita incomes were Rs 49.4 in 1900-01
and Rs 55.7 in 1913-14. The difference between the two rates of growth
is a measure of the inflation between 1900-01 and 1913-14.
Can we even take this increase in per capita income as indicating that
the income of the ordinary people and hence their power to purchase
consumer goods from the market was increasing? In answering such a
question we must remember that in the Indian economy only,a fraction,
perhaps no more than 40 per cent of the production, ever passed through
the market. Thus it is theoretically possible that the market value of
the output or services of ordinary people increased without an actual
increase in the cash in their hands for buying consumer or essential
producer goods. However, in an economy in which the use of money
was expanding (and it was expanding fast in some periods), it is unlikely
that the proportion of output mediated by the market should decline
except sporadically. But the part of output used up outside the market
is often underestimated. In that case, with a rise in the proportion of
 Indian Demography and Economy 143

market-mediated output the growthof output may be overestimated, as

monetization affects larger and larger shares of total output.
If we ignore this possibility, we have still to ask whether a major
part of the income was earned by the very rich so that the income per
head of ordinary people was substantially lower. We do not have any
adequate study of the personal or class distribution of national income
in India in the period before independence. But Atkinson did provide
a break-up of the total national income as between the agricultural
population, the common non-agricultural population, and the classes
of 'sufficient or ample means'. From his calculations it turns out that in
1895, the last class, comprising 5.4 million out of a total British-India
(including Burma) population of 222 million (or 2.04 per cent of the
population) enjoyed an income of Rs 1,130.0 million out of the total
national income of Rs 8,765.6 million (or rather more than 12 per cent
of the total income). If we put it another way, while the income per head
of the agricultural population was Rs 35.9, and that of the common
non-agricultural population was Rs 34.1 per head, that of the classes
of persons of ample means was Rs 208.2 or almost six times that of the
income of an average Indian. Taking Atkinson's figures at their face
value, this is an underestimate of the degree of inequality of incomes,
for the landlords who earned their incomes from agriculture are clubbed
together with ordinary peasants, so that the income per head of the
latter was bound to be considerably lower than the Rs 36 derived by
Atkinson. Furthermore, we must remember that a considerable part of
the top incomes was earned, by expatriate Europeans who remitted a
large part abroad, so that those expenditure flows were not available for
financing Indian production. Moreover, a large part of the incomes of
both Europeans and rich Indians would be spent on imported luxuries.
For an assessment of the relation of growth of incomes to current
expenditures on consumer goods or investment expenditures, it is neces-
sary to find out how the income distribution and the purchasing power
were changing over time. During the period from about 1898 to the
First World War, prices of agricultural goods tended to increase faster
than those of industrial goods. At first blush, it would appear that since
Indian producers were primarily sellers of agricultural commodities and
buyers of industrial goods, by and large, most Indians would benefit as
a result of these changes in the terms of trade. 23 But several caveats must
be entered against any such unambiguously optimistic conclusion. First,
a large part of the rise in agricultural prices consisted of a rise in prices of
foodgrains. However, most small peasants and landless labourers were
144 Colonialism and Indian Economy

net buyers of foodgrains. So a rise in grain prices would, ceterisparibus,

imply a fall in i:heiueal incomes. This would be true, afortiori, for those
workers in·ihdustry whose money incomes tended to lag behind rises in
the cost ofliving: Most Indian industrial workers and artisans in the late
nineteenth-and early twentieth centuries would fit this category.
The second gross fact to remember is that big traders dealing
wholesale in agricultural commodities would intercept a large part of
the profits realizable from increases in their prices. In particular, exports
in most" parts of India (except for rice exports of southern India and
cotton exporrs of western India) were handled almost exclusively by
European merchants who pocketed the lion's share of most of the gains
from enhanced prices and quantities of exports.
There were, almost certainly, some regions such as the western
Jamuna doab of today's Uttar Pradesh, the canal colonies of western
Punjab, or the irrigated regions of Sind, where large Indian farmers
were ,gaining substantially from increased availability of irrigated land,
realizing those gains through exports or sales of crops in the domestic
market. 24 But where the supply ofland could not be effectively increased
through irrigation, or the opening up of new land, where peasants were
at the mercy of moneylenders and traders, and where the export trade
was effectively barred to even substantial Indian producers and traders,
an increase in exports oi; their prices did not necessarily translate itself
into increased standards of living of the ordinary people. This is clearly
evinced by the case of Bengal and Bihar in the first three decades of
the twentieth century. This region had been an exporter of rice in the
nineteenth century. For example, in 1888-9, Bengal (including Bihar
and Orissa) exported to foreign countries 9,045,993 maunds of rice and
in the net, exported a total of 13,571,910 maunds of rice (or roughly
9.93 million cwts.). 25 Later, Bengal began to import rice from Burma,
but continued to export a considerable amount of the fine rice produced•
domestically. This might be considered a profitable exchange, especially
because Bengal proper (today's West Bengal and Bangladesh) was
producing increasing quantities of jute, which displaced the relatively
coarse aus or bhadoi paddy. However, what is tantalizing is that the
net availability of foodgrains per head in Bengal, taking coarse and fine
varieties together, decreased over the years from 1891-2 to 1920-1. 26
What is even more tantalizing is that the net availability of rice (which is
the cereal consumed in Bengal) per head declined most steeply in those
regions of Bengal which became the chief producers of the 'golden fibre',
jute. 27 Thus it is not possible to deduce anything directly ancLsil]lply
 Indian Demography and Economy 145

about the condition of ordinary peasants or workers from the state of

export trade or trade in general.
Can we perhaps shift the time-frame? Is it possible to say chat during
the period of the so-called Great Depression of 1873-96, when world
agricultural prices tended to decline in relation to industrial prices28
ordinary Indian peasants and workers were definitely doing better?
Such a conclusion would certainly be hasty. There is evidence chat many
agricultural exports were expanding during the period. If such increases
could be said to have always originated in extension of cultivation to
land which did not produce valuable subsistence crops, or which was
made more productive through public investment at a relatively low cost
to the peasant, and if the gains were translated into increased earnings
for the peasant rather more than into large profits for the trader, then it
would be possible to say chat such expansion would have benefited the
peasants. Again, while this may have been true of substantial producers
of exportable crops on land opened up through irrigation, it probably did
not apply to the general run of peasant producers of exports. Expanding
exports were not always translated into higher prices even in the case
of crops in which international competition was weak or non-existent.
If we take jute, a monopoly product of eastern India with booming
exports, we find chat the landed cost of jute in Calcutta from Narainganj
(in the district of Dacca) and Serajganj (in the district of Pabna) behaved
as in Table 7:1.

Table 7.1 Landed Cost of Jute per Maund in Calcutta,

1879-80 to 1882-3
Variety 1879-80 1880-1 1881-2 1882-3
R. a. p. R. a. p. R. a. p. R. a. p.

Narainganj Fine 5 2 9 5 0 3 4 15 10 3 7 6
Medium 4 9 6 4 6 9 4 3 4 2 15 2
Common 4 0 9 3 13 7 3 10 4 2 7 6

Serajganj Fine 5 4 0 5 2 0 5 1 0 3 9 0
Medium 4 11 0 4 8 0 4 4 0 3 I 0
Common 4 2 0 3 15 0 3 12 0 2 9 0

Source:Watt (1972(1889]: 553).

Note: 12 pies= 1 anna; 16 annas = 1 rupee

The actual prices obtained by the peasant were much lower than
indicated in Table 7 .1, because the profit margins in the jute trade were
146 Colonialism and Indian Economy

high. Moreover, it is likely that in years of sagging prices, the proportion

obtained by the peasant also declined. (One reason was that many of
the small traders' margins were fixed by quantity and not according
to value.) In order to appreciate the irony of the situation it has to be
noted that the exports of both raw jute and jute manufactures from
India increased steadily during these years.
To the extent that jute was grown on land, which would have
otherwise been devoted to the production of aus rice, the interests of
the consumers of the latter would have suffered as. a result of higher
production of jute. Apart from such indirect substitution effects,
consumers of exportable food crops were more directly affected when
such exports expanded fast. It was argued by British officials in the
1870s and 1880s and it continues to be argued even now that when
expansion of infrastructure (such as railways) makes it possible to move
grain from one point to the other, it benefits everybody by ironing out
prices. Several arguments may be advanced against this view. In the first
place, the effect of railway development in ironing out food prices in the
late nineteenth century has generally been exaggerated, 29 since attention
has been concentrated on the 'superior' and generally exportable grain
crops, and not enough weightage has been given to the prices of millets
which were the staple food of the poorer people in many parts of India.
When the superior grains were exported to other regions or abroad, an
upward movement in the prices of millets occurred. This effect would
be more pronounced in local markets and would show up as a larger
degree of seasonal fluctuations in the prices of the inferior foodgrains
than at points of export and over the year as a whole, since the latter
would be strongly affected by international movements in exports and
prices. Table 7.2 briefly illustrates the greater volatility of the prices of
millets than of wheat. If prices of localities mainly consuming millets
were used, the swings would be much larger for the prices of dryland
grains than for wheat. The poorer people would, of course, benefit from
any increased employment generated by larger outputs of foodgrains,
but under conditions of traditional cultivation of millets in unirrigated
tracts, such effects would be marginal.
Independently of such substitution effects between superior and
inferior foodgrains, the depletion of local stocks through exports of any
grain would tend to push up the cost of living of the poorer peasants
and workers and would, ceterisparibus, depress their real earnings. 30
This argument would be particularly strong if the money wages of
agricultural labourers and artisans remained constant or even fell when
 Indian Demography and Economy 147

Table 7.2 Index Numbers of Retail Prices of Major Food Crops in India,
1880-1 to 1900-01 (base: 1873=100)
Year Wheat Jowat Bajra
1880-1 96 91 98
1884-5 89 98 95
1888-9 118 118 126
1892-3 127 120 121
1896-7 206 211 204
1899-1900 176 207 196
1900-01 160 140 133
Source:Government of India, Depattment of C_ommercialIntelligence and Statistics:
Index Numbers oflndian Prices 1861-1926, Calcutta, 1928, p. 3.
Note: Both 1896-7 and 1899-1900 were f.unine years.

food prices rose. This is what tended to happen for most of the last
quarter of the nineteenth century, and even later.31Two of the main
caus~ of this were the continual erosion of employment opportunities
in artisanal occupations in most parts of India, and the failure to invest
in agriculture and modern industry on a scale that would be adequate to
counteract stagnation of opportunities in traditional pursuits.

Demographic Change 1871-1921

We now turn to perhaps the grossest index of changes in the conditions
of living of the ordinary people, that is, rates of population growth-an
index which economists tend strangely to neglect when trying to mea-
sure changes in per capita incomes or standards of living. During the
period from 1871 to 1921, the population of the Indian subcontinent
(excluding Baluchistan and North-Western Frontier Province) grew
from 249.49 million to 299.63 million. This yields an annual rate of
growth of 0.37 per cent only.32 This was not the result of careful family
planning, with low birth rates and low death rates, but the outcome
of a precarious balance between high birth rates and high death rates
yielding, say, a rate of gmwth of population of 1 per cent per annum
being disastrously upset by virulent famines that wiped out net increases
of population often years or more in district after district, even province
after province. During the period from 1876-7 to 1899-1900 alone,
the total number of deaths from famines was at least 16-17 million. 33
The effects of these deaths from famines, plagues, and excess mortality
caused by malnutrition, and diseases aggravated by poor physique, 34 on
intercensal population changes in some major provinces can be gauged
from Table 7.3. (the figures in Table 7.3 are not strictly comparable
148 Colonialism and Indian Economy

because of changes in jurisdiction etc. but they are adequate for our pur-
pose). It is dear that whole provinces with populations of20 million and
above as well as smaller areas suffered disastrous famines or epidemics
not just in one decade but repeatedly, with only a few years of respite.

Table 7.3 Intercensal Percentage Changes in Population in Major

Provinces and States in India, 1872-1921

Province or region 1872-81 1881-91 1891-1901 1901-11 1911-2l(b)

British Territory
Ajmer-Merwara +16.2 +17.7 -12.1 +5.1 -12.5
Bengal +6.4 +7.6 +7.8 ;7,9 +3.2
Bihar and Orissa +17.0 +6.1 +1.1 +3.8 -1.0
Bombay +1.2 +14.5 -1.7 +6.0 -1.7
Central Provinces +20.0 +9.3 -8.3 +16.2 +1.1
and Berar
Coorg +5.9 -2.9 +4.4 -3.1 -0.4
Madras -1.2 +15.6 +7.3 +8.3 +2.7
Punjab (a) +10.0 +6.9 -1.7 +5.6
United Provinces +5.1 +6.2 +1.7 -1.1 -2.7
Princely States
Baroda Srate +9.2 +10.7 -19.2 +4.1 +3.4
Bombay States +2.1 +16.5 +14.5 +7.3 (c)
Central India Agency N.A. +9.4 -16.2 +10.1 -3.l(d)
Central Provinces States +49.5 +23.4 -4.8 +29.8 (c)
Hyderabad State N.A. +17.2 -3.4 +20.0 -5.8

Source: Census of India, 1911, vot I, India, part I-Report by E.A. Gait, 1913, Calcutta,
Superintendent, Government Printing, Chapter 2, Subsidiary Table 1; Census oflndia,
1921, vol. I, India, part I-Report by J.T. Marten, 1924, Calcutta, Superintendent,
Government Printing, Chapter l, Subsidiary Table IV.
Notes: N.A. = Not available
(a) The growth of the population of Punjab together with that of North-Western
Frontier Province was +7.0 per cent over the period.
(b) Changes in natural population (excluding emigration and immigration).
(c) Not separately estimated.
(d) Estimated together with change in the population of Gwalior State.

The only decade in which the populations of all the provinces and
regions enumerated had a positive growth was that of 1881-91 (Coorg
is the only exception, but its population was rather small), and the
only large province which had a positive growth in every decade was
Bengal, but even Bengal suffered an unusually high death rate as a result
of the influenza epidemic of 1918-19, so that the rate of growth over
the decade of 1911-21 was only 3.2 per cent. Bombay Presidency seems
 Indian Demography and Economy 149

to have suffered the worst, with a virtually zero rate of growth in the
decade of the 1870s, a negative rate of growth in the 1890s, and again
a negative rate of growth in the decade 1911-21. Madras Presidency
did slightly better, but it had a negative rate of growth in the 1870s and
virtually a zero rate of growth in the 1910s again. Most of the princely
states fared no better than Bombay and Madras. What is even more
striking is that United Provinces, which had a riverine terrain, with
expanding government irrigation systems, suffered repeated reverses
in its population growth, as did the neighbouring provinces of Bihar
and Orissa.
Lest somebody imagine that a regrouping of the provinces and
estimating the rates of population growth on a comparable basis
would alter any of our conclusions about the patterns of population
growth, let me point out that Visaria and Visaria35 have carried out such
a regrouping of all the Indian provinces (excluding Burma) and princely
states, into five zones-East, West, Central, North, and South-and
have estimated their annual rates of growth over the period 1871-1941.
Their estimates confirm that only the East zone had a positive rate of
growth for all the decades fr?m 1871 to 1921, with the lowest rate of
growth in the period 1911-21, the West zone had negative rates of
growth in every alternate decade starting with 1871-81, the Central
zone had negative rates of growth in the decades 1891-1901 and
1911-21, the North zone had very low rates of growth in the decades
1891-1901 and 1901-11 (0.09 and 0.11 respectively) and a negative
rate of growth in the period 1911-21, and the South zone a strongly
negative rate of growth in 1871-81; India as a whole had annual rates of
growth varying between 0.09 per cent (in the decade of 1911-21) and
0.89 per cent (in the decade of 1881-91). It is worth noticing that the
'prosperous' province of Punjab was not spared the horrors of famines
and pandemics.

Remittancesof Imperial Tribute

It might be thought that these statistics of death tell a complete story: no
further elaboration is needed on either their origins or their ends, their
causes or their implications. But dreadful as it may sound, famines ben-
efited quite a lot of people, and famines and epidemics were aggravated,
if not actually caused by some specific policies. One way of averting
periodic famines would have been to invest in agriculture and indus-
try so as to increase the pr~ductivity and the employment potential of
the Indian economy. Some investment, of course, took place, but not
150 Colonialism and Indian Economy

enough. A major constraint on output growth and domestic investment

was the leakage of a significant fraction of the income of British India in
the form of the so-called Home charges remitted to Britain for maintain-
ing the apparatus of British rule in India. Some figures are only for the
first five years of this century but their relationship to one another would
probably be representative of the whole period from 1876 to 1914.
From Table 7.4 we see that disbursements in England regularly
amounted to 3-4 per cent or an even larger fraction of the national
income in India. It may-be argued that not all of this was leakage; some
part-say, one-third to one-fourth of the disbursements--consisted of
expenditures for railway construction or irrigation canals. But against
that we must balance the expenditure on British troops and civil servants
in India, which was a pure leakage from the point of view of the Indian
economy. Such expenditures certainly amounted to a much larger sum
than that spent for productive purposes by the India Office in England.

Table 7.4 National Income and Foreign Disbursements, India, 1900-05

Year National income of Disbursements (3) as percentage
India (in Rs million) in England of(l)
(1) (2) (3) (4)

1900-01 11,972 34,869 523,035 4.37

1901-02 11,863 27,460 411,900 3.47
1902-03 12,1,64 25,730 385,950 3.17
1903-04 11,833 31,492 472,380 3.99
1904-05 12,971 31,168 467,520 3.60
Source:For col. (I), Sivasubramonian (1965: Table 5.1); for col. (2), Statistics ofBritisH
India, Fourth Issue, for.1909-10 and preceding years, Part N (a), Finance and Revenue
(Calcutta, Superintendent, Government Pri~ting, 1911), Table No. 1 of 'Ways and
Means--Home Government'.
Note: Col. (3) has been derived from col. (1) by applying a multiplier of Rs 15 to the
pound.

Thus India was made to spend 3-4 per cent of her national income
for simply maintaining the apparatus of foreign rule in the country.
Of even the amount that was spent on productive investment, a large
part--one-third to half-was spent abroad for buying machinery and
raw materials. The stimulus such expenditures could have provided-in
the form of incomes to the producers of railway stores or machinery and
millwork, and so on, and in the longer run, an incentive to invest in the
facilities for producing the capital and intermediate goods-was lost to
the Indian economy.
 Indian Demography and Economy 151

When we tty to assess the extent of the depression in the short run
caused by this kind ofleakage ('drain' in the older parlance), we have to
remember that in this period not more than half perhaps of the national
income passed directly through the market mechanism. And while there
was a considerable amount of private investment in land in kind, the
major growth in the productive capital would be financed directly and
indirectly by the incomes accruing to the people who operated in the
market. Thus the leakage may have amounted to 6 per cent or even more
of that portion of income which counted from the point of financing
productive investment.
There is a further aspect of the leakage of incomes abroad which is not
easily quantified. The extraction of the surplus from the Indian economy
took place mainly through the fiscal mechanism of the state. The taxes
were mostly indirect, imposed on items of necessary consumption, such
as salt, and on land, and the mechanism of extraction involved a host
of intermediaries, such as landlords, tax-gatherers, and moneylenders.
Their operations not only impoverished the peasants and artisans but
also impaired their efficiency because the levies were generally exacted at
the wrong time and in the wrong shape.
We have also to remembq that of the incomes remaining in Indian
hands, a very large fraction accrued to a small section of the population,
leaving the vast majority of the people extremely poor, and hence poor
consumers of industrial goods.
In the later sections of the chapter, we consider factors that shaped the
growth of moder1,1manufacturing and mining or processing industries
in India. While doing that, we have to keep in mind the fact that
despite the demographic disasters, despite the impoverishme,nt of large
sections of artisans, workers, and peasants, some groups were definitely
prospering in India in the late nineteenth and early twentieth centuries.
These would be the merchant~ dealing in exportable commodities and
those commodities which had a more or less assured market, landlords
who could squeeze out more rents or illegal exactions from their tenants,
small and large manufacturers who benefited from the further lowering
of the cost of lab,;mr (provided that they could sell their goods), and
farmers who profited from the extension of irrigation in newly opened
up areas in Punjab, Sind, and some other pockets. Famines themselves
provided opportunities for making money to traders and financiers
involved in the moving of grain in their priv,ate capacity or as part of
famine relief operations. So while the poorer consumers contracted
their purchases of many commodities because they were unemployed or
152 Colonialism and Indian Economy

otherwise impoverished, or just died, the groups benefiting from either

genuine productivity-rising investment or from the dreadful processes
of famines or regressiveredistribution of incomes provided new markets
for manufactured and other goods. These in turn extended the field of
operations'Of the apex banks.
1

1he.Glob aland Indian Political Environment:

E~p.ec;;ti~nsof Foreign Industrial Investors
The tlifrty-nine years from 1876 to 1914 are no more than the years
From ~ir~ to maturity of a citizen in an affluent country today. But they
were fittle short of two full generations as measured by the lifespan of
an'average Indian of those days.36 For most other human beings of
tlie time also a generation and a lifespan of an average person were
synonymous.
Lifespans were about to be extended first in Europe and North
America, and then elsewhere, through the discoveries of Louis Pasteur
(1822-95), Robert Koch (1843-1910), Fritz Haber (1868-1934),
and numerous other scientists and technologists, mostly in EurQpe
but increasingly in other parts ,of the globe as well. Even in Calcutta,
where' the sewers and slums of the Black Town made every conception
an obstacle race for survival of the mother and her child, Ronald Ross
(1857-1932) discovered the carrier of the malarial parasite and thus
made it possible to plan for the containment of the disease, if not its
eradication.
Those scientific discoveries were accompanied by others, which pro-
vided more plentiful means to some human beings to kill other human
beings. Alfred Nobel's.(1833-96) explosives, which would provide the
wherewithal for recognition of scientific and literary genius was only
one in a series of increasingly powerful chemicals, materials, weapons,
and engineering devices for destruction. Even if most scientists regarded
such uses as only unforeseen by-products of their work, few of them
could be unaware that the political levers of that world were in the
hands of people for whom war was a trade and a passion.
Our book spans the period from the Congress of Berlin (held in
1878), which was a truce in imperialist rivalries till the outbreak of
the First World War, the first armed conflict encompassing the whole
world. Indeed, this was the period when imperialism took the specific
form of repeated attempts to re-divide the world between imperial
powers, and India as the largest British colony was inevitably dragged
into the vortex.
 Indian Demography and Economy 153

The financial aspects of the global domination by imperialist powers

must be at the heart of any attempt to find a meaning or a pattern in
the senseless narrative that history can otherwise turn out to be. Even
Indian banking is part of that pattern, and while we desist from any
attempt to even provide a sketch of the global financial scene, our story
must often assume as a background what was happening in London,
Paris, Berlin, and New York.
What was happening in the corridors of power and the closets of
bankers in those centres did not go entirely unchallenged in the world
outside. The last quarter of the nineteenth century saw the emergence of
Indian nationalism as a movement orchestrated by middle-class profes-
sionals and businessmen; in Europe it saw the rise of organized labour.
While the October Revolution of 1917 saw the culmination of one part
of the European struggle, 1919 and 1920 saw the ascent of Mahatma
Gandhi to a position of virtually undisputed leadership of the national-
ist movement in India.
If we change our vantage point slightly, we can see that the year 1900,
which falls roughly in the middle of our period, was almost the mid-
point of the careers of two men, Rabindranath Tagore (1861-1941) and
Rudyard Kipling (1865-1936), who in their persons embodied the
literary ethos of the two poles of the British empire in India: Tagore
captured in his short stories and novels-but specially in his short
stories-the texture oflife of the ordinary people--middle-class men and
women mostly-but also peasants and their visible oppressors. Kipling
created a secular religion for the white man's imperialist activities.
That the spoken words of the book have behind them some awareness
of the larger world that does not make a direct appearance has to be
explicitly stated for two quite different sorts of reason. First the history
of any human institution rields up its meaning most fully when it can be
seen as part of the larger tapes.try, of all the contradictory, all the jostling
aspects of man's (or woman's) social and political existence. Secondly,
to the extent·· that any explanation of the developments narrated in
the book is at all possible, that explanation can be constructed only in
terms of the lives lived and the deaths suffered by ordinary people as
well as the instruments wielded by the functionaries of the institi.itions
whose evolution is studied in this particular case. The pitiful nature of
the earnings of an Indian peasant at the height of the British Raj is
an extremely relevant piece of information for understanding why the
Bank of Madras could not lend to the peasants but might have been
anxious to see the birth of such institutions (for example, co-operatives)
1S.4' Colonialism and Indian Economy

as would mediate profitably between itself and the peasants. If we have

to explain why such hopes came to nought in most cases, we have to
probe into the.exact nature of the precariousness of the subsistence of a
typical Indian peasant.
However we look at it, the years from 1876 to 1914 is a long period
in term~ ofahe history of colonial India. This was also a period in which
many long-term changes were presaged but did not happen: the Indian
people liad to wait another thirty-three years for political independence
to arrive. The works of J.J.Thomson and his students at Cambridge,
and the work of Max Planck, Albert Einstein, and Niels Bohr would
ultimately' release the devil's offspring in the skies of Hiroshima and
Nagasaki in August 1945. The promise offered by the Indian fields of
stopping the famines and eventually allowing the poor people at least to
live longer did not begin to be realized until after 1947. The struggle for
giving the poor peasants and artisans access to reasonable credit facilities
was not taken up in earnest until after 1947 either.
These long-term changes or the waiting or the struggling for them
changed people's lives. But those lives were lived from day to day, 'from
month to month, from year to year and then only from generation to
generation. It will give a false idea of astonishing jumps in time if, for
purposes of description and analysis, we only take the end points of
changes that spanned a life-time or more. On the other hand, if we
only narrate the day-to-day changes, we will miss out the way ordinary
human beings try to plan their life cycles and the way groups or
aggregates of human beings try to overcome long-standing obstacles.
Expectations about the long-term and actual long-term changes do
affect behaviour, net-least of all, behaviour with regard to production,
trade, and investment decisions.
To illustrate the problem of knitting myriad details of short-run
behaviour to depict the texture of the longueduaee,let us ask in what
ways.•the fact that India was a dependent colony of Britain influenced
die behaviqur of traders, and investors, who formed the major clientele
of die-Presidency banks.
Irl, order the avoid misunderstanding, it is necessary to emphasize
again th.at, the, British Government of India was a despotism. It was
answerable fo the British ,people, most of whom were thoroughly
ignorant of Indian affairs, but not to the Indian people in its entirety
or its representatives. The actual Government of India was carried on
by a small and immensely powerful body of civil servants. They had to
obey laws, whose implementation was largely in their own hands. Most
 Indian Demography and Economy 155

of the decisions taken by the supreme government consisting of the

British Viceroy and his council could not be appealed against. Briti,~h
rule in India and its absolutist character looked pretty permanent to
most informed observers. By and large, those traders and investors did
best who took this permanence for granted and adapted their behaviour
accordingly.
The colonial state apparatus protected private property, and by and
large, respected the sanctity of private contracts. But it was a state geared
first of all to the preservation of British rule and authority in India; and
its actual institutions and policies effectively created positions of privi-
lege for British businessmen in India; It also facilitated the sale of British
manufactured goods in India and Indian primary products abroad, and
by extension, the sale of those few manufacturers that required only ru-
dimentary industrial skills or involved practically no economies of scale
in production in a static or dynamic sense. The Government of India
practised a commercial policy which was tantamount to free trade for all
foreign goods in India. But, of course, most foreign countries other than
Britain to which Indian exports were sent did not practise free trade. We
can characterize this policy, after R.P. Dutt, as 'one-way free trade'. 37
In this period the Indian economy was heavily biased towards the
production of agricultural goods with very few inputs except land,
labour, and perhaps some organic manure and-in the few patches
where it was available-water from anicuts, canals, tanks, and wells.
The British Indian government was willing to promote the construction
of railways and subsidize them, if necessary, especially if they were
perceived to have military importance, or to build port facilities, but
its promotional measures in other directions were extremely meagre.
Irrigation was perceived to be necessary for ensuring a rise in the
productivity of crops and in agricultural exports, which, it was thought,
would pay for imports of British manufactures. But the government
normally financed the construction of irrigation canals only if the water
rates would fully pay for the cost of digging and maintenance of the
irrigation works. The experience of repeated famines and expenditures
incurred in ameliorating (rather than really relieving) the distress of the
people probably modified the stance somewhat in the twentieth century
but the First World War supervened before any such hypothesis could
be tested on the ground. We can, therefore, treat most of the period
as one of general official callousness with regard to promotional and
developmental measures that did not yield quick commercial returns to
the government.
156 Colonialism and Indian Economy

But, of course, even in a poor country with old trading channels,

commerce developed progressively as the means of communication and
finance extended all over the world and the Indian railway network and
port facilities also grew. Those traders and financiers generally came out
on top and were in positions of vantage to utilize the evolving network in
India and had connections with markets where demand was expanding
or where new techniques for processing the goods were being perfected.
The European businessmen trading in India fitted this bill best. The'
channels of overseas trade had become virtually their monopoly in most
parts oflndia by 1876. They retained control over them and extended
their operations to new areas and commodities as bigger steamers plied
the seas, powered by ever more powerful steam engines and backed by
giant firms such as the Peninsular and Oriental, or the British Indian
Steam Navigation Co.
The major areas of activity of the European businessmen remained
trade--trade in imported manufactures and in exportable primary
commodities--with a sprinkling of crudely processed agriculture-based
manufactures such as jute gunnies and hessian and cC'tton yarn of
low counts. When easy opport'unities of making profit opened up in
the latter class of goods they combined their trade with manufactures.
Since manufactures carried out under the control of European and
Indian firms using modern ,machinery also provided expanding avenues
for the employment of banking capital, it is necessary to delineate
the dynamics of such manufactures, sketchy though such delineation
must be.

jute Manufacturers.1870--1914
Let us take, for example, the case of jute manufactures and the way it was
developed by European entrepreneurs from 1854 onwards. 38 Of what
relevance is their political and social orientation to British colonialism
in India and to the British empire in general in understanding the
Europeans' manufacturing record with respect to jute?
Jute had been spun into yarn or ropes and woven into gunny bags
by handicraft methods, long before it was taken up for making into
gunnies or hessian by machinery. The pioneer in the processing of jute
by machinery was Dundee in Scotland, which was a traditional centre
of flaxspinning and weaving. Processing jute by machine methods, and
treating the fibre with suitable oils or chemicals for this purpose had sta-
bilized in Dundee by the 1850s. The Crimean War of 1854-6 provided
a strong stimulus to the machine manufacture of jute goods in Dundee,
 Indian Demography and Economy 157

since the import of flax from Russia virtually ceased. A further stimulus
was provided by the American Civil War, which expanded the market
for jute goods, mainly for provisioning the warring :µmies. D\l_?;dt;~ r
became and remained virtually the sole centre of machine manu£acturs:1
of jute goods for three decades from the 1840s up to the pe~i~n,~
of the 1870s, since the Indian contribution to such manu(actur~ .W,~.
negligible till then, and so was the contribution of competing, s~i~ii~lf?
such as France and Germany. This was possible because D1;1n1~e W~;~t
centre of the flax and linen industry, located in the leadi!l~·i.I_l~\\ffie
nation of the day. But it was also helped by the fact tliat jute.~t,ffiti
monopoly product of Bengal and jute export;s were a .mpn?,P?Jt~fifur~ 1
British traders located in Calcutta or the eastern Bengal·c!is~ri<;ts..ct'.·lcen
The entry of the Indian branch of machine µianuf3:ctw7"of j\t~!h
goods occurred not as a competitor of Dundee in the exR9~~P.~ffi~,
but as a competitor of the products of the handicrafr jute ~~W~'rftt£(1_ 1
of Bengal. Characteristically, the first jute-spip.ning mill, was;~!!tJHlb?i\r
Rishra because it was near Serampore, which w~ .a centff. of,~P:\\\?LI?ff
and weaving of jute and hemp. 39 But once jute n;iills..~A·;~!,W.,
numbers, the occupation of the traditional weayers ~f jute-sacking, the
Kapa/isof Bengal,40 was destroyed. Moreover, the jute mills increasingly
turned to ,distant locations in Bihar and Uttar Pradesh (North-Western
Provinces, or United Provinces of Agra and: Oudh,in;British;~~Y.~.f?E,
recruiting their labour, which was. cheaper. The Ii:idian \~q~ur<:rMei;v,e4;
in positiop.s where the very rudimentary skills requ,ired,p:mlp..~~ Pi£~~d.
up on the job. Another case of absolut!'!de~skilling100ndiat_1.laho4! h.~d
taken place through the.advent of modern.ma~hipe:oP.e~a!e~_in14s~ies
in an atmosphere of colonialism and r;i.ci~ism. :" , .1, i. , , ,

The first jute mill set 4p by Gt:.orgeA,qkland, 'fas,_like.~)le.fjrst-s;(?,t.t9n

mill, a pure spinnipg cancerµ. Sqo.Q.handl.ooms w~.n:aq<;iedto. i~is. ll}ill
and from the second -mill,onwar4s, aJl ,th<;jute m;ills,werf;.bot4 spinning
and weaving units. These:pipneering V:t;nturer-~ Rishra. nshara) ;mill,
the mill of-the Borneo .~ompany, which later·.bec;amethe Baranagore
Jute Mills, arid the mills-at Shibpur and Gouripur-:µl displaced jute
handloom products w,hich."'{eresold within India and used extensively
in the co.u,tal ,trade. ·:·. " ·· · ,
. But. fro0 th.e J 870s onwards came mills which, increasingly sought
markets abroad and began <;;ompetingwith Dundee in foreign markets.
The person credited with the pioneering-work in finding markets·abr.oad
was Thomas Duff: He had dose connections with both Dundee and
Calcutta. He was a trader bur had a family background in manufacture
158 Colonialism and Indian Economy

at Dundee, and he obviously combined the skills of both a production

manager and marketing manager. He was a member of the Borneo mill
staff in the 1860s, then went back to Britain, and, after successfully
running a mill at Barking (near London), decided to float the Samnuggur
jute mill in 1873 in association with three other Dundee men. 41
The very profitable working of the five older jute mills (except the
Rishra mill) during the years 1868-73 provided the stimulus for the
launching of several new mills, which took the number of looms in
the jute mills of Bengal from 1,250 in June 1873 to 3,858 in April
1877.42 The flotations of mills in these early years came under three
heads: the first was a speculation by adventurous men with little
money or real experience in running business ventures but with a lot
of gumption.
Such were men like George Ackland and Richard Macallister, the
bus conductor from Philadelphia who took over the Fort Gloster Mill. 43
Most of these adventurers' speculations failed, and the concerns were
either closed or taken over by others. The second were 'speculations' by
men or firms with money who decided to take a hand in a promising
new venture. Thus were floated the mills of the Borneo Company, and
the mills of the two doctors, the Seebpore (Shibpur) and Gourepore
(Gouripur) jute companies. Since they were controlled by hard-headed
men of business with some idea of the trade they entered, most such
ventures of Scotsmen or Englishmen seem to have turned out well.
Last came that group of men who had both money and a direct
experience of handling jute or its manufactures when they floated new
jute mills. Among the pioneers, Thomas Duff and his Dundee friends,
A. and J. Nicol and J.J. Barrie, fitted this bill best. The mills managed
by Thomas Duff and Co., and registered in the UK, did very well.
But increasingly, such combinations of expertise and money were to
be found in the Anglo-Indian managing agencies such as Andrew
Yule & Co., Bird & Co., George Henderson & Co. (later Jardine
Henderson & Co.) and the jute mill industry came to be dominated by
these concerns.
Mill flotations and increases in the loomage of the jute industry came
in pulses: large profits led to strong expansive movements, a decline
in prices of final goods, and a fall in profits. This in turn slowed up
expansion, and then the cyclical movement resumed its upward phase.
Speculative movements in raw jute, jute manufactures, and loom
expansion were an integral aspect of the growth of the jute industry. But
the remarkable part of the story was that between 1880 and 1910 the
 Indian Demography and Economy 159

jute mills showed hardly any slackening of growth on a decade to decade

basis.44 The sturdiness of long-term growth of the jute industry, despite
the speculative behaviour of many of the relevant variables, loses its
paradoxical nature once we grasp, both the specificity of the European
control of the 'commanding heights' of the colonial economy and polity
and the nature of the international competition faced by the industry.
The international market for jute manufactures was expanding rather
strongly. Between 1880-1 and 1888-9, while the amount of raw jute
exported from India expanded from 5,809,815 cwts. to 10,553,143
cwts., and its value from Rs39.94 million to Rs78.97 million, the value
of jute manufactures exported from India rose from Rs 11.31 million to
Rs 25.71 million. Since India was the sole producer of jute in the world,
and the raw jute exported was made into sacks or doth at Dundee, or
the USA and Continental European centres of manufactures, this shows
that the overseas market for jute manufactures was expanding, and
that the fraction of jute processed overseas was lnuch larger than that
made into sacks and gunny cloth in the Calcutta mills. Thus, up to
the end of the nineteenth century, the Calcutta jute mills were not yet
taking away markets from Dundee or any other manufacturer but they
were increasing their share in an ever-growing market. Secondly, jute
manufactures were virtually a new industry at Dundee as in Calcutta,
and the Dundee products had yet to become entrenched in most of the
markets: those markets were yet to be formed in the 1880s and 1890s,
through further expansion of grain production in the US prairie or the
Argentine pampas.
That the political opposition from Dundee to the expansion of the
Calcutta jute mills did not become very fierce is thus explained by a
number of factors, such as the expanding nature of the international
market, the relative newness of the industry at Dundee, the commonness
of ties of many of the Dundee and the Calcutta entrepreneurs, 45 the
countervailing interest of the machinery manufacturers at Dundee
in supplying the Calcutta jute mills, and finally the relatively small
dimensions of the industry and jute mill interests at Dundee (in contrast
with. the Lancashire cotton mills, which exerted a far more effective
pressure on the Government of India in an attempt to slow down the
growth of the Indian cotton mills).
Once the British businessmen found that it was much more
economical to manufacture the simpler kinds of jute goods in Calcutta
than in Scotland, they did not have too much to worry about the
Dundee competition. In India, through their extensive commercial
160 Colonialism and Indian Economy

network, they had a firm hold of the wholesale trade in jute, at least up
till the First World War, a labour force which was kept docile and cheap
through the lack of alternative employment opportunities and the use
of all the means of coercion available to members of the ruling race in a
colonial setting, and privileged access to foreign markets through their
agents and contacts in London and Scotland. To all this was added the
consolidation of economic power by a few managing agency houses such
as Bird & Co., Andrew Yule & Co., George Henderson & Co., Jardine
Skinner, Gillanders Arbuthnot, Kettlewell Bullen, Ernsthausen, & Co.,
and F ,W. Heilgers-a consolidation that was protected by privileged
access to high finance 'and to any government patronage that was going,
such as contracts for supplies of rice to fight famines, construction of
port facilities, opening of branch railways, and so on. In the jute mill
sector this control was further enhanced by the establishment (in 1884)
of the Indian Jute Manufacturers' (later, Mills) Association, which
operated something approaching a collective monopoly, especiallywhen
prices of jute manufactures fell, threatening profits. This setting gave
the confidence to Ernest Cable who would write in 1903 (in a letter to
C.S. Cox): 'In the prosperous times of a boom, we can "off our own bat"
float a jute mill in three hours.' 46
In the case of jute manufactures, we can take the growth of the
major market as being exogenous to the Indian economy: the expansion
of European overseas settlements and the growth of the grain trade
propelled that market. A part of the market was in India. There, howev.er,
it was expansion of the railways and trade in grain and seeds-forces.
that were released by the colonial government or the international
economy-which provided the chief impetus. We can also by and
large ignore the handloom sector of the jute industry, for handicraft
manufacture of jute very soon paled into insignificance ,in comparison
with the mill output of jute goods, and never recovered the lost grounci.
For example, already in 1884-5, out of the. total;exports of 82,77,9,207
gunny bags,·77,841,776 were produced bx po;weHootns(all lqca\ed in
mills) and only 4·,f>3J,637,431by,handlooms. 4~ ,11
The jute industry in India continued to forge@ead, and,.the biggest
managing agency houses of eastern'lndia came to control,a.significant
percentage of the productive capacity in themiils. Table7.5. shows.tliat
there was hardly: a slackening 0£the long~term rates of growth until the
eve of the First World War. By 1909,,the Indian mills had·left Dundee.
far behind in their productive capacity} 8 From thei first deca'de.,ofthis
century, the exports of raw jute also began declining.19 ,, J .,.
 Indian Demography and Economy 161

Table 7.5 Indian Jute Mills, 1879-80 to 1909-10

Year or period No. of persons No. of No.of
employed looms spindles

1879-80 26,826 4,876 69,456

1889-90 58,830 7,629 155,318
1899-1900 101,630 14,021 293,218
1909-10 204,104 31,418 645,862

Percentage growth in

No. of persons No.of No.of

employed looms spindles

Between 1879-80 119.3 60.6 123.6

and 1889-90
Between 1889-90 72.8 83.8 88.8
and 1899-1900
Between 1899-1900 100.8 124.1 120.3
and 1909-10

Source. Government of India, Director-General (later, Department) of Commercial

Intelligence and Statistics, Financial and CommercialStatisticsof British India, and
Statisticsof BritishIndia and Bagchi (1972: Table 8.1).

