Economy of India under Company rule

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The Economy of India under Company rule describes the economy of those regions that fell under Company rule in India during the years 1757 to 1858. The British East India Company began ruling parts of the Indian subcontinent beginning with the Battle of Plassey, which led to the conquest of Bengal Subah and the founding of the Bengal Presidency, before the Company expanded across most of the subcontinent up until the Indian Rebellion of 1857.

Economic impact

Main article: Economic history of India
See also:
Economic deindustrialisation of India

A number of historians point to the colonization of India as a major factor in both India's

protectionist policies such as bans and high tariffs were implemented to restrict Indian textiles from being sold there, whereas raw cotton was imported from India without tariffs to British factories which manufactured textiles from Indian cotton and sold them back to the Indian market. British economic policies gave them a monopoly over India's large market and cotton resources.[4][5][6] India served as both a significant supplier of raw goods to British manufacturers and a large captive market for British manufactured goods.[7]

Indian textiles had maintained a competitive advantage over British textiles up until the 19th century, when Britain eventually overtook India as the world's largest cotton textile manufacturer.

Qing China.[9]

Land revenue

In the remnant of the

East India Company found itself short of trained administrators, especially those familiar with local custom and law; tax collection was consequently left in the hands of the existing hereditary collectors. This uncertain foray into land taxation by the Company, may have gravely worsened the impact of a famine that struck Bengal in 1769–70 in which between seven and ten million people—or between a quarter and third of the presidency's population—may have died.[12] However, the company provided little relief either through reduced taxation or by relief efforts,[13] and the economic and cultural impact of the famine was felt decades later, even becoming, a century later, the subject of Bankim Chandra Chatterjee's novel Anandamath.[12]

In 1772, under Warren Hastings, the East India Company took over revenue collection directly in the Bengal Presidency (then Bengal and Bihar), establishing a Board of Revenue with offices in Calcutta and Patna, and moving the existing Mughal revenue records from Murshidabad to Calcutta.[14] In 1773, after

Resident in charge.[14] The following year—with a view to preventing corruption—Company district collectors, who were then responsible for revenue collection for an entire district, were replaced with provincial councils at Patna, Murshidabad and Calcutta and with Indian collectors working within each district.[14] The title, "collector," reflected "the centrality of land revenue collection to government in India: it was the government's primary function and it moulded the institutions and patterns of administration."[15]

The Company inherited a revenue collection system from the Mughals in which the heaviest proportion of the tax burden fell on the cultivators, with one-third of the production reserved for imperial entitlement; this pre-colonial system became the Company revenue policy's baseline.

tax farming.[17] In their overall approach to revenue policy, Company officials were guided by two goals: preserving as much as possible the balance of rights and obligations that were traditionally claimed by the farmers who cultivated the land and the various intermediaries who collected tax on the state's behalf and who reserved a cut for themselves and identifying those sectors of the rural economy that would maximize both revenue and security.[16] Although their first revenue settlement turned out to be essentially the same as the more informal previous Mughal one, the Company had created a foundation for the growth of both information and bureaucracy.[16]

In 1793, the new Governor-General,

zamindars; it simultaneously defined the nature of land ownership in the presidency and gave individuals and families separate property rights in occupied land. Since the revenue was fixed in perpetuity, it was fixed at a high level, which in Bengal amounted to £3 million at 1789–90 prices.[18] According to one estimate,[19] this was 20% higher than the revenue demand before 1757. Over the next century, partly as a result of land surveys, court rulings and property sales, the change was given practical dimension.[20] An influence on the development of this revenue policy were economic theories which regarded agriculture as the engine of economic development and consequently stressed the fixing of revenue demands in order to encourage growth.[21] The expectation behind the permanent settlement was that knowledge of a fixed government demand would encourage the zamindars to increase both their average outcrop and the land under cultivation, since they would be able to retain the profits from the increased output; in addition, it was envisaged that land would become a marketable form of property that could be purchased, sold or mortgaged.[16] A feature of this economic rationale was the additional expectation that the zamindars, recognizing their own best interest, would not make unreasonable demands on the peasantry.[22]

However, these expectations were not realised in practice and in many regions of Bengal, the peasants bore the brunt of the increased demand, there being little protection for their traditional rights in the new legislation.[22] Forced labor of the peasants by the zamindars became more prevalent as cash crops were cultivated to meet the Company revenue demands.[16] Although commercialized cultivation was not new to the region, it had now penetrated deeper into village society and made it more vulnerable to market forces.[16] The zamindars themselves were often unable to meet the increased demands that the Company had placed on them; consequently, many defaulted, and by one estimate, up to one-third of their lands were auctioned during the first three decades following the permanent settlement.[23] The new owners were often Brahmin and Kayastha employees of the Company who had a good grasp of the new system, and in many cases, had prospered under it.[24]

Since the zamindars were never able to undertake costly improvements to the land envisaged under the Permanent Settlement, some of which required the removal of the existing farmers, they soon became rentiers who lived off the rent from their tenant farmers.

Enclosure movement in Britain, agriculture in Bengal remained the province of the subsistence farming of innumerable small paddy fields.[24]

The zamindari system was one of two principal revenue settlements undertaken by the Company in India.

utilitarian James Mill who formulated the Indian revenue policy between 1819 and 1830. "He believed that the government was the ultimate lord of the soil and should not renounce its right to 'rent', i.e. the profit left over on richer soil when wages and other working expenses had been settled."[26] Another keystone of the new system of temporary settlements was the classification of agricultural fields according to soil type and produce, with average rent rates fixed for the period of the settlement.[27] According to Mill, taxation of land rent would promote efficient agriculture and simultaneously prevent the emergence of a "parasitic landlord class."[26] Mill advocated ryotwari settlements which consisted of government measurement and assessment of each plot (valid for 20 or 30 years) and subsequent taxation which was dependent on the fertility of the soil.[26] The taxed amount was nine-tenths of the "rent" in the early 19th century and gradually fell afterwards.[26] However, in spite of the appeal of the ryotwari system's abstract principles, class hierarchies in southern Indian villages had not entirely disappeared—for example village headmen continued to hold sway—and peasant cultivