Colonial costs

A collection of essays that concentrate on the question of de-industrialisation in colonial India, this is a volume by a scholar for other scholars.

WHETHER the impact of British colonialism in India was detrimental or beneficial to the country and its people may appear to be a distant academic debate now, but from the middle of the 19th century until the time of Independence it was a live issue and, indeed, formed one of the main planks of the freedom movement. Possibly it was Karl Marx, writing as a correspondent of New York Daily Tribune in August 1853 on The Future Results of British Rule in India, who initiated the debate: England has to fulfil a double mission in India: one destructive, the other regenerating the annihilation of old Asiatic society, and laying the material foundations of Western society in Asia. Soon after, in 1871, Dadabhai Naoroji published his much-discussed book Poverty and Un-British Rule in India. Then there were the heated arguments and counter-arguments about the drain of resources from India to Britain through official transfers and in other ways. A further question that came up later in time was whether India was industrialised or de-industrialised during the British period. A more nuanced and more recent issue has been the claim put forward by some scholars that the Western powers introduced the notion of equality before law, which, in turn, laid the foundations of a civil society in India.

Amiya Kumar Bagchi's collection of essays on Colonialism and Indian Economy must be seen against such a background. He concentrates on the question of de-industrialisation. It is a fact that some modern industries were started in India during the British regime; it is equally a fact that some traditional industries largely disappeared. And, it can be claimed, as has been done by some scholars, including those who have been working on India's long-term economic transition, that the phenomenon has happened throughout the world, including, and more prominently, in the present-day advanced economies. They thus suggest that it is more a manifestation of technological progress than of economic actions or policies. That being the case, says Bagchi, it is important to specify criteria that can be used to establish empirically whether de-industrialisation was indeed an identifiable historical phenomenon, not just a play on words, and whether it had special features to be taken note of as far as India is concerned. Capitalist industrialisation, points out Bagchi, is generally acknowledged to be accompanied by three developments: (a) an increase in the proportion of national income generated by the secondary sector (mainly manufacturing); (b) an increase in the proportion of the population engaged in the secondary sector; and (c) a continual rise in mechanisation in industry. What Bagchi characterises as de-industrialisation is the reversal of any of these three conditions over a long period.

Having established these criteria, Bagchi sets out on the difficult and rather risky business of marshalling and processing statistical information that lies scattered in many documents and reports to come up with data over a long period (and at least in a representative region of the country as statistics pertaining to the country as a whole are not available for the past). A good part of the volume consists of such exercises and debates with others engaged in similar activities. Taking Gangetic Bihar and covering the periods 1809-13 and 1901, he provides evidence of a decrease in the proportion of the population engaged in industrial activity and then goes on to examine the fragmentary evidence to arrive at the conclusion that there was the working of a general process of de-industrialisation in India over much of the nineteenth century. This is supplemented by showing that there was hardly any rise in mechanisation in industry and that the share of national income generated by the secondary sector was indeed declining.

To those who claim that it is in the nature of technological change to displace labour, Bagchi points out that if those displaced have other avenues by which to make a reasonable living, the blow is softer, but that did not happen in India where those who were thrown out of traditional industries had nowhere to go except into agriculture, which could not productively absorb them. Equally important, he argues that if the increase in industrial productivity in a country resulting from mechanisation were to be accompanied by some displacement of workers in the same country, some redistributive measure (via taxation, for example) could reduce the loss of earnings of those displaced. But when mechanisation in Britain was displacing workers in India, there was not even a possibility of that kind of relief. Within India itself, says Bagchi, when de-industrialisation drove labourers 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.

What about the land reform measures introduced by the British to change customary land ownership patterns and allegedly to introduce private property rights in land and thereby confer security to the owners? Bagchi again examines historical evidence to show that what the British established was not so much the marketability of land but a thriving market in various intermediary rights in land and that the introduction of transferable property rights in landby the British had been from the very beginning hedged about with restrictions introduced for the sake of long-term stability of revenue demand and of social structure, which, therefore, benefited the intermediaries but not the actual cultivators. Life for the vast majority of people in the rural areas became more insecure.

The same asymmetry was seen in the industrial sector also. Sure enough, the British did establish some new industries in India: jute manufacturing, tea plantations, coal mining, cotton textile, and so on. The intention behind these too was to support British industrialisation and not particularly to build a base for industrial development in India. Some Indian interests were benefited by these changes, while for the vast majority of people the benefit was only recurring famines, which, ironically, provided further opportunities to make profits.

To these must be added the fact that a significant fraction of the income of British India, estimated to have been between 3 and 4 per cent, was being transferred regularly to the United Kingdom in the form of the so-called home charges that is, simply to maintain the apparatus of foreign rule in the country! There was also a further aspect of the leakage of Indian income, which cannot be quantified easily because it was done indirectly, as taxes, mostly indirect ones, imposed on items of necessary consumption. Trade laws were also perfected to provide advantage to the British. In the cotton textile industry, for instance, mill managers were persuaded to install obsolete and technologically inappropriate mule spindles long after they were discarded practically everywhere else in the world. Also, the virtual monopolisation of the management of all joint-stock banking by Europeans meant that most Indian businesses were denied credit on terms on which it was granted to Europeans. Here is another instance of glaring discrimination. Around 1795, whereas 77 Indian employees in the Banaras district court together earned Rs.1,020 per month, the salary of the sole British judge presiding over the court was Rs.2,200 per month [even] in 1878, whereas the three principal European officers of the Bank of Bengal drew an aggregate salary of Rs.5,833 per month, the total wages of the Indian staff of the cash-keepers department were Rs.4,224-8 per month.

As for the broader theme of the British having laid the foundations of civil society in India, Bagchi points out that with the kind of policies followed by the colonial masters such as various forms of ethnic discrimination, deliberate encouragement of patriarchy in property rights, and the regular practice of various forms of non-market coercions it was not possible for a civil society to emerge. At the same time, they precluded the emergence of a secular and humane society. Reflecting the sense of insecurity experienced by the bulk of the population under the British, Bagchi asks: Can civil liberty be secure when life is not? That, of course, is a question to be pondered over at all times, including our own.

This is a volume by a scholar for other scholars. The general reader who has the patience to work through tonnes of data and tightly presented arguments will benefit by getting to know how one of the best brains in the profession deals with controversial issues.