, Since there were other countries producing jute manufactures, and

since these countries often imposed a higher tariff duty on imports of jute
goods than on jute, Indian mills could not exercise a fully monopolistic
control over prices or quantities of jute manufactures. But they could
act as a local regulator of prices or quantities and as a quantity or price
leader (depending on the prevailing situation, a quantity leader in the
case of a shortage of jute and a price leader in the case of a glut of jute
manufactures), 50 and this is what they became, probably from the 1890s
onwards. The Indian Jute Mills Association helped organize short-time
working agreements which formalized some aspects of the collective
leadership exercised by the industry. (For exercising a collective local
monopoly it was not necessary that prices of jute goods should be kept
high permanently or that there should be insuperable barriers against
the creation of new capacity.)51
Since the variations in the profitability of the mills were almost
entirely governed by the price at which they bought jute and the price
at which they sold their gunnies or hessian (since wages were stagnant,
and techniques unchanging), what the mills sought to do through the
short-time agreements was to drive a wedge between market arrivals
162 Colonialism and Indian Economy

of jute in Calcutta and their purchases, and between the sales of

manufactures and their fabrication. On the other side, the short-time
agreements forbade the extension of jute mill capacity beyond those
already publicly admitted by the mills52 and thus regulated the extension
of the capacity within wide limits. The latter task became easier over
time as a small group of European managing agencies came to control
most of the mills.53 The success of the short-time agreements is partly
indicated by, and was in turn conditional upon, the fact that expansion
of mill capacity and increase in mill consumption of jute kept in pace in
the years up to the First World War. 54
The continued growth of the jute industry the world over was made
possible primarily through the expansion of production of grain and
other bulky materials in countries such as the USA, Argentina, and
Australia. The Indian mills were accounting for a larger and larger
share in the world market for jute manufactures but that market was
expanding fast enough to at least allow the other manufacturing centres
to go on producing growing amounts (Table 7.6).

Table 7 .6 Exports of RawJute and Jute Manufacturers from India,

1879-80 to 1909-10
Annual average Exports of raw jute Values of exports of
for period Quantity Value jute manufu.cturers
(.ultS) (Rs lakhs) (Rs lakhs)

1882-3 to 1891-2 9,279,565 6,15 1,87

1892-3 to 1901-02 11,771,835 9.54 5,54
1902-03 13,036,486 11,13 9,02
1903--04 l~,721,447 11,72 9,47
1904-05 12,875,312 11,97 9,94

Source.O'Conor (1908: Chapter 5, pp. 282, 287).

But as has been noted already, exports of raw jute from India and
hence jute manufactures in foreign countries began to decline in the
years immediately preceding the First World War. In the first decade of
this century, as indeed in other periods, the price of raw jute fluctuated
greatly, and fears were expressed that jute might be replaced by some
cheaper fibre.55 But no such fibre could be found, and the jute mill
companies continued to promise about the best average returns over
time among British-controlled enterprises.
. Indeed, the prosperity of jute trade (apart from movemeqt, of
grain for famine relief in 1899) was the only item explicitlY.mentic;m<;q
 Indian Demography and Economy 163

in the reports of the Bank of Bengal, for the half-years ending in 31

December 1899, 31 December 1904, 31 December 1906, 31 December
1912, and 31 December 1913 as being responsible for creating an
enhanced demand for money in those half-years. (The latter half of
the year was, of course, normally the slack season for the Indian money
market.)
The jute mill companies were a large absorber of working capital,
and hence naturally major customers of banks. For example, for a
group of six sterling companies, for the year 1908-09, the total stocks
in hand at the end of the accounting year amounted to £1.54 million
out of total assets of £4.20 million. 56 But there were other modern
industries in eastern India, which were also large absorbers of working
capital, and hence major users of bank finance. Tea and coal are the
two other large 'industries' in eastern India, and they were almost as
exclusively under European control before the First World War as the
jute industry.

Tea Plantations 1870-1914

Indian tea could oust the China tea from the British market for several
reasons: the Indian tea planters could reduce their cost of production
and hence the price at which they sold their products as their cultivation
practices improved, ·as the proportion of mature trees to immature
plantations of tea increased over time and the size of cultivated areas
or plantations under the control of a single managerial unit increased
on an average.57 But price changes were not the sole factor: for, Chinese
tea prices in London also declined in response to Indian competition.
While the price of Indian pekoe per lb. in Calcutta declined from
Re 1-1-3 pies in 1871 to Re 0-1 5-3 pies in 1885, the price of China
Souchong in London declined from Is. 8~d. in 1871 to Is. 4~d. in
1885. 58 Two factors, in addition to price reduction, seem to explain the
advance of Indian tea in the London market: one was the continuous
change in British taste from the green to the black varieties of tea,
and the other was the inability of the Chinese peasant to match the
responsiveness and the aggressiveness of the British tea planting and
marketing companies. 59
When the British planters in Ceylon (Sri Lanka) shifted from
blighted coffee plants to the plantation of tea: tea plantations in India
met a formidable competitor in the London market. The plantations
in Ceylon were organized by basically the same class of people as con-
trolled the plantations in India, and seem to have been more aggressive
164 Colonialism and Indian Economy

in increasing their output and marketing it abroad. During the late

1890s and early twentieth century, in response to the usual cyclical
fluctuations and competition from Ceylonese tea, planters often raised
a cry of 'overproduction', but most schemes of regulation of produc-
tion fell through, and Indian acreage and output of tea continued to
increase apace, as is shown by figures in Table 7.7. From this Table it
is also seen that while cultivation in areas other than Assam and Bengal
increased, eastern India retained its pre-eminence in the production of
tea in India.

Table?.? Area under Tea and Average Annual Production of Tea

in British India, 1886---1910
Period Assam Bengal British India
Area Output Area Output Area Output
(acres) (1000 lbs) (acres) (1000 lbs) (acres) (1000 lbs)
1886-90 218,000 72,376 77,500 21,576 322,700 98,109
1891-5 258,100 92,656 99,300 31,151 389,800 131,246
1896-1900 319,200 119,154 124,500 41,457 488,600 169,38}
1901-05 338,600 143,162 135,400 50,151 525,800 204,64
1906-10 345,100 168,613 141,300 61,325 547,400 251,072
Source:Misra (19.85:Tables 2.2 and 2. 7); these Tables are based on Government oflndia.
Department of Sratistics (later Department of Commercial Intelligence and Statistics),
Cultivation of Tea in India (annual), Production o/Tea in India (annual), and Note on the
Production o/Tea in India.

Before leaving the subject of tea in India, two structural characteris-

tics of the industry must be considered, and for the relation of the tea
industry to apex banking. First, tea gardens generally owned a consider-
able amount of land that was not used· for cultivation. 60 Some of it was
intended for new plantations in future, some of it was used as barriers
against intrusion of wild animals (or as pathways for their passage with-
out disturbing the plantation), and some was used to tie the workers
down to plantations once their period of indenture was over. The tea
gardens gave these workers small plots ofland on which they could build
cottages and grow vegetables. This way the workers' families provided a
reservoir from which to draw labour in the peak plucking season. Over
time, as workers became more settled in these areas, such policies were
used to curb their discontent at the 'deplorable living conditiohs and
ensure their sub}ection to the semi-servile discipline of the tea gardens.
The second characteristic to be noticed is that most large planta-
tions were controlled by European companies or partnerships, and that
 Indian Demography and Economy 165

Indians were mostly owners of small gardens.61 On the basis of data

provided by Thacker'sIndian Directoryfor the year 1910 it has been
estimated that while the average size of estates controlled by Indians was
210 acres, that of estates controlled by the Europeans was 817 acres, the
total area under the control of the former being only 28,311 acres as
against 495,115 acres controlled by European-s.62 Moreover, a large frac-
tion of the European gardens was controlled by big managing agency
houses based in India and Britain. 63 Hence, besides the racial barriers
that generally restricted the access oflndian businessmen to credit given
by European-controlled ban4, there were further structural factors
limiting the access of Indian tea gardens to finance provide& by the
Bank of Bengal (and 'very probably other large joint-stock banks operat-
ing in eastern India). From the surviving correspondence of the head
office of the Bank of Bengal with its Jalpaiguri branch (which was the
first branch to be opened in 1894 in the tea-growing district, primarily
to facilitate remittance of funds by 'the managing agents in Calcutta
to the gardens under their control), it appears that in 1903 or 1904,
the typical method of financing an Indian-owned tea garden (such as
Anjuman Tea Co. Ltd., Chunia Jhora Tea Co. Ltd., or Gurjang Jhora
Tea Co. Ltd.) or a small European garden (such as that of Preyer & Co.
at Haldibari) was to get a de,mand promissory note from the company,
guaranteed by a European tea broker in Calcutta (W.S. Creswell & Co.,
or A.W. Figgis & Co.) who handled their crop, and also get the crop
in the plantation hypothecated as collateral security.64 But the Bank of
Bengal agent at Jalpaiguri claimed in October 1903 that he had got all
the 'native' tea gardens in his district to do their 'financing through his
branch', presumably, in the form of cash credit limits guaranteed by
their tea brokers. This pattern of financing continued at least down to
the 1920s. The Indian gardens borrowed directly from the Jalpaiguri
Banking and Trading Corporation, Jotedars' Bank, and so on; later on,
the Central Bank oflndia finanted some Indian gardens.65 By contrast,
tea gardens controlled by large European managing agents had their
finance arranged in Calcutta through those agents. This pattern of
financing held throughout the period 1876-1914.

CoalMining 1870-1914
The third branch of non-agricultural 'enterprise in India in which finance
was required on a large scale was coal mining. As mentioned earlier, this
industry can be traced back to early days of British rule.66 However,
down to 1879-80, the amount of coal mined annually in India fell short
166 Colonialism and Indian Economy

of one million tons: out of a total estimated Indian consumption of

1,455,873 tons in that year, imports amounted to 587,634 tons and
Indian output to 868,239 tons. 67 There were many reasons for this slow
growth. The first was the lack of industries which would use coal to run
boilers or steam engines, or use it as an input for making dyes.68 The
second was the lack of acquaintance of ordinary Indians with mineral
coal as a fuel and their continued use of wood or other vegetable and
waste matter for cooking and heating purposes. The third reason was
the wanton felling of forests not only by ordinary domestic user~ and
businessmen for purposes of fuel, but also for use by railways which were
the biggest potential consumers of coal at that time. To cite some figures
at random, in 1887, Indian railways consumed 292,808 tons of wood as
fuel;69 in 1905 the consumption of wood (as fuel) was 253,159 tons, in
1914 it was down to 95,598 tons, and in 1917 it again increased to more
than 243,450 tons.70 The fourth factor behind the slow growth of the
use of Indian coal was the prejudice ag~nst it parboured by European
managers of railways and industrial enterprises. Coal raised from the
Bengal mines had a typically higher ash content, and a lower carbon
content than the imported English and Welsh coal, but it generally had
a lower sulphur content.7\,In any case, Indian coal was much cheaper
than imported coal, and if.we go by the figures of ton-mile output per
lb. of coal yielded on East· Indian Railways by imported (Welsh) and
Indian coal, and calculate the productivity per rupee of the two types of
coal,72 Bengal coal would come out as distinctly the superior input to
use. However, almost certainly, the British equipment used on railways
and in all industrial enterprises was not always adapted to handle the
higher ash-content of the Indian coal, and the prejudices of European
managers and engineers were slow to die.73
As the demand for coal in India increased, prejudices gave way to
the attraction of lower prices, and the output of Indian coal increased,
as is shown by Table 7.8. A major leap in output took place with the
exploitation of the Jharia coalfields after 1894. This was made possible
because a railway connection between the Jharia coalfields and the
rest of the country (especially Calcutta, and through the trunk.lines
to Bombay) was built in 1894. But imports of foreign coal into ~ndia
continued: part of the import was due to the low cost of·'sea c:i,rdage
to the western coast of India compared with the cost of carrying' 'Coal
from the Bengal coalfields, but part was also due to the continued
consumption of foreign coal by Indian railways even in placeS,!Which
could have been supplied economically by the Bengal coalfields. As.in
 Indian Demography and Economy 167

Table 7.8 Average Annual Production, Exports, and Imports of Coal

in British India, 1886--1910

Year or period Production of Net imports of foreign Exports of

Indian coal coal into India Indian coal
1881-5 1,227 657 Negligible
1886-90 1,758 733 18(b)
1890-5 2,758 677'" 41
1896-1900 4,750 333 305
1901-05 7,627 204 569
1906-10 11,523 344 775
1911 12,716 319 862
1912 14,736 561 899
1913 16,208 645 759
1914 16,464 419 580
Source.Misra (1985: Table 3.17); and Investors India Year-Book(1919: 157).
Notes: (a) Four years' average.
(b) Three years' average.

the case of use iron rails,74 the prejudice against Indian produc':! may
have survived long in the hearts of some European railwaymen.
As Indian production increased, exports of coal to other countries,
especiallythe Straits Settlements and Ceylon also increased. The generally
slow growth of modern industry in India as a whole contributed to a
slow growth of the coal industry. The operation of coal mines involved
most of the large coal companies in Bengal and Bihar in the running
of colliery zamindaris. The land from which the coal was mined was
already permanently settled. The colliery companies either acquired the
zamindari rights or leased them wholesale or piecemeal.75 They used
them to exploit the mines in any way they pleased, for there were few
official guidelines regulating the operation of mines, and those few that
were there were more often than not observed in the breach. These
zamindari rights were also very powerful instruments for the control
of labour. Mine-workers were generally recruited from the surrouncling
forest-dwellers or people belonging to the so-called tribal groups or
scheduled castes. The conditions of work were bad, accident rates high,
and naturally, labour sought many ways of evading this slavery. The
coal mines tried to coerce people living on land controlled by them
to go into the mines, or face being literally turned out of their hearth
and home. On the other side, those mining companies which faced a
shortage of labour at the going wages tried to entice workers by giving
them tiny plots ofland to live on and grow crops in. (The similarity with
168 Colonialism and Indian Economy

the practice in the plantations is obvious.) Thus the running of capitalist

enterprise in coalfields involved a good deal of coercion by the colonial
state and instruments to stop the .uiirestrained working of free markets
in land and labour. 76 Soine of the larger joint-stock companies such as
the Bengal'Coal Co. {coqtrolle'd by Andrew Yule) and Burrakur Coal
Co. (controlled by Bird &-Co.) ruled their collieries virtually like feudal
domains, and the racial superiority arrogated by the colliery controllers
and the ruling race to which they belonged helped enormously in this
mode of carrying on capitalist enterprise.
While there were several large collieries before 1914 raising and sell-
ing anywhere between Rs ,I million and Rs 10 million worth of coal,77
most collieries were small; even many joint-stock coal companies raised
and sold coal worth. Rs 100,000 or less. Collieries mainly depended
on cheap labour working under highly unscientific conditions to raise
coal and make their profits: this was true of large as well as small com-
panies. In fuct, the coal mining operations of many large companies
were leased out to raising contractors who invested as little as possible
in modern 111iningequipment. Many managing agents had coal mines
under their management, which they ran under very different systems
of control. Some of the smallest or inconveniently located mines. might
be,leaseq by them to .private contractors or to other companies on pay-
ment of royalties (generally as so many rupees per ton of coal raised), in
some ·mines the actual raising operations would be carried on by con-
tractors, ~nd only for the,rest of the mines would the companies become
direct employers of mining labour and conduct the raising operations
themselves~
The-co~ mines under,the management of large managing agencies
were only a part of conglomerates consisting of jute mills, tea plantations,
coal mines,· mica mines, manganese mines, and perhaps an engineering
works or two;'and a paper mill or two. 78 Of course, these processing and
mining enterprise~.would be linked together in a huge trading network
covering·-say,imports'of piece-goods, sales of shellac, oilseeds, raw jute,
and an)':other pfdducts that might be profitably traded overseas or in
the Indian market on,a wholesale basis.
..,,....
:'"I f

Patternso+:
'}'
Conulomerate
0111
Control
J

The horizontal or ,vertical patterns of integration between the differ-

ent firms under their control were determined by the strategic ~oals
of the particular .conglomerate concerned. 79 The financial structures of
the different companies within the conglomerate, and the use of the
 Indian Demography and Economy 169

companies-as loss leaders or profit centres-would be determined by

the strategic goals of the conglomerate as well as the histories of those
particular companies. For example, where the companies were old and
not particularly profitable, their equity capital would be large, because
much of the windfall profit made by them would have already been
realized at their moments, of glory in the form of sales or transfers of
shares of the companies, and there· would not be large profits to be
alienated to shareholders unconnected with the managing agency house.
But if a firm was expected to be outstandingly profitable, the equity
capital base would be narrow, the company would be closely held, and
the needed capital would be raised through debentures or preference
shares. Such differences between company characteristics and expecta-
tions about their behaviour were there even within the same industry,
but they could sometimes be seen emerging as a differential industry
characteristic. Thus, for example, cotton mills in eastern India were
not greatly profitable in the late nineteenth or early twentieth centuries,
and sterling tea companies were generally highly capitalized through
sales of shares at prices that reflected the expectations created by the
promoters. This is why, for example, the values of paid-up capital for
jute mill companies underestimated the total investment made in them
and those of sterling or rupee tea companies or cotton mill companies in
eastern India tended to give an exaggerated idea of the capital invested
in them. 80
The three industries we have so far taken up for a detailed examina-
tion formed the core.of the group of modern industries in eastern India.
For India as a whole also, apart from the cotton mill industry, which we
take up in the next section, jute mills, tea gardens, and coal mines were
the most important fields of investment of private capital on a large
scale and employment of labour in relatively large units of organiza:-
tion. Besides these three fields, there were, of course, the railways, which
might be regarded as the biggest field of employment of capital in India.
But most railways had been promoted with public guarantees of profit,
many were developed as state enterprises, and increasing mileages of the
railway system were being bought up by the state. Their growth was fai;
more influenced by the aims of the colonial state and the attitudes of
European investors putting their money in the London money market
for investment, in Indian government securities than by the private
profit motives of individual British or Indian investors in India. It is
true that as the guarantee system was extended to promotion of railways
by provincial governments and district boards, managing agency houses
170 · Colonialism and Indian Economy

in India took a hand in running branch railway lines. Many such railway
companies as well as port or municipal development authorities turned
towards the Presidency banks to underwrite their bond flotations and
subscribe to their paper. But all such activities belonged to the public
domain of the colonial state and were not just outgrowths of the private
commercial activities of British business, powered by the same sort of
opportunities as' ':tctuated their investment in jute and tea companies.
Besides.Weenterprises already mentioned, there grew up between 1876
and -1914~ coffee plantations in southern India, a few sugar mills in
ncmherrilndia, a·few paper mills scattered throughout India (the most
important; ones being located in eastern India), and a few engineering
en.terpi;ises,,the most important of which were again located in eastern
India.
We~have already noticed that Bengal alone, among all the major
provinces of India, experienced a substantial growth of population
,throughout the four decades between the 1870s and 1914. Most of the
growth nf modern enterprises also came to be concentrated in the land
and the abundant population of the eastern region. European managing
agency houses drew not only on the labour force of the central, northern,
and a part of the southe~n region, through the extensive network of
recruitment maintained by the European managing agents in Calcutta. 81
The colonial state apparatus at its different levels, the particul:tr land
laws in operation in eastern India, and the system of indentured labour
in the Assam tea plantations ensured the supply of cheap labour to all
these enterprises without virtually any let or hindrance.
All these forces combined to give Bengal a lead in the expansion of
exports. We have 1:stilh;l.tedfive-yearly averages of figures of exports of
merchandise from the three Presidency towns of Calcutta, Bombay, and
Madras,•and the hinterlands of their own ports and minor ports near
them. We find that in comparison with the average annual merchandise
exports ·of. the five years from 1871-2 to 1875-6, the annual average
nfercl;i:l:ndise·exports of the five years from 1911-12 to 1915-16
expanded by 282.71 per cent in the case of Bengal, 162.53 per cent
in the ·case 0£ Bombay and 257, 73 per cent in the case of Madras. 82
Since Bengal's exports were already in the first quinquennium Rs 241.5
million, as against Rs 221.0 million of Bombay, and Rs 67.2 million of
Madras, by the beginning of the First World War, Bengal's total exports
considerably exceeded those of Bombay and Madras combined. On
the other hand, because of the definite retardation suffered by Bombay,
 Indian Demography and Economy 171

the relative differential between the exports from Madras and Bombay
was considerably narrowed over the period. That the rapid expansion
of Bengal's exports failed to benefit the Indians of eastern India to any
great extent had to do with the whole political economy of British rule
in India, some aspects of which have already been touched.

The Development of Modern Industry and

the Internal Market in India: The Case of the
Cotton Textile Industry
The growth of the cotton mills in India was influenced more strongly by
the state of the market for cotton doth within India rather than abroad,
thus providing a contrast with both jute mills and tea gardens. Moreover,
unlike in the case of coal, which was an intermediate good, the current
level of income rather than current investment had the major influence
on the state of the market for cotton goods. Cotton mills contrasted with
jute mills also in another respect: the interaction between the handicraft
and the mill sectors of the industry had a far greater influence on the
fortunes of the cotton mills than on those of the jute mills.
Down to the end of the nineteenth century, handlooms continued to
produce the larger part of the total Indian output of cotton cloth. For
example, in 1900-01, the output of cotton piece-goods of Indian mills
was 420.6 million yards, that of Indian handlooms was 646.4 million
yards and net imports of cotton piece-goods into India was 1,875 million
yards. 83 Indian mill production of cotton piece-goods appears to have
overtaken the handloom output only by 1909-10. But the two together
fell short of the net imports of cotton piece-goods 'into India even in
the years 1913-14 and 1914-15. We have already seen that despite
lack of systematically estimated national income series before 1900, it
is possible to say that by and large, in most regions of India ordinary
people were poor, tended to die early and in large numbers; and they
tended to fare no better in 1900 than they had done in 1870.
It is difficult to believe that the demand for consumer goods could
grow fast among such a disease- and famine-ridden population. There
were, of course, very rich landlords, princes, businessmen, and profes-
sionals, especially lawyers, among that population, but the demand
coming from them would be mostly for luxuries and the better varieties
of doth, not for the coarse doth which would be the major staple of the
Indian cotton mill industry, once mills took up weaving in earnest.
172 Colonialism and Indian Economy

Wheh' we •turn• from the consideration of the general economic

background to we· Indian market for mill-produced cotton twist and
yarn, and cotton-cloth, we have to bear in mind three factors tending to
irkrease"tlfedemand for mill-produced cotton cloth and yarn even if the
incomes of ordinary•people were not increasing fast, or not increasing
at all. First, the prices of ordinary cotton cloth and lower counts of yarn
declined almost steadily from 1873 down to 1896 or so. The influences
tending to this result,had to do with the general slide in agricultural prices
in international markets during the period, 84 and the intensification of
competition in the international cotton textile industry. This would
tend to increase the sales of cotton goods. Secondly, there was probably
a change in tastes and fashions going on in India, so that those who
could afford. it wore more clothing than before and more mill-made
cloth than before. Thirdly, during this period, the sales of mill-produced
yarn continued to increase at the cost of handspun everywhere in India, 85
and the sales of mill cloth also tended to eat into the marke.:s of hand
loom cloth in many regions. But in some parts oflndia handlooms were
able to expand by using mill-made yarn and displacing imported coarse
cloth. However, the Indian and the Japanese mills proved to be much
tougher competitors oflndian handlooms than the Lancashire mills had
been in this range of fabrics.
Jf we ignore the B9wreah cotton mill (near Howrah) 86 in Bengal
fouhded in 1817 or 1818 and the cotton mill established at Pondicherry
some years later, which did not lead to any cumulative growth of the
cott6n· mill industry, the real beginnings of that industry can be said
to have taken place in western India. The first two factories, the one
founded at Broach by James Landon in 1855, and the other by Cowasj.ee
Nat;1ab~oy.,Davarin Bombay in 1856 (these were the years when they
Jiegaft<to fitnction although they were conceived· in 1854) were both
spfnning m,ills. The third mill, ·the Oriental, founded by Maneckjee
Petit which began functioning in 1858 had a weaving shed housing 300
looms located in·h. 87 .
The Bombay ,miijs constituted the predominant sector of the Indian
cottoh mill ihdustry;for a long,time, and it is with their prospects that
we must cpncerp,'Qutselves first. The Bombay mills suffered a setback
after 18611 first ~im the; cotton boom caused by the civil war in the
USA -:and blockage, of ~otton exports from the southern ,states and
then with-the- crash .of 1.866,...7,which took a heavy toll of businesses
in Bombay.88 ,The:cotton•boom affected,the expansion of the Borp.bay
mills by raising the profitability of trading as against industrial
 Indian Demography and Economy 173

investment, by increasing the price of cotton beyond all previous

records, and probably also by making it scarce in the Indian market,
since it was grabbed by exporting firms for sale in Britain. The last
factor also adversely affected one major segment of the customers of
the Bombay mills-the Indian handloom weavers. The crash caused
further damage since many mills were saddled with stocks of cotton
bought at fancy prices, and also of unsold finished goods and so were
unable to clear the large loans taken in the years of inflated valuation of
their security.
During most of the 1860s new mills came up, mostly in other parts
of India than Bombay city. But between 1873 and 1875, Bombay
witnessed a phenomenal amount of mill-building and when the Bombay
Mill-owners' Association was established in 1875, the Bombay segment
was the leader of the mill industry by a large margin.
The early mills specialized in the spinning of yam of an average count
of 20s or even lower. Although some mills also had powerlooms for
weaving, more than 50 per cent of all yarn spun was sold by them. 89
1he Bombay merchants had close trading links with China, so yarn was
exported to that country as well as to nearby Indian provinces such as
the Madras Presidency from the late 1860s. But such exports, gathered
momentum in the 1870s and 1880s (Table 7.9). What the mills in
India were doing was to replace the lowest counts of yarn imported into
India and China, and also, of course, displacing the work of spinners in
both the countries.

Table 7.9 Annual Averages of Exports of Cotton Twist and Yarn to

Foreign Countries from India, 1871-89
Quinquennium or year Quantity (lbs) Value (Rs)

1871-2 to 1875---o 4,370,329 20,96,007

1876-7 to 1880--1 19,524,665 86,55,305
1881-2 to 1885---o 54,035,981 2,06, 16,340
1888-9 128,906,764 5,20,70,996

Source.Watt (1972(1890]: 169).

Despite competition from the Indian mills, the imports of twist and
yarn into India continued to increase down to the end of the 1880s
(Table 7.10). It can be seen that the prices of yarn, whether imported
or exported, were declining all these years. Since the Indian mills were
still mostly producing yarn of an average of count of 20s, their output
was catering to the needs of the handloom weavers producing the
174 Colonialism and Indian Economy

coarser varieties of woven goods in India and China. However, the finer
varieties of handloom cloth continued to be woven for a long time with
imported yarn.

Table 7.10 Annual Averages oflmports of Cotton Twist and

Yarn into India, 1871-9
Quinquennium or year Quamiry (lbs) Value (Rs)

1871-2 to 1875-6 31,934,495 2,72,68,650

1876-7 to 1880-1 36,339,902 2,96,16,344
1881-2 to 1885-6 44,542,928 3,31,97,'401
1888-9 52,587,181 3,74,67,969
Source: Watt (1972(1890): 167).

The biggest segment of visible trade in cotton cloth in the 1870s was,
however, the imports of mill-made cloth from abroad (Table 7.11).

Table 7 .11 Annual Averages of Values oflmports of Cotton Manufacturers

(other than twist and yarn) into India, 1866-89
Quinquennium or year (in Rs)

1866-7 to 1870-1 14,78,63,641

1871-2 to 1875-6 15,55,54,760
1876-7 to 1880-1 17,45,54,086
1881-2 to 1885-6 21,23,08,636
1888-9 27,76,45,082
Source: Watt (1972[1890]: 170).

Indian mills found it far more difficult to substitute these imports

than the imports of yarn or the production of coarse cloth by handlooms.
An elaborate marketing network had been built up by the big British
managing agency houses for servicing the imports of piece-goods-a
network which involved organized banking, the flow of information,
and infrastructure. The proportion of European and Indian piece-goods
received by the different provinces in 1888-9 is indicated in Table
7.12.
As Table 7.12 indicates, in 1888-9 there was an enormous volume
of interprovincial trade in cotton piece-goods. Bengal or rather Calcutta
was the biggest import point of foreign piece-goods and it supplied
North-West Provinces and Oudh (Uttar Pradesh), Assam, and even
Punjab (Bihar and Orissa were included with Bengal). As the trade
channels developed, the lines of supply changed: more and more of
 Indian Demography and Economy 175

Table 7.12 Net Imports of Cotton Piece-goods into Different

Provinces oflndia in 1888-9
(in Rs /,akhs)

European Indian Total

manufacture manufacture

Nonh-West Provinces and Oudh 399 -17 382

Bengal 836 -2 834
Madras 138 -30 108
Punjab 281 11 292
Bombay 91 -37 54
Central Provinces 50.5 -10 40.5
Nizam's Territory 18 4 22
Rajputana and Central India 84 31 115
Berar 27.25 12 39.25
Mysore 26 10 36
Assam 64.25 2.25 66.25
Sind 43 34 77
Source:Watt (1972(1890]:163--4).

Punjab would be supplied by Bombay and Karachi as the railway and

trading network spread.
Since a large part of the piece-goods traded were of the finer varieties,
these provincial import figures would not be taken as appropriate targets
for the local, provincial cotton mill industries. This was especially the
case where the province or centre concerned suffered from a comparative
disadvantage vis-a-vis Bombay and Ahmedabad. It was otherwise with
imports of twist and yarn, which were of a cruder variety. Here such
provinces as Madras and North-West Provinces and Oudh, and even
Bengal, would aspire to displace both imports of European yarn and
yarn produced by the Bombay mills. In 1882-8, for example, of the
total value of yarn (Rs 14,958,006) imported into Madras fully 84 per
cent was of foreign origin. 90 Of the total import of European yarn worth
Rs 14.96 million, Rs 10.35 million was directly imported from the
UK, Rs 3.35 million from the Bombay Presidency and Rs 1.35 million
from Bengal. The explanation of the latter figure was that besides the
advantages conferred by the trading and financing networks of big
Calcutta and Bombay firms, many places of the Madras Presidency
were much more accessible from the ports of the Bengal and Bombay
Presidencies than from ports of the Madras Presidency of 1888-,9. The
total imports of yarn from other provinces into Madras were Rs 11.7
million. Of this amount Rs 2. 7 million was the product of Indian mills
176 Colonialism and Indian Economy

elsewhere (mostly in Bombay, but some in Bengal). Since these would

be mostly coarse yarn, the Madras mills could try to substitute most of
those imports. The provincial contours of the supply channels in 1888-9
are indicated in Table 7.13.

Table 7.13 Valueoflmports of Cotton Twist and Yarn into Different

Provincesoflndia, 1888-9
(in Rs lakhs)

European Indian Total Supplied

manufacture manufacture from

Madras 90 27 117 Madras and

Bombay
Bengal 85 31 116 Bombay
Bombay 83 8 91 Bombay
North-West Provinces 32 12 44 Bengal
and Oudh
Punjab 28 3 31 NW
Provinces
and Bengal
Central Provinces 19 11 30 Bombay
Nizam's Territory 11 4 15 Bombay
Mysore 6 5 11 Bombay
Sind 8 1 9 Bombay
Assam 9 9 Bengal
Berar 16 17 Bombay
Rajputana and Central India 4 2 6 Bombay
Source.Watt (1972(1890]: p. 162).

Hence the proximate target for Indian mills would be to supply th<;
coarse yarn (that is, yarn of low counts) consumed by weavers in local
and. nearby markets, to continue to supply coarse yarn to China from
favourable locations in Bombay, Madras, and even Bengal and to take
away the market for coarse cloth from handloom weavers and from
the L':tncashire mills. To Indian mills, the Indian market would not
loolt li~e a vast' undifferentiated plain to conquer in a massed campaign
but as a variegated topography to be won by localized battles and
positional warf.ire.
To the problem of the regional fragmentation of the market was to
be added the heterogeneous nature of the product already alluded to.
Indian mills by·and large would require better machinery·and more
skilled workmen th'an they had in the 1880s to produce finer counts of
yarn and better qualities of cloth. The proposition that Indian cotton
 Indian Demographyand Economy 177

was almost exclusively of the short-staple and medium-staple variety

and was hence an obstacle against the production of finer qualities is
debatable. The fact of the matter is that Indian mills-especially at
Bombay-seem to have suffered a decided setback in the 1890s and
their rate of growth fell drastically in the 1890s and down to the First
World War. The difficulty of conquering the markets for finer counts
of yarn and better qualities of cloth cannot be blamed for this, for the
Bombay mills suffered reverses in the market for coarse yarn in China,
and their growth slowed down long before they had begun to wrest any
significant part of the market for the finer varieties of cloth from the
Lancashire mills.
Indian cotton mills produced both yarn and cloth. It would be
difficult to construct composite indices of spindles and looms, or yarn
and cloth, to represent the growth of cotton mills. We have instead used
the total average employment to represent the size of the cotton industry
and constructed the rates of growth accordingly (Table 7 .14).

