Over the years in the late eighteenth and the early twentieth centuries the colonial state had been perfecting its system of surplus extraction from the agricultural economy of India. India had to provide a market for Britain's manufactured goods, and serve as a source of agricultural raw materials and served as a major market for British industries, like cotton, iron and steel, railways, machinery etc.
Agricultural Policy :
o Some of the recent historical writings point out that the fact still remains that India was not transformed into a full-fledged capitalist economy. As in the case of agrarian economy, so also in other sectors, British policies failed to foster growth. And this was due to the colonial nature of those policies, i.e., the policy of gearing up the colonial economy to the needs of the economy of the mother country.
o There was, first of all, limited colonial initiative to develop agricultural production, except the construction of some irrigation canals in parts of northern, north-eastern and south-western India, i.e., in non-Permanent Settlement areas where there was scope for enhancing land-revenue rates.
▪ It is possible to argue that between 1900 and 1939, the area under irrigation almost doubled; but that was only in absolute terms. In relative terms, in 1947 when the British empire ended its long career in India, only a quarter of the total cropped area was under public irrigation system.
▪ The real reason was that public investment in this sector was guided only by the profitability factor and extreme contingencies, such as prevention of famines.
▪ Region where irrigation facilities developed, it favoured only the more prosperous among the peasantry, as canal rates were very high.
• In Punjab, the canal colonies became the model of commercial agriculture in Asia, but the new prosperity that accrued even after paying high water rates, was shared only by limited social groups, such as a few agricultural castes and some medium and large-sized landlords.
▪ The aggregate agricultural yields were largely static in colonial India, and between 1920 and 1947, especially the production of food crops lagged far behind the rate of population growth.
• Near-famine conditions were therefore not rarities in India during the British period and in 1943 two to three million people perished in a major famine in Bengal
o Commercialisation of agriculture, which favours differentiation within the peasantry, capital accumulation and production for the market, is considered to be a sign of progress towards capitalist agriculture.
▪ In the Indian case, however, the initiative often did not come from within the peasant society and the benefits did not accrue to them either. In the case of indigo in eastern India, planters (had no right to buy land until 1829) had to persuade, and later force, the local peasants to accept advances to produce indigo in their lands
▪ As for other crops, there is a persistent view that the peasants were "forced" to cultivate cash crops because of high revenue demand, the necessity to pay revenue and rent in cash and above all for debt servicing.
▪ It was only the rich peasants who could go for cash crops and they too remained immensely vulnerable to the fluctuations in the market.
• In western India, for example, cotton cultivation grew in response to the cotton boom in the 1860s caused by the American Civil War. It created a pocket of prosperity in the Deccan cotton belt, which disappeared very soon after the end of the war and was followed by a famine and agrarian riots in the 1870s.
• Jute cultivation in eastern India developed as the peasants failed to meet the subsistence necessities and hoped to earn more by cultivating the "golden crop". So an economic motive was certainly there in peasants' decision to shift to jute cultivation. But as Sugata Bose has shown, the primary producers could hardly reap the benefit of the boom in jute market between 1906 and 1913, as "jute manufacturers and exporters [majority of whom were British] were able to exercise their monopsony power as purchasers of raw jute", leaving the jute growers no space to bargain for prices.
o The jute economy crashed in the 1930s and was followed by a devastating famine in Bengal in 1943. It is difficult to establish a direct connection between commercialisation and famines, even though cash crops in some areas might have driven out foodgrains from the better quality land, with consequent impact on output.
o When colonial rule came to an end, food crops were still being grown in 80 per cent of the cropped acreage. But on the whole, as noted earlier, the aggregate production of food crops lagged behind population growth.