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.
Industrial Policy
o Until World War One, there was no import duty, which could possibly offer any sort of protection to any of the Indian industries .
o India became field for British capital investments in railways and agency houses.
o Much of the foreign loans and investments were for the development of infrastructure, for integrating internal markets and, therefore, for the modernisation of the Indian economy itself.
Railways are considered to be another contribution of British rule towards the development of modem economic infrastructure.But its main purpose was to serve the interests of the empire, rather than the needs of the lndian economy.
• Empire and deindustrialisation:
▪ Following the industrial revolution, not only did this export demand gradually evaporate, but colonial rule opened the Indian markets for British manufactured goods and led to "deindustrialisation" or destruction of indigenous handicraft industries, reducing the number of people dependent on secondary industries.
There was rising industrial income because of increasing per worker productivity in the crafts achieved through technological specialisation and industrial reorganisation.
The shift from local to long distance trade market helped artisanal industry, but did not lead to successful industrialisation, with the necessary structural changes and economic development.
• One of the reasons behind this lack of overall economic development was that the colonial state in the nineteenth century was far from just a "night watchman",
Since 1813 when Indian trade was freed from the monopoly of the East India Company, India came to be considered as a lucrative field for British private capital investment, chiefly in railways, jute industry, tea plantation and mining.
o Indian money market was dominated by the European banking houses. One major reason why the Indian entrepreneurs failed and their European counterparts thrived was the latter's greater access to and command over capital, facilitated by their connections with the banks and agency houses, while the Indians had to depend on their kins, families and castemen.
British economic interests in India operated through the Chambers of Commerce and the Managing Agency Houses, which influenced government policies and eliminated indigenous competition.
dominating jute industry, coal mining and tea plantations, controlling 75 percent of the industrial capital in India and almost half of the total industrial employment. So whatever industrialisation that did occur was mostly, though not exclusively, through British capital, with the profits being regularly repatriated. And the major factors that favoured this development were the discriminatory official policies.
▪ Tea industry remained dominated by British capital until the 1950s; so was coal mining in eastern India.
• Successes of the Indian Industrialist:
o The development of jute industry in Bengal:
▪ jute as a cheap substitute for flax was developed in the early nineteenth century and Bengal remained the chief supplier of raw jute for the industries in Dundee. In 1855 the first jute mill was started in Bengal, and then closeness to sources of raw materials and cheap labour gave it a competitive edge over the Scottish industry.
▪ The World War One and the wartime demand hike gave the industry a real push. The amount of paid up capital in jute industry increased from 79.3 million in 1914-15 to 106.4 million in 1918-19, to 179.4 million in 1922-23. Bulk of the capital invested was British capital, organised through the Indian Jute Mills Association (IJMA), which controlled output in order to maintain high prices. The profitability of the industry continued until the Great Depression.
▪ However, this dominance of expatriate capital notwithstanding, from the 1920s some Calcutta-based Marwaris, who had made
money as traders and shroffs, began to intrude into this exclusive sphere and started investing in jute industry. First, through buying stocks and lending money, many of the Marwaris got themselves elected to the boards of the European managing agencies. And then, people like G.D. Birla and Swarupchand Hukumchand set up their own mills in 1922. This marked the beginning of Indian jute mills around Calcutta.
▪ This Marwari stranglehold was gradually extended to other sectors, like coal mines, sugar mills and paper industry. Between 1942 and 1945, they began to take over some of the European companies.
o The real success of the Indian industrialists, however, came in the cotton industry of western India.
▪ Until the beginning of World War One imported textiles dominated Indian markets. This import considerably declined during the war-more than halved between 1913-14 and 1917-18-
• partly because of the transport dislocations caused by the war and partly due to 7 .5 per cent import duty on cotton textiles imposed in 1917.
• There was the military demand and the call for 'Swadeshi', proposing a boycott of foreign goods and the use of their indigenous alternatives.
▪ Cotton industry existed in India before World War One, and along with the European managing agencies, certain traditional trading communities like the Gujarati banias, Parsis, Bohras and Bhatias, who made money through export trade with China, had maintained their presence in this sector.
▪ The industry remained dependent on foreign collaboration for imported machinery, chemicals and technological expertise.
o Iron and steel industry, under the leadership of Tata Iron and Steel Company (flSCO), began at the turn of the century under direct government patronage.
▪ Because, here the monopoly of the Birmingham steel industry had already been broken by continental steel, except in matters of government and railway orders.
• Though government policies and the stranglehold of British capital inhibited Indian enterprise in certain sectors, recent researches show that below the westernised enclave and above the subsistence economy of the peasants, there was an intermediate level— the bazaar— where Indian businessmen and bankers continued to operate.
o Some of these indigenous firms took advantage of the new opportunities of the empire, such as the railways and telegraph, and ran sophisticated and fairly integrated business networks that covered the whole of the subcontinent. These firms later expanded overseas to China, Burma, Straits Settlement, Middle East and East Africa. It was these operations which generated indigenous capital, which was later invested in industries after World War One. India's underdevelopment was therefore not due to any lack of entrepreneurial skills.
No comments:
Post a Comment