Table 7.14 Decadal Rates of Growth of Employment in Indian Provinces:

Cotton Mills, 1879-1910
(in percentage)
Decade Bengal Madras Bombay North-Western All
Provinces (later India
United Provinces)
Between 1879-80 65.16 410.12 130.46 294.00 150.96
and 1889-90
Between 1889-90 19.28 134.31 61.48 67.46 64.57
and 1899-1900
Between 1899-1900 0.72 35.42 38.53 73.30 32.24
and 1909-10
Source.Government of India, Department of Statistics, Financialand CommercialStatis-
tics of BritishIndia and the Office of the Director-General of Commercial Intelligence:
Statisticsof BritishIndia, Government oflndia, Department of Statistics.
Note. The rates of growth are taken as the percentage difference between the beginning
and the end year of the decade. There is no intention of claiming that such a crude
measure represents the 'true' rate of growth of the cotton mills. It is only claimed that
more sophisticated methods would not alter the major qualitative conclusions.

What comes out from Table 7.14 is the severe deceleration in the
rate of growth of the Indian cotton mill industry over the three decades.
It, may be argued that in many centres such as Madras or the North-
Western Provinces, the initial size of the industry was so small that the
deceleration can be entirely explained by the meagreness of the base.
178 Colonialism and Indian Economy

This is, however, not true in Bombay, where according to the Reportsof
TheBombayMill-owners'Association,the numbers of spindles and looms
were 1,154,184 and 12,396 respectively in 1879-80 and 2,350,728 and
17,735 respectively in 1889-90. It is the rate of growth of the Bombay
mills t\rhich dbminated the rate of growth of the all-India mill industry,
as can be seett,.from Table 7.14. We can put it in another way: the
Indian'cotton mill industry suffered a major deceleration long before it
had wrested the market even for the coarser varieties of goods from the
Lancashire mills, While S.M. Rutnagur 91 and S.D. Mehta 92 both notetl
the' phenomenon of slowing down of the growth of the Bombay cotton
mills during this period, neither has tried to explain the slow-down
properly: Mihta has implicitly placed all the blame on the tariff policy
pursued by the Government of India. A recent analyst, Y. Kiyokawa,
has fixed the blame for Indian failure to meet Japanese competition
on technical and managerial retrogression of Indian mill-owners and
managers without, however, putting his finger on what caused the
retrogression. 93
Roughly speaking, three clusters of factors can be identified as
inhibiting the growth of the cotton textile industry in Bombay, and
to a lesser extent in centres such as Madras and the North-Western
Provinces, especially from the 1880s onwards. The first is a series of
tariff changes, which individually affected the profitability of the cotton
mills of the time, but more importantly, when seen as a sequence of
policy packages, modified the long-term political expectations under
which the investors in cotton mills operated. 94 The second is the more
general regime of colonialism under which the mill managers and the
shareholders or controllers of cotton mills operated. The third is the rise
of Japanese competition. This affected the prospects of Indian cotton
mills not only in third markets but also in India herself. Indian mills had
to face a much more aggressive competitor than Lancashire, even before
they were in a position to counter the financial, marketing, and political
force of the Lancashire mills.

Tariffi as ImperialInstruments
The history of ~ariffsrelating to imports of cotton yarn and cotton cloth
into India,?? reveals a persistent attempt on the part of the,Lanaashire
interests to increase the sale of their products'.in 'India arid to depress
any increase in..sales,by Indian mtlls in the Indian mar~et. Th~~Gov-
ernment of India tried often' to' block th'is pressure whem tnts ,was-in
conflict with its revenue needs'. In .this,.resistance,it,was..supported by
 Indian Demography and Economy 179

major sections of British businessmen in India. But in the long run the
Lancashire interests managed to impose the policies desired by them
on the Government of India. Before we sketch the actual tariff changes
affecting the growth of Indian cotton mills made by the government
over the period 1876-1900, it is necessary to point out that the power of
the Lancashire interests cannot be taken simply as the triumph of a
section of metropolitan capital over the larger interests of the British
imperial system. For, the import of British cotton yarn and cotton piece-
goods accounted for between 40 and 50 per cent of the total Indian
imports throughout the late nineteenth century. If these imports had
vanished, it would have been far more difficult for Britain to balance
her imperial accounts, even after taking into account the unrequited
Indian exports Britain exacted as her political tribute. The import
surplus India had with Britain, largely caused by the huge imports of
cotton goods and yarn, along with the export surplus India had with
most other countries helped Britain to square her accounts with the
USA, and many other third countries with which she had persistent
current account deficits.96
In 1871, the import duty on cotton twist and yarn was 3>-2per cent,
and that on cotton goods 5 per cent. In 1874, the Manchester Chamber
of Commerce addressed a memorial to the secretary of state for India, in
which it was argued that the duties were prohibitive as far as trade in low
counts of yarn and coarse cloth was concerned especiallysince the custom
valuations (the Chamber alleged) were too high. The Government of
India promised to look into the valuations (which had already been
revised in 1869). It appointed a committee consisting exclusively of
British merchants and officials, and under the chairmanship of Alonzo
Money (who had incidentally been president of the Bank of Bengal),
to look into the tariff question. This committee unanimously rejected
the demand of the Manchester Chamber for abolition of the tariff. The
latter was not satisfied with the report of the committee and continued
to pursue its real objective, which was to check the growth of cotton mill
production in India.
A new tariff Act passed in 1875 retained the import duty on cot-
ton twist and yarn and cotton goods, but reduced the valuation. It also
imposed a 5 per cent duty on the import of long-staple cotton into
India, which was a move openly made to obstruct the production of
finer qualities of goods by Indian mills. The loss to the Indian exchequer
caused by these changes was £388,000 or at least Rs 3.88 million. But
Viceroy Lord Northbrook and his council were not willing to sacrifice
180 Colonialism and Indian Economy

the cotton duties which brought in a revenue of more than £800,000.

Ultimately because of his differences with the Conservative secretary of
state, Lord Salisbury, on this issue and on other matters, Lord North-
brook resigned, and Lord Lytton was appointed in his place.
Owing to the need to finance the fa.mine relief operations and the
warlike preparations set afoot by that jingoistic Viceroy, Lord Lytton,
the reduction of the duties was deferred for a year. But the House of
Commons passed a resolution on 11 July 1877 demanding the abolition
of the cotton duties by the Government of India. In 1878, the latter
exempted from duty certain coarser varieties of cloth with which Indian
manufactures were supposed to compete.
The Manchester Chamber of Commerce was not satisfied with these
exemptions, but wanted further concessions. In 1879, in opposition
to the majority of the members of the council of India, 97 the Viceroy
(and his finance member Sir John Strachey) exempted from duty 'all
imported cotton goods containing no yarn finer than 30s'. Moreover,
all cotton twist of no. 32 mule, and no. 20 water, and lower counts
was exempted from duty. 98 In 1882, with Lord Ripon as the Viceroy (a
Liberal appointee) and Major Evelyn Baring {later Lord Cromer) as the
finance member, the remaining duties on cotton goods (along with all
other import duties) were abolished. & far as the tariff regime affecting
Indian cotton mills was concerned, the policy of the British government
ofindia proved to be truly bipartisan!
In order to appreciate the trend of the policy with regard to cotton
duties pursued by the British government, it is necessary to take a look
at what happened in the 1880s. There were large increases of imports of
yarn in 1879-80 but the competition of the Indian mills largely restricted
the increased imports to varieties above 20s. After 1882, according to
O'Conor's analysis, the same competition confined the increases in
yarn imports to counts finer than 32. In the case ofimporrs of cloth also,
the tendency was for the better classes of goods to experience faster rates
of increase.99
The two years of the major reduction of duties on cotton yarn and
cotton goods (1879 and 1882) coincided with the beginning of an upturn
in economic activity in England and the peaking of that activity. 100
From 1883-4 began a downturn of which the trough was reached in
1886. These were associated with fluctuations in the activity of the
Lancashire mills and their exports to India. J.E. O'Conor, the official
commentator on the foreign trade of India, observed in 1885 that in
spite of the reduction of prices effected by the Lancashire mills (backed
 Indian Demographyond Economy 181

by reductions in the money wages of the workers), the consumption

of imported cotton goods in India had not increased significantly over
the preceding five years (from 1880-1 to 1884-5). 101 Lancashire mills
had resorted to dumping, 102 and yet sales of coarse Indian mill-made
cloth had been advancing because of locational advantages which were
increasing with the extension of railways into the interior.
The glutting of the market with cotton cloth and the decline of
prices, combined with other factors, such as a decline of yarn exports
to China, depressed the profits of the Bombay mills very considerably
in 1884-5 and in 1885-6. 103 However, official commentators made
alarming predictions about the prospect of cessation of imports of grey
cloth, and even some of the coloured varieties, and of yarn of both the
lower counts and the medium ranges. 104 Yet the more sober observers
noticed that most of the increases of cloth imported into India between,
say, the 1860s and the late 1880s consisted not of the finer varieties of
goods but of the despised grey goods, which were the only goods within
reach of the majority of Indian consumers. 105 Given this background,
it is not unreasonable to surmise that the Lancashire interests would
fight tooth and nail any measure which promised an advantage to the
Indian producers.
In December 1894, to meet dire financial needs, the Government
of India imposed a 5 per cent ad valoremduty on cotton fabrics and
yarn, and to propitiate Manchester, a countervailing excise duty of
5 per cent was imposed on yarn of counts above 20s (whether sold
outside or woven in the mills) produced by Indian mills. But Manchester
or the British parliament wasnot so easily appeased. The Secretary
of State for India, Sir Henry Fowler, promised on 21 January 1895,
to loyally obey the injunction of the House of Commons to avoid
'protective injustice' .106
Under pressure from British manufacturers, further enquiries were
made into the composition of imports of yarns and cloth imported
into lndia. 107 These revealed that there was very little overlapping as
between imports and Indian production of yarn above 24s: the finer
counts were almost exclusively imported, and the lower counts locally
produced. In the case of cloth, there might be some overlapping in'
medium ranges because yarn of relatively low counts could be used as
warp in such cloth. But the threat of Indian competitio.i in the better
classes of goods was still minimal. Such findings, and almost universal
opposition to further revision of cotton tariffs, failed to overcome the
Manchester lobby. 108 In 1896, the Government of India reduced the
182 Colonialism and Indian Economy

tariff on all woven cotton goods to 31/z per cent, exempted all yarn
imports from duty and slapped an excise duty of 3Y2per cent on all woven
goods made by the Indian mills. This series of measures determined
the political expectations of Indian cotton mills, which were given to
understand that they would face very powerful political opposition
if they aimed to take away the Indian market in cotton goods from
Lancashire.

ColonialBlinkers
But the influence of colonialism was felt not just in a tariff policy
which was inimical to the growth of the Indian cotton mill industry. It
was felt in a much more general dependence on British methods and
British advice in a period when the British were no longer the leaders
in global industrial technology and when new leaders were changing
the methods of production and organization in factories. 109 Indian
mills clung, for example, much longer to mule spindles, installing them
in large numbers in the 1880s and 1890s, even though ring spindles
gave better results, especially in the lower counts of yarn. Indian mills
also seemed to have accepted the idea prevalent in Britain that finer-
quality cloth could be woven only out of long-staple cotton, while
Germany, and other European continental countries were importing
short-staple cotton (from India) and producing good-quality cloth by
using machinery specially adapted for the purpose.11° All this is not
surprising, because the equipment used in Indian mills was bought from
Lancashire manufacturers who generally sent out their men to set up
the machinery. In the earlier years, they often trained the operatives or
recruited weaving masters, engineers, and others in England to send out
to India. The later weaving masters, engineers, and so on even when
they were Indians had usually been trained in the Lancashire technology
which bounded their horizon. (The Victoria Jubilee Technical Institute
was established in Bombay in 1889 to train Indians in textile technology,
but the methods were generally taken over entirely from Lancashire.
theory and practice.) 111

JapaneseCompetitionin Cotton Goods

Finally, the Japanese emerged as formidable competitors to the Indian
cotton mills long before the latter were in a position to conquer the
Indian market from the Lancashire firms. They bought Indian raw
cotton and spun it more cheaply on the ring spindles they installed in,
their mills to sell the yarn first in Japan and then in China. They obtained
 Indian Demography and Economy 183

a special footing in China after they had emerged victorious in the first
Sino-Japanese war, and proceeded to acquire a thorough knowledge of
the Chinese market in the interior, unlike the Indians who remained
confined to the treaty ports or rather just to Hongkong and Shanghai
(as shown by the figures of exports of Indian yarn to Chinese ports).
The Japanese organized a cartel for the joint purchase of Indian raw
cotton, and they naturally could bargain for good terms, especially since
they were prepared to pay more for the Indian produce than most other
importers of Indian raw cotton. uz
Before we leave this subject, it should be pointed out that the short
length of staple was not an absolute bar to the production of better-
quality cloth. 113 But whether better-quality cotton cloth was made out
of short- or long-staple cotton, a considerable additional investment
in preparatory bleaching and finishing facilities would be needed. The
long-term factors that damaged the profit prospects of the Bombay
cotton mill industry also depressed the rate of investment in such
facilities. Finally, a rapid advance towards production of finer quality
cloth would have necessitated liberation from the power of Lancashire
in at least two directions--overcoming the prejudices imbibed from the
Lancashire managers and technicians with regard to the suitability of
short-staple cotton for finer varieties, and the enormous market power
of the Lancashire mills selling in India which was wielded with a greater
degree of ruthlessness as Indian mills nibbled at their markets for lower
counts of yarn and coarser varieties of cloth.
The short-staple cotton produced by the Indian growers survived
because of both positive and negative factors. The emergence ofJapan as
a major consumer of Indian cotton and the pushing forward of Indian'
mills specializing in the coarse goods provided an expanding market for
the short-staple cotton (local Indian mills and the Japanese generally
paid better for Indian cotton than the European shippers). Most of the
careful observers such as Henry St George Tucker (no other than the'
founder of the Bank of Bengal) and J. Forbes Royle,114 all agreed that,
on the negative side, 'the cultivator had little incentive for improving
the staple length or producing clean cotton. While he lost in yield (in
terms oflint) per acre by producing longer staple, he did not get enough
as premium to compensate for the loss in yield and increase in expense.
Hence many of the improved varieties deteriorated quickly in quality
in the' nineteenth century. Ginning in steam factories led further to a
deterioration in quality since different varieties of cotton were mixed up
in the ginning plants. 115
184 Colonialism and Indian Economy

However, as time went on, and indigenous cotton mills and the
Japanese shippers gave a premium for better-quality cotton, the traders,
and ultimately the cultivators, developed an incentive for acquiring and
retaining the reputation of producing good-quality cotton. The Bombay
Cotton Trade Association pointed this out to the Indian Cotton
Committee in 1918: 116
We areof opinion that the substitutionof short-staplecotton for long-staplevarieties
is, in a large measure,due to the fact that long-staplecottons have in the past not
commanded a price correspondingwith their intrinsic value whilst, on the other
hand, short-staplevarietiesgrown in districts otherwiseknown for the production
of long-staplecotton have... commanded prices considerablyabove their intrinsic
value. A3 long as short-staplecotton is grown in these districts to such an extent
only that it can be marketedmixed with the long-staplevarietyof the same district,
the short-staplecotton passesoff at approximatelythe same price as the long-staple
cotton.

The staple of the Indian cotton really became longer once a sustained
long-term growth in its demand emerged as a result of increase in the
weaving of finer varieties of cloth in Indian mills117 and as the irrigation
facilities needed to grow the long-staple varieties expanded in Punjab
and Sind. This growth of better varieties of cotton nicely illustrates the
complex pattern of interar;tjon of supply and demand factors at several
different levels and in differ~nt epochs of competition.
The Bombay mills constituted the predominant section of the
Indian cotton mill industry (see Table 7.15). In the 1890s and after, a
combination of political factors, severe monetary stringency in Bombay
after the closure of the mints, and famines and plague affected adversely
both the demand for the products of the Bombay mills at home and
conditions of their supply, and naturally the growth of the Bombay
mills suffered badly. The whole export sector of the Indian cotton mill
industry in Bombay and elsewhere was affected by all these factors and
by ever-expanding Japanese competition. The growth of such centres
as Ahmedabad and Madras was not enough to compensate for the
severe slowdown elsewhere, and we obtain the results that have been
summarized in Table 7.14.
Barring the cptton mills, tea and coffee plantations, a few sugar refin-
eries and distilleries, the gr~ater part of India outside the few centres of
industry was agriculttJral and most of the financing was needed for trade.
The dominance of trade.over industry gave a not\ceable seasonality to
the demand for credit, especially from,the apex banking system, as in the
earlier part of the nineteenth century. At the annual general meeting of
 Table 7.15 Progress of Cotton Mills in Bombay and India between 1880 and 1915
Bombay Island All India
Year ending No.of No.of No.of No. of hands No.of No.of No.of No. of hands
30 June mills spindles looms employed daily mills spindles looms employed daily
1880 32 987,676 10,856 29,417 56 1,464,590 13,502 44,410
1885 49 11,347,390 12,011 41,545 87 2,145,646 16,537 67,186
1890 70 1,895,660 13,785 59,135 137 3.274,196 23,412 102,721
1895 69 2,123,892 20,217 75,740 148 3,809,929 35,338 138,669
1900 82 2,536,891 22,215 72,914 193 4,945,783 49,124 161,189
1905 81 2,560,916 28,073 92,924 197 5,163,486 50,139 195,277
1910 89 2,824,646 41,931 104,536 263 6,195,671 82,725 233,624
1915<al 86 2,994,367 51,846 111,924 272 6,848,744 108,009 265,346
Source:Report of the BombayMill Owners'Associationfor I 9 I 5.
Note: (a) Year ending 31 August.
186 Colonialism and Indian Economy

the Bank of Bombay held in July 1889, the chairman, the Honourable
Frank Forbes Adam, had noticed that the demand for credit because of
extension of industrial enterprise was mitigating the seasonality in the
demand for credit, and he had judged that if the tendency continued,
the capital of the Bank of Bombay would have to be enlarged soon. 118
Bue these expectations were not fulfilled, since industrial growth in
Bombay faltered soon after. Even in the industrially more vibrant Ben-
gal, industry remained the handmaiden of trade rather than becoming
its mistress. We turn in the later chapters to a closer consideration of the
movements of trade, finance, and credit in the forty-five years between
the passing of the Presidency Banks Ace and the coming of the First
World War.

Notes
1. For details of the provisions of the Presidency Banks Act, see Bagchi (1987:
Chapter 35 andAnnexure 35.1).
2. For the history oflndia in its broad contours for most of the period, see Sumit
Sarkar (1983: Chapters 2-4).
3. For Braudel' s concepts of the tongueduree, the event and the conjuncture, see
Braudel (1980).
4. This is how Braudel (1972-4(1949]) had originally used the concept of langue
duree.
5. Sivasubramonian (1965).
6. Maddison (1985: 201-10).
7. For a survey and critique of these estimates, see M. Mukherjee (1969: Chapter
2 and Appendix II).
8. F.J. Atkinson (1902).
9. See, for example, Mukherjee (1969: Chapter 2).
10. See, for example, Heston (1983).
11. F.J. Atkinson (1909).
12. Journal of the RoyalStatisticalSociety,June 1902, pp. 277-8. The same charge
has been made by many later economists and historians, but ironically enough,
their criticism has primarily been meant to show that the agricultural statistics
underestimatedthe rate of growth of output, thus detracting from the glory of Raj
Britannica in India! On this issue see Mishra (1983); see also Mishra (1981: Chapter
3). Mishra, on the whole sides with Desai who showed that agric~ltural statistics in
British India did not have any systematic bias one way or the other, and could be
used to derive valid conclusions about trends.
13. Blyn (1966).
14. For a critique of Atkinson's (and Mukherjee's) methods, see A.K. Bagchi's
review of Mukherjee, National Income of India, in Scienceand Culture,Calcutta), vol.
36, no. 10, October 1970.
15. Harnetty (1977); and Blyn (1966: Appendix Tables 3A and 4C).
 Indian Demography and Economy 187

16. Ibid.: Appendix Table SA.

17. F.J. Atkinson (1902: Appendix Table IV).
18. Strachey and Strachey (1986 [1882]: 110).
19. See, in this connection, Chaudhury (1984: 60-73).
20. The best exposition and documentation of this last argument is given by
Whitcombe (1972: Chapter 2).
21. There are problems in comparing the data on occupations for the Indian
censuses of 1881, 1891, and 1901. But as R.E. Enthoven pointed out in his repon
on the census of the Bombay Presidency in 190 l, the 1901 data on total numbers
of workers in given occupations and dependents on those occupation (which were
separately recorded in that census) can be compared with coral numbers of persons
(including dependents) supponed by those occupations in 1891, or the numbers
of actual workers in given occupations in 1901 can be compared with the figures
of numbers of workers in those occupations, collected under the census of 1881.
Making these comparisons for the Bombay Presidency (including the so-called
'Native States'), we find that the numbers supported by the textile industries were
969,000 in 1891 and 812,000 in 1901, while the actual numbers of workers in
these industries were 702,000 in 1881 and only 445,000 in 1901. See Census
(1901d: 220-2). We have cited the evidence for the Bombay Presidency, for dur-
ing these years, the employment in modern cotton mills, presses, and so on, was
probably expanding at a much faster rate in that region than anywhere else in India.
Thus if the decline in employment in handicrafts was being compensated by increase
in modern factory employment anywhere, it should have been in Bombay where
such compensation should have been most evident. Yet the compensation was
obviously not enough to cause an upturn in employment in secondary industry as
a whole. For a discussion of the general issue of de-industrialization in the nine-
teenth century, see Bagchi (1976b); Chattopadhyay (1975); Vicziany (1979b); and
Bagchi (1979a).
22. Sivasubramonian (1965: Tables 6.1 and 6.2).
23. For a discussion of the implications of price rises in India before the First
World War, see Bagchi (1972a: 74-6).
24. See Mishra (1981), for the contrast between Maharashtra, where trader-
moneylenders played a major part in controlling trade and indirectly, production of
agricultural goods and Punjab, where production of agricultural commodities and
regional, if not long-distance, trade in these commodities was dominated by large
farmers, landlords, and landlord-moneylenders.
25. Watt (1972 [1891]: 526).
26. Blyn (1966: Appendix Table SD). Blyn's Table shows a stagnation, with a
slight tendency to decline in total net food grain availability over the period. Since
the population was increasing over the period, this implied a fall in per capita
availability of foodgrains.
27. Mukherji (1976).
28. For a study of the relevant issues in the context primarily of the British
economy, see Saul (1969) and Perry (1973).
29. See, in this connection, A.K. Ghosh (1949).
188 Colonialism and Indian Economy

30. This argument was strongly made by Connell (1885). It is interesting that
Connell argued against the extension of railways under governmental guarantee and
the subsidizing of wheat-carrying railway lines in the name of laissez-faire.He argued
that !~cal stocks were a better protection against fumine than railways carrying grain
in the event of a fumine.
31. For evidence of stagnant or sagging real wages of agricultural and other
workers in the late nineteenth century, see M. Mukherjee (1969: 87-90); Bagchi
(1979b); and S. Krishnamurty (1987). In the last article is also given evidence of
a fall in the proportion of the workforce engaged in industrial occupations. This
would supplement the information given in the references cited in note 21.
32. Visaria and Visaria (1983: Table 5.8).
33. Estimated from Ibid.: Appendix 5.2.
34. See in this connection, Klein (1973) and (1984).
35. Visaria and Visaria (1983: Table 5.8).
36. According to the estimates made by census authorities and by later scholars,
the life expectation of an average Indian at birth varied from 19 .4 years to 25 .7 years
in the decades between 1871 and 1921. See Visaria and Visaria (1983: 502).
37. R.P. Dutt (1949: 118). Dutt had referred to the imposition of larger tariff
rates on Indian goods in Brirain than on British goods in India, but his phrase
can be easily extended to cover a situation where Indian goods were imported into
foreign countries only afrer paying a duty but foreign goods were imported virtually
duty-free into India.
38. Our account is based mainly on the following, Wallace (1928); Buchanan
(1966 (1934]: Chapter 2); Dasgupta (1965); Bagchi (1972a: Chapter 8); and
Chakraborty (1989: Chapter 2).
39. Chakraborty (1989: 18).
40. Buchanan (1966 [1934]: 241-2).
41. Wallace (1928: 36).
42. Ibid.: 95.
43. Bagchi (1987: part II, pp. 85-6 (fn. 49]); S. Rungta (1985).
44. In our crude calculations we have tried not to identify the exact periodicity of
the cycles but to capture some of the more robust aspects of long-term movements.
45. •Birkmyre Bros., for example, had owned a small mill in Scotland (at Gourock,
according to Wallace (1928: 38] and at Greenock according to Playne and Wright
(1917: 8 5), which they had dismantled and brought over to establish their Hastings
Jute Mills at Rishra.
46. Jacomb-Hood (1929: 198).
47. O'Conor (1885: 59).
48. Wallace (1928: 64).
49. For estimates of raw jute exports, exports of jute manufactures, total mill
consumption of jute, see Mukherji (1982: Appendix Table 2.3).
50. The agreements often broke down because some mills found it to be against
their interest to abide by them. Since the number of loom working-hours was
generally fixed as a percentage of the total productive capacity, successful working-
hour or selling price agreements often led to renewed expansions of capacity. But
 Indian Demography and Economy 189

these working-time agreements provided a cushion against severe losses in an

otherwise highly profitable industry. For examples of starting and breaking down of
selling price or working-time agreements, see Wallace (1928: 49-51 and 61-3).
51. A serious mi$understanding of the nature and objectives of the short-time
agreements mars the analysis of Morris (1983: 571).
52. Chakraborty (1989: Chapter 2).
53. Cf. I3agchi (1972a: sections 6.8 and 8.1).
54. See, in this connection, Multherji (1982: chart 0.
55. Cf. Investors'India Year-book1921, p. 142 for a Table of prices of raw jute
(Naraingunge), corn-sacks and hessian between 1900 and 1919.
56. Bagchi (1972a: p. 275, footnote 38).
57. Misra (1985: Chapter 2).
58. O'Conor (1886: 84).
59. Cf. Watt: Dictionary of EconomicProducts,vol. VI, part III:
The stronger teas from India and Ceylon have for many years been gradually
displacing the weaker teas of China. Indian and Ceylon teas are capable of
producing a far greater quantity of liquid tea, owing to their superior strength
and quality. Thus, as the use of these stronger teas progressed, a given weight of
tea would yidd a larger volume ofliquid.
60. Buchanan (1966 [1934]: Chapter 4); Griffiths (1967: Chapters 5-9, 20, and
32); Misra (1985: Chapter 2).
61. In 1891-2, our of the total area of334,845 acres under tea in British India
108,277 acres were controlled by companies registered in London, 55,414 acres by
companies registered in Calcutta, and fully 171, 154 acres were controlled by private
concerns (mostly European-owned, presumably). See Watt, Dictionary of I!conomic
Products,vol. VI, part III, pp. 422-3. This example indicates why the paid-up capital
of registered companies in this period cannot be taken as an index to the size of an
industry or its components.
62. Misra (1985: Table 2.5).
63. F~r lists of managing agencies controlling rupee or sterling companies1 in
1911 or 1914, see Bagchi (1972a: Tables 6.5 and 6.6).
64. lhis information is based on interviews with N.N. Bagchi, former managing
director of Jalpaiguri Banking and Trading Corporation, B.C. Ghose and S.P.
Roy, who both bdonged to pioneer Indian families in the tea industry, and
Dinesh Chandra Chakraborti, ex-employee of the Imperial Bank of India. For a
list of the banks operating in the Jalpaiguri district in 1929-30, see the evidence
of Digindranath Banerjee, director, Jalpaiguri Central Co-operative Bank Ltd., in
Report of the Bengal ProvincialBanking Enquiry Committee 1929-30, 1930, vol. II,
Evidence-Part I, p. 504.
65. The relative insignificance of the Indian-controlled tea companies at least
when seen from Calcutta, is also witnessed by the fact that virtually none of them
were listed in the Investor'sIndia Year Books (published by Place, Siddons, and
Gough) of the years before the First World War.
66. For its history in colonial India, see Watt (1908: 333-5); and Buchanan
(1966 [1934]: 254-7).
190 Colonialism and Indian Economy

67. Ball (1881: 63).

68. Cf. Watt (1908: 341):
... the low price obtained (3s. 8d. per ton at the pit mouth in 1903) probably
indicated that until the metallurgical industries have developed into imponani:
consumers of coal, present production may be viewed as approaching the limits
of demand.
69. Watt 1972 [1889]: 392.
70. TheInvestor'sIndia YearBook 1919, p. 157.
71. Watt, 1972 [1889]: 385-6.
72. Ibid. p. 387.
73. See Misra (1985: Chapter 3, section 4) for an exhaustive analysis of these
issues.
74. C£ Bagchi (1972a: Chapter 9, section 9.4).
75. Buchanan (1966 [1934]: Chapter 12); and D. Rothermund and Wadhwa
(1978).
76. For a discussion of the theoretical framework which is suitable for an analysis
ofland-labour-capital relations in colonial India, see Bagchi (1988b).
77. These figures are based on the accounts of coal companies provided in the
Investor'sIndia Year-Booksof the c~rresponding years.
78. Bagchi (1972a: Chapter 6).
79. See Papandieck (1978), for a case study of the venical and horiwntal links
between coal sompanies unde,r !1iecontrol of Andrew Yule and Co.
80. This is the reason why Rungia's (1970: Chapter 9), gives a misleading idea
of the absolute importance and reladve rates of growth of the different industries in
India in the late nineteenth century.
,81. Bagchi (1972a: Chapter 5).
82. These rates of growth have been calculated on the basis of figures given in
Table I ofBagchi (1976c). •
83. The figures used in this paragraph have been taken from Bagchi (1972a:
'table 7.1). · --~ ·- ·- ' ·
84. See for consideration of the various ~actorsinvolved, Saul (1969:) and Perry
(1973). ' • I

85. Cf. Raghavaiyan~ (1893: Para 39).

86°.Rungta (1985: 16-4-6). '
,87. SJ?. Mehta tl,954: Chapter 2, and p. 233).
88. !bid.: Chapters 3 and?; Bagchi (1987: Chapters 25-6).
0

89. S.D. M~lita {1954: 41). Mills outside Bombay sold nearly 70 per cent of
their yarn output in the market in the 1870s.
90. Administration Reportof the Madras Presidency for 1882-83 (1883: 118).
91. Rumagur (1927:'20-1).
92. S. D. Mehta (1954: Chapter 6).
93. Kiyokawa ~1983).
94. For general accounts of the politicai developments in Britain and i~
India insofar as they affected the policies of the Indian governnment directly, see
Gopal (1975); Moore (1966); and Thompson and Garratt (1934: Books VI and
 Indian Demography and Economy 191

vm.Thompson and Garratt remarked on p. 494, 'The removal of the duty [on
manufactured cotton goods by Lord Lytton's administration] certainly too small to
be protective according to modern standards seems to have had little effecton the
d~elopment of Indian industry, which progressed steadily'. This is typical of the
facile judgements on the issue made by many other historians.
95. The best account of these changi:sis still Dutt (1963b[1906]): Book II,
Chapter 12, and Book III, Chapter 9). See also S.D. Mehta (1954: Chapters 4 and
6) and Bagchi (1972a: Chapters 2 and 7).
96. It is true that Britain's earnings from her stock of over~ capital were enough
for most of this period to finance the large flows of invesnpent going from Britain
to other countries, and a smaller import surplus with Britain ~uld have been
sustained by simply lowering these flows. See Pollard (1985). But major adjustments
would have been required in the British economy, and they might have been as
painful as after the First World War, when many of those adjustments actually had
'to be made.
97. One of the objections raisedby a dissenting member of the council, Whitby
Stocks, is worth quoting for its irony,
Indian newspapers will proclaim in every bazaar that the repeal was made 'solely
in the interest of Manchester, and for the benefit of the Conservative Party, who
are, it is alleged, anxious to obtain the Lancashire vote in the coming elections.
Of course the people oflndia will be wrong: they always must be wrong.when
they impute selfish motives to the ruling race'. Quoted by Dutt (1963b[l906]:
301).
98 ..Watt (1972[1890]: 168).
99. Ibid.: 170.
100. Sayers (1967: 32).
101. O'Conor (1885: 31).
102. 'It may be added that the somewhat larger imports of last year were caused,
pot by a reviving demand, but by the necessity under which. E~glish manufacturers
lay of diminishing stocks which had largely accumulated for which no other outlet
was visible, and the existence of which brought about a fall of prices in Manchester,
singularly depressing to the cotton industry.' (Ibid.: 31)
103. Ibid.: p. 57 and O'Conor (1886: 46-7) ..
104. See, for example, Watt (1972[1890]: 168 and 170~.
105. Ibid.: 171. Watt's Dictionary or his later CommercialProducts often
speaks in several voices in different parts of the sanie entry. This is no doubt because
the entties were jointly composed by several hands, even if Watt finally edited
them. ·
106. Dutt (1963b[1906]: 394).
107. Findings of these enquiries are summarized in S.D. Mehta (1954: Chapter
6) and Bagchi (1972a: section 7.2).
108. C£ also G. Watt (1908: 620): 'It was soon found ... that this endeavour
[that is, the Indian cotton tariffof 1894: A.B.J to equalize the burden of taxation on
the two great competing sets of cotton manufacturers (Indian and foreign) was not
a success.
192 Colonialism and Indian Economy

109. For an elaboration of this part of the argument, see Bagchi (1988b).
110. C£ Watt (1972(1890]: 166).
111. It is symptomatic that Platt Bros donated a complete set of machines to
the Institute when it was established and that the first few principals and weaving
masters etc., were all Englishmen (or Scotsmen) who had received their training in
England. See Rutnagur (1927: 573---84).Cf. also comments by S.D. Mehta (1954:
103), on the supposed mechanical ineptness of the Indians, except, of course, the
Parsis who happened to own most of the early mills! But Indians and Europeans in
the Bombay mills were all in Lancashire blinkers, as far as textile technology was
concerned. A description of the formal opening of the Institute to celebrate the year
(1887) of the golden jubilee of Queen Victoria's accession to the throne is provided
in Edwardes (1923: 76-8).
112. During the First World War, two representatives of the Japanese buyers of
Indian cotton (who were organized in the Japanese Cotton Shippers' Association)
were nominated along with two European shippers to serve on the board of directors
of the Bombay Cotton Trade Association Ltd. See Report of the Committee of the
Bombay Mil/owners' Association for 1915.
113. C£ Watt (1908: 617):
... at the Delhi Durbar Exhibition of 1903 some remarkably fine muslins of
Dacca were sold on behalf of the manufacturers ... the examples presently [sic]
being turned out would measure 400's or 450's [counts: A.B.J while English
power looms have been known to produce 600' s.
The point of interest in these Dacca muslins, however, lies in the fact that the
hand spinners of Dacca are producing today yarns of fineness that no machinery
in the world could spin from the inferior staple which they use. Dr Taylor wrote,
in 1840, that the Dacca spinners fail~d to use the fine American cotton, and gave
as their reason the fact that the English yarn swells on bleaching, while that of
Dacca shrinks and becomes finer and stronger.
In spite of this example and the evidence of continental European and Japanese
cotton mills utilizing short-staple cotton and mixing it with long-staple varieties
where necessary, to produce better quality goods, Watt notes in another part of the
same entry:
One lesson alone seems to stand out through the past decades of the steam-
power cotton industry of India as unwavering, viz. the conviction that when
the time comes for India to assun,,.eonce more the role of a producing and even
exporring country in the finer cotton goods, it must either have improved its
staple or discovered a country capable of meeting its necessities in suitable raw
fibre (1908: 591).
114. For references see Ibid.: 590.
115. See in this connection, Bagchi (1988b), and the written statement (given
on 28 January 1918) of the Bombay Cotton Trade Association submitted to the
Indian Cotton Committee, in Minutes of Evidence taken before the Indian Cotton
Committee, 1920, vol. N, Commercial, part I,•pp. 116-18. Difficulties were also
faced initially in selling long-staple cotton growth with government patronage.
 Indian Demography and Economy 193

116. Ibid.: 117.

117. In addition to all the other evidence cited above, it may be mentioned that
the Buckingham and Carnatic Mills of Madras offered to pay a premium for the
so-called Cambodia cotton in the Madras presidency as soon as it was released in
the market. Similarly, A and F. Harvey promoted the Karungani strain of cotton in
the deep south once it was introduced by the government department of agriculture
(Baker 1984: 147-9).
118. BombayGozette,1889, July.
 LandTax, PropertyRights,and
PeasantInsecurityin ·colonial lndia* 1

T he question of private property in land in the eastern lands, includ-

ing India, has liee'n debated in E~ope at least since the seventeenth
century. It has been claimed
{•
that . the British rulers had, for the first
time, created private prop~ in land and thereby conferred security
on the owners. 1h.i1 cliiin is :examin~ by analysing actually how land
laws and land tax }q_ the Bombay Deccan districts operated in the nine-
teenth century. The'intimate relation between land tax and the nature
of property rights in India 'un<.ietthe British .is brought out; and it is
shown that British lan,fi:i.ws' tended to aggravate rather than mitigate
the insecurity of peasants in the Bombay Deccan. The withdrawal of
the State &om public works or affordable loans to the peasants for land
improvement was also a factor which exacerbated peasant insecurity and
delivered peasants into the usurious net of the moneylenders. The debt
process and the relation between ownership of tenure rights, the control
over land, and insecure tenancy are examined to show how complex the
process could be. P~t adjustment included the repeated outbreaks of
peasant resistance against the British rulers and their local collaborators.
The epistemology of the recognition of the famine condition is exam-
ined, and the claim that population grew at a high rate in the Bombay
Deccan in the first quarter of British rule is shown to be questionable.
The reasons for failure of schemes for agricultural banking without state
support are shown to lie in peasant insecurity .associated with land poli-
cies followed by the rulers. The case of the P,n~y Deccan throws light
"' t"\..1. ..

~ .. .,, l.-~·

*Reprinted from, 1992,Journal of PeasantStudies,20(1), October, pp. 1-50.

 Land Tax, Property Rights, and Peasant Insecurity 195

on the wider issue of how peasant security is subverted in other ,areas

of the wqrld. where, the pro~em of a vulnerable ecology and uncertain
peasanF production is compounded by state policies regarding property
rights and taxatiop.

Land Tax arid Property Rigfi1sin British India

The control of land and.its p,roduce has been the locusclassicusof mQSt
armed conJlif~ iq re~rdt;d hisJ<?I¥:1t;'l ap.~ysisJ.i.33;eorrespondinglybeen
the cd.}_us
be/Iiiµmost ~cc;oy!}ts?f S,!Jcialch~g~! scono,mic transformation,
and political rev.olutiop. The lack, of private prpperty in land,, the union
in the person of the sovereign of both the public and priv;ate spheres
of social life, and hence the lack of separation of the strictly p9liti~
sphere from civil society have been. regarded separately and jointly, as
the characteristics and constitutive elements of ',Oriental' societi~, and
more specifically of Oriental despotism. This tradition, as is well known,
go~.qack at lfast to Jetlll Berpier, writing in the sey.eq,,teenthcentury, but
was giyen its immense iJ.Uthorityb:yflw;,iy-r.i,t:ingspf ~.~.F. Hegel. 2 With
some modifications, tl:,,isvievy also inf<nmc;q.a,very iJllportant grpup of
offi~i~ls~nd policy-makers in. col91;1ial.}n.dia,:J~µaqoxicallyenough, the
supposed lack of individual pr9perty as agajnsf qiere possession in the
village communities o( ~ia (ip.cluqiIJ.gJn,d}~1.~d their subjection to
the sovereigvty of the state, pr(?vid!!4.the,g~{m pf ,t\ie Asiatic mode of
produc;tion as concepn,ialized by ~rl Marx. , , ,,
There was a r:ival,tr<\dition wp.i,ch con~i~ereq ~ian lands to i}ave
their share of private pn;,perty in li!Pd; Tqeiweliclt recognition of the
presence of private propercy in land jn,d;1eMugq.il_d9JUinionsgoes back
~t l~ast to Tavernier,,a contemporary o(Ben;i,ie~.J\mopg British officials
and policy-makers, Philip Francis tqok the ,Vi\;!W dµt, the ~mindars or
tµe l~dlqrds ~d not the.state were fa.e. Pt<;>prietprso{ the spil4 and.Mark
WiJ4,:WM of the view th3;t in rpe;,Mysore,lqp.gdofil\ of the eighteenth
cent:uzy, lancl W¥ owned by jn,divifl-u?-Lc!!ltiv<ltqrs5, and. the ,sapi~ _view
• W:J§ .echoed in the wi;i~ings of Mou.nfstu~ Elphinstons: regarding tb,c,
Mara,\ha terrj!qry~ l;Iowever, the sc:;conq,yi,ew,wasdi;ovyIJedin the n~ed
!lla;Egropean write.r~of t!:,,eeighte;nth q:nmry felqo cons;eptualize ifo:
Prien~ ¥ µie cp.angeJessotqer 1;9wlych r,µ,rogean .coup,trie§,would,a),so
3RprpxuwitJ!jf !,l}ey,fajled to s:a{ry,o..ut,Ql~ 19i;ids,ofr~olutiOQS they ,wen,:
h9P.\P.$for, Thfn, qf course,, ~ith the §preacj of J;:u,ropean,colon'ialis!ll,
WJ:.,iQt;i.entha<;l to be S<;_en 1 a.;;.
1 thar .p~~i:x,e,fo~r,s~.;vyhis;h,Ei,1ropea,a
col\q~f F'jl\Udg~v~ize,jl}t9 life. SpIDF,Qf ,evep.M~QC's'Yritings ci;>ul,q
~ interpr~ .along similar lines. 6
196 Colonialism and Indian Economy

Only a few writers wer~ willing to recognize explicitly or implicitly

that some forms of private property in land which existed before the
onset of colonialism were fractured by the need of the colonial state
to finance its operations-almost exclusively from land-a need that
necessarily had to interf~e, often arbitrarily, with pre-existing patterns
of possession and ownership. Perhaps Richard Jones (1831), among the
more famous political economists of the nineteenth century, came closest
to this recognition. By the time Marx came to compose the materials
that were published as Capital,vol. III, he had come round to the view
that the property systems introduced by the British in their dominions
in India were nothing but caricatures of their original models 7 (see also
Marx on Jones). 8 •

When Marx wrote in his final years his note on Phear (1880), it was
clear to him that the system of property rights in land in Permanent
Settlement Bengal was too complicated to be described in terms of
either a village corporation or village republic, or in terms of allodial
holdings of peasant proprietors, and that zamindars as rent-receivers and
moneylenders as major appropriators of the surplus through advances to
zamindars, other intermediary right-holders, and to the real cultivators
of the soil were all participants in a system that defied description in
terms of familiar Europeah categotjes. 9 But a systematic analysis of the
way in which the revenue systems introduced by the British fractured
the possibility of creating a property-owning peasantry or initiating a
process of accumulation based on improving productivity, remained still
to be carried out for different regions in India. Such an analysis would
also introduce a degree of concreteness into the notions of property
rights, security of_gRe~;i.tions, and other concepts beloved of jurists
following the Benthamite tradition.
Despite all the caveats advanced by administrators and analysts from
Wilks to Phear and Jones to the later Marx, the British rulers in India are
still credited with the introduction of the concept of generalized private
property• into the Indian legal system and hence into Indian society.
The locus par excellence of this generalized private property right was
supposed to have been land. But since land taxes also financed colonial
conquest and rule. in India, a conflict was sef up between an intended
vesting'bf private persons with property tights and the ·need of the state to
curb that property right wherever it came into conflict with the need to
realize a secure, and grnwing revenue from land taxation. '.Thisproduced
the paradox that whereas in Britain the'nature of property rights held by
a person in land often determined the extent to which, and the form in
 Land Tax, Property Rights, and Peasant Insecurity 197

which he was subject to taxation, in India it was the form of the land tax
that determined the nature of property rights in land. It also determined
the kind and the degree of security a person with :such tax~determined
property rights enjoyed in his property. In this essay,'we will explore the
kind of insecurity to which peasants were subjetted in the British rulers'
quest for a secure revenue from the land. This will also shed lig1it on the
question of freedom and unfreedom of the Indian peasant.
The British rulers, as is well known, instituted two main systems of
land taxation in India. The first wasthe so-called Permanent Settlement
or the Cornwallis system that was enforced in Bengal, Bihar, and Orissa,
the first really large territory the British conquered in India. Under
this system, the government authorized a small group of large revenue-
payers to collect the land tax from the occupiers or cultivators of land
and then pay most of it into the government coffers, afrer retaining a
portion (initially authorized to be ten per cent of the revenue) as the
reward for their trouble. This system is better styled as the zamindari,
rather than the Permanent Settlement, because it was only in the case of
these large revenue-payers (who were usually called zamindars in British
documents) that the quantum of tax on a given piece of land was fixed
permanently.
Under the second system, the government recognized the actual
occupiers (but not necessarily the cultivators) of land as the persons
required to pay the land tax directly to the government. The quantum
of tax could vary from period to period: initially it varied from year to
year but over time, the procedure was adopted of conducting periodic
surveys of the tax-paying capacity of a particular region, and revising the
taxes ('land revenues') accordingly. This system was called raiyatwari (or
raiyatwar),because the'occupiers ofland were called raiyats. Raiyatwari
was born in the Baramah'ai region of the Madras Presidency under the
administration of Alexander Re:td and Thomas Munro, but it was'given
a canoniql formulation in the famous Fifth Report of the House of
Commons on the Affairs of *e East li;idia Com'panyof 1812-13. 10
The distinguishing charaderistic of the Cornwallis system was the
recognition of a group of intermediaries as holders of property rights in
land revenue; in contrast, under raiyatwari, no intermediary1tax.!payers,
and henc'e holders of property rights in land, were in principle recogni~ed:
only the occupiers were recognized as holders of property in fand.'Afte'r
its installation in Bengal, the·Cotnwallis sys&m sufferetl in pdpu}aiity
among British policy-makers. Once the lhitisli had effectively attained
paramountcy in the subcontinent, reasons of state did not rf!qtiii-ethe
198 Colonialism and Indian Economy

recognition of big zamindars as revenue-payers; policy-makers did not

see why they should hand over a substantial (and in th~ qise of Perman,ent
Settlement, a growing) fraction of the potential tax revenue to a group
of idle landlords. Concern for pe~ant ~elfare also seemed t~ ,argue
against the.zamindari s~ement: an enlightened British administration-
woul~ take better care of the mass of the peasantry than a group of
greedy tax farmers.
It should be ~tressedthat raiyats in British legal terminology and actual
cultivators of the land were not conterminous groups. In many regions,
the raiyats wer~ a privileged group ~uch as the m{rasdars, patidars,or the
big sharers in bhaiyacharatenures. The British tried in some i;egionsto
settle with the so-called village communities which were dominated by
such big men of the countryside. 11 Almost inevitably, they ultimately
had to deal with the individual sharers,in these village comm~ities, even
though particular village dignitaries were supposed to be responsi~le
for the payment of the C\JC.More importantly, the mirasdars or other
big men often became the intermediary right-holders since they did
not cultivate or manage their lands directly. Moreover, in some parts
of India, the British freshly recognized a group of intermediaries (the
taluqdarsin Awadh, for example) as the group entitled to pay the
land tax. Thus al~o~gh, outside the Bengal Presidency, and parts of
the Madras Pr~idency,
i· .I
raiyatwari
, ~,. ,
was the dominant system, in many
regions of India, P,f~perty rights.in land were effectively held partly by
actual cultivators and partly bx groups of intermediary right-holders.
{Betweenthe cultivators and the zamindars or taluqdars who paid their
taxes qirectly to the State, more than one layer of intermediaries grew up,
claiming a share in the surplus produced by the peasants).
By and large, zaniindari settlement was viewed unfavourably in the
writings of contemporary British officials and opinion-makers such as
M~~ro, Mountstuart Elphinstone, Charles (later, Lo~d) Metcalfe, James
Mill, ,and John Stuart Mill, and in the analysis of later economists and
histori~ns.d In contrast, ra!yiltwari settleme~s has been taken ,to be·
equivalent to P!=asantproprietorship:, and has been judged to be benefi-
~ial to the Ip.dian p,easantry.We shall take a closer look at the nature ot
1

property rights jn land th,it.raiyatwart

~ ~ )- J. t
.. •,,
conferred and;t the conditions of
.I

existep.ceenj9yecJ..}n;- ,the ra)yaf~under, this allegedly pro,-peas~t iawi

tenure ~ystem.,J\\µipugh .}VC!I., will-0c~i.o{\ally .refer to the zamindari
syste\11,the l:itter,~'ill.be qf9ug.'1t·iq.,mainlyfor purpqses of c9qi~sop..
F!h~c~me.to be ~ene~~Y accepted that the I}rjtishei~J intrq~µced
private.i;igr,.ts
_inlpid whe,re).lon,eJ;Xisteqor they consolidated such rights
 Land Tax, Property Rights, and Peasant Insecurity t99

where they had a pre-British origin. What has b,eep.generally overlooked

is how very contingent those property_rights were in India under British
rule. Private property in land in Britain assu\fie:;dthe form of freeho(ds
where the proprietor held the land absolutely without making any 1 Lu
regular payment to any higher authority, or the form of copyholds
or long leaseholds, under which the proprietor made a ~e~ payment
(often a nominal one) to a superiqr right-holder. The proprietor~ 1Jnder
freehold or copyhold tenure did not hold µie lahd rmder the cpnditipn
that they had to make r~ar annual payments to t:4eCrown or to some
superior lancllorci'and wouid have t9 f9rfeit th jr property ,if ftiey fail~d
1
to maj{e'the paymeqt punctu:ilfy. In the eightfep.th century, they paid a
land 1tax-,But they paid the tax because they were proprietors, aqd were
not considered proprietors because they paid the tax. ,
· By contrast, in British India, under both qie zamindari and the
raiyatwari tenures, it was the prompt payment of a tax to the government
every year that allowed the so-called proprietors to hold the 'property
in land. 13 The security of property was made subject to the superior
requirement of security of public revenues from the land, which after
. all constituted the sinews of British colonial expansion, and almost the
principal raison d'etrefor maintenance of the colonial state. In an era
in which revenue needs grew both for making remittances to Britain
(as 'dividends' on East India Company's stock, and as 9Cpensesof the
British Indian establishment in Britain) and for .defraying the costs of
further conquest in Asia (and ~en in Africa), the tequirement of 1e
security of private property in land was to be subordinated to that of the
security and size of the pubfic revenue.
By stipulating that the designated revenue payers, whether they
were zami~dars, taluqdars or jenmies (in MaJ.a6ar)or they were ralyats,
must pay the land revenue promptly, or lose :illtheir rights, the British
made sure that the taxes would b~ paid, pro~i~ed th!!Yh~d'an adeq~te
administrative,l
and coerciye machinery at their disposal
""ti' ~ t
to •make
..
the
threat crediR\~. By ,linking th~ i;e,ven''!-1~
to be pajs\ to ,~e ~til1}_ated,
averagf pro,duce of the laqd with,..onJy ~ino~ a1justments ~Ofyarjatio~
in harv~ts, ap.~pitchtng the tax de!faJlP5.f~C~~.ntlr, hi&\1,,.,difr,
!}1.i\de
it ce~n that a n~mber of ,tµe ,-iesignate9 r~"t~l}ue-p;iyers 1
~quls:l,lost;
their ·titles every year. For an agrarian system tlJ.at,~epend_edmajnly
qn rainfall-in a subvoP.ical climatt,:it ,-oulq n~~sarily J'!el,dy;~ng
amounts of produce. Moreqver, the British poli~iesadded to.th~ 'natural'
ris~ i~:the system. First, by making ~l tb.e'land, '{~~l~dipg,pastures~~d
a.Sj ~ " ( l u~ \ Jt i

forests, ~Ubjectto taxation Or to monorolization I ~y ,d1r~tate, ~~ .,~l\X

200 Colonialism and Indian Economy

policies introduced ecological disturbances. The peasants could not keep

cattle or other livestock as sources of manure or depend on forests as
sources of timber or fuel and had to 'mine' the land on which they had
engaged to pay taxes.14
Second, by depriving the zamindars and other superior right-holders
or village biradaris(that is, the group of landowning families) of their
local judicial or police powers and at the same time releasing them from
their obligation to maintain roads, dams, or markets, they tended to
depress the productive or profit-yielding capacity of the land, until new
institutions evolved to repair the damage. Third, by compelling peasants
and zamindars to pay their dues in money of a designated character, the
system often glutted local markets with produce and depressed agricul-
tural prices. In many parts of India, peasants and zamindars had been
accustomed to pay their taxes or their tribute in kind (in grain, sugar,
elephants, and so on) and even when money was used, it might be money
of a low denomination such as cowries. The British demonetized vast
stocks of such small denomination currencies; they went on effectively
to demonetize gold coins for th~ purpose of payment of public dues. 15
In a situation of demographic growth and a relatively low degree
of uncertainty of _eroduce, which approximated to the conditions in
Bengal, the zamindatis changed hands rapidly, but remained saleable.
A virtual revolution ;w~, effected. in the ranks of the Bengal zamind-
ars. Most of the old and big '¥111-indarisdisappeared or disintegrated
into smaller fractions, anl new nien, often officials connected with the
British land revenue administration, came to hold titles to these
zamindaris. When the permanent settlement revenues were introduced
in Bengal, the actual cultivators suffered a total loss of security of ten-
u;e, especially after the powers of the zamindars had been strengthened
by Regulation VII (haptam) of 1799. Since the rights of the actual
occupiers or cultivators were never registered at all, we have only the
reports of the revenue collectors and other officials to go by in assessing
the way in which their contition was affected by the .British land tax
sy;_s~em~Tµose r~~o.~~·tifGeno?gh to cony~ the sense of utter turmoil
in th2 conditions bf tlie peasarifiy th'at the British'innovations _brought
abou{ 1&iJi-tderthe raiyatwarf system, the revenue liability of the occupi-
ers w~ ~e~sed on the ~:5i~ of periodic surveys.As we have noted earlier,
the weight.of British official opinion, starting with Alexander Read and
Tubmas Munro, .tende<J.to f~vour this style of settlement; a retrospe'ctive
theoreticil· Ju;tification was sought to be proviaed by the Malthus-
Ricardo-West the'oty of land rent.
 Land Tax, Property Rights, and Peasant Insecurity 201

We shall later scrutinize the theoretical basis of such rationalization.

It is to be noticed, however, that the raiyatwari settlements had to be
revised repeatedly, because the assessed revenues could not be realized and
despite the official claim that the system provided security ofpropew to
the raiyats, in many areas no market in land cquld be conjured up in any
shape or form. When the state failed to realize the assessed revenue from
a raiyat, it auctioned the rights to the piece of land on which revenue
was due. Again and again, it was found in southern and western 'India
that there were no bicl.ders for such rights. 17 Thus for a considerable
length of time and in large parts of the countty, the State failed to create
even a minimal kind of private property.
Demographic growth and unlimited power of eviction granted to the
zamindars made the permanent revenue settlement in Bengal a success
in terms of raising revenues for the British. Bengal land revenues long
provided the surplus for remitting tribute to England, for financing
wars of conquest in and outside India, and for meeting the deficits of
the Bombay and Madras Presidencies. We still do not know exactly how
demographic factors and land revenue systems interacted in colonial
India. Evidence has now aq:umulated of a demographic stagnation in
southern India in the early part of the nineteenth century; 18 southern
India was also badly affected from about 1825 down to around 1852 by
a depression of prices of agricultural goods. Were these, at least partly,
caused by the kind of insecurity we mentioned earlier? Or were they
substantially exogenous to the land tax system,?It is difficult to beJieve
in such independent causation over such a Jong period. But ip either
• "" $
case, demographic factors did not come to the aid of the raiyatwari
system, until secular price rises had moderated the virulence of the fiscal
demands of the colonial state.
One basic change the British introduced was to fix the tµ on a piece
of land in money, while earlier on,, the tax generally varied w,ith the
seasons. 11,iiswas supposed to give the peasants pr the superior right-
holders, such as the zamindars, a greater degree of security. Of course,
the net income left in a given year to a peasant or a zamindar af"rerpaying
the tax would depend not only on whether the tax was fixed in value but
also on how high the tax rate was. If the tax rate w~ high enough, the
peasants would be left with no surplus at all for investment or even for
the working capital required for the next season; the zamindar would
similarly find it impossible to pay his dues to the government without
subjecting the subordinate right-holders to further exactions and thus
depressing their condition further. In many raiyatwari areas it was
··202 Colonialism and Indian Economy

admitted by the British officials that the initial rates were really high. 19
This was also true of the rares in Bengal under the Cornwallis system in
the initial years.20
Apart from the effect of a rise in taxes, their fixity in the face of
variability of the net produce of the land had the effect of incr~ing
the degree of riskiness faced by the peasants {or the intermediary right
holder). In order to see' this, 1et us first assume that the price of the
produce remains'constant between good and bad years, so that we can
igrlore aI}y va'.ti;bility of the return caused by price changes .
. We adopt the f~llowing notation:
Yt is the<net income before tax received by the peasant {or the legally
recognized occupier) in year t.
Zris the peasant's net income after tax in year t.
E(Y) is the expected value of the net income of the peasant before
tax. Tis the total tax to be paid by the peasant:Let KE(Y) = T, where 0
<K< 1
Under the pre-British system, the tax in any given year would be
KYt.
Under the British system, regardless of the size ofYt in any year, a tax
T is exacted.
llien'Zt ='Yt- t
ahd'Var {Z) = Var (Y)under the British system
Unaer the pre-British system,
net income in a given year t, is Zt = (1-K) Yt.
Denoting the variance of Zt under the pre-British system as Var
CZ:),
we have Var CZ).={l-K) 2 Var (Y)
:. Var (Z) < Var (Z) since o < K < 1
Under the pte 7British system, although the tax was calculated in
monef and on the average return from the land over a number of years, it
was allowed tb vary with the size of the actual crop harvested. Moreover,
although calculated in hlo'ney, it was often collected in kind. Under the
Brjtisl).,not pnly was the payment fixed in money, it was also realized in
ll}oney, exactly at hhest ,rimes.. So the riskiness of prices was added to
th~fisks fnhererit in the harvests and aggravated the peasant's burden.
The efects bf Pricevariations are far more complex than the effects
of changes in output. If government taxes are fixed in money,,and if
prices of crops rise, then. it would seem a priori that the pea,san,tsor
intermediary right-holaefs would benefit because the real burden of
taxes would go down. The validity of this conclusion could, however,
 Land Tax, Property Rights, and Peasant Insecurity 203

be nullified by several factors. First, if price rises were due to famine

conditions in general, and if the tax-payers had no stodcs left in their
granaries' then they would become net buyers' in general, and would
be unable to pay their taxes unless they' received credit from• some
source. In British Indian villages, this source woulti generally be village
moneylenders. So if the tax-payers survived the famihe, they would end
up in debt; many of them would also lose their assets such as ploughs
and cattle, and possibly land, if theidand riglits were considered 1worth
acquiring. If price rises were due to a local famine, and· if grain was
imported into the region from outside, then the adverse,effeds 6n the
tax-payers would be moderated through a· fall in the cost of their net
purchases-provided again that they had some means of• making 'those
purchases.
Second, if price rises were due to exogenous factors, but if the !axpay-
ers were heavily indebted to moneylenders, then most of the gains of
the peasants would be wiped out because their creditors would normally
seize this opportunity of having some of their claims realized.· In -the
long run, the peasants might be as badly off as before the price rise, if
the debt to the moneylenders was large enough, and if the moneylenders
could manipulate the size of the debt with impunity.
Third, in any normal year, some of die peasants would be net buyers of
grain in the market, because their landholdings were too small. So while
the bigger landholders gained by the price rise, the smaller peasants, and
of course, the agricultural labourers would lose out ih case of a secular
(rather than seasonal) price rise compareq with years of price stability.21
What happened in the case of a secular or even a temporary price
fall? If the government tax dues had been fixed before the"'price fall,
then the burden on the tax-payers would increas'e. If the surplus of the
landholders wasnot large ertough'to pay the goferhment dues' with the
reduced prices of their output, they would have· to secure a fresh loan
from tlie mono/lenders and 'their indebted.hess muse-go up. The' net
buyers of grain among the landholders 'would benefit provided they
had any' means left after paying the more burdensome government dues,
and provided the next season' was good 'enough for them to be more
amply employed.
It would thus seem that for a large fraction of government tax.'.payers,
a price rise or a price fall was equally bad. But over the long run, if price
rises were accompanied by secular growth irr output and population,
then the fixity of land revenue in terms of·money would benefit the
more wealthy landholders or intermediary right-holders. This' is what
204 Colonialism and Indian Economy

happened in Bengal for much of the nineteenth century. But in many of

the raiyatwari areas, the depression in prices from the .1820s to the early
1850s spelled almost unmitigated disaster, and then the famines of the
later part of the century nullified most of the benefits that would have
accrued with a secular growth in output and population.
In°order to study peasant insecurity caused by the British land taxation
system, without the complication of the oppression of the intermediary
right-holders as far as possible, we took the four Bombay Deccan districts
of Ahmadnagar, Poona, Bijapur, and Sholapur over the period from
the 1820s to the 1880s as our unit of study. Most of these areas were
acquired by the British from the Marathas after the conclusion of the
third Anglo-Maratha war, and some areas were acquired later from the
Nizam of Hyderabad. They all had a raiyatwari tenure, and they were
subjects of intensive investigation by the Deccan Riots Commissioners
in 1875, 22 and by Harold Mann 23 •

Insecurity, Penury,J)eath~, .and Stagnation in the

Bombay J)eccart.:duri'ngtho,First Century of
BrifislrRule
Many of the paradoxes created by British rule and by the conception the
British administrators had of their role in Indian society had been noted
by contemporary ol;,servers. For ~X~}?le,,,Captain Robertson, the first
administrator of Poona after it had been seized from the Peshwa, noted
.~ .-.i,. "f • f} ,

that the mirasi tenant was 'in no way inferior on its original basis ... to
µiefql,d;r,p~e,1Il9st Ufl4o~,bte1freeholcfestate in England'. 24 He also
noted th,at wha~P}~ ~!rasi tenant paid was in the nature of a tax rather
than a rent. Thus in making the rights of all raiyatwari tenants condition~
on prompt payment of the government demand, the British abrogated
pre-existing private property rights in land rather than introduce it de
novo or strengthen it in any fashion., In the report that Mountstuart
Elphinstone wrote after he had taken charge of the Peshwa' s territories,
he noted that with all the vices, which he naturally attributed to the rule
of the defeated enemy, 'the Mahratta country flourished, and the people
seem to have been exempt from some of the evils which exist under our
more perfect Government.' 25
These were initial reactions of the administrators in charge of the
districts of the Bombay Deccan. Long after the so-called conservative or
cautious policy o(Elphinstone had been tried out, the radical assessments
of Pringle had been tried out and rejected, and supposed better survey
 Land Tox, Property Rights, and Peasant Insecurity 205

and settlement operations had been instituted in many districts and

new assessments of land revenue had been made on that basis, a former
Governor of Bombay, Sir George Clerk, giving his evidence before the
House of Lords in 1852 asserted that the raiyatwari settlement was.the
most detrimental to the country and generally produced paupers. 26 ,
The main argument against the raiyatwari settlement advanced by
its critics is that under it, generally speaking, the government jacked up
its demands too high. In fact, some officials, such as Henry St George
Tucker, recognized that it was precisely ~e absence of intermediaries to
which the government might have to surrender part of its demand that
made the system attractive to many administrators. 27
Most of these-judgements, sombrely echoed and consolidated by
R.C. Dutt, seem to have been confirmed by later analysis. The Bombay
Deccan and other territories of western India appear to have enjoyed a
much greater degree of prosperity under Maratha rule than later British
officials seem to have given them credit for.28 The Maratha territories
threw up significant pockets of commercial agriculture, big farmers, and
improving landlords dominating the countryside; 29 under the British
expediency and the desire to jack up rents as proof of the efficiency of
the rent-colleqing official seem to have played at least as large a role in
the determination of the level of assessed government demands as any
principles of utilitarianism or paternalistic conservatism did. 30 What has
perhaps not been sufficiently stressed is that in many areas, including the
Bombay Deccan districts (comprising Poona, Ahmadnagar, Sholapur,
and Bijapur), all the experiments in revenue assessment failed to yield
a solution to the peasants' problems of security of income or life, or to
the British administrators' problem of ensuring a stable and growing
revenue which would justify their rule in terms of the fullness of govern-
ment treasury and hence a satisfactorily large remittable tribute, or in
terms of the moral satisfaction of knowing that people were, 'happy and
pro;;perous' under their 'guardianship'. The physical environment, land
revenue policies, and price fluctuations all tended to make the attain-
ment of the basic objectives of the rulers and the ruled equally elusive.
We have sec::nin the first section that even if the average land revenue
realized from the cultivators by the British and the pre-British rulers
were the same, the British system of keeping the land revenue fixed
irrespective of the seasons would tend to increase the risks faced by the
peasantry. These risks would extend to the risk of death. In a bad year,
the peasant would be more likely to starve under the British system since
he would be expected to pay his revenue even in that year if he wanted
206 Colonialism and Indian Economy

to retain his occupancy right (because that is all that the British land
law guaranteed him), and this meant that for a poor or even a middling
cultivator, the chance of retaining a subsistence after paying all his (her)
dues could be slimmer in that year.
The British system increased the risks of the cultivator in yet another
way. Earlier on, the title to a piece of land was not forfeited even if the
owner failed to cultivate it and hence pay tax on it in one year or even
for a number of years. Under the British dispensation, the holder of the
occupancy title to a piece of land would lose it if he failed to pay the
land revenue on it for a single year (unless he obtained explicit, official
remission). So even in years of bad harvests or low prices (the latter
were not generally considered grounds for remission of the government
demand), he had to pay the full land revenue. Moreover, a poor peasant
often did not have the wherewithal to cultivate a piece ofland, especially
if he had suffered a recent loss of cattle, or loss of his 'normal' income
because of bad harvests or famines. But in the hope that he might be
able to cultivate it some day, he held on to his occupancy title, thus
incurring expenditure on an asset which remained under-utilized. 31 Ifhe
had incurred a debt because of bad seasons, this would, of course, add to
his burdens. Since the majority of the cultivators of the Bombay Deccan
were mired in debt in most years after British take-over of the region,
this increase in risk was experienced by most peasants.
There is evidence that the British administrators not only radically
changed the basis of land rights, and increased the rigour of payment of
land tax which now became essentially a rent payable by tenants-at-will
(except that the landlord of these tenants was the state itself); in the
first few years, they also increased the tax burden on the general run
of cultivators, that is, on both the recognized raiyats or 'state tenants',
and on others who might be sharecroppers or tenants-at-will of the
recognized state tenants. 32 So not only the variance, but the mean of
the income left to the cultivators was diminished under British rule, at
least initially.
How did the various fiscal and other economic factors tending to
increase risk interact with the physical environment and what results
did they produce? Data on output, population, or distribution of
landholdings as between different groups of cultivators for the Bombay
Deccan for the period from 1818 till the end of the 1870s are yet
to be compiled. It is possible to compile figures of output from the
1880s on the basis of various published and unpublished reports of the
government. Such calculations would be needed in order to separate out
 Land Tax, Property Rights, and Peasant Insecurity 207

even approximately the roles played by different social and economic

factors in making the typical Bombay peasants' life nasty, brutish, and
short, and yet enabling a group of rich landholders and moneylenders
to survive and even thrive in that environment. 33 But even without
such detailed calculations, some of the gross risks faced by the ordinary
run of cultivators can be illustrated by data on acreages and the
history of reluctant remissions of land revenue granted by government
administrators and the cultivators' defaults in revenue payment in spite
of the penalties suffered by them for such default.
In order to give an idea of the degree of fluctuations in fortunes
suffered by the cultivators, we will cite some data regarding the acreages
in different parts of the Bombay Deccan from 1818 down to the 1880s.
Most of the series do not cover the whole period, since the coverage
of different administrative divisions changed over time. But even the
fragmentary series are enough to give us a qualitative idea of the degree
of fluctuation in fortune suffered by the peasants. Take Table 8.1, for
example, relating to the taluka of Indapur in Poona district, an area
which has become famous because of the assessments made by Pringle,
who was supposed to have used the Ricardo-Malthus theory of rent for
determining the land revenue and because of the frequent references
made to it by later commentators. 34
Table 8.1 shows that the tillage area varied from a low of 94,908
acres in 1825-6 to a high of 161,933 acres in the very beginning of the
period. There is no easily discernible trend in these figures; they tended
to move downward up to 1825-6, and gcmerallystagnated around an
average of about 130,000 acres during the next few years. The revenue
collected also fluctuated between a low of Rs 6,305 and a high of
Rs 129,057, and there is no easily discernible trend in these figures
either, if we exclude the first four years of the series. Prices, on the other
hand, moved distinctly downward, but fluctuated greatly from year to
year: from a high of 12.50 shersthe rupee in the famine year of 1824-5
they moved to 64.00 shers in 1826-7, shot up to 32 shers per rupee in
1827-8 but plummeted to 80 shers the rupee in 1828-9.
All these fluctuations were reflected not only in the land revenues
collected but also in the amounts of land revenue outstanding, in spite
of remissions granted by government officials: the outstandings came
down to a low of Rs 402 (after the suspension of the assessments made
by Pringle from 1824 to 1828, and the revisions effected by Goldsmid
and Wingate), but they far exceeded the actual revenues collected in
1822-3 and in 1830-4.
208 Colonialism and Indian Economy

Table 8.1 Tillage, Land Revenue, and Prices, Indapur Taluka, 1818-37
Year Tillage(a) Land revenue Land revenue Price ofJ uari
in acres collected outstanding (Indian millet)
(Rs) (Rs) shers per Rupee (b)

1818-19 1,61,934 98,988 11,249 17.00

1819-20 1,57,899 1,21,593 6,834 19.50
1820-1 1,52,584 1,19,471 4,261 32.00
1821-2 l,58,226 1,29,057 4,593 32.00
1822-3 t:33,438 36,965 71,753 32.00
1823-4 1,30,422 19,332 13,049 36.75
1824-5 1,06,912 6,305 2,771 12.50
,,1825-6 94,908 38,937 4,920 44.00
1826-7 1,50,679 46,730 3,024 64.00
1827-8 1,19,455 8,746 6,154 32.00
1828-9 1,18,316 43,362 16,653 80.00
1829-30 1,26,050 48,020 44,358 46.00
1830-1 1,32,416 8,121 43,206 40.00
1831-2 1,30,671 11,344 558 60.00
1832-3 1,34,564 9,857 997 23.00
1833-4 1,50,604 35,635 23,933 46.00
1834-5 1,26,310 41,652 4,955 48.00
1835-6 1,31,707 45,478 1,327 38.00
1836-7 1,59,900 50,199 402 66.00
Source:GBP (1885b: 414).
Notes: (a) Up to 1828-9, the original figures were in bighas: they have been converted
as one acre = four-thirds bigha,in accordance with the equivalence provided
in GBP (1885b: 139]).
(b) The Indapur sher was bigger than the Poona sher, which in turn was more
than twice the weight of the Bombay sher.So these prices may not be strictly
comparable _withfhose given later'.

Indapur was by no means exceptional in the immediate two decades

after the British take-over. The tillage and revenue data for two revenu~
subdivisions of Karmala and Ropla of the district of Sholapur also reveal
severe fluctuations (Tables 8.2 and 8.3). In these two cases also there is
no discernible trend in areas tilled at least until the late 1830s. If there
is an upward trend after that, the figures only indicate a recovery to the
levels of the early 1820s. The British revenue officials had to struggle
to extract revenues from a group of cultivators, most of whom were
trying just to survive, and many of whom were not succeeding. The
clearest evidence of the unequal struggle the officials waged to increase
the revenue extracted comes from the Karma!a revenue figures, where
it is found that over the two decades ending in 1841-2 the amount
of revenue extracted (Rs 823,109) fell short of the revenue remaining
 Land Tax, Property Rights, and Peasant Insecurity 209

Table 8.2 Dry-crop Tillage, Total Revenue Paid, Revenue Unpaid, and
Prices in Karmala Group ofVillages, Sholapur, 1822---42
Year Dry crop Revenue to Revenue Amount Price ofJuari
tillage be paid (a) unpaid (b) paid at shers per
(in acres) (Rs) (Rs) (Rs) Rupee (b)

1822-3 1,33,186 1,06,114 48,996 57,718 54

1823-4 1,13,934 1,00,852 37,457 63,395 32
1824-5 1,29,320 1,02,081 93,485 8,596 15
1825-6 1,17,661 95.143 36,940 58,203 32
1826-7 1,25,121 87,354 23,118 64,236 48
1827-8 92,188 69,992 37.998 31,994 33
1828-9 81,552 65,922 20,619 45,303 51
1829-30 1,10,848 69,751 56,199 13,552 2
1830-1 94,898 71,564 33,040 38,524 50
1831-2 1,00,853 76,268 30,978 45,290 40
1832-3 1,01,648 75,161 64,425 11,336 14
1833-4 98,334 77,159 23,711 53,448 24
1834-5 85,165 68,042 24,313 43,729 9
1835-6 83,720 65,409 33,154 32,255 48
1836-7 86,383 66,973 25,739 41,234 44
1837-8 1,00,444 72,691 33,281 39,410 48
1838-9 1,22,298 86,145 50,339 35,806 42
1839-0 1,31,829 88,845 56,228 32,617 45
1840-1 1,45,338 97,604 48,220 49,184 52
1841-2 1,43,196 1,03,963 46,684 57,279
Total 16,48,233 8,25,124 8,23,109

Source:GBP (1884b: 326); price data are from GBP(1884b: 323).

Notes: (a) Includes land revenue and cesses.
(b) Compromises remissions and lease reductions.

unpaid (Rs 825,124). The Survey Superintendent, Lieutenant Nash,

in submitting his report in 1843 considered the land revenue assessed
for Karmala too high, but not for Ropla.35 The difference between
Karmala and Ropla was that the collections for the latter group came
to 63 per cent of the assessed revenue instead of just about 50 per cent
in the case of Karmala. However, Nash's conclusion was still not to
revise the Karmal3. land revenues drastically, but effect only minor
adjustments so ,as to diminish the chance of having to make remissions
on a regular basis.
For different segments of the districts of Poona, Sholapur, and Bijapur
(Table 8.4) it is clear then that the first twenty years afo::r British rule
witnessed severe fluctuations in the area tilled and land revenue realized.
Moreover, even after the revision carried out by Goldsmid, Wingate,
210 Colonialism and Indian Economy

Table 8.3 Tillage and Revenue in the Ropla Group of Villages,

Sholapur 1822--41
Year Tillage Total revenue Actual Juari Qowar)
(acres) assessment collection Price (shers
(Rs) (Rs) per rupee)

1821-2 64
1822-3 58,095 42,697 37,084 128
1823-4 54,897 40,219 34,765 44
1824-5 62,009 48,054 16,286 20
1825-6 63.455 47,106 34,451 42
1826-7 63,719 48,837 44,767 56
1827-8 50,340 43,219 18,890 58
1828-9 42,327 38,064 25,277 80
1829-30 47,220 38,996 10,637 48
1830-1 39,513 34,050 22,565 80
1831-2 46,467 40,219 28,489 64
1832-3 43,127 42,348 11,758 20
1833-4 47,759 46,973 36,474 48
1834-5 41,655 38,161 26,i03 80
1835-6 42,391 35,955 24,466 57
1836-7 46,884 44,876 35,778 68
1837-8 51,830 44,230 31,942 80
1838-9 61,717 48,466 27,639 67
1839-40 65,835 56,676 28,129 52
1840-1 74,896 65,736 32,475 57
Total 844,876 527,975
Source:GBP (1884b: 323).

and other survey officers to the draconian assessments of Pringle, the

initial area of tillage was restored at best. With a longer series in the
case of a major part of the Ahmadnagar district (Table 8.5), very similar
conclusions are arrived at. le also appears chat the third decade of
British rule did not witness any improvement either in the condition of
agriculture or in the predicament faced by revenue officers. It may be
noticed that figures of tillage showed smaller fluctuations than figures of
revenue collected. This underpins further the precarious conditions under
which peasants cultivated their land: they undertook to cultivate more or
less the same areas every year, but found chat insufficient rains or other
causes had destroyed a large proportion of their expected output. Then
began pleadings with the officials, remissions, or ·outstanding payment
by means ofloans raised by the moneylenders. 11ie~samepeasants might
not be affected every year, btit almost every yt:ar';f substantial section of
the peasants would find themselves'in that predicament.
 Land Tax, Property Rights, and Peasant Insecurity 211

Table 8.4 Bijapur: Tillage and Land Revenue in the 475 Villages of
Badami, Bagalkot, and Bijapur Segments, 1820-44
Year Tillage (acres) Land revenue (Rs)
For collection Remissions

1820-1 3,19,959 11,948

1821-2 3,13,554 11,917
1822-3 3,15,458 52,952
1823-4 2,89,009 81,530
1824-5 2,72,569 1,18,532
1825-6 3,65.534 2,65,717 1,28,829
1826-7 3,81,103 2,76,932 1,18,716
1827-8 3,74,085 2,17,152 1,76,859
1828-9 3,82,701 2,60,545 1,33,105
1829-30 3,81,301 2,05,636 1,85,959
1830-1 3,73,259 2,35,420 1,46,921
1831-2 3,60,134 2,22,089 1,26,151
1832-3 3,40,969 1,53,852 1,75.243
1833-4 3.33.157 2,53,310 1,10,065
1834-5 3,37,772 2,64,250 70,396
1835-6 3,42,822 2,67,706 66,119
1836-7 3,47,467 2,65,926 65,081
1837-8 3,54,722 2,60,558 74,463
1838-9 3,58,044 2,07,208 1,28,301
1839-40 3,57,882 2,72,530 63,080
1840-1 3,61,653 2,54,694 80,444
1841-2 3,65,236 2,74,148 64,644
1842-3 3,51,725 2,68,198 55,674
1843-4 3,37,657 2,46,161 60,501
Source:GBP (1884c: 459-60).

The problems of the peasants in many parts of Bombay Deccan

were further compounded by the poor development of infrastructure
and transportation networks. A bumper harvest would depress prices
all over the district, but the depression would be even more pronounced
in those parts that had few roads and fewer market-places. Contrary to
this, a scarcity would push up the prices even further in the more hilly
and barren parts of the districts of Poona, Ahmadnagar, Sholapur, and
Bijapur. 36
While, as we have argued, in many parts of the Bombay Deccan
districts, stagnation was the basic trend, even during the 1840s, there
were some other parts which experienced a growth in tillage in the 1840s
and in the seventeen years or thereabout from 1851 to 1868. This comes
out from the aggregate data relating to the Poona dfstrict from 1839-40
212 Colonialism and Indian 'Economy

Table 8.5 Tillage and Revenue, Ahmadnagar*, 1821- 51

Year Assessment on Tillage Assessment Remissions Actual
the basis of (acres) on the basis (Rs) Collection
land given for of tillage
cultivation (Rs) (Rs)
1821-2 · 6,86,318 9,20,378 6,86,318 10,878 675,440
1822-3_ 6,65,376 7,66,911 5,99,567 50,748 5,48,819
1823-4 5,26,485 6,25,622 4,92,667 57,843 4,34,764
1824---5 5,58,318 6,75,714 5,44,164 2,86,302 2,57,862
1825---6 5,57,321 6,36,521 5,39,787 42,812 4,97,113
1826--7 5,72,085 6,61,987 5,64,062 32,130 5,31,794
1827-8 5,34,381 5,93,360 5,10,347 1,51,967 3,58,380
1828-9 5,15,909 5,97,199 4,96,296 95,698 4,00,000
1829-30 4,87,180 5,39,678 4,32,114 1,63,860 2,68,254
1830--1 4,78,458 6,15,137 4,57,420 58,085 3,99,335
1831-2 4,95,207 6,06,831 4,83,603 68,765 4,14,838
1832-3 4,93,864 5,43,343 4,41,229 2,41,725 1,99,504
1833-4 6,09,014 6,37,169 5,45,522 45,771 4,99,751
1834---5 5,07,346 6,14,348 4,89,354 82,436 4,06,918
1835---6 5,15,124 6,58,993 4,94,007 1,12,463 3,81,544
1836-7 5,27,337 7,38,582 4,99,455 1,02,947 3,96,508
1837-8 5,62,316 8,04,317 5,25,578 70,428 4,55,150
1838-9 6,04,510 8,69,020 5,70,732 . 1,16,615 4,54,117
1839-40 6,68,758 8,92,142 6,31,816 1,30,031 5,01,785
1840-1 7,08,012 9,23,244 6,95,638 1,34,143 5,62,495
1841-2 7,30,072 9,00,262 7,16,661 1,68,630 5,48,031
1842-3 7,11,993 9,94,937 7,10,445 17,836 6,31,609
Source:GBP (1884a: 483) ..
Note: *1he area includes not the whole district but only the subdivisions of Nevasa
Kharda, Ahmadnagar, Korti, Shevagon, and Jamkhed.

to 1882-3 (T;ible 8.6). The data reveal that there was rapid growth in
tillage (by more than 33 per cent in eight years) in the district as a whole
between 1839-40 and 1847-8, followed by several years of stagnation;
growth resumed in 1851-2, was fairly rapid (at the rate of between 1
and 6 per cent) up to i867-8, and then slowed down. Except for a brief
spurt between 1872 and 1873, growth of tillage ceased altogether in the
1870s.
Of course, the apparent growth in tillage was not synonymous with
growth in output, as the substantial remissions or outstandings of
revenue in 1839-40, 1840-l,·1841-2, 1845-6, 1853-4, 1866--7 prove.
But substantial growth took place in parts of the Bombay Deccan in the
1840s, 1850s, and _1860s.Officials attributed this to the lowering ofland
 Land Tax, Property Rights,and PeasC'n!Insecurity 213

Table 8.6 Tillage and Revenue in the Poona District, 1839-40 to 1882-3
Year Tillage (acres) Land revenue(Rs)
Remitted Outstanding Collected
1839-40 8,95,438 1,06,399 4,944 6,70,966
1840-1 9,47,840 99,262 17,503 6,82,792
1841-2 9,82,600 1,20,314 24,408 6,42,961
1842-3 10,00,881 26,937 9,635 7,69,580
' 1843-4 10,55,282 42,917 4,498 7,44,422
1844-5 10,63,127 92,395 33,321 6,89,399
·1845-6 11,02,088 1,05,947 27,983 6,88,837
1846-7 11,48,755 19,283 22,473 8,15,606
1847-8 1,2,28,304 24,622 7,176 8,18,451
1848-9 12,27,898 40,610 11,838 7,75,355
1849-50 ·11,96,719 31,483 10,759 7,62,429
1850-1 12,15,015 51,961 4,168 7,20,324
1851-2 12,73,394 28,352 3,258 8,04,623
1852-3 13,16,767 7,278 452 8,00,721
1853-4 13,68,430 82,942 2,498 7,24,762
1854-5 i3,95,080 6,123 244 8,14,863
1855-6 14,47,006 10,320 413 8,54,292
1856-7 15,34,473 16,489 351 8,79,282
1857-8 15,66,231 2,?07 607 9,19,191
1858-9 15,98,898 2,427 93 9,33,046
1859-60 16,54,399 364 13 9,56,631"
1860-1 16,64,802 238 47 9,66,183
1861-2 16,91,352 4 3,297 9,99,326
1862-3 16,96,097 422 423 9,96,991
1863-4 17,20,335 1,467 34,378 9,88,793
1864-5 17,36,582 228 15,357 10,06,414
1865-6 17,43,179 128 12,557 10,55,213
1866-7 17,84,390 80,038 71,766 9,37,296
1867-8 18,03,708 44,325 1,011 11,66,090
1868-9 18,14,896 48,592 429 11,55,784
1869-70 18,19,237 4,786 269 12,01,476
1870-1 18,31,953 4,756 2,553 11,11,378
187J'.--2 18,42,868 57,779 1,24,497 9,67,373
1872-3 18,48,831 5,468 45,521 11,26;729
1873-4 19,01,205 1,77,957 91,255 9,91,175
1874-5 18:84,679 40,615 7,203 11,83,328
1875-6 18,75,669 34,805 7,C32 11,26,729
1876-7 18,64,475 1,736 4,56,828 7,03,213
1877-8 18,68,193 1,349 68,657 11,01,477
1878-9 18,61,631 250 1,08,644 10,40,305
1879-80 17,75,553 3970 24,446 11,07,763
1880-1 17,77,153 1,334 12,309 11,27,905
1881-2 17,86,064 3,392 2,882 11,50,687
1882-3 17,75,583 1,08,651 9,664 10,36,718
Source:GBP (1885b: 512).
214 Colonialism and Indian Economy

revenue rates after the revisions suggested by Goldsmid and Wingate

and other survey officials had been put into effect in the late 1830s, and
after the rates had been fixed for ten-year or thirty-year periods. 37
The growth in tillage from the 1850s was attributed by the district
collectors and survey settlement officials to rise in prices from 1852 38-
which, ipcidentally, was an all-India phenomenon-t? the construction
of the Great Indian Peninsula Railway through the Poona district,
bringing with it an injection of money into the local economy39 and
to the" boom in cotton prices as a result of the breaking out of the
American Civil War. However, this story of growth illustrated by
Table 8.6 for Poona and by Table 8.7 for Indapur taluq within the
same district, especially before the 1850s, has ever to be qualified by the
endemic risk to crops and life suffered by the ordinary cultivators as a
result of bad seasons, poor communications, severe fluctuations in grain
prices, and arbitrary assessments. As the Poona Gazetteer,quoting reports
of survey superintendents, revenue commissioners, and other officials
put it:40
The eighteen years ending 1854 was a period of little improvement. In Indapur and
Bhimthadi, the people were few and poor. Over almost the whole of the district
about half of the eighteen years, 1838, 1840, 1841, 1844, 1845, 1850, 1851, and
1853 were bad seasons and except when its price was raised by a general failure of
crops, grain was ruinously cheap, the rupee price oflndian millet varying from 30
to 144 and averaging 104 pounds.

During all these years, new revenue survey and settlements were
being carried out by government officials with expectations of higher
and more stable revenues. But as Townsend, the revenue commissioner
of Poona remarked in October 1849, 'every new assessment must be
viewed as an experiment, the success of which could be estimated only by
the experience of some years' .41 Even if a low assessment were followed
by an extension in tillage, and a rise in land revenue, this might not be
sustainable even for a decade. According to Inverarity, the Collector of
Poona in 1846, for example, the moderate settlement of Goldsmid had
been by no means an unmixed blessing: the extension of tillage had led
to the exhaustion of tillage from constant cropping. The more highly
assessedlands had fallen waste because the unthrifty habits of the people
led them to till for a few seasons the poorer waste fields rather than
spend time and labour in renewing by artificial means the exhausted
powers of the more valuable land. 42 We will analyse the significance of
lnverarity's comment when we turn to the government policy regarding
irrigation, roads, and so on.
 Land Tax, Property Rights, and Peasunt Insecurity 215

Table 8.7 lndapur, Tillage, 1838-59

Year Tillage (acres)

1838-9 2,12,407
1839-40 2,18,308
1840-1 2,24,695
1841-2 2,27,564
1842-3 2,28,551
1843-4 2,22,515
1844-5 2,27,089
1845-6 2,52,302
1846-7 2,54,972
1847-8 2,89,378
1848-9 2,91,165
1849-50 2,73,595
1850-1 2,71,007
1851-2
1852-3
1853-4 2,95,081
1854-5 2,97,106
1855-6 3,01,390
1856--7 3,04,743
1857-8 3,05,100
1858-9 3,00,003
Source:GBP (1885b: 425n., 433n., 435n., 439n., 440n., 441n., 442n., 448n., 45ln.,
465n., 466n., 467n).

As we have noted earlier, whatever growth might have taken place in

the Bombay Deccan districts during the period 1840-70, it had ceased
altogether by the middle of the 1870s. What happened after the 1880s?
From Guha 43 V:e get figures of crop acreage in the Bombay Deccan
(including the four districts covered by us plus the districts ofKhandesh,
Nasik, Satara, and Belgaum) for 1885-6 to 1940-1. Confining ourselves
to the period 1885-1920, we find that the average area under crops was
21,162,000 acres during the quinquennium 1885-90 and 20,636,000
acres during the quinquennium 1915-20.
Of course, from this it does not follow that e!':her the area under
crops or the output in the four districts covered by us should have
exhibited the stagnant pattern for the cropped area for the whole Deccan.
But it is known that for the whole area, the output of cereals and pulses
showed a stagnant or even a declining trend from 1885-6 to 1919-20
and the only major crop that showed a trend ir.crease in output was
cotton. 44 We also know that in 1881-2 or 1882-3, grain crops (mainly
jowar, bajra, maize, or wheat) occupied 84 per cent of the cropped
216 Coloniolism and Indian Economy

area in Ahmadnag.u, 45 86 per cent of the cropped area in Poona, 46

79· per cent of the cropped area in Sholapur, 47 and 75 per cent of the
cropped area in Bijapur. 48 Only in Bijapur was cotton responsible for
more than 5 per cent of the cropped area. But we know from Mishra 49
that even in Bijapur the acreage under non-foodgrains in relation to
,the gross cropped area remained constant over the period from 1885-6
to 1897..t.8.In Ahmadnagar, Poona, and Sholapur, cotton occupied a
vieq· small fraction of the total acreage, and the proportion of cotton
or of noo-foodgrains to the gross cropped area virtually did not change
between 1885-6 and 1897-8.
George B1yn50 has computed the acreage and outputs of the major
crops in India. from 1891 to 1947. The two main grain crops of the
Bombay J;?.e~0}.n districts were jowar (juari) and bajra, which normally
accounted for 75 to 84 per cent of the area under crops in the four
districts.·
For the· Bombay-Sind region, according to Blyn, the area under
jowar was 8,757,000 acres in 1891-2 and 8,810,000 acres in 1920-1;
the outputs of jowar in the two terminal years were 1,437,000 tons and
1,210,0009 tons respectively. The area under bajra in the Bombay-Sind
region was 5,534,000 acres in 1891-2 and 3,764,000 in 1920-1; the
output of bajra was 569,000 tons in 1891-2 and 497,000 tons in
1920-1. The last year of the series was a bad year. But eveff if we took
the other years into account, and tried to fit a trend line, it would be
difficult to find a positive trend for the whole period.
Finally, we turn to a gross measure of the risks faced by the population
of the Bombay Deccan districts as a group, namely, the chance of
life and death itself. We do not have readily constructed life tables for
these districts. But for half the total period, that is, from 1872 to 1921,
we have reasonably good census data. These data are reproduced in
Table 8.8. '
From Table 8.8, we see that the population of each district increased
and dei:;reasedalternately in the intercensal decades between l 87~ and
1,921,and this .wasalso true in the aggregate. Moreover for the districts of
P~qna, Sholapur, and the region.as a whole we find that the population
increased only marginally over the ·forty-nine years, 1872-1921, and
the populations of Ahmadnagar and Bijapur actually declined over
the period. '
If we find that the latter half of half a century of stagnation in
output and acreage is also associated with demographic stagnation-a
stagnrtion which was the result of spurts of increase in population
 Land Tax, Property Rights, and Peasant Insecurity 217

Table 8.8 Population of the Four Bombay Decc.an Districts, 1872-1921

District 1872 1881 1891 1901 1911 1921
Ahmadnagar 778,337 751,228 888,755 837,695 945,305 731,552
Birjapur 816,273 638,493 796,339 735,435 862,973 796,876
Poona 921,353 900,621 1,067,800 995,330 1,071,512 1,009,033
Sholapur 719,375 582,487 750,689 720,977 768,330 742,010
Total 3,235,338 2,872,829 3,503,583 3,289,437 3,648,120 3,279,471
Source:GBP (1884a: 46-7); GBP {1884b: 23-5); GBP (1884c: 71-2); GBP {1885a:
94-8); Census (1901d: 43); Census (1911: 36); and Census (1921: 25).

punctuated by disastrous famines-then it would be natural to expect

that the earlier period of stagnation in tillage would also be associated
with demographic stagnation. However, it has been claimed on the basis
of the earlier population estimates that population in fact grew at rapid
rates in the Deccan as a whole-from 2.4 per cent per annum over the
period 1826-46, and between 1.2 per cent and 1.6 per cent per annum
between the years 1846-72. 51
At least for the four districts covered by us, the figure of population
growth for the 1826-1846 period is plainly incredible, in view of the
stagnation in tillage, the frequent harvest failures, and abject poverty
of the average cultivator noted by Collectors, revenue commissioners, and
survey and settlement officers. In view of the apparent growth in tillage
observed from the 1840s down to the 1860s, the estimated figure of
population growth appears to be more credible. The degree of credibility
of the figures is assessed here on the basis of the record of these same
districts during the period when population censuses were conducted
systematically, namely, 1872-1921, the fact that figures of natural rates
of the growth of population exceeding 2 per cent per annum were not
reached in any large region in India for a decade-long period until the
1950s, and our information that no good reasons existed for assuming
that land accreage or productivity had grown positively between the
18f Osand 1840s.

Stagnation and the Burden of Land Revenue,

Ecological Damage, and Moneylender Power
We have used a fairly informal method for describing the phenomenon
of stagnation and fluctuations in cultivators' fortunes as a group. Some-
times ordinary least square methods of regression or graphical methods
have been used in order to test the peasant's 'rationality', and usually the
218 Colonialism and Indian Economy

inference has been that the peasants were rational, and that the spread of
money economy and better transport was associated with improvement
in cultivators' fortunes. 52 Before the 1880s, yearwise data of acreage
under different crops and their outputs were not available. Therefore,
it is not possible to find out the ways in which peasants might have
reallocated their resources so as to minimize the damage caused by crop
failure. McCloskey has argued in favour of the risk-minimizing rational-
ity of the English peasants' practices in the early modern period. 53 Many
of the Indian peasants' practices may, on closer scrutiny, also turn out
to have such damage-minimizing properties.
We face several difficulties in applying simple-minded statistical
methods to data on agricultural outputs and yields, especially in areas
subject to frequent harvest failures and famines, and characterized by a
large degree of peasant differentiation as well. First, what are the relevant
prices to use as the regressors or independent variables in a situation
where they vary widely between one year and the next, or between one
season and the next? (Prices also varied greatly as between different
localities within the same district). Second, famines and harvest failures
produce effects over several periods. For example, even by 1882-3, the
district of Sholapur had qot recovered from the effects of the 1876 and
1877 famines. 54 The cattle of many cultivators had died, their houses
were in ruins, and they did not have resources even to cultivate all the
land on which they had undertaken to pay revenue. So after being
exposed to such severe exte~nal shocks, the dependent series-the area
tilled-would itself be serially correlated.
Third, in the presence of a high degree of peasant differentiation, the
aggregate outcome _cannot be taken as simply the sum of the reactions
of the 'average' peasant. A poor peasant facing prices had to find out the
wherewithal for survival. In any plausible utility maximization exercise
he will end up at a corner solution, with survival not being guaranteed
every year. He may end up being unable to cultivate not only a larger plot
next year (in response to a higher price), but being unable to cultivate any
plot at all. Even if he is able to cultivate the same acreage, he may do a
much worse job of tilling it than in a year of 'normal' harvest because he
is enfeebled, or his draught animals are enfeebled, or he has no animals
or no implements of his own left after meeting the subsistence needs
of himself and his family. On the other hand, a cultivator with a large
marketable surplus in his granary and facing high prices, will normally
have an incentive to cultivate more land, or to cultivate it a little better.
Of course, under the 'rational expectations' hypothesis, such a cultivator
 Land Tax, Property Rights, and Peasant Insecurity 219

will try to separate out the noise from the information in the signal of
a sudden price rise,55 but I for one would not have known how to carry
out the filtering operation for such a cultivator.
It remains to note that, there was a high degree of inequality in the
distribution of holdings with occupancy rights in the Bombay Deccan
districts. In Poona, in 1882-3, while the average size of a holding was
about nine acres, more than 57 per cent of the holdings were below
10 acres, and about 1.2 per cent of the holdings were above 50 acres
accounting for at least 10 per cent of the total area takenfor cultivation. 56
In Ahmadnagar in 1882-3, the average size of a holding was about
15 acres, 73 per cent of the holdings were below 20 acres in size, and
holdings above 50 acres accounted for about 2.5 per cent of the number
of holdings and more than a sixth of the area taken for cultivation. 57 In
Bijapur and Sholapur, the average sizes of holdings were larger at 38 acres
and 48 acres respectively. But in each case, on the plausible assumption
that the distribution of holdings within any size-classwas skewed, more
than half of the holdings were below the average size and the amount
of land in holdings of the top size-classes numbering not more than 1
to 2 per cent of the total number accounted for more than 10 per cent
of the land taken for cultivation. 58 Whether the differentiation among
the peasantry had increased over the period from 1821 in any sense is a
question we will not try to answer in this essay.
A favourite explanation of the British officials for the low productivity
of land and frequent harvest failures in the Bombay Deccan was that
peasants, because of increase in population, were forced on to marginal
lands. However, the British land revenue system itself compelled the
peasants to cultivate marginal lands, and also forced them to mine their
land in a situation where most of them had few investable resources left
to improve its productivity. Moreover, the British rulers took a long time
to take up the provision of public irrigation, and even longer to provide
agricultural loans to the peasants at low rates for effecting improvements.
(The granting of such loans was a regular practice under the Mughal and
the Maratha administrations.) When they did, the peasants had little
incentive at first to take advantage of the public irrigation facilities or
the official taqavi loans on terms which the government offered. These
problems are all related to the basic subversion of private property rights
and common property resources that the British land revenue policy
was responsible for.
Under either the so-called 'utilitarian' or the Ricardo-Malthus rent
doctrine, the landlord was supposed to be able to appropriate all the
220 Colonialism and Indian Economy

net rent after meeting the necessary expenses of cultivation. From a

positive theory explaining the size of the rent, this was converted into
a normative theory of the determination of land revenue demands
by many British Indian officials. The latter regarded the state as the
landlord and considered the net rent to be the appropriate size of the
land·revenue to be extracted by the state. There were several difficulties
with this procedure, even if their construction of the role of the state in
pre-British India were accepted. First, an environment in which neither
labour nor capital was fully mobile, and where a very large fraction of
the economic activities was conducted by family members with their
own resources, it was difficult to determine what the appropriate wages
for family labour or the 'normal' rate of profit on capital would be.
Besides these microeconomic difficulties, there was the other conceptual
difficulty: what was the competitive rent, or competitive wage or profit
when the state constituted itself the absolute monopolist in control of
the land? Besides these conceptual difficulties, which would arise even
in a situation characterized by fully certain outputs and prices, little
attention was paid to the appropriate concept of net rent in the presence
of severe fluctuations in harvests and prices.59
The so-called Ricardo-Malthus theory of rent also justified the
extraction of a higher rate of taxation from the better class oflands. With
large fluctuations in harvests, and with high rates of interest charged by
.gioneylenders, however, the peasants discounted the yield of all lands
•heavily. If the discount rate applied was high enough, the difference
between, say, the expected values of the better class of land and the
marginal lands might easily be less than the difference between the rates
oHand revenue on the better class of lands and the inferior plots. In
such a situation, the phenomenon observed by lnverarity which we
referred to earlier, namely, that peasants would take up the worse lands
for cultivation and leave the better class alone could easily come about
as a result of the peasants behaving 'rationally'. 60
"The.British land revenue assessments also compelled the peasants to
use· as-:much lanq as possible for crop production rather than for the·
maintenarlce,oflivestock. This meant not only that crop production
encrbached' on pastures that were generally less suitable for grain crops
but. also that ;peasants or shepherds had fewer resources to maintain
cattle or other livestock. Since the latter were the main source of
fertilizers, this meant that the normal productivity of land could. not
be mairhaihed. 6,1 ·
 Land Tox, Property Rights, and Peasant Insecurity 221

A final aspect of the British land revenue system, which damaged the
productivity of the land and increased the insecurity of the peasantry,
was the virtual discontinuance of public expenditure on irrigation dur-
ing the first 25 years of British rule. In the Poona district, in fact, the
government spent very little on irrigation before the 1860s. In 1863-4
a survey of the potential for small reservoirs was made by Captain Fife,
but the latter recommended the construction of waterworks only where
flowing water from the Sahyadri was available.62 Accordingly, Lake Fife
and the Mutha canal works were constructed in Poona. In other districts
of the Bombay Deccan also, public irrigation works were generally con-
structed only in the 1850s and 1860s. The irrigation potential of many
of the public irrigation works remained under-utilized for a long time.
For example, in the district of Sholapur, the Ekrur Lake was sanctioned
in 1866, completed in 1881-2, and had a command area of 15,320
acres. In 1882-3, only 1,306 acres were irrigated with the water from
the lake.63 Apart from the fact that it often takes a considerable period
for cultivators to get used to a new mode of irrigation, the water rates
charged were also a deterrent. In the case of Ekrur Lake, for example,
Rs 5,240 were collected as water rates in 1882-3; that is, the charge for
use of the lake water came to more than Rs 4 per acre.
The tillage in the district of Sholapur in the same year was 1,906,235
acres and the land revenue collected was Rs 303,954 so that the land
revenue per acre came to a little more than one-fourth of a rupee. Thus
the water rate came to more than 16 times the land revenue rate. In view
of the general uncertainty of prices, the stagnation in technology and
the general scarcity of fertilizers, it is not surprising that peasants should
have discounted anticipated earnings quite heavily, and that they should
not have rushed to utilize highly priced irrigation facilities constructed
by the government .
.. As we have noted earlier, the Maratha administration had advanced
taqavi or tagai loans to cultivators for crop production and land im-
provement in the shape of livestock, wells, small irrigation reservoirs,
and so on. The British were slow to resume the practice, and when they
did, the amounts offered were meagre. Peasants were reported to be
reluctant to take these advances, for, generally speaking, they involved
a considerable degree of formality, and they were often not avail-
able when they were wanted. The local vani, on the other hand, was
willing to lend money on the spot at exactly the time it was wanted.
On the other side, of course, the resident vani could control the
222 Colonialism ond Indian Economy

production or marketing activities of the debtor in a way that the

officials could •not. This phenomenon can be put in· the language of
'information impactedness'64, the interlinkage of markets, or the struc-
tural condittons fo, debt.bondage, but the underlying reality would be
the same., !
As the British deepened their penetration into the rural economy, so
did the moneylenders. Three factors contributed to this development.
One was that the supply of capital to farmers and cultivators declined
as a result of British conquest and the decline of Poona from the seat of
~ imperial government-to a mere district headquarters. 65 According to
tf.wcompiler of the Poona Gazetteer,who based himself on the Deccan
&witsCommission (DRC) (1878) and the report of the Poona Collector,
Captain H.D ..Robertson in 1821, before the British conquest,

Poona baniers had their agents in the districts and the ramification of the money
trade in !~ans to ~he people and to the renters of villages created a wide circulation
of spe2ie, which returned to the coffers of the Poona bankers with an abundant
accumul~tion of interest. Loans of this nature were usually repaid in grain which was
req:ivecLat a price much below the market rate, and this brought great returns to
the lende;s, Under the British revenue system all these advantages to the capitalists
disappeared. The trade in moneylendipg was still further hindered by the substitu-
tioh 9f.suits in courts instead of the former private methods of dealing with debtors.
/be merchants were forced to be more cautious in their speculations and to look
more to individual character and collateral security. A few bankers failed from bad
8ebts contracted by broken-down nobles and officials. By about 1821, business was
very dull in Poona; many rich bankers had fallen into poverty. 66

The second factor helping the moneylender tighten his grip on the
landholder was the-in8exibility of the revenue demand in money in a
situation of enormous uncertainty in harvests and prices-the sagging
tendency of prices up to the beginning of the 1850s did not help
matters.
The third factor weakening the position of the ordinary, illiterate
cultivator vis-a-vis the moneylender was the location and the procedure
of the civil courts. The courts were generally at a considerable distance
from the .typical village, and the latter usually had poor communications
with the outside world. In these courts the evidence that counted most
was a document, and documents, especially relating to loans, could be
manufactured or forged by the typical moneylender since the ordinary
peasant was mostly illiterate and ill-informed about the new-fangled
procedures. These factors removed most means of redress against mis-
carriage of justice from his reach.
 Land Tax, Property Rights, and Peasant Insecurity 223

The British administrators, however much they might complain

about the rapacity of the Gujarat or Marwari vani, knew that they
were dependent on the moneylenders for realizing their land revenue
demands from the peasantry. In Ahmadnagar district, this dependence
was formally recognized by realizing the revenue not from the cultiva-
tors directly, but from moneylenders acting as hawalas,or sureties, for
their clients. This practice was stopped in 1833. But soon after this,
the land revenue demands were lowered and the value of the land of-
fered as collateral increased. This improvement, and the stoppage of the
hawala system led almost immediately to a surge in the number of civil
suits filed against landholders from 2,922 in 1835 to 5,991 in 1839. 67
The introduction of the Civil Court Procedure into the Bombay
Presidency in 1827 resulted everywhere in increasing the power of
the moneylender. This power, ho;wever, was exercised in seizing the
occupancy right of the cultivators only in years when prices were high,
or land revenue assessments were lowered officially. In general, therefore,
the number of civil suits or seizures of land by creditors fluctuated as
between different periods. The inflation in prices from the 1850s had the
effect of increasing the creditors' interest in acquiring titles to occupancy
rights of the indebted peasants. But it also allowed the more substantial
cultivators at least to resist such demands.
Long before the passing of the Deccan Agriculturists' Relief Act,
many Collectors or survey and settlement officers had been pleading
for limiting the liability of the cultivators for debts contracted to
moneylenders. For instance, Spooner, the Collector of Ahmadnagar in
1848 described how a small loan can, through the operation of a high
rate of interest, compounded every year, and the signing of fresh bonds
incorporating the interest charges together with the original principal,
as a new loan, can gobble up all the movable assets of the cultivators
together with his land, as a result of a decree passed by the Civil Court.
Spooner then proposed that 'no court should be allowed to issue a
decree in a lender's favour without inquiring into the debt and into the
borrowers' means of paying the debt .... In no case should a debtor's
bullocks or other means of earning a living be liable to sale for debt'. 68
But the law moved exactly in the opposite direction. The anti-usury law
limiting the legal rate of interest to 12 per cent was abolished soon after,
and in 1859 a new judicial procedure was introduced requiring 'the
punctual conduct' of duties by the subordinate courts. 'At the same time
the landholders' credit was enhanced by adding his land and field tools
to the security which was liable for his debts' .69
224 Colonialism and Indian Economy

The fall in prices of a major cash crop, namely, cotton, in the late
1860s, and the sagging of prices in general in the early 1870s aggravated
the problem of indebtedness of the more substantial landholders. These
developments triggered the disturbances in Ahmadnagar and Poona
which acquired fame as the Deccan riots of 1875. But increase in the
power of the moneylenders over the peasantry, the increased likelihood
of the latter to lose their occupancy rights, and peasant resistance were
not phenomena chat can be said to be immediately precedent to the
Deccan riots but were virtually coeval with the British conquest of the
territory of the Deccan.
The introduction of land revenue demand to be paid promptly in
cash, the abolition of the hereditary rights of the mirasdars or vatandars
and the new power given to moneylenders to acquire occupancy rights of
the indebted peasants may also have been responsible for the widespread
supplanting of the Maratha vanis or kunbis by the footloose Marwari
and Gujarati vanis as moneylenders in the villages, and contributed
to the breaking out of the Deccan riots. Once the land rights became
fully transferable, the moneylender did not have to depend on the
village network and on the continuous monitoring of the peasant's
activities in order to make the latter pay up. He could simply sell up
the peasant's assets, get the land cultivated himself or retain the peasant
as his sharecropper. But the readiness of the moneylender to sell up the
peasant depended on the value of the occupancy right which in turn
depended on the price of the produce and on the ease with which the
peasant's assets could be seized either by resort to civil courts or through
a settlement.
The supplanting of village-or region-level arbitration procedures by
civil court procedures, and the virtual setting aside of the older village
government network under the British-lessened the moneylender's
dependence on the consent of the village for realizing his principal and
interest. Moreover, the necessity of settling land revenue and debts in
cash even in years in which harvests had failed or local or regional level
prices were low meant chat the moneylender needed large cash balances
or an easy access to suprareglonal credit networks. The immigrant
moneylender who was part of a large network of banking had a decided
advantage over local kunbi or Brahmin moneylenders, and progressively
supplanted them as British rule extended in time and space.
How did the peasants adjust or respond to all these changes? We
have already referred to some of't:he adjustments in terms of extension
of cultivation to inferior lands, turning of pasture into arable land, and
 Land Tax, Property Rights, and Peasant Insecurity 225

reluctance to invest in land-improving capital works. The ultimate

adjustment in the case of a peasant who suffered a disastrous harvest
failure or lost his occupancy right was, of course, death. We have not
tried to catalogue the number of years in which in particular regions
peasants suffered loss of harvests. What the government reported as a
famine was chosen on extremely arbitrary and changeable criteria. To
give an illustration of the frequency with which harvests failed in the
district as a whole, or in major parts of the district, I counted the number
of such failures in the Poona district between 1821-2 and 1853-4.70
Of these the following crop seasons were considered to be either
'unusually bad', 'on the whole unfavourable', 'peculiarly unfavourable',
'bad on the whole', or a season of, 'failure of rain', of 'scanty rain', ·or a
season of'failure in east', or 'failure in east and centre': 1823-4, 1824-5,
1827-8,1829-30, 1830-1,1832~3, 1837-8,1838-9, 1841-2, 1844-5,
1845-6, 1850-1, and 1853-4. So in thirteen out of thirry-three years, a
substantial fraction of peasants experienced starvation or worse. Besides
these, there were a number of years, in which the peasants suffered
because of disastrously low prices. Sometimes low prices coincided with
local harvest failures. Only a few of these years were described officially
as years of 'famine'. So the prevalent idea that famines in the Bombay
Deccan were concentrated only in the last quarter century must be
seriously questioned.
One method of 'adjustment' which probably had pre-British roots,
but which may have become more frequent after the formal abolition
of slavery,71 and the insecurity and loss of assets brought by the British
land laws, was the practice of what was euphemistically described in the
Gazetteersof the f!ombay Presidencyas 'mortgage of labour' or service
m<;>rtgage. In the words of the Ahmednagar Gazeteer.

A husbandman, who has fallen hopelessly in debt, has lost his land, and still owes
money, as his last resource, will mortgage his labour for a term of years. It also
sometimes happens that a family of three or four brothers, wishing to borrow money
to buy cattle, will agree among themselves to work off the loan by one of their
number serving the lender .... Moneylenders are the only class in Ahmadnagar to
whom labour is mortgag.:d. The services of a bondsman, or one who has mortgaged
his labour, are rated at Rs 18-24 a year, exclusive of food and clothing. An ordinary
grown workman takes four or five years to work off a debt of Rs 100. One case is
recorded in which four persons, two brothers, and their wives, mortgaged their joint
labour against an outstanding debt of Rs 900.72

The peasants, of course, adjusted to changing seasons and prices

by altering the composition of crops under cultivation. However, in
226 Colonialism and Indian Economy

the absence of detailed data for the period before the 1880s, it is not
possible even to begin the exerciseof finding out the relative importance
of rains (and their distribution), prices, and land revenue assessments
in the allocation of land and other resources by the peasants. Harold
Mann, 73 in a ~ighly interesting exercise, tried to find out exactly how
the total rainfall or its distribution as between different months or
seasons influenced the outputs of crops in the four districts of Poona,
Ahmadnagar, Sholapur, and Bijapur over the period 1871-1939.
The most important of his findings is that 'in the less precarious areas,
the variability of the corps seems to be greater than that of the rainfall;
in the tracts more liable to famine, the opposite is the case'.74 This would
be consistent with the hypothesis that the peasants in famine-prone
areas try to ensure their survival by stickin_gto a rule that minimizes
the probability of a total failure of crops. They would thus go in for
the most drought-resistant crops which also were generally their chief
means of subsistence (namely, jowar and bajra). In the areas less prone
to famine, variations in crop composition could be broken down into
at least two components. The bigger peasants would put more of their
acreage under commercially more profitable crops. Secondly, even some
of the smaller cultivators, either voluntarily or through debt-induced
compulsion, would put some acreage under crops which are meant
to be sold in a regional market-rather than consumed or sold in a
local market.
Peasants' modes of adjustment to the compounding of insecurity
effected by the British land revenue system were not alwayspassive or non-
violent. The British administrators reported numero~ disturbances and
rebellious outbreaks throughout the period covered by us: the Deccan
riots should be counted among the milder disturbances. In 1826 the
Ramoshis75 of southern Poona revolted, 'partly owing to the scarcity of
1825'. 76 'Under the leading [sic]of one Umaji they were so enterprising
and successful that, in 1827, as they could not be put down, their crimes
were pardoned, they were taken into pay, employed as hill police, and
enriched with land giants'.n In 1828, the Kolis of Ahmadnagar rose
under the leadership of Ramji Bhangria, who had been a police officer
under the Marathas and then under the British, and Govindrau Khari,
himself a Koli, who had earlier been the commandant of Ratangad
fort under the Marathas. Govindrau had refused employment under
the British government. Although the chief rebels were arrested by the
British in 1829, the Koli uprising in the Sahyadris continued, under the
leadership of Rama Kirva, a Koli. In 1830 he was joined by the Bhils.
 Land Tax, Property Rights, and PeasantInsecurity 227

But ultimately the British troops sent against the rebellious Kolis and
Bhils prevailed and Kirva was captured and executed.78
Although Kolis, Ramoshis, and Bhils are the only groups which
the Gazetteersmention as having broken out into open revolt, I do not
believe that they had no support from other ethnic groups, communities,
or castes: for example, the Brahmin Kulkarnis are supposed to have
abetted the Koli risings of 1828-30 and deliberately misled the British
counter-insurgency forces.79 Nor do I assume that the uprisings took
place only because of economic factors. However, economic factors
played a role in either triggering a revolt or sustaining it by enlisting the
support of other people suffering from a similar sense of injustice. The
Kolis who had taken to agriculture tended to suffer from the exactions
of the moneylenders even more than the Kunbis (the dominant peasant
caste), some of whom were landlords and moneylenders. Thus in 1836,
Captain Mackintosh, writing in Transactionsof Bombay Geographical
Society,vol. I,80 found that the Kolis of Rajur in north Ahmadnagar
complained bitterly against moneylenders from Gujarat:
The moneylenders of Rajur were foreigners from Gujarat, visited their homes at
intervals, and retired to their homes, when they made a competency. There were
four headmen who had agents in different villages to buy up the grain. The mon-
eylenders had induced the district hereditary officers to take shares in their shops
as when people of local rank were mixed with them the Kolis were afraid to com-
plain against the lenders. The Kolis keenly felt the injustice of which .they were
victims, and were eager to engage in any undertaking which gave them a chance of
revenge.

In addition to charging excessive rates of interest, keeping fictitious

accounts and compelling the debtors to settle the accou9-ts at a time
which suited the lender, the moneylenders also acted as monopsonist
buyers of the Kolis' produce. The Kolis, apart from resorting to
courts, sometimes attacked the Vanis' houses and burnt their books.
They occasionally held naked swords at the Vanis' throats or slightly
wounded them. 81
The naked swords of the Kolis in Poona were again turned against the
sovereign protectors of 'law and order' in the Sahyadris in 1839:
Early in 1839 bands of Kolis appeared in various parts of the Sahyadris and attacked
and robbed several villages. All castes joined them and their numbers soon rose to
three or four hundred, under the leading of three Brahmans Bhau Khare, Chimnaji
Jadhav, and Nana Darbare. The rising took a political character, the leaders declared
that they were acting for the Peshwa, and assumed charge of the government in
his name. 82
228 Colonialism and Indian Economy

No sooner had this revolt been crushed and two persons, a Brahmin
and a Koli, had been hanged, and a number of others sent to prison or
transportation for long terms (including life) than there was another
uprising among the people of the hills. The uprising of Kolis, which
began in 1844, was led by Raghu (Raghoji) Bhangria and Bapu Bhangria,
83
both Kolis, but they were joined by persons belonging to other castes.
The revolt was finally crushed only after the capture and execution of
Raghoji Bhangria in 1847.
There was a major uprising of the Bhils of Ahmadnagar and Poona
in 1857; in this case the triggering event was the mutiny of the British
Indian troops in May 1857 (which is often styled as the first Indian war
of independence). The Bhils, who were led by Bhagoji Nai, Patharji
Naik, and Harji Naik, were not finally quelled until Bhagoji Naik was
killed in an engagement on 11 November 1859.84
In 1873 Honya Bhagoji Kanglia, a Koli, gathered a group of follow-
ers in the western hills of Poona and Ahmadnagar, and began attacking
moneylenders. 85 Many moneylenders suffered a loss of property and
some had their noses cut off. In 1875 the open violence against mon-
eylenders, especially against those of Marwari origin, spread among the
majority Kunbi cultivators, and it is the aiffusion of that revolt, most of it
taking the form of violence against property rather than violence against
persons, that has come down in history as the Deccan riots. While the
government appointed the Deccan riots commissioners to investigate
the riots among the Kunbis, purely police methods were used against
Honya Kanglia, who was arrested on 15 August 1876, and condemned
to transportation for life.86
Apart from the general sense of.grievance from which the cultivators
suffered, specific developments in the profiles of land tax and produce
prices contributed to the worsening of relations between the peasants
and the moneylenders. One major element was an increase in land
revenue demands effected after 1867, when in most parts of Poona
the settlements made thirty years before had come to an end, and
the government effected new revisions. The increases in government
demand effected through the survey and settlement operations between
1869 and 1872 in five revenue subdivisions of Poona, namely, lndapur,
Bhimthadi, Haveli, Pabal, and Supa ranged from 31.47 per cent (in the
case of Supa) to 65.48 per cent (in the case of Haveli). 87 The second
factor aggravating peasant insecurity and hardship was the fall in prices
of produce between 1871-2 and 1873--4. The joint effect of these two
developments was, in the words of the Poona Gazetteer,'first to reduce
 Land Tax, Property Rights, and Peasant Insecurity 229

the landholder's power of paying, secondly to make creditors seek by all

means in their power to recover their debts or to enhance their security
by turning personal debt into land mortgage, and lastly to check further
advances to husbandmen'. 88
The third factor which may have precipitated the violent action of
the more substantial landholders was an order passed by the Revenue
Department of the Government of Bombay on 5 February 1875.
According to this order, if there were land revenue arrears, they should
first be recovered by sellip.g the movable property, and only when that
was exhausted should the officials proceed to sell up the land of the
defaulting cultivator. According to the Poona Gazetteer-.
This order rhe moneylenders turned to rheir own advantage at rhe expense of rhe
landholders. In February and March 1875 rhe lenders refused to pay rhe second
instalment of revenue on land whose produce rhey had received from rheir debtors.
Landholders who found rheir movable property attached, after they had handed
their creditors rhe produce of rhe land on rhe understanding that rhey would pay rhe
rents, naturally felt that they were rhe victims of deliberate fraud. 89

The riots had been preceded in many areas by the social and economic
boycott of the moneylenders, often led by cultivators belonging to the
upper castes.90 When such measures failed to remove the incubus of
moneylender power, it was then that villagers of Supa and Kedgaon
invaded (on 12 and 13 May 1875, respectively) the houses of the
moneylenders, and took away or destroyed their property. This was the
official beginning of the Deccan riots.

The Debt Process and the Failure of Agricultural

Banking for the Poor Peasant
The investigation conducted by the Deccan riots commissioners 91 and
the search for a solution to peasant indebtedness through an agricultural
bank, proposed in the 1880s by J.W. Wedderburn and M.G. Ranade,
revealed that the debt process for the peasant could not be understood
simply in terms of the rate of interest charged by the moneylender or
the market value of the collateral offered by the peasant. The latter was
caught in· a web of a lack of freedom as soon as he was compelled to
enter the debt process, a compulsion which was a regular feature of his
life cycle.
According to the DRC s findings, in the twelve villages of Poona and
Ahmadnagar specially selected for detailed study, about one-third of
those peasants and landholders who paid their land revenue directly to
the government were in debt. 92 The total debt of these twelve villages
230 Colonialism and Indian Econo y

was found to be Rs 194,242 and the land revenue assessment of the

indebted peasants was Rs 10,603. The DRC took the value of dry crop
land to be worth about seven years' assessment and irrigated land to be
worth from fifteen to twenty years' assessment. Taking an average of the
two types of land, the DRC concluded that the purchase price would
not exceed ten years' a'ssessment.Thus the total debt was twice the value
of the land o'f the indebted peasantry. 93
Mdst of these peasants were very poor with assessments of less than
ru20. Their non-land assets generally had very little value. Thus it could
h:irdly be claimed that the indebted peasantry had offered valuable
collateral.94
. The question then should be asked why did the moneylenders lend
sums of money, which were far larger than the values of any assets
·the peasants could pledge? One answer is that the nominal amount of
debt had little relation to the actual amount of money lent. At the very
moment of lending a sum, very often, the interest that would accrue
on the loan in the first year was deducted from it. And since the rate of
interest was exorbitantly high,. failure to repay any part of the principal
or interest would soon make the loan assume astronomical proportions.
A particular case was cited by Cockerel!, introducing the Bombay
Indebted Agriculturists' Bill (which eventually became the Deccan
Agriculturists' Relief Act of 1879) in the Governor-General's Council
on 20 June 1878.
A ryot had borrowed Rs 10 and at the end of ten years from the date
of the loan, his account with his creditor stood thus: he had paid Rs 110
and still owed Rs 220 so that in the short space of ten years, through
the process of repeated renewal of bonds in which compound interest at
high rates was added to the principal, his debt had been made to mount
up to thirty-three times the sum actually borrowed by him. 95
The creditor often foreclosed on the mortgage, and even without
civil suits, the right of occupancy was transferred to the creditor. But
the ttanfactions between the creditor and the debtor did not end there.
Even after the right of occupancy had been transferred, the Ahmadnagar
ryot often continued to pay the land revenue due from the mortgage. 96 •
The mortgagee in fact converted the ryot into a tenant-at-will on his (the
ryot's) own land even before the right of occupancy had been transferred
or the land ,had been sold up by instituting a civil suit (in which the
sowkar,generally obtained an exparte decree since the ry,ot failed to put
in an appearance to contest the case).
 LandTax, PropertyRights,and Peasant Insecurity 231

Thus the creditor-debtor relationship was easily transformed into

one in which the debtor delivered up whatever surplus produce he had
to the creditor. The creditor became his landlord, and defacto the master
of his whole family. Sons, wives, and daughters of the tenant became
the sowkar's virtual serfs because of the debt obligations of the tenant.
It is not really correct to say that the tenant had become a sharecropper
on his own land because (a) the tenant continued to cultivate the land
only at the creditor's and now the landlord's pleasure and (b) the share
of the crop he had to deliver could be anything, depending on how the
creditor chose to calculate the arrears on the debt for which the peasant
had lost his hand.
Under these conditions, it is not surprising that the sowkars were
often found not to foreclose on the mortgages even after the nominal
debt had grown to be several times the value of the land; it was not
the net value of the land but the present value of the gross earnings
of the indebted peasant's family minus whatever minimum subsistence
the sowcar chose to allow them that became the security for the loan.
The seriously embarrassed peasant's family. entered into a compact for
enserfment when the peasant took a loan from the sowcar.
Under these circumstances it becomes very difficult to produce a
convincing economicmodel of the course of indebtedness of the peasant
and its outcome. That the seriously embarrassed peasant would, with
only a little kick from Dame Luck, lose control over his land and his
labour was virtually certain. But exactly when the defacto loss of land
would be registered into de jure transfer of occupancy right or forced
sale ofland become an open-ended issue.
According to the DRC, the incidence of actual transfer of occupancy
right and of forced sales through civil suits was higher in Ahmadnagar
than in Poona. The reasons for this difference, as cited in official reports,
are all related to variations in the debt process: (a) paradoxically, the
lighter burden of land revenue in Ahmadnagar made land rights in that
district a more attractive proposition for the moneylender or the rich
landholder; (b) the greater degree of ignorance and helplessness of the
Ahmadnagar,tyot made him an easy victim in the law courts. Lastly, the
virtual monopoly of moneylending enjoyed by the immigrant Marwari
sowcars of the Ahmadnagar district had its impact. The moneylenders of
Poona had among them a larger number of vanis with traditional ties to
the village and may have, therefore, been restrained in their operations
to some extent.
232 Colonialism and Indian Economy

The open-endedness of the exact timing of transfer of land suggests

chat the statistics of the transfers of land as obtained through deeds
of sales were poor indexes of the actual loss of land by the peasants.
The DRC enquiries revealed chat many peasants had lost their land
to the sowcars. But the deeds of sale may have recorded a fact which
had been accomplished long before a sale was registered. On the other
side, registration of transfer of occupancy may indicate the beginning
of a condition of serfdom of the tenant rather than his reduction to the
position of a free, propertyless labourer.
Indeed, in many cases loans need not have been made at all against
the security of land. The sowcar's dealings with a typical indebted
peasant included the following transactions: 'the debtor delivers his
produce, or as much of it as he is obliged to deliver, to his creditor, and
the creditor supplies his needs, clothing, assessment, seeds, food, and
cash for miscellaneous expenses'.97
The question naturally arises: how did the sowcar, turned into the
effective landlord, subject always to the ultimate overlordship of the
state, maintain his control over the debtor and his family?
In the case of pie pe~ant who still had not legally lost possession
of his land, the threat of dispossession and its opposite, the hope of
recovering the land if the ;mwcar's demands were met, must have acted
as a powerful means,of control. But in the case of the debtor whose land
had already been trans~e,rredto the landlord, the means of control would
have taken diverse forms. First, there would be the use of the quasi-
religious belief that an indebted man does not attain moksha,unless he
or his descendants pay up the debts. These beliefs were also embedded in
local customs whichheld the indebted man to be a thrall to the creditor
even after the debtor had no more worldly assets to deliver. Secondly,
there would be the whole coercive apparatus of the state working down
to the village which almost automatically favoured the wealthy, in the
name of preserving law and order. It was assumed that it was the poor
who would breach the conditions of peace and not the rich. Thirdly,
in a society where agriculture had come to be virtually the exclusive
means of livelihood, and where unemployment was endemic, the mere
threat of eviction of even a bonded sharecropper would be enough of
a deterrent. 98
The relations between the sowcar and his debtor were affected not
only by the microeconomic and microsocial factors working at the
level of the village but also by the structural constraints of a colonial,
tributary economy. The DRC and later enquirers such as the Famine
 Land Tax, Property Rights, and Peasant Insecurity 233

Commission of 1901 were aware of most of th.esefactors but, with a few

notable exceptions, they tended to concentrate on excessivepopulation
growth, peasant irrationality, or peasant ignorance as the dominating
issues. Many modern analysts who regard population growth or the
working of the primeval peasant mentality rather than the framework of
imperial rule and the fragile ecology of the tract, aggravated by that rule,
as the basic reasons for the crisis of Deccan agriculture in the 1870s are
repeating the arguments of the DRC and the Famine Commissions.
The DRC, the Famine Commission of 1880, and the Famine Com-
mission of 1901 were all unanimous in concluding that the revenue
system introduced into the Bombay Presidency was a major cause of
the indebtedness of the ryot, and his impoverishment. The Famine
Commission of 1901 expressed the gap between ffi;eintention of the
makers of the Bombay revenue system and its outcome pithily:
We desire to guard ourselves against the supposition that we impute want of
care or solicitude for the people's interest to the authors of the Bombay revenue
system.... What we wish to point out is that their intentions have not been fulfilled.
They expected the accumulation of agricultural capital: but their plans did not
promote thrift, nor did they conduce to the independence of the ryot. They looked
for the capitalist cultivator; and we End the sowkar'ssert.99

As formulated by the same Commission, the salient features of the

Bombay system were:
1. the creation of a territorial unit of land revenue assessment,
which is called the 'field';
2. the assessment of land revenue on each 'field' independently,
each thus becoming a separate holding;
3. the recognition of the recorded occupant of the 'field' as pos-
sessing complete proprietary rights over it, subject only to the
payment of the revenue or tax from the recorded occupant in
bad years as in good. 100
The D RC commented extensively on the British laws which abolished
ceilings on rates of interest to be charged, made civil procedures
dependent on nothing but written evidence, and tilted the balance
decisively against the small peasant without literacy or effective access to
the civil courts. 101
Despite official denials, force and torture were often used as late as
the 1890s 102 to realize the arrears of revenue from tenants. The presumed
increase in the value of the land as a result of the general rise in prices
fuiled to improve the bargaining position of the ryot as against the
234 Colonialism and Indian Economy

moneylender. The recurrence of famines did not help matters. With the
cattle often gone, the soil productivity further depleted because of lack
of fertilizers, and with the peasant himself being emaciated as a result of
months of starvation, his value to the moneylender was less than before.
The moneylender's own surplus was also diminished because of the mass
default of his borrowers. So while the demand for credit went up, its
supply remained below normal in post-famine years.103
The DRC report also suggested that indebtedness of the peasantry
discouraged their enterprise; it further discouraged them from making
use of whatever public irrigation facilities were available because the
increased yield would merely enrich the sowcar (or the government
but the DRC were reluctant to adopt that position). 104 Moreover, the
DRC pointed out that the transfer of land from the peasant to the
sowcar might also have an important employment effect: 'Such holdings
as pass into the hands of the sowkarwill not, under hired labour, support
as many persons as lands cultivated by proprietors, and these holdings
are yearly increasing' .105 Here we have an early formulation of the
proposition that lands cultivated by family labour would display a higher
degree of labour intensity than those cultivated by wage labour. But
if our earlier argument is valid that many indebted peasants remained
as virtual serfs on the land and their whole family labour was mobilized
by the sowcar, then there should not be a great deal of difference
in the intensity of labour use.106 Obviously, the DRC formulation
would require that the land is no longer cultivated by a sharecropper
but by wage labour: or else it requires that the sharecropper effectively
puts in less labour on the alienated land than on land he can call
his own.
The British land revenue system rendered land, and especially the
land of the small peasant, a very poor asset for banking purposes. This
was fully grasped by those Poona capitalists who had offered to help
Wedderburn to start an agricultural bank. This was also grasped by
many of the British officials and other Englishmen or Scotsmen who
interested themselves in these questions. Wedderburn in his speech at
the meeting (~f 4 July 1883) held in London to consider his proposal for
an agricultural bank for India stated:
As to special disadvantages attaching to such an enterprise in India, from a banking
point of view, there is no real and serious difficulty except that arising from the
poverty of the individual ryot and the want of solidity in the security he is able to
offer. He is, indeed, the absolute proprieror of his holding, subject to the payment
of the government assessment; and if this assessment were either fixed or limited in
 LandTax, Property Rights,and Peasant Insecurity 235

a definite way, the security would be good but this is not the case; the demand being
liable after 30 years co an enhancement which may swallow up the margin of profit
on which the mortgages depend. The Poona Committee [oflndian bankers-AB.]
have asked that in the area of experiment the existing rates should not be disturbed
for a period of 20 years from the present date. 107

Sir James Caird, who had been a member of the Indian Famine Com-
mission of 1878-80, and was considered an authority on agricultural
subjects, reiterated the same point at the same meeting and reminded
the listeners of the further complication of intermediary right-holders.
The danger of the failure of such an experiment as that proposed (namely, an agricul-
tural bank for India) was the risk of such an enhancement of rent by the government,
or the zamindar, as would swallow up the growing profit of the cultivator. 108

Wedderburn and the Poona capitalists wanted the debt servicing

charges of the agricultural banks due from the peasants to be put on the
same basis as land revenue dues and realized by the same process. They
also wanted an assurance that the government would not raise the land
revenue demand, for a definite period of time. The former demand the
government rejected as being politically inexpedient; it would in any
case have been ineffective, because it is doubtful if peasants would have
rushed from the comfortable, if smothering embrace of the sowcar who
would theoretically meet all his needs and with a considerable degree
of flexibility, to the cold embrace of a bank which would be niggardly,
if just, in its supply of credit needs, but would be absolutely rigid in
its demands.
The would-be bankers wanted to soften the rigidity of their terms if
the government would also agree to soften its demands in case of a crop
failure. Either a definite promise to grant remissions in case of a crop
failure or a promise not to raise land revenue demands for a fixed term
would have led to some loss of prospective revenue for the government,
which might or might not be recovered through more productive lands
and higher land revenue yields later in the day. This last possibility the
government refused to contemplate, and so the Poona-Wedderburn
scheme for agricultural banks came to nought.

Conclusion
The separation of the private and public spheres of law, and the emer-
gence of a civil society have been prime concerns in the conceptualiza-
tion of a bourgeois political system from Montesquieu to Gramsci. 109
The security of property and the stability of expectations have figured
236 Colonialism and Indian Economy

in the writings of all protagonists of the bourgeoisie from James Har-

rington down to Jeremy Bentham.U 0 The same issues have surfaced in
our own time again in discussions of the foundations of civil society,
the possibility of a socialist democracy, and the virtue of disengagement
of the State from society in post-colonial societies. Our analysis of the
operation of the British land revenue in the Deccan should make it
clear that contrary to some recent analysts such as Washbrook, 111 there
is little evidence that the British authorities wanted to separate the do-
mains of public from private law, at least as far as property in land was
concerned. There were many British administrators who recognized the
over-determining character of the state demand for revenue in shaping
the land tenure system in British India. 112
The issue of civil liberty is also connected with the question of the
degree of security of life provided by the land tenure arrangements in
British India. Can civil liberty be secure when life is not? The access of
moneylender power and the institution of informal or legal bondage
under British rule are not phenomena confined to the Bombay Deccan
alone, as Elizabeth Whitcombe 113 had demonstrated in the case of
Uttar Pradesh. What is ironical is that peasant insecurity and peasant
unfreedom were as endemic in raiyatwari Deccan as in taluqdari Awadh.
The enormous degree of imperfection in credit markets arising out of
differences in values of collateral offered by different borrowers and
the adverse selection process faced by borrowers in the presence of
incompleteness and asymmetry of information in credit markets have
been stressed in recent literature. 114 The peasants of the Bombay Deccan
under colonial rule paid for such imperfections in the credit markets
with their lives and their freedom, and not all the good intentions
of the Poona bankers or Judge Wedderburn could rescue them from
that condition of insecurity and potential bondage so long as the basic
ingredients of colonial public finance endured.
The linkages of the majority of peasants living on an insecure margin
of sub~istence and the failure of private accumulation are too obvious
to be stressed again. What needs to be emphasized, however, is that as
I had noted earlier, 115 the transfer of thousands of workers in declining
handicrafts to agriculture could not be effected without impoverishing
the workers further if accumulation in agriculture was also sluggish.
Whether we look at issues of civil liberty or economic transformation,
if colonialism was a process of'creative destruction' (to lift a phrase from
Schumpeter); the 'creativity was well hidden from the eyes of the vast
majority of peasants in colonial India.
 Land Tax, Property Rights, and Peasant Insecurity 237

Notes
1. I am indebted to Sudhir Anand and Siddiq Osmani for detailed comments on
an earlier version of this article. I am also indebted to Partha Chatterjee for directing
my attention to Lawrence Krader's work. They are all absolved of any liability for
any remaining errors in the article.
2. Krader (1975: Chapter 1).
3. Stokes (1959), (1976).
4. R. Guha (1963: Chapter 4).
5. Krader (1975: 62--4).
6. Avineri (ed.) (1969: 'Introduction').
7. Marx (1966: 331-2).
8. Marx (1971: 399-449).
9. Krader (1974: 243-84).
10. Firminger (ed.) (1917-18); Stein (1989: Chapters 2-4).
11. Nanavati andAnjaria (1951: 29-30).
12. For a representative sample, see Mill (1818: vol. I, Book II, Chapter 5, and
vol. V, Book VI, Chapters 5 and 6); Jones (1831: Chapter 4) and (1857: Book II,
Chapters 7 andl2). Marx in the 1850s had obviously been greatly influenced by the
Fifth Reportof the House of Commons (Firminger [ed.] 1917-18). The evolution
of Marx's thinking from his ankles on India to a critical assessment of the views of
Phear and Maine in the last years of his life has been traced in Krader (1974). Some
major landmarks in the evolution of Marx's thinking in this area are to be found in
Marx (1979 [1857-9]: 83-136); Marx (n.d.), (1966) and (1971).
13. The only exception to this was constituted by the lands given in fee simple,
vinually free of cost, to mainly European planters in Assam and other areas where
tea and coffee plantations were to be promoted A. Guha (1977: Chapter 1).
14. Bagchi (1976c); Baker (1984: Chapter 3).
15. Bagchi (1987: Chapters 1-3).
16. Ascoli (1917); Firminger (1917-18); Sinha (1962), (1965) and (1970);
Chowdhury (1958).
17. Dutt (1963a[l906]: Chapters 8 and 20-1); Kumar (1968); Sarada Raju
(1941); and Baker (1984: Chapters 3 and 6).
18. Lardinois (1989).
19. Dutt (1963b[1906]: Chapter 4); Klein (1965); Kumar (1968: Chapters 3
and 4).
20. S. Islam (1979); Gupta (1984: Chapters 1-3).
21. C£ Mitra (1979); de Janvry and Subbarao (1986).
22. DRC(l878).
23. Mann (1955).
24. Robertson's Reportdated 10 October 1821, as quoted by Dutt (1963b[1906]:
247). For accounts ofland rights in the Maratha territories before British conquest,
see Fukazawa (1965a), reprinted in Fukazawa (1991: 148-98); Fukazawa (1972),
reprinted in Fukazawa (1991: 199-244); Fukazawa (1982: 193-203); Perlin (1978:
172-237); Wink (1986).
238 Colonialism and Indian Economy

25. M. Elphinstone, Report on the Territories conquered from the Peshwas,

dated 25 October 1819, as quoted by Dutt (1963a[1906]: 243).
26. Clerk's evidence is quoted by Dutt (1963b[1906]: 40-1).
27. Tucker (1853: 250).
28. Klein (1965) and Kumar (1968).
29. Perlin (1978).
30. Rabitoy (1975); Stokes (1976); Ambirajan (1978: 167-71).
31. GBP (1884c: 217); Bagchi (1976c).
32. GBP (1884b: 467); Dutt (1963b[1906]: 45). We shall use the word raiyats
or ryots to designate the state tenants rather than those whose rights were dependent
on the will of the raiyats.
33. There has been a controversy on the question of whether a new class of
rich peasants was making their presence felt in the countryside of western India in
the nineteenth century. See in this connection, Charleswotth (1978: 97-113) and
Mishra (1982: 3-51).
34. Kumar (1968: Chapter III); S. Guha (1985: Chapters 2-3).
35. GBP (1884c: 323-7).
36. GBP (1884b: 483-4, 529).
37. GBP (1885b: 414-19).
38. Ibid.: 464, 470.
39. Ibid.: 108-9, 471.
40. Ibid.: 464.
41. Ibid.: 445.
42. Ibid.: 439.
43. S. Guha (1985: 86).
44. Ibid.: 88-9
45. GBP (1884b: 245-6).
46. GBP (1885b: 7).
47. GBP(1884c: 229).
48. GBP (1884d: 319).
49. Mishra (1982: 14).
50. Blyn (1966: Appendix Table 3A).
51. S. Guha (1985: 162-8).
52. See, for example, McAlpin (1983).
53. McCloskey (1976) and (1989).
54. GBP (1884c: 217).
55. See, for example, Lucas (1973).
56. GBP (1885b: 6).
57. GBP (1884b: 244).
58. GBP(1884c: 218); GBP(1884d: 310).
59. Many of the conceptual difficulties were clear to the more reflective British
officials.Pringle had been a thorough-going follower of the Ricardo-Malthus theory
of rent and wanted to assess land revenue on the basis of the so-called net produce
rather than on that of the gross produce. The latter was accepted as the basis of
assessment by the survey settlement officers, Lieutenants Wingate and Nash, and
Mills, the principal Collector of Poona in the late 1830s.
 Land Tax, Properly Rights, and Peasant Insecurity 239

However, Williamson, the revenue commissioner in 1838, argued that if the

government were the principal landlord, then 'it would undoubtedly be unjust to
leave one man a greater proportionate share of the fruits of his labour than another.
But if the object of an assessment was to impose a land-tax, the plan of taking a
certain share of net produce was the only means by which any interest could be
created in the land stronger than that local attachment which the Kunbi had for
his fields; nor was the comparatively higher assessment of inferior soils, which was
caused by such a system, to be deprecated' (GBP 1885b: 409n).
According to Williamson, it was 'natural and most profitable for the cultivator
that the best soils should be first cultivated' as those in proportion to the capital and
labour employed on them yield the best return, 'and when the fiscal arrangements
of Government invert this natural order of things', it was a clear proof that there was
something radically wrong in the system (ibid.). The officials in the headquarters
however objected that Williamson's principle 'carried to extremity would seem to
end in the abolition of all difference of rate or classification, and the settlement of
one uniform rate for land of all qualities' (ibid.).
60. For this proposition to be true it is not necessary that the peasants should
maximize expected net returns. It could be valid under a number of other rules
of decision-making in the presence of uncertainty. For a discussion of a number
of alternative decision procedures under uncertainty see Luce and Raiffa (1957:
Chapter 13).
61. Bagchi (1976c).
62. GBP (1885b: 15).
63. GBP (1884c: 225).
64. Williamson (1975).
65. GBP (1885b: 97-8).
66. Ibid.: 98.
67. GBP (1884b: 473-4).
68. Ibid.: 483.
69. GBP (1885b: 115).
70. As reported in Ibid.: 369-461.
71. The main form of slavery in Poona at the time of British take-over seems to
have been domestic slavery, although it was reported that some of the men slaves
worked in the fields. A person could be enslaved for failure to pay a debt bur this
was rarely done (GBP 1885b: 133-4). Slavery generally resulted from the sale of
kidnapped children or the sale of children during a famine. They were kept by
Brahmins or wealthy Muslim families, and rarely by the major cultivating caste
members, namely Kunbis (GBP 1884b: 320-1).
72. GBP (1884b: 304).
73. Mann (1955).
74. Ibid.: 38.
75. The Poona Ramoshis were classed by the compiler of the Gazetteeramong
'the unsettled tribes'. The Poona Ramoshis seem to be 'the outlying northern remains
of the great Kanarese ... group of tribes which are included under the general names
ofBedars or Byadarus-hunters and woodsmen' (GBP, 1885a: 409).
240 Colonialism and Indian Economy

76. GBP (1885b: 306).

77. GBP (1885a: 307).
78. GBP (1884b: 416-17).
79. Ibid.: 417.
80. As quoted in Ibid.: 307.
81. Ibid.
82. GBP (1885b: 307).
83. The account is based on GBP (1884a: 417-18) and GBP (1885b: 307-8).
But there are discrepancies about the date of the outbreak, and the triggering
event. According to the first account, Raghu and Bapu Bhangria were sons of a
jamadar of Ahmadnagar whom the Kolis forced to join the rebels. According to the
second account, Raghoji made a raid on some Marwaris who applied to the police.
Raghoji's mother was tortured by the police conducting the investigation. At that
point Raghoji revolted. Perhaps both the accounts are true. Although Raghoji might
have been forced to join the rebels, his loyalty to the cause of the revolting peasants
might have been cemented because of the outrage committed against his mother.
84. GBP (1884b: 418-20).
85. Ibid.: 420; GBP (1885b: 119-309).
86. GBP (1882: 526).
87. GBP (1885b: 118n).
88. Ibid.: 188. The qualification should be made that for the poorer peasants,
personal debt and land mortgage were close kin to each other, if not at the time of
contracting the debt, then definitely when it came to servicing it. This will be made
clearer in the next section.
89. GBP(l885b: 119).
90. Ibid.: 119-20.
91. DRC(l878).
92. Ibid.: Para 75.
93. Ibid.: Para 77.
94. On the importance of the collateral in judging the 'price' or cost of credit,
and in equilibrating well-behaved loan markets, while providing the rationale for
rationing of credit, see Jaffee and Russell (1976: 651-66); Azzi and Cox (1976:
911-17). On the importance of asymmetric information in adversely selecting out
the worse-off borrowers from the normal banking operations of credit institutions,
see Stiglitz and Weiss (1981: 393-410). For an account of attempts to organize
co-operative rural credit, with the help of the government, see Catanach (1970) and
Laud (1983).
95. s.c.Ray (1915: 129).
96. DRC(l878: Chapter 3, Para 79).
97. Ibid.: Chapter 3, Para 78.
98. cf. Bagchi (1973a) and Breman (1974).
99. FC (1901: Para 333).
100. Ibid.: Para 327.
IOI. DRC (1878: Chapter 3).
102. Laud (1983: 5).
 Land Tax, Property Rights, and Peasant Insecurity 241

103. GBP(1884d: 347).

104. This is the converse of the case analysed by Bhaduri (1973) and (1984), in
which the landlord discourages the introduction of technical change because the
expected decrease in his interest income (from the decline in the money borrowed
by the sharecropper because of increase in his income) more than offsets the increase
in the share of the landlords' crop resulting from higher land productivity. For a
general analysis of the constraints imposed on the poor peasant because of the
imerlinkages of the markets for his labour, the credit obtained by him and the
output sold by him, see Bharadwaj (1974). 1
105. DRC (1878: Para 61).
106. Bagchi (1982a: Chapter 6).
107. The Times (1883).
108. Ibid.
109. Montesquieu (1989 [1748]: 20-76).
110. Macpherson (1962); Halevy (1972: part I); Long (1979); and Parekh (ed.)
(1973).
111. Washbrook (1981).
112. Rabitoy (1975: especially,pp. 91-2).
113. Whitcombe (1972: Chapters 4 and 5).
114. Azzi and Cox (1976); Stiglitz and Weiss (1981).
115. Bagchi (1976b).
 9
Markets, Market Failure.~, and the
Transformation of Authority, Property,
and Bondage in Colonial lndia* 1

Pure Competition and Market Failures

conomists working in the tradition of Leon Walras and Vilfredo
E Pareto have derived a theorem about the dual correspondence be-
tween a purely competitive equilibrium and a Pareto-optimal state. This
means roughly that every such equilibrium displays the zero-sum proper-
ties of Pareto optimality (that is, nobody can be made better off through
a reallocation of activities without making somebody else worse oft)
and that every Pareto-efficient state can be supported by a set of prices
such that every economic agent seeking to ma,ximize utility or profits
(which in equilibrium,must be zero) with the prices as given ends up
with the trades prescribed by the purely competitive equilibrium. Once
the stringent conditions of such correspondence became clear,2 some
of the more perceptive economists began to w9ro/ about the numerous
ways in which markets failed. Market failure may mean at least two
different kinds of outcome. The first is that the given market may fail to
produce an equilibrium in positive prices and quantities, as when a large
supply of fish suddenly arrives in a market; ~d there are no takers even
at zero prices, so that the sellers (or more often, public authorities) have
to dispose of the surplus at a positive cost. The sec~mdis that there is an
equilibrium, but that equilibrium is sustainable 0;nly if either the seller

*Reprinted from, 1996, Bunon Stein and Sanjay Subrahmanyam (eds), Imtitutiom
and EconomicChangein South Asia, Delhi, Oxford University Press, pp. 48-70.
 Markets, Market Failures, and the Transformation of Authority 243

or the buyer (and sometimes both parties) has a determinate influence

on the price at which the commodity or service is traded. The rise of
Keynesian macro-economics has been seen by many economists as the
emergence of the study of market failure on a grand scale. The endemic
unemployment in rural areas of Third World countries and the failure
of even subsistence wages to bring about full employment is another
example of market failure. The second type of market failure was long
recognized in the literature as the case of industries with decreasing costs
at the point of equilibrium.
Traditional neoclassical theory dealt with situations in which all
features of the commodities were fully known to everybody. This theory
was extended to situations in which states of nature were uncertain, but
all the agents had full information about the possible state of nature
and the probability of each of them occurring. 3 But Radner showed
that when the agents had incomplete information about states of nature
and about each other's behaviour, problems arose about the existence of
competitive equilibrium; when the equilibria existed they could not be
proved to be Pareto-efficient either. 4 Radner further demonstrated that
if agents did not have unlimited computational ability, (and unlimited
time for carrying out the computations), the well-behaved competitive
equilibria would vanish. In the case of both uncertainty about the agents'
behaviour and limited computational ability, money would be needed
to tide over the uncertainty and the limits of computational ability; thus
the existence of competitive equilibria in any economy using money
becomes a hazardous affair.
While neoclassical economics has something to say about the local
conditions of market success (to coin a phrase) or even the varieties
of market failure, it has virtually no light to shed on the conditions
for sustainability of market success, or the reasons for persistent market
failure. For the former, we have to turn to the followers of Keynes and
Kalecki, and, of course, to the followers of classical political economy
from Adam Smith to Karl Marx. For the latter we have to turn to
discourses going far beyond the boundaries of traditional economics
or traditional political economy as taught in academic institutions.
The core of classical political economy has been claimed to be the
investigation of the conditions for promoting the wealth of nations
primarily through the instrumentality of capital accumulation, and of
the determinants of income distribution between landlords, capitalists,
and workers. 5 The latter in its turn was thought greatly to influence
the speed of. accumulation and its quality through its influence on the
244 Colonialism and Indian Economy

distribution of workforce between productive and unproductive labour.

In pre-Marxian dassical political economy, very roughly speaking, the
shifting of the income distribution from landlords to capitalists was
supposed to promote economic growth by promoting accumulation
and helping to shift labour from unproductive to productive uses (since
landlords' consumption was regarded as the source of employment of
unproductive labour).
I have argued elsewhere that Malthus overestimated the significance of
effective demand failure in the British economy of his time and came to
decidedly wrong conclusions regarding the remedial measures needed. 6
I would now argue, pace Eltis, that Malthus confused issues of short-
run. demand failure with those of long-term sluggishness of investment,
and failed to see that abolition of landlordism was necessary in order
finally to release the long-run propensiry to invest from the shackles
of pre-capitalist, non-market power, and pre-capitalist incentives. 7 That
the British, with the advantage of the first start and global dominance in
manufactures, were able to make landlordism wither away rather than
abolish it formally, is another matter.

Political Economy as the Rhetoric of

British Imperialism in India
It is this corpus of political economy that the more theoretically minded
British policy-makers in India turned to when trying to rationalize their
policies. That the justification was couched in terms of political economy
has been eloquently argued by Ranajit Guha and Eric Stokes.8 But,
that the justification was often no more than a cloak for expediency in
many contexts has been argued by Rabitoy and Stokes in his later work. 9
On the balance of the evidence, my sympathies lie more with the latter
view than with the former. 10 I have argued this in some more detail in
a recent paper.11
I find the view that land tenure arrangements in India were modelled'
either on the experience in Britain or on the tenets ofRicardian political
economy untenable for the following reasons. First, the British never
created a set of landlords with freehold rights in India, except in the
region of tea plantations where they gave most of the land away to
European planters on a nominal payment. Correspondingly, they never
created a set of capitalist tenant farmers with a secure tenure or long
leaseholds. Secondly, for most of the period of British rule in India,
there were severe constraints on mobility of labour and capital. So
this idea of an economic rent to be calculated on the basis of a given
 Markets, Market Failures, and the Transformation of Authority 2;45

market wage and a uniform rate of profit was mostly a fantasy. Both.
these reasons for the non-applicability of the British model and of the,
Ricardo-Malthus theory of rent were known to Richard Jones ·os~l)7
but their significance for conducting any discourse on land markets,
commodity markets, or peasant rights has not been grasped by most
analysts in the field.
Economic theorists love to indulge in fantasies of the first weaver
meeting the first agriculturist to exchange each other's products in a
completely spontaneous manner. But anthropologists and historians
have long known that the actual functioning of markets has generally
required them to be connected with social networks, political authority,
and the organization of merchants and financiers transcending the
borders of states. 12 In pre-British India one of the ways in which the
rulers sought to establish their legitimacy and extend their authority
was by licensing markets, augmenting the facilities for merchants
to bring their wares to their realms, and making tax concessions to
attract trade from neighbouring kingdoms or chiefdoms. 13 O( course,
rapacious rulers sought also to treat merchants and bankers as lambs
to be fleeced, but unless this was only a short-term expedient, the
rule of such chiefs and princes did not generally endure. British rule
greatly disrupted this network of markets, most of which were oriented
towards domestic exchange, and the extension of overseas trade failed
often to compensate for this disruption. Secondly, in pre-British India
the successor states of the Mughals had to nurse their core domains in
order to survive or gather the resources for further aggression. In proto-
capitalist Europe poor laws, guild regulations, and state patron?-ge of
the economy were designed to ward off the shocks of famines, wars, and
foreign competition. The British never, treated such policies as part of
their agenda of rule over India. Naturally, the incursion of unregµlated
international influences often led to uncompensated income losses
and to the spread of monopolistic power of local controllers of money
and authority over markets for goods, credit, labour, and land-to the
point at which it became meaningless to talk about the working of a
self-regulating market.

Market-places and Long-distance Trade:

Creation and Destruction
At the time of the British conquest of Bengal and other major provinces,
there were commodity markets for most consumer goods, there was
long-distance trade in many staples, and there were money and credit
246 Colonialism and Indian Economy

markets linking the major centres of trade and government. The

direction of trade and the location of markets were greatly influenced
by the pre-British structures of regional power and the pre-British style
of governance. & we have mentioned already, the market-places were
themselves often created through the specific political act of a local
ruler, a regional power or the supraregional authorities. 14 Colebrooke
commented in 1795 on the decline of market-places in Bengal after the
customs and other commercial duties (saars) levied by the zamindars or
the local rulers on the traders were abolished. The abolition of these tolls
was part of the Cornwallis reforms turning the decennial settlement into
the Permanent Settlement, and clipping the power of the big revenue
farmers.15 On the other hand, the British effort to 'rationalize' the
internal tolls of the country made them much more burdensome than
before, and especially damaged those manufactures which depended on
long-distance supply of raw materials such as cotton, since the reforms
had a cascading effect on costs.16 Moreover, imported goods came to
enjoy a tariff preference in the Indian market over the produce oflndian
industry, varying between 2.5 and 10 per cent ad valorem,17 as the British
conquest of the country ci'pened,upthe whole of the conquered territory
to the influence~ pf transoc,eanic trade. Of'course, these influences had
to negotiate all die real transport barriets, and other ph'.ysicalbarriers
to easy communicati;h posed by die land mass of India, breached by
the flow of' the great river~ and their tributaries and deltaic 'offshoots.
Then there was the4ragmental:ion of the territory with internal tolls·
and custom duties which were survivals of pre-British times, though
transformed by British diktat and practices. Finally, the rapid expansion
of India's import -and-export trade was checked repeatedly by the·
recessionary force generated by the British conquest. This story of the
survival and transformation of pre-British structures melding with'
market failures as an accompaniment of the impact of British rule, or
even of institutional changes effected through international economic
pressures, would repeat itself in different regions and different phases of
the two centuries of British rule.
The recessionary impact of British rule was felt in the late 1760s in
Bengal. This was the immediate occasion for the East India Company's
appeal to the British parliament for financial help and lfd to the first Act
passed by the parliament to regulate the Company's rule in India. This
was also the occasion for the Company's decision to commission Sir
James Steuart to examine the scarcity of money in Bengal and suggest
possible remedies, which resulted eventually in the introduction of a
 Markets, Market Failures, and the Transformation of Authority 247

Scottish system of banking and note-issue in the Company's territories. 18

In many cases of British conquest, unrequited transfers and consequent
impoverishment of the territory occurred long before the formal
assumption of power by the British. Such was, for example, the case of
the territories of the Nawabs of Arcot and of Awadh. However, a more
dramatic displacement of authoriry could be followed, as in the case of
Bengal, by a noticeable recession and widespread failures of markets, such
that producers of crops were unable to sell them except at ruinously low
prices. This monetary stringency led to widespread shortfalls in revenue,
which is how the phenomenon came to the attention of the authorities,
just as it was the failure to finance the Company's 'investment' with
its normal territorial revenues that had provoked the enquily into the
problems of shortage of specie in Bengal. The fall in demand as a result
of the fall in money incomes ensuing from the dismissal of the Peshwa' s
soldiers and effective dissolution of his court at Poona was cited as a
major reason for the disastrous fall in price of grain in the erstwhile
Peshwa territories. 19 This recession also was one of the causes of the
decline of handicrafts in the Bombay Deccan. 20 The latter in turn fed
the forces of recession and merged with the general phenomenon of
depression in prices and economic activiry in most parts of northern,
western, and southern India from the middle of the 1820s down to the
beginning of the 1850s.21 Almost certainly this led, in many cases, to a
contraction of the sphere of circulation of money. Symptomatic of the
stagnation in demand for credit was the fact that although directors of
the Bank of Bengal proposed to raise its capital from Rs 5 million to Rs
20 million, these limits of capital and note-issue were not reached until
the abolition of the banks' right of note-issue from 1861.22 ·

Land Tenures and Market Failures in

Bundles and Fractions of Claims
The most contentious area in the historiography of the British Indian
economy has been the subject of land tenures. It is not only the
intentions or the ideologies of the policy-makers which have been under
debate, but also the nature ofland rights. One of the hardiest _perennials
in colonial India's historiography has been the contention that British
colonial administrators introduced, or intended to introduce, capitalist
farming of the type they were familiar ~ith in Britain. The foundation of
the prosperiry of the agrarian bourgeoisie which ruled England from the
Commonwealth period down to the eighteenth century was an absolute
properry in land, which was considered to be more or less inviolate. 23
248 Colonialism and Indian Economy

The land tax which this bourgeoisie imposed upon itself was light, and
was neither the first charge nor the essential condition for the landlords
to retain their land. In India, both in the Permanent Settlement and in
the raiyatwari areas, the payment of the tax to the treasury became the
first charge and the essential condition for the landlord's (zamindar's) or
the smallholder' s (raiyat's) right to the fruits of the land, a share of the'
rent in one case, and a share of the value of the produce in the other.
What was sought to be commoditized was not the full present value of
the land as a productive asset, but only certain shares or bundles of claims
to the produce or the rent of the land, these claims being threatened
with extinction every time the revenue payment (kist)became due. Such
commoditization itself was confronted repeatedly with problems of
market failure-during the first thirty years or so, in the case of the
Permanent Settlement in Bengal, and during an even longer period in
the case of the raiyatwari settlements in the Bombay Deccan and in
Tamil Nadu. 24 Zamindars often failed to meet the undertaking for rent
payment they had entered into with the government, and when their
claims (their so-called 'estates') were disposed of, they often had to be
sold at no more than the value of two or three years' revenue demand.'
Even then, often there were no purchasers at all at these auction sales.
Some of the purchasers withheld their bids fraudulently, but"fraud' was
the counterpart of extortion by agents who had v~ry little information
about ground-level reality. Even then, a very large fraction of the
zamindari rights changed hands between the institution of the Bengal
Settlement of 1793 and the close of the second decade of the nineteenth
century.~5
Market failures.in the zarnindari areas might have occurred on an even
more extensive scale, but for two reasons. In some cases, at the time of the
settlement itself, the British administrators recognized the structures of
local power in which the prospective revenue-payers could be expected to
realize that rent out of which they would pay the government's demand.
Additionally, the British either legalized, or deliberately averted their'
eyes from, that exercise of power without responsibility which became
the style of rural governance by the local magnates recognized by the
British. The explicit recognition of the local structures of lineage and
local political structures, while settling land revenues, comes out clearest
in the case of Banaras when Jonathan Duncan as British Resident at the
court of the Raja of Banaras introduced Permanent Settlement there. 26
Duncan recognized that 'corporate groups as well as individuals had
landed rights' in these territories. 27 According to Cohn:
 Markets, Market Failures, and the Transformation of Authority 249

Duncan wanted to collect the revenue from and to grant zamindari rights to what he
termed the 'village zamindars' by which he meant those men in lineage ter~itories or
taluks who stood forward. as leaders of the corporate body, or those individuals who
could establish their rights to parts of villages or whole villages, either as grants from
previous government or through tradition. 28

Viewed from the standpoint of individual and exclusive property

rights, a great deal of confusion resulted. Claims to shares were often
based not on the rights alleged to be enjoyed by immediate ancestors,
but on the bases of those enjoyed by the ancestors of ancestors.29
There were claims and counter-claims that had to be arbitrated by the
British officers in charge or by a recognized leader of the locality, often
on the basis of oral tradition only. These modes of settlement built
into the power structure of superior land right-holders a bias towards
traditional, pre-commercial, and rather arbitrary modes of clecision-
making. They also led to the effective abrogation of the rights of inferior
right-holders:
No record of rights of subordinate members of proprietary groups was recorded.
Internal division of the revenue obligation was lefi: to be recorded by members
themselves. No record of rights of permanent tenants and other tenants was kept, so
that subordinate cultivators had no legal protection. 30

Cohn has shown how some new groups acquired zamindari rights
in the Banaras division-groups which were connected with Banaras
rajas, or other influential Indian chiefs of the region, with some of
the early British Residents and other British officers and, increasingly,
with the British apparatus of revenue collection. In the process, one
caste, namely the Rajputs, declined decisively as landholders. However,
after the initial upheavals caused by British take-over, it is remarkable
how stable the structure of landownership became and how effective
banking, trade, and subordinate offices under the British still remained
as routes to acquisition of zamindaris and power until the beginning of
the twentieth century. 31
In the case of Bengal, the Regulation of 1790 was the real beginning
of the Permanent Settlement and it required the revenue farmers to
issue written undertakings (pattah) to tenants. However, in many cases,
tenants, following earlier usage, claimed hereditary rights of occupancy,
which the pattahs would deny to them. The pattahs also restricted their
rights ~n other ways by increasing even their legal dues to extortionate
levels. Intermediaries below the revenue-payers to the government used
pattahs fraudulently to deprive the hereditary occupiers of their rights by
entering their own or their family members' names in the pattahs. For
250 Colonialism and Indian Economy

all these reasons, probably the vast majority of the hereditary occupiers
and cultivators failed to secure true records of rights and became mere
tenants-at-will. 32 Under the new legal process instituted by the British, a
single written document could overturn the information and judgement
of a whole community, and these tenants-at-will had to fight for more
than a century-and-a-half to get even a modicum of security of tenure.
The Permanent Settlement story of failure of markets and institu-
tions that act as operative vehicles of markets did not end there. By
Regulation VII of 1799, the government armed the zamindars with
powers that bypassed legal process, and allowed them to realize whateyer
they considered to be their dues from cultivators. As the Collector of
Midnapore wrote in 1801, the demand for Regul~.tion VII came from
the zamindars who could now transmit the coercion exercised by the
Company's officers down to the lowest level, that is, to the cultivator
or the actual occupier of the land. 33 The Bengal zamindars had already
started creating various subordinate intermediate rights in order to
facilitate the collection of the revenue. After the passing of Regulation
VII, this process, and naturally the exploitative pressure on the tenant,
were accentuated. Soon Bengal ended up with the score of layers of
intermediaries and the hundreds of sharers in both the originally ,recog-
nized zamindari rights, and the intermediary rights oflater creation with
which we are familiar.34
Thus the state in this case, in order to take care of a market failure,
privatized part of the coercive powers that it claimed to monopolize.
Such private coercive rights were also usurped by the European planters.
In the districts dominated by the planters it was not always clear
whether the District Collector or the big planters were the real rulers
of a particular district. All this did nothing to unshackle the market in
the countryside. In the meantime, the de-industrialization process, the
failure of private accumulation and the decay of pre-Britisli irrigation
works in the Permanent Settlement areas enormously increased· the
pressure of a burgeoning population on the land. 35 But these same
forces created a tliriving market in variotis intermediary rights in land.
That did not mean that 'land' became a free asset, because what were
sold were bundles and fractions of claims to the produce of the land.
Moreover, land remained the sole productive asset in many villages and
the major anchor of social and political power, and in some cases, the
sole instrument against the threat of pauperization, bondage, or exile.
All kinds of non-market methods were used to obstruct transactions in
claims to the rent or the produce of the land. Extremely unequal relations
 Markets, Market Failures, and the Transformation of Authority 251

between creditors and debtors, and between the big buyers of produce
and the peasant sellers prevailed. Thus pervasive dominance by a few big
players allowed them to force the peasants to make their transactions
in labour, produce, credit, and land rights in an interlinked manner. 36
Not surprisingly, the Permanent Settlement areas were characterized by
endemic market failure. Although there were some respects in which the
raiyatwari areas differed from the zamindari or taluqdari areas, market
failure was as characteristic of the former as of the latter. 37

Uncertainty, Market Failure, and lnterlinkages of the

Credit, Land, and Labour Markets
In a society in which the majority of the people derive their livelihood
from agriculture, the uncertainty faced by peasants plays a very important
role in determining their relations with the rest of the society and the
state, and in determining the form which market' success or market
failure takes. Conversely, the relations of peasants to landlords, to
traders and moneylenders, and to the state greatly influence the nature
and degree of uncertainty faced by the peasant.
Except under highly unusual conditions, all cultivators face uncer-
tainty in production, an uncertainty created by nature in the form of
uncertain distribution of rainfall, uncertain levels and timing of inunda-
tion of rivers, uncertain incidence of floods, and of pests. In the market
for agricultural produce, peasants face uncertainty in prices: this uncer-
tainty can in turn take the form of seasonal variations or annual changes.
For poor peasants, the distinction between seasonal and longer-term
changes often becomes meaningless, but for more substantial cultivators
and landlords this distinction makes sense. In addition to price and
production uncertainty, there is the influence of the land tenure system
in determining the shape of things for the peasant. Does the peasant pay
his tax in kind or in money? Does the payment depend on the state of
the harvest or is it a fixed payment? If it is fixed, is it fixed in terms of
produce or in terms of money? Does the payment become due at fixed
times of the year? If it does, then the peasant may face a liquidity crisis
even ifhe may be judged solvent in the long run. Are there other claims
on the peasant's produce than those of the state? Are they themselves
fixed or variable?
A typical Indian peasant would face this complex of uncertainties
under either a landlord system (zamindari or taluqdari) or a small-holder
(raiyatwari) regime. But under the first perhaps the number of claimants
· to his produce other than the state would be larger. To simplify slightly,
252 Colonialism and Indian Economy

we will concentrate our attention entirely on the problems of a peas~t

ruled by raiyatwari tenure. '
The introduction of the raiyatwari tenure in the Bombay Deccan, or
in most parts of the Madras Presidency, did nothing to mitigate the risks
faced by the peasant in respect of production. But by convertingvari~ble
assessments into payments fixed in terms of money, the British regime
enormously incl-easedthe variance of returns expected by the peasant. 38
When this was combined also with an increase in the mean share of
produce claimed by the state, it led to a severe increase in the downside
risk. In many areas the government had earlier granted production loans
or advances (taqavtJto cultivators. The cessation or severe retrenchment
of such advances under British rule led to a decline in supply of credit to
the peasants exactly when the need for it increased.39
Borrowers and lenders in the market for credit to the peasantry,
faced with such uncertain prospects, were caught up in problems of
incomplete and asymmetric information, adverse selection, and unequal
bargaining power. Because of the risk of bankruptcy, a higher rate of
interest offered by a prospective debtor is not necessarily an indicator of
his or her better credit-worthiness. Since the, principal and the interest
rate cannot be the only variables characterizing a loan, the quality and
value of collateral acquire special significance in equilibrating, the credit
market. 40 Moreover, since the information about and assessment of
risks faced by the debtor is bound to be different as between the debtor
and the creditor, the equilibrium inevitably is characterized by credit
rationing, the lender almost always extending a smaller loan than the
debtor wants. 41 The creditor seeks to guard against loss through lack
of information· by extending his monitoring mechanism. This is one
of the motivating factors behind the debt bondage so often observefl
in an extreme or a mild form in virtually all rural areas under British
rule. This monitoring may extend to surveillance over all the activities
of the debtor-including his operations in the labour, produce, and
land markets. It is one of the structural bases of the interlinkages of
markets we have already noted above. But the interlinkage of markets
within these structural constraints is also an indication of the extreme
inequality of economic and political power if, by political power, we
denote all the relations of dominance in society which may have non-
market coercion as their ultimate sanction. ·
Although this way of posing the problem has acquired academic
currency only in recent years, the basic causes were known tQ many
British administrators. Edward O'Brien, as Settlement Officer of
 Markets, Market Failures, and the Transformation of Authority 253

Muzaffargarh in Punjab in 1878-9, came to the conclusion that the

moneylenders had stepped into the position of pre-British (Sikh)
governments, which had minutely superintended agriculture in the area,
whereas the British government had failed to remedy the deficiency of
landqwners as farmers and managers.42Market failure and institutional
failure were the joint progenitors of interlinked markets.
In the raiyatwari areas of Bombay Deccan, the British revenue
officials realized the importance of moneylen,d~s, both for tiding the
raiyats over from one season to another, and for enabling government
officials to collect the land revenue deman~., In fact for some years,
the moneylenders had been recognized as sureties fpr realization of the
revenue from the peasants. During the years of depressed prices, with
high assessment rates, the value of land as collateral was so low that the
moneylenders had little incentive to sell up the raiyats for unrealized
dues. The local moneylenders, or sowkars, initially depended more on
their personal relationship with the peas~ts than on ~ourts of l~w to
realize their dues. Even then, out of a desire to, prot~ct -the rights ,of
peasants, some officials in the 1840s suggested revision of civil court
procedure and the restriction of the right to transfer land through.sale
or mortgage.
With a rise in prices and a decline in the proportion of produce real-
ized as land tax, the value of the land increased, and local moneyleJ?-ders
were increasingly replaced by outsiders. Hence the problem of alienation
of land in settlement of debts assumed major proportions and received
increasing official attention. In fact, the peasant tended to be subje,ct to
the moneylender's will in respect of the allocation of his own and his
family's resources long befo;e the land became formally alienated. In
many cases a combination of usufructuary mortgage and share-~ropping
yielde.d a better return to the creditor than the outright acq,uisitipn of
the land would have done. As is well known, ulti,mate!y the,cjissafisfac-
tion of the majority of peasants in Bombay exploded in the Deccan riots
of 1875-6, and forced the government to pass rhe Dc;ccanAgriculturis~'
Relief Act in 1879. The Act, inter alia, provided that, the immovable
property of the agriculturists should not be attached or sold in execu-
tion of a decree unless it had been specifically mortgaged and that even
in such cases, the court might direct the lands to be cultivated by the
debtor for a number of years on behalf of the creditor, after which the
debt would be discharged.43
Many British administrators were dismayed alternately by the
'~' of markets, when the occupancy rights in land passed from less
254 Colonialism and Indian Economy

enterprising to more enterprising proprietors, and by market failures

when the increased value of land as collateral merely strengthened the
hold of the moneylender on the peasants without leading to agricultural
improvement or peasant prosperity. This alternation led to interven~ioris
in the market process from the very beginning of conquest in at least one
extensive territory, that is to say, the British Punjab (which comprised
modern Punjab, Haryana, and Himachal Pradesh in India, and most
of Punjab and the North-West Province in Pakistan today). In that
larger Punjab, as in other regions, just after British conquest, prices
fell drastically.44 Partly in response to this fall, and partly because of
a protective attitude towards village communities (whether they really
existed on the ground or not), the Board of Administration in Punjab
prescribed a rule of pre-emption in 1B92. The Board pointed out that
'the land ... did not belong to the proprietor in an absolute sense, it was
subject to land tax, and' the Government had an undoubted right to
prevent the deterioration of the revenue capacity of the village'. The
Board had already prohibited the practice of subletting villages for the
purpose of discharging 45 the revenue demand. In 1852, it was laid down
tliat if, for !tny' reason, land was alienated, it had first to be offered to
a member of the village community at an equitable price according
to a proceclt.irf outlined by the Board. 46 These protective rules were
crystallized in the Punjab Civil Code of 1854. It empowered the courts
t'o~sei as!cte unreasonable alienations (that is, alienations to spite heirs or
relatives)',if challenged by the aggrieved parties within the legal period' ;47
it 'reiterated the rule of pre-emption in regard to permanent transfer
ofland'; and made it applicable to 'the sale onand for debt in execution
of decrees'.
·The Punjab case illustrates that the introduction of transferable prop-
1ehr.rights in land (however fragmented and conditional they might be)
·by the British haa: been from the very beginning hedged about with
restrictions 'inttoducfd for the sake of long-term stability of revenue
ciemand 'an'd 'Sf: s6\:\al".:si:rucntte,.
'Village communities 'were virtually
'invenrea, esp1:l:ilill~i}i''tRe'trans-Indtis Uistricts; restrictions on transfer-
'abiliiy were transferred from Hindu law into Muslim law which had not
recogpiz'ed sb~h r(!srtictibns earlier. '
After 1866, whe'6.llie general Code of Civil P~ocedure was introduced
into Punjab' and the post 6( the Judicial'Commissioner was replaced by
the institution of the Chief Court, difficulties arose about the int~rpreta-
tion of the rule 6f pre-emption and the procedures to be followed in
reviewing compulsory sales in 'satisfaction of land revenue demand or
 Markets, Market Failures, and the Transformation of Authority 255

'in execution of decrees fi?r settlepient 4ebt. But th~e problems and
the resulting debates did not overturn the rul~ of pre-emption. 48 There
was a pause in government intervention in tfie'land market between the
1870s and the 1890s. But during the pause opinion grew stronger, with
the opponents of such opinion losing gr_ound,'for further restrictions
on transfer ofland rights. In particular, it came to be a matter of policy
severely to constrain voluntary transf~rs of land. '1n the debates ,that
sprawled across the reports of Settlement Officers, D'eputy Commission-
ers, Revenue and Financial Commissioners, and Lieutenant-Governors,
particul;~ conceptions of the characteristics of castes .~nd .c~mmuniti~s
figure prominently. The fates of the 'imRrovi4enf Meo c3.5teand the
'proud and unproductive' Rajputs (who could be either Hlndus or
Muslims), the sturdy Jats, 'the crafty'. but en~etprising ~tris were all
sought to be weighed by a new all-embracing piece of legislation. Thus
was born the Punjab Alienation of Lancl: Act; which ca.nie into force in
June 1991.
As Bhattacharya, F?x, and others have poit}ted out, 49 there were
regional as well as local differences among the peasants and landowners
in Punjab. Different communities had different attitudes to manual work
in the fields, and average members of particular communities enjoyed
different statuses: some were almost fated to be agricultural labourers,
and some could not earn their living through honest sweat:even if they
were pauperized. However, members of 'respectable' peasant castes
often joined the ranks of 'peasant proletarians' ,50 that is, wall peasants
in 'the Lenin-Mao characterization' of rural tlasses.51 Some Khatri
moneylenders or traders had become landlords even oefore the British
'.1dvent,and many Muslim landlords thems~lves becanie 'moneylenders
to their share-croppers and fo other landowners. The British imposed a
set of administrative intervemions of their own or 1!1arketfailures that
had been caused by the multiple sources of uncertainty faced by peasants,
by pre-capitalist status rankings, and by the inequality of bargaining
power caused by inequality of asset distribution. This administratively
engineered interference in an imperfect market mechanism may or may
not h~ve arrested depeasantization. But arresting depeasantization was
only a means to an end-that of finding a loc:tl political constituency
among landowner and their dependent peasantry. It is possible that in
soliciting a greater degree of loyalty among the landowners, the British
might have exacerbated their brewing conflict with-urban traders and
bankers. 52 The political st~nce of the administrators .of the British Punjab
at the end of the nineteenth century showed that British officials had
256 Colonialism and Indian Economy

very largely shifted their expectation of a natural support base among

the traders and bankers to that among the landlords and the dependent
peasants. As the functioni_ngof markets changed, so did the social basis
of authority exercised by the British, although, of course, the shift was
not uniform in ~ partsof the country.
In Punjab, the British went further than merely to bolster a landown-
ing gentcy:anl_the upper stratum of peasant proprietors. In the canal
colonies they effectively crqted a new class of landlords. That opera-
tion went hand in hand with the extraction of an ever larger revenue
from the land, especially that-which had th,e benefit of irrigation from
government irrigation 'works.53 It is difficult to maintain that unfettered
operation of competitive market forces too\{ preced~nce over either the
extraction ofa remittable surplus,f or over the m:Unt~nanceof a support
'""!-"">

b:ise for imRerium eve!1in the h!~ npon of eniP.ire·in India, long aft~r
the P.haseof mercantile contrpl had passed in the metropolis.
• I ' ! • '

British Rule as an Awesome Theatre, and the Price of

Pista.ticillg, Discrimination and Landlord Consolidation
Al] ,~e' i,nvolves,
'
theatre, including democratic rule, as anybody who
watcht;q pie performance of Ronald Reaganas President of the United
Stat~ can vouch for. But some theatre is more awesome than, ocl}ers,
~d.some theatre involves more pomp and circumstance than others.
The theatre of rule also involves careful management of the distance
between the watchers and the actors. The British administrators who
qime to India, habituated as they were to the ways of 'gentlemanly
capjtalism', 54 and as agents of a mercantile organization owing its birth
to, that same compromise that legitimized the landlord oligarchy of the
eighteenth century, were well used to the nuances of the theatricality of
public ~e. 55JfRichard Wellesley, the 'glorious little man' inspired awe
:ynbng)lis,subordinates and naturally among the Indian subjects of th~
£a.c.t)ndia Company by his pomp, aggressiveness,and the hauteur of the
local coiµ-t he crqted (he was the builder of the first government palace
ip. Ca\w~),,he ,was creature enough of his society to mind terribly
when hr was fobbed off with a mere Irish marquisate. (Of course he
woulq be even more galledwhen his younger brother rose to the dignity
of a ducal ~t.)
We have fortunately a very dear account of the strategies used by
the more fur-seeing British conquerors and mlas for creating distance,
but a1soinstillinga sense of the British ~rity in character (and
hence in claims to the right to rule over Indians) in the instructions
'' Markets, Market Failures, and the Transformation of Authority 257

issued by John Malcolm to officers serving under him in 1821. 56

Malcolm appreciated that want of union among the Indians was 'one
of the strongest foundations' of British power. He also foresaw that the
reduction of Indians to the common yoke of British rule was likely to
make them 'more accessible to common motives of action'. 57 According
to him, while British power had so far 'owed much to a contrast with
misrule and oppression', thls stre9gth was daily diminishing. Moreover,
'we have also been ind~bted to an indefinite impression of our resources,
originating in ignorance of their real extent: knowledge will bring his
feeling to a reduced standard'. 58 Malcolm wanted due respect to be paid
to Indian perceptions ~frank and aut}iority:
'
Though it is essential, in our intercourse with natives who are a~ed to and give
value to ceremonies, to understand such perfectly, and to claim from all what is
due to our station, that we may not sink the rank of the ,European superior in the
esrimation of those subject to his control it is now the duty of the former to be much
more attentive to the r~pect which he gives them than what he receives, particularly
in his intercourse with men of li.igh rank. The princes and chiefs of India mat, in
different degrees, be said to be all dependent on the British government; many have
little more than the name of that power they have enjoyed; but they seem, as they
lose the substance, to clingto the furms of station. The pride of reason may smile
at such a feeling; but it exists, and it would· be alike opposite to the principles of
humanity and policy to deny it gratification. 59

The elements of oriental pomp and the style of the British landlord
oligarchy were being mixed and remixed in different proportions
throughout the period of British rule long before Lytton's apotheosis of
Queen Victoria as the Empress of India, and long after the world had
been treated to the spectacle of a 'naked fakir' sitting down at the same
table as gentlemen who knew the proper attire for every hour of th~ day.
But the maintenance of British power was not simply a matter of theatre.
Might had to be demonstrated occasionally by blowing a score ofindian
sepoys off the mouth of a cannon, by spectacularly finishing off the last
mansion (havelz')of a recalcitrant chief, or publicly hanging the adult
males of a whole hamlet when the need arose. There were other ways
of demonstrating British might, as King Thibaw knew to his cost, and
as Sayaji Rao II was made to realize through his humiliating treatment
after an imagined slight to the 'durbared' Emperor oflndia.
The distancing, of course, had its materfal aspects: the high and
mighty had to be maintained at a far higher cost than their servitors.
This was emphasized as a principle during the Cornwallis reforms, and
this became ingrained in every cell of the structure of British authority
258 Colonialism and Indian Economy

in all spheres of life. For instance, around 1795, whereas the 77 Indian
employees in the Banaras district coun together earned Rs 1,'020 per
month, the salary of the sole British judge presiding over the coun
was Rs 2,200 per month. 60 Again, when the Bank of Bengal starred
functioning in 1809, the salary of the British secretary and treasurer
was Rs 800 per month, that of the highest paid Indian employee, the
cash-keeper (khazanchee)(no less a person than ·Raja Ramachandra Roy,
great-grandson of Clive's financier, Naku Dhar) was Rs 300, and the
aggregate pay of the rest of the Indian staff together was Rs 500 per
month. 61 The disparity in the salaries of Europeans and Indians did not
change before the First World War. For example, in 1878, whereas
the three principal European officers of the Bank of Bengal drew an
aggregate salary of Rs 5;333 per month, the total wages of the Indian
staff of the cash-keeper's depanment were Rs 4,224-8 per month. The
secretary and treasurer alone drew 'Rs 2,600 per month; and if we
exclude the salary of Rs 1,200 drawn by the khazanchee, the total of 112
employees in his depanment drew Rs 3,024-8 per month. 62 Keeping
the Europeans in their noble positions had its economic effects. For
example, down to 1~78 (and I suspect, in many cases, even afterwards)
European broke.cswi:re paid twice the fee paid to Indian brokers for
government securities. pought and sold. The 'taste for discrimination'
exacted its toll by keeping technically and business wise better qualified
people out of many: occupations. Eventually, as Indian businessmen
penetrated Europe~ pi:siryes, the taste could no longer be so freely
indulged in. The wonder 1s·not that European dominance of Indian
large-scale business c~b)ed in many sectors after the First World War;
the surprising pan is that !t did not crumble mu~h earlier.
The explanation-forth.is delay would have to be sought in the enor-
mous imponance of government patronage, the interlocking nature of
British domination ~f ~igher administration and large-scale business,
the ideological hegemony imposed on Indian educated opinion by
British imperium, and the sluggishness of accumulation produced by
the 'haerµorrhage of colonial remittance overseas. The last two factors
had a m;jor. impact in s~;1pingIndian society and technology, and hence
th~if influence ~ be still qaced in post-colonial India.
I have argued elsewhere that the imposition of the imperial view that
Britain led the \vorld'iq every sphere on educated Indian opinion and,
of course, on British businessrµen and technologists working in India,
had harmful consequences fot Indian technological development. 63 I~
the cotton textile industry, not only did the policy of' one-way free trade'
 Markets, Market Failures, and the Transformation of Authority 259

and the discriminatory treatment oflndian spinning and weaving mills

hamper accumulation; by persuading mill managers to install obsolete
and technologically inappropriate mule spindles in Indian mills long
after they had been discarded in Japan, the USA, an,d most countries
of continental Europe, the ideology of 'British is best' hobbled the
Indian cotton mills more or less permanently in their competition
with their new rivals from the ear1y 1900s, namely the Japanese cotton
textile industry.
The distancing and discrimination P.ractis~dby II}empersof the expa-
triate British community ~~d discernible real costs flj>rthe economy as a
whole. The virtual mo~?polization of the m<\Ilagementof all jointstock
banking by Europeans for most of the nineteenth century meant that
most Indian business was denied cr~pit on 1-e,~ms which were granted
to large-scale European business, unless the particular Indian group
had powerful European collaborators. For example, Nursey, Kessowjee
& Co. was supported in their loan applications to the (New) Bank of
Bombay by the direction of W. Nicol & Co. long efter both the groups
had become bankrupt. 64
There was a double gap in the information flows between European-
controlled banks and their Indian customers: the ordinary In"dians, or
even _Indian businessmen: were badly informed about the business
affairs of the powerful European constituents of, say, the Bank of
Bengal; the Bank of Bombay, or Arbuthnot & Co., especially if the
major part of the Europeans' business happened to be located abroad.
Correspondingly, the bank managements were badly informed about
the business affairs oflndians. The managements could generally pass on
their losses to the Indian guarantors or collabo,rators of bankrupt fi,rqis.
The Indians had no such remedy, and ~uffered very badly through the
failures of the major agency ho1;15esin Benf!;alin the 1830s, the failures
.
of the mushroom. banks of the North-Western Provinces . in the 1840s
and 1850s, the failures ofW. Nicol & Co. and Finlay1 Scott & Co. in
1878-9, and Arbuthnot & Co. in 1906. Only perhaps in the case of the
failure of the Bank of Bombay in 1867 were the responsibilities and the
losses of the Europeans and the Indians ev,enlydistributed.
There is yet anpther area in which racially based discriminatiop
probably had real effec~son the economy. Practically all Indians were
excluded from technical and supervisory positions in Britis~ firms,and
most public technical organizations. In modern parl1u;i.ce,no a111o~ntof
signalling by Indians acquiring superior education coulq get them p<)-St
the barriers manned by uninformed British managemer{t. All lndia,ns
260 Colonialism and Indian Economy

were pushed below a threshold level, and a pooling equilibrium ruled,

with all higher levels of technical and supervisory work being entrusted
to often less qualified Europeans. 65
Market failures of this kind were perhaps inevitable given the prevailing
structure of unequal economic interdependence of the world economy
and the structure of power implicit in colonial rule. But the colonial
authorities adopted other measures directed at social and economic
engineering even in the period since the 1870s, and these measures freshly
clogged up the'rharlcet mechanism in distinct ways, even as they created
new channels for the market forces to flow into. One major illustration
of this development is the social engineering practised by the British
authorities in the canal colonies. The network of canals constructed by
the British in Punjab and Sind from the 1880s added largely to the land
revenue of the region (thus belying the claim that land revenue declined
very significantly as a source of tribute for the empire). Moreover, the
irrigation works were themselves, with the sole exception of Upper
Jhelum Canal, enormously profitable, especially from the 1920s.66
Instead, however, of settling the colonies with working peasants (on the
pattern, say, of the settlements under the US Homestead Act of 1862),
the British deliberately created a layer of landlords in the canal colonies,
and these landlords were distinguished both by caste and by class from
others. Whereas the peasant grantees belonged to such castes as Jat,
Arain, Kamboh, Saini, the larger grantees (those with grants of 50 acres
or above) were Rajputs, Qureshis, Sayyids, and Gujars. 67 Inevitably, this
spawned a whole congeries of intermediary formations familiar in older,
landlord-dominated regions-such as managers or lessees of absentee
landlords, revenue. farmers acting as agents of landlords and, of course,
all types of dependent peasantry and workforce. 68 Thus, through all the
changes in ~tructures of authority during ~e two centuries of British
rule, ~rtain social formations continued to be reproduced through the
very iorking ot the colonial system-depressing accumulation and
generating flows of distorted information-and through deliberate
polity measures.
Capitalist ~olonialism works by introducing and exploiting markets.
~ut the structure of colonial power is essentially political and not just a
passivereflection,ofirrlp~r~tives'dictated by an impersonal market. Hence,
market 'failures-cleli6erai:e1y engineered or systematically generated-
are as much a component of the working of the system as market
successes. Contradictions of capitalist colonialism expressed as market
failures have been too little studied so far; hence I have concentrated on
 Markets, Market Failures, and the Transformation of Authority 261

the failures ,rather than on the successes. A fuller account will have to
deal with their interaction as a dynamic or dialectical process unfolding
through history.

Notes
1. I am indebted to the part1c1pants of the international workshop on
'Meanings of Agriculr~e' and 'Production Units in Micro- and Macro-struccural
Perspective', held under the auspices of ch'e Centre of South Asian Studies, School
of Oriental and African Studies, University of London, in July 1992, for their
comments on an earlier version. I alone, however, remain responsible for any errors
in the paper.
2. Debreu (I 959).
3. Arrow (1964 [1953]; Debreu (1959: Chapter 7).
4. Radner (1968).
5. Bharadwaj (1989: Chapters 1-5).
6. Bagchi (1988a).
7. Eltis (1984).
8. R. Guha (1963/1981); Stokes (1959).
9. Rabitoy (1975);Stokes (1976), reprinted in Stokes (1978: 90-119).
10. Bagchi (1982b).
11. Bagchi (1992).
12. Braudel (1982).
13. Naqvi (1972).
14. Cohn (1960), reprinted in Cohn (1987).
15. Colebrooke and Lambert (1795: 47-8). Colebrooke commented,
Wanting the regulation, and protection received from officers of the sayer,
markets have declined; and many have been tocally disused, since the abolition
of the sayers. This is undoubtedly an evil ... Numerous markets by promoting
intercourse, contributed to general prosperity. The discontinuance of many
markets in the short space of four years, and the decline of the existing mares is
an alarming circumstance. (Ibid.: 48)
This passage was omitted when Colebrooke published a revised version of his
part of the book in 1804 (Lambert, who wrote the part on the external commerce of
Bengal, had died in the meantime).
16. Trevelyan (1835), reprinted (1976: 92-3) with an introduction by
T. Banerjee.
17. Ibid.: 96.
18. Steuarc (1772); Barber (1975: Chapter 4).
19. GBP (1884b: 433); GBP (1885b: 373).
20. S. Guha (1985: Chapter 2).
21. Raghavaiyangar (1893); Thomas and Pillai (1933); Siddiqi (1973).
22. Bagchi (1987: Part I, Chapter IO and part II, Chapter 23).
23. See, for example, Beckett (1986); Rubinstein (1987); Stone and Fautier
Stone (1984); F.M.L Thompson (1963}; E.P. Thompson (1991: 1696).
262 Colonialism and Indian Economy

24. Baker (1984: Chapter 3); S. Guha (1985) and (1987).

25. S. Islam (1979: Chapters 5 and 6).
26. Cohn (1960) and (1969). Both reprinted in Cohn (1987).
27. Cohn (1969: 355).
28. Ibid.: 356.
29. See, for example, the case of the Raghubansi Rajputs ofDobhi taluk in Ibid.:
357.
30. Ibid.: 358-9.
31. See in this connection Nevill (1909: 113-23).
32. Chowdhury (1958: Chapter 3).
33. Ibid.: 125-7.
34. Bagchi (1975b).
35. Ibid.
36. Bharadwaj (1974: Chapter 1).
37. For a more detailed discussion of one particular raiyatwari area &om the
point of view of peasant insecurity, peasant dependence, and peasant resistance, see
Bagchi (1992).
38. Ibid.
39. Whitcombe (1972: 161).
40. Azzi and Cox (197 6); Jaffee and Russell (1976).
41. Stiglitz and Weiss (1981).
42. van den Dungen (1972: 126-7).
43. Dutt (1963b[l906]: 241).
44. B. Narain (1929/1984: Chapter 6).
45. van den Dungen (1972: 43).
46. Ibid.: 44. = , .!·
47. Ibid.: 47.
48. Ibid.: Chapters 2 and 3.
49. N. Bhattacharya (1983) and (1985); Fox (1984).
50. N: Bhattacharya (1985: 120--4).
0

51. Bagchi ( l 982a:-€hapter 6).

52. C£ the critique of the Punjab Land Alienation Act by Hubert John Maynard,
a high-ranking British official, before and soon after the Act was passed, as sum-
marized by van den Dungen (1972: 287-95).
53. Ali (1989: Chapter 5).
54. Cain and Hopkins (1986).
55. For an analysis of oligarchic governance in eighteenth-century England as
theatre, see E.P. Thompson (1991: 43-7).
56. 'Sir John Malcolm's Instruction and Orders to Officers: Instruction by
Major-general Sir John Malcolm, G.C.B., KLS., to Officers acting under his Orders
in Central India, in 1821', Appendix VIII, in Malcolm (1826), reprinted, 1970, in
edition edited by K.N. Panikkar, New Delhi, pp. 307--407.
57. Ibid.: 378.
58. Ibid.: 377.
59. Ibid.: 389.
 Markets, Market Failures, and the Transformation of Authority 263

60. Cohn (1960: 330).

61. Bagchi (2006[1987]). The modal salary of an Indian employee was around
Rs 10 per month.
62. Bagchi (1989: 23), and internal records of the Bank ofBengal.
63. Bagchi (1990b: 45-76).
64. Bagchi (1989: 190).
65. For a discussion of pooling equilibrium in markets characterized by asym-
metric information, see Kreps (1989).
66. Ali (1989: 162-3, 67).
67. Ibid.: 73.
68. Ibid.: Chapters 2, 5, and 6.
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 Index

ad valoremduty on cotton fabrics and Asian shipping 24; elimination of24

yarn 181 Assam tea plantations 170
African colonies xvii Atkinson, F.J. xli, 5, 7, 10, 139,
Agency Houses, failure of 24 141-3; and division of population
agitation, of woollens weavers xxiii 7-8; estimate per capita income 8,
agrarian, system 199; bourgeoisie in 139-40
England247
Agricultural Banking, and debt process, Babu Rash Bihari Mandal 125
failure of229-35; creditor-debtor bakashtmalik 124
relationship 231 Bangladesh 119-21; absence of
agricultural development, and capitalist class in 121
industrial growth, relation Bank ofBengal 258-9, 186, 259
between 29; promotion by British Bank of Bombay, operations of25
government 37; in Bengal, Madras, Bank of Madras, and lending peasants
and Punjab, comparison of 38 ' 153
agriculture 107; dependency on 70; bankers 27-8; as declining class in
' and harvests failure xl, 217-19, Baroda 25; decline in Surat 25;
224-5; production relations in distinguished from money-changers
28-37: in Punjab 131 25-6
Ahmedabad 25-6; cotton mill banking, and moneylenders, network
industry of 22; as local business of 224; Scottish system of 247
class 24 bank-lending 130
Ambaidas, Rao Bahadur Becherdas 31 Baring, Major Evelyn 139, 180
Amin; Samir xlviiin5 Barrie, J.J.158
Andrew Yule & Co. 158 Bellary raiyatsxxxv
anti-usury law 223 Bengal Chamber of Commerce 67
artisans 47, 28; 93-4, 146-7; family Bengal Coal Co. (controlled by
size of 96; transfer from textiles to Andrew Yule) 168
agriculture 77; in underdeveloped BengalDistrict Gazetteers100-3
countries 72-3 Bengal Presidency xliv, 198
294 Index

Bengal xix, xxxix, xlvi, xlvii, 8, 15-16, British Government oflndia 154-5; as
21,24,29,42,46,66,92, 103,144, despotism 154; refusal to introduce
170, 246; as base of exploitation currency notes 17
15; and British colonialism 15; British Indian Steam Navigation Co.
British conquest of xxiii; business 156
community xiii; exports expansion British Managing Agency houses 34;
of 170-1; growth of population in for servicing imports of piece-goods
170; imponing rice from Burma 174
144; land revenues xxvii, 30,201; British Punjab 254, 256, seealso
partition of xlvi, xlvii; shonage of Punjab
specie in 247; tenancy laws of 1859 British rule, caste and community in
and 1885 29; zamindarsof 200, xvii
seealsozamindars British trade 157; Susan Bayly on
Bernier,Jean 195 xxviii
Bhangria, Ramji 226 British, empire xiv, seealsoimperialism;
Bhapgria, Bapu 228, 240n83 and foreign investment xxiv,
Bhangria, Raghu (Raghoji) 228 xxix-xxx; imports xxxviii; as
Bhattacharya, Durgaprasad on industrialized country 15, 130;
population xxxvii-viii internal tolls and 246; land revenue
Bhils 227; uprising of228 system introduced by 220-1, 234;
biradaris,village 200 land tenu~e system 34-5; landlord
Bird&Co.160 oligarchy 257; and mi1rket failures
Birlas tradi,ng 23 1
, xxx;
" 1
1
and
.i:l
market for manufactures
., i ~ 11 r
Blyn, George xxxi-xxxi, i,dvii,38, of i5,:-}p;•as mer~tile compmnity
85, 140,216; detailed analysis on 130; planters in Geylon (Sri
agric~i~rai growtli in India xxxi Lanka) 163-4; and private land
Bohr, Niels 154 rights 198-9; and private property
Bolts~William 12n29 xviii; 'subsidiary allies' of 137; tea
Bqmbay 15-16, 18-19; merchants planting and marketing companies
and China 173; mills 22, 172, 163; and trade in India xxx; for
175,184 transoceanic imperial power 15;
Bombay Corron Trade Association war against French xxiv
184 Buchanan, Francis 89
Bombay Deccan, depression in xi; Burrakur Coal Co. (controlled by Bird
harvest fuilures in 219; insecurity, &Co.) 168
penury, deaths in 204-17
Bombay Indebted Agriculturists' Bill Cable, Ernest 53-4n52, 160
230 Caird, Sir James 235
Bombay Mill-owners' Association 173 Calcuua xiv, xlvi, xlviii, 5, 8, 18-19,
Bombay Presidencies, deficits in 201 . 21,33,38, 157,159, 162-3;
Brahmans Bhau Khare 227 British traders in 157; as capital
Brahmin Kulkarnis 227 oflndia 20; European tea broker
Braudel, Fernand concept of longue in 165; jute mills in 159; making
duree 138 sacks and gunny cloth 159; private
Brayne, F.L 46 exports from 8-9
 Index 295

capital, accumulation 16-17, 132; Colebrooke, H.T. xxxii, xxviii, 1-2,

flows and international migration 246; on decline of market-places
71; markets 27 246; Estimate of Produce of Land
capital-intensive techniques 80 3--6; population estimate by 92-3;
Capitalism xxi, xiv, xxvi, 129, 131, on sharecroppers 127
seealsocellular capitalism; and colonial blinkers 182
resources 116 colonialism xix-xx, xxi, xxvi, xliv;
Capitalist, classes, formation of 37; and Civil Society xv-xxi; ethnic
characteristics of 23-8; In Bengal discrimination in society under
23; Gujarati 23, 25; colonialism xvi; exploitation during 14, 120,
260-1; enterprises xx; imperialism, 130; and Histoty oflndia xiv; and
rise of xv; industrialization, changes patriarchy in Kerala and xviii; as
in 117-18; relations in Indian process of•'creative destruction'
agriculture 128 236; and tribute from India and
capital-labour and worker-worker Burmaxxix
relations xiv, 34 cotton spinning and wclving'99;,100
Ceded Districts in South India xxxiv decline of 68, dependency on
'cellular capitalism' 131, seealso 85nl4 ,,
Capitalism cotton, boom and civil war in USAl 72;
Census of 1901 107, 109, 111-12 cloth, price decline inl81; in•
Charles (later, Lord) 198 eastern India: 22; gooHs, British-
Chatterton, Alfred 43 made 86n3 l; growth in Bombay
Chattopadhyay, Raghabendra. xi-xii and Ahmedabad 23; industty 31,
Chettiars 38 61; of Kanpur xiii; in Madras 38;
China xvi, 22; industrial organization manufactures, decline in 7 4; prices,
in 87n69; experience with American Civil War and raising of
development strategy 32-3; opium xxxvi; reduction of duties on 180;
trade in 18; Opium War, defeat textile industty in Bombay, factors
of xxiii; Chinese tea prices in for gro'Yffi 178; textile industty xxii,
London 163 109, 171-86; trade, N.K. Sinha on
Civil Court Procedure into Bombay 65-6
Presidency 223 cultivators 77, 207-8; in Mysore
Civil Society under ColoniaHsm kingdom 195
xv-xxi Curzon, Lord 137, 139
Clark-Fisher scheme of pattern of
industrialization 70 Davar, Cowasjee Nanabhoy 172
Clingingsmith, David xxxix, xiii Davenant, Charles xxii
Coal mining 165-8; ofBengal 166-7; Deccan Agriculturists' Relief Act,1879
exploitation Jharia 166; and Indian 253
consumption 166 Deccan Riots 34, 224, 229
coal, Indian 166; English and Welsh Deccan Riots. Commission (DRC)
coal 166 222,229-34
Cockerell on Bombay Indebted de-industrialization xx-xxi, xxxviii-xliv,
Agriculturists' Bill 230 64-9, 71, 77,98-9, 102,250;and
Code of Civil Procedure 254 Gujarat 33; oflndia 117-18
296 Index

demographic, growth and eviction planters xviii, 250; powers xiii;

power to zamindars 201; change private merchants, profits of 15
147-9; expenditure norms for families,
Desai, Ashok xxxi Buchanan Hamilton and 110
Desai, Meghnad 76 export surpluses 15-23; behaviour of
development theory 78-84 21; as index of exploitation 67, 69;
Dewey, Clive xxxi western and eastern India 15-23
Digby, William 139 exports 8, 9, 18, 114, 160, 170; of
Duncan, Jonathan 248 Bombay 21-2; crude cotton
Dutch xiv, and chattel slavery xvi; manufactures 21-2; exploitation
rule in Indonesian archipelago in 15-23; growth and Madras 21;
xxxvi growth of Bengal 21; and import
Dun, R.C. xiv, xxxviii, 30, 90, 139, figures of ports 18-19; of raw jute
205 from India 162
Dutt, R.P., and policy of'one-way free
trade' 155 factory employment, Sivasubramonian
on 85n15
East Bengal xlvii; workers in industry Famine Commission (1901) 232-3
119 famines 21,217,234; in Orissa 92; in
East India Company (EiC), and Sholapur 218; in south India xliii
Dewani of Bengal and Bihar farmers 47; in Madras 40; in Punjab
xxvii; exacting tribute as land tax 40, seealsopeasant classes
xxv, xxvi; internal trade and 130; fertilizers, scarciry of 221; spread of77
monopolization of cotton export feudalism xlviii, 129, seealsolandlords
trade 65; silver import into India Feuerwerker, Albert 70
xxvi; and trade monopoly with financing system (traditional) in
India xiii; investment xxvi-xxvii; Ahmedabad 34
and trade xxii-xxiii First World War xxix
East Pakistan, seeBangladesh fly-shuttle looms 61, seealsohandloom
economic, development, L. Lefeber on industry
paradigm for 82-3; rent 244-5 food crops, exportable 146
Einstein, Albert 154 foreign industrial investors 152-6
Elphinstone, Mountstuart 195, 198, forest-dwellers, uprooted xxiv
204 Fowler, Sir Henry 181
employment, destruction of 66, 82;
and services of informal sector 81 Gandhi, Mahatma 153
Engels, F. xxi Gazetteersof Bombay Presidency 25
Esteban, Cuenca xxviii 'gentlemanly capitalism' 256
Europe, and abolition of private George Henderson & Co. 160
coercive power .xvi global, competition xiii-xv;
European(s), businessmen trading in domination, financial aspects
India 156; capitalist', planters 128; of153
exports control by businessmeii,22; Gold and silver imports 17
in Madras or Bombay 21; managing Goldsmid, settlement of 214-15
agencies 162, 170; migration xxiv; Great Depression 1873-96, 145
 Index 297

Greaves Cotton 22; as exponers 22 impon, of cotton piece-goods 171; of

Green Revolution 130-1 cloth 76; duties·l79-80; and export
gross domestic material product • trade oflndia 246; surpluses 21; of
(GDMP) ofBengal and Bihar twist and yarn 173; of yarn 180.
xxvii, 2; estimate of 6-1 O; Income, compression 19; distribution
of British India 8 244; growth xxxiii, xii, 81, 142; and
Gujarat 28, 29, 31-3, 37,223,227; occupations 17-21; of wage-earners
business communities xlii; l!J/l
capitalist class23; classification indenturing oflabour 126, 138;
of villages in 30; Jan Breman on in Assam tea plantations 170;
hali system in 127; merchants to European-controlled plantations
23,24 xxiv
Gujarati vanis 223--4 Indian cotton 176, 183, 184; Japan as
gun manufacturers 103 consunfer"of, 183
Indian cotton mill ihdustryxxii, 159,
Haber, Fritz 152 171-2, 177.--8, 182',.184, 259; irt
Habib, Irfan 122 Bombay, 184
halis 33 Indian economyxxiv, xxxv, 14, 31, 32,
Hamilton, Buchanan 61, 64; 50,132,142, 149-51, 155,160;
population estimation of 89-93, and agricultural production 155;
93-100; survey of 106 colonialization of .:xxiv;depression
handicrafts 24; decline of 37, 58, of xxxv; and expenditure on British
59-60; decline in Bombay Deccan 150; and extraction of surplus 151;
247; disintegration of28; in and Indian capitalist class 132;
Ottoman Empire 70 and international colonial system
handloom industry 24-5, 86n31, in 50; and investment 149; and jute
Deccan, 69; decline of98-9, 101; manufactures 160
revival of 67; survival of 86n38, lndianJuteMillsAssociation 160, 161
101-2 Indian mills 173-6, 179, 181--4; and
haptamand panchamlaws 29 competition 178; and imporrs 180;
Harvey, David xiv coarse yarn target of 176; cotton
Hasan, Nurul 122 piece-goods of 171; excise duty on
Hegel, G.W.F. 195 goods of 182; exports originating
Heston, Alan xxxi-xxxii, xii; estimate from 22; its share in world market
of income xxxi 162; ofBombay 177; production
Hicks, Sir John 71, 73--4; on capacity of 160; for machinery and
handloom weavers 59 skilled workmen 176-7
Hindu fundamentalism xix Indian, agriculture xxxi, 128; balance
Hindu revivalism xix of trade accounts 16; and British
Hossain, Rokeya Sakhawat xvii administrators 204; business
elimination of'24; business, denial
Imperialism xiii-xv, xxi, 152; and of credit for 259; businessmen 31!
political economy of British 36, 165, 258, 259; capitalist classes
244-5, tariffs as instruments of 24, 115, 120, 132; customers and
178-82 seealsocolonialism; European controlled banks 259;
298 Index

exports 17, 155, 179; handlooms Jamuna doab 144

172-3; manufactures xiii, xiv, 180; Japan 21, 116, 117, 182,183,259;
market 14, 65, 132, 168, 172, competition in cotton goods of
173, 176, 178,182,246; political 182--6
environment 152--6; producers joint-stock, companies 25; coal
xxxiv, 2, 143, 144, 181; raw cotton companies 168
182, 183; society xxi, xxvi, 196; Jones, Ricliard 196, 245
surpluses xxviii, xxx; technological jute manufacturers/mills 156--63; of
development 258; traders and Bengal IOI, 158..:9;Thomas Duff
external trade 24; tribute xxviii, and Co. as pioneer for 156-7, 159;
xlix by George Addand 157; Indian
industrial, growth 23, 29, 37, 43, 47; branch of machine manufacture
bourgeois class in Ahmedabad 37; of goods 157; international market'
investment in India 17; 21', 26; . for 159--60
population 8, 46, 62, 63, 90, 93,
97, Ill; production 61; revolution kaliparaj communities 33
58-9, 70; workers xii, 62, 144 Kalraand occupational distribution
industrialization xxxix, 60, 61, 69, 70, ' 118
108, II5;ofEgypt70, 75 Kamiyas, and land cultivation
industries 65, 171-86; consumer I34n28
goods 74,; cottage 46, 61, 119; Kanbi cultivators 27
handloom 1011 102; Indian 59, Kanglia, Honya Bhagoji 228
84n8; 102; indigenous 58, 59; rural Kapa/isofBengal 157
70; secondary, 'depi:ndence on 108; karanavanxviii-xix
secondary, ill Gangetic•Bihar 61--4; Keatinge, G.F. on agricultural
small~scale xxxi, xii, I 4;31, 46, 50, growth 36
84, 118, 131 Khari, Govindrau 226
investment xxvi, xxvii, ii.vii, 8-9, 26, Khatri moneylenders or traders 305
28, 32, 64, 73-5, 77, )2f, 12n28, Kipling, Rudyard 153; 'white man's
169; agricultural 35, 79;·ofEast burden' of 137
India Company 8,,247t in jute Klein, Ira 49
and tea companies i-70; in tea Koch, Robert 152
plantations 22 Kolisof Ahmadnagar 226; in
irrigation in British India 38-9, 44, Poona 227; uprising of226-7,
141-2; in Bihar and Orissa, decline 228
of35; and Cauvery network 3; Krishnamurty, ]. xii, 118
side-effects of 36; traditional kunbis 224; against moneylenders
systems of78; works in Madras 227,228
and Punjab 40-1
Islam, M.M. 14, 42' labourers 85nl6; agricultural 34, 65;
Islamicizing illiterate Muslim xix cost 151; farm 109, 110, 157;
istimarior ba,farzandan123 landless :xxiv,xxxvi, 27, 143; in
Punjab 46; wages of234
Jacob, Captain Le Grand 69 labour-saving, innovations 81;
jajmani system xlixnl2, 126-30 technical change 79, 80
 Index 299

Lamben, A xxviii, xxxii, 15, 29; on livelihood xxiii, 89, 98, 107-9, 251;
exports of Bengal 8; on trade and agriculture as means of 232; and
commerce of Bengal 15; uses of anisans xx; shifting cultivation as
Current Rupiyas9 means of 124
Lancashire, 179, 183; cotton mills living standards and survival
of 159,176,177,178, 180-1; xxxvii-xxxviii
technology 182 loans 232; and advances 26; and
land tax/raxation xxv, xxvi, xxx, xxxiii, moneylenders 210
xxxiv,29, 194, 196-9,206,228, Longue Duree in India 138-9
248, 253-4; Lamben on 29; low Ludden, David xlvi, xlvii
productivity of219; and property luxury goods, consumption of 121
rights in British India 195 Lytton, Lord 137, 180
land tenure systems 29, 78, 89, 92,
232,236,247,251,253;and Macallister, Richard 158
market failures 247-51; connection machine manufacture of jute goods
with civil liberty 236; pro-peasant 156,157
198 Mackintosh, Captain 227
land, cultivators of 124, 197; laws in Madras 15-16, 18-19, 21-2, 37-41,
Bombay Deccan 194; markets 170, 175; deficits in Presidencies of
245,252,255; ownership of 28, 201; trading groups 38
124; in Permanent Settlement Malcolm, John 257
Bengal 196; revenue demand Malthus-Ricardo-W.est theory of land
217-29, 224, 254-5; rights and rent200,207,219-20,238n59,
British xxxiii, 77; transfer of 30, 245
124, 232, 234; ownership of 28, Manchester Chamber of Commerce
122,249 179-80; and abolition of tariff
landholders xxv, xxxvi, xlvii, 27, 137, 179
. 203, 206-7, 222, 223, 224, 229, Manchester, cloth 68; exports 69,
231,249 manufacturing economy xxiii, 19
landlords xvii, xxv, xlvii, 27, 28, 30, Marathas 15; areas acquired by British
124, 127, 128, 151,244,248,251; from 204; resistance of 24
landlordism 134n21; consolidation market, British invasion of Indian
256-61; and moneylenders 31; and 24-5; commodity 245; expansion
tenants, relations between xiv, 127, 72; expon, xii, 157; failures xxvi,
seealsozamindars xxx, 242-55, 260; in India 171-86;
Landon, James 172 international xxviii, 122, 159, 172;
large-scale industry, barriers against and long-distance trades 245-7;
entry of native businessmen success 243,251,260
into 31; Bill Warren on xiv; Marshall, Alfred 5 lnlO; 'long run'
massive destruction of traditional of138
handicrafts, preceded growth of Manyn, Henry xxii
56n88; barred entty of Indians into Marwari merchants 24
xxxii Marx, Karl xxi, 195; Capitalof 196;
Leibnirz's monads 80· on East India Company xxix
licensing markets 245 McCloskey, D.N. 218
300 Index

mechanization 60, 73-4, 80-1; O'Brien, Edward 252-3

Joan Robinson on 84n8 O'Conor,J.E. 180
Mehta, S.D. 178 October Revolution 153
merchants xxxvi, xiii, xlvii 18, 64, 74; Oligopolistic structure 130-3
Bengali 24; European 15; Indian Oriental mill 172
xlii, 24; shipping control by overseas markets 72
Gujarati23
metayage(bargadarz)system 36 Pakistan, agriculture in 119;
Metcalfe, Charles xxxviii, 198 capitalism of 131; national
Mill, Fort Gloster 158 income and employment in 119;
Mill, James 198 public investment in 121;
Mill, John Stuart 74, 198 tertiary sector in 119-20
Milligan, as Deputy Director of paper industty 95-6, 102
Agriculture 45 Pareto, Vilfredo 242
mine-workers 167-8 partition of Bengal xlvi, xlvii
mirasitenant 204; tenure 53n45, 204 Pasteur, Louis 152
Mishra, Satish xxxi Pacnaik, Prabhat xxviii-xxix
modernity and Rabindranath Tagore patta-holding, equalization of
xxi xxxvi
moneylenders xxx, xxxvi, xlii, 27, 28, peasant classesxix, xxxv, xxxvi, xiv,
30,46, 194,203,22-4,227-9, xlvii, xlix, 29-32, 34, 35, 36, 46;
231,234,253; activities ofxliii; and exploitation of 49
borrowers 252-3; as appropriators peasant-cultivated land of eastern
196; attacks on 228; as hawalas India 35
223; on landholder 222;power of peasants xxxiii, xliv, 145,200,201,
217-29; and serfdom,-power of 33 202,203,211,218,219,220,
Morris, Morris David xiv, xxxviii 225-6,229,251,252,253;
Mukherji, Saugata 14, 42 agricultural loans and (taqavz)
Munro, Thomas xxxiv, 198,200 219, 252; and agriculture 35-6,
Muslim, identity xix; revivalism 46-7; Bhattacharya, and
xix; illiterate masses-in Bengal, Fox on Punjab 255; in Bombay
Islamicizing of xix Deccan 194;"castesjoining
'peasant proletarians 255;
'naked fakir' 257 debt 229-32; in eastern India
Naoroji, Dadabhai 139 42; grantees 260; indebtedness
Nash, Lieutenant 209 of, 223, 224, 230, 232, 234;
national income oflndia 139-47; insecurity 194-5, 228-9; in
S. Sivasubramonian's estimation semi-servile bondage xxv; in the
of 139; Atkinson on 139, 143; as Caribbean, condition of79; and
disbursements in England, fraction moneylenders relations 228-30;
of150 in pre-British times xxxiii; prices
Nattukottai Chettiars xliii 145-6; raiyacwari tenure251-2;
Nawab of Bengal, defeat of xxiv production uncertainty
Nobel, Alfred 152 and 251; suffering and change
Northbrook, Viceroy Lord 179 224-6; survival of219
 Index

Permanent Settlement xxxiii, 197-8, Rabitoy, N. 244

248; in Bengal 249-50; Cornwallis racism xx
reforms and 29, 246, 257; and Radner, R. 243
eastern India 35; ofland revenues Raghavaiyangar, S. Srinivasa
xliv; revenues in Bengal 200 xxxiv-xxxv; on famine ln16;
Peter, W.W. xlviii-xlixn6 on peasant depression xxxv
Petit, Maneckjee 172 railways, construction of xxxvi, xxxviii,
Phule, Jotirao xvii 19-21,38,67,77, 160, 166;for
piece-goods, in Bengal, annual employment 169; extension of
average investment in 8; xxxvi, 77, 155, 181, 188n30;
trade 175 wood consumption of 166
Planck, Max 154 rain-fed agriculture 47
Plassey Revolution xxvii raiyatwari xxxiii, xliii, xiv, 197-9,
political economy, British imperialism 248,'251; 253; depression in
and244-5 prices 204; ,in' Madras Presidency
population, agricultural 70, 142, 252, mirasdarsas 198; patidars
143; ofBengal 1, 42, 90, 92-3; as 198; Pelly on xxxv;'regions xiv,
dependency on Industry, 93-100; 197-8; 248; and revenue liability
growth xxxii, xxxvii-xxxviii, 6, 33, 200; seulement Sir George
47-5048,49,50,81,92, 126,128, Clerk on 205; tenure in
149,170,217; H.T. Colebrooke Bombay Deccan 252, 253;
on 54n62; 92-3; of Purnea 91; of ryotwariareas 30-1; ryot of
Rajmahal 91; rates of, 48, 50, 149; Abmadnagar 231; indebtedness
regional 50 of ryot 233
Presidency Banks Act (1876) 136 Rajputs 249, 255, 260
Presidency Banks and imperial order Ramabai, Pandita xvii
136-8 Ramoshis of Poona 227, 239n75
price, rises 203, 253; of manufactured Ranade, M.G. 229
goods 10; sagging and indebtedness Rangoon 18-19
224 Rao II, Sayaji 257
primitive accumulation xiv Read, Al=nder 200
Prinsep, GA. 51n7; on 'private revolt of 1857 xxix
accumulation' 15 Ricardo, David 69, 71, 73-5; and free
property rights 249-51; in land 194, trade 66n89
254 Ricardo-Hicks approach 75
Provincial Trade 20 Robertson, Captain H.D. 204,222
Punjab Civil Code 1854 254 Royal Africa Company xxii
Punjab Land Alienation Act 46 Royle, J. Forbes 183
Punjab xxx, 38, 39, 40, 43, 45, 46, Rungta, R.S. 32
47,50, 131,148,175,254; Rumagur, S.M. 178
capital-intensive implements
in 45-6; capitalists of 131-2; Saith, Ashwani xxxii
introduction of machinery 45; Salisbury, Lord 180
under British rule 38; seealso Samaldas, Lalubhai 36
British Punjab Sayer, R.S. xlixn8
3.02 Index

serfdom, in Southern India 32, 126; as taqavi or tagai loans 29; for agricultural
replacement of debt bondage 33; 36; and Maratha administration
beginning of a condition of231 221
servitude by Romanovs xvii Taras, investment in iron and steel 23
Seth, Jagat, house of24 taxation 197-200; calculation of202;
share-cropper l, 128, 255; on land 201
Colebrooke's estimate on 127 taxes xxxiii, 125, 151, 197-204, 206,
Silk weaving 100; as a major handicraft 233,248,251
industry 107 tax-payers 203
silver xxvi; for coinage 17; in India tea industry in India 17, 163-5, 169,
and China, demonetization of73; 171; financed by bank ofbengal
import of xxvi 165
Sind xxx, 18-19, 21, 38, 47, 144, 151, Thackersey, Vithaldas 36
175, 184,216,260; irrigation in Third World countries 57, 74-6, 78-9,
144, 151, 184; network of canals 81, 116-17, 120,243;
in260 Thomas, P.J. xxii
Sinha; N.K. 122 Thomson,J.J. 154
Sivasubramonian, S. xxxi, xxxii, xli:x, Thorner, Daniel xxxviii-xxxix, xi,
6-8, 10, 85n15; estimate of total 118; and de-industrialization
income 5, 7, 84n9, 118,139,142 oflndia 58
Skrine, F.H. 140 tillage 207-9, in district ofSholapur
slavery 33; abolition of xvii, 33, 225; in 221; growth of210-14
Poona 239n71; in Roman Empire Toynbee, Arnold xlvi
xliv; bonded 'slaves' in Thanjavur
xvii; plantation, in Caribbean xvii trade xiv, xxii, xxiii, xxvi, 2-3, 18, 24,
SlaveryAbolition Law, Act V, 1843 29,32,38,65, 130-32, 144-45,
126 156,160,172,175, 184,;of
Smith, Colonel Baird 68 British and 37, 38; export xxii, xxiv,
sowkars 230,231, 233-4, 253 xxxix,22,26,65, 144,145,246;
Spengler, Oswald xlvi private 65
spinning 109; technology of 86n31 traditional occupations, displacement
Spooner as Collector of Ahmadnagar of80
223 tribute 15, 29; imperial 149-52
starvation xlvii, 204-17, seealso Tucker, Henry St George xxiv, xlviiin4,
famines 183
Stokes, Eric 244 Tugan-Baranovski, theory of87n46
structural adjustment programme
(SAP)xx ujliparaj communities 33
structural adjustment, colonial rule as Umaji 226
xxiii-xxix; and direct parliamentary ' underdeveloped countries 79;
rule xxix-xxx . development;strategy for 81-2;
Sultan, Tipu xlixnl 1 and tecli.nolbgical change 69-78
underdevelopment xxv, xi, xlviiin5,
Tagore, Dwarakanath 24 33, 68, 81; technological 72
Tagore, Rabindranath xxi, 153 Union Bank, failure of24
 Index 303

usury 46, 120, 129, abolition oflaws Wedderburn, J.W. 229, 235
against 28, seealsoanti-usury law Wellesley, Richard 256; and wars
against Tipu Sultan and Marathas
vanis 222; Gujarati 223-4; Maratha xxvi
224; Marwari 223-4 West Bengal xlvii; livestock in 3-4;
Vicziany, Marika 106--7 decline in crops productivity in 42
village, community 53n45, 125; life of Whitcombe, Elizabeth 49, 236
138; panchayat28, seealsopeasant Williamson xiii; revenue commissioner
classes 238-9n59
Voelcker, J.A. on water supply and women xviii- xx, xii, xliii, ln 18, 94,
private investment for agriculture 153; property rights of xx;
36 of upper-caste as spinners 94
Wong, Bin xxiii .
wage-labourer xlixn 14, l, 80 Workmen's Breach of Contract Act in
wages 34, 59, 68, 74, 79, 84, 101, 110, 1859 126
131-2, 167,220; in kind 68
Wakefield, E.G. 74 zamindari 200; areas 30; B.S. Cohn
Walras, Leon 242 on 249; holdings 123; rights,
Warren, Bill xiv settlement 198
Washbrook, David on zamindars xix, xlixn8, 35, 92, 200;
traditionalization xx commercial duties (sa'ar) levied
weavers and spinners xvii; Buchanan by 246; dominance of 17; market
Hamilton's survey of 68; failures in areas of 248; Philip
employment prospects of87n54; Francis on 195; powers of 29,
handloom, 22, 25, 59, 68, 173, 124-5; and Regulation VII 200;
176; to other labour 67 as rent-receivers 196; as revenue-
weaving, of coarse cloth 100; payers 198
as part-time occupation 101 zirat or proprietor's private lands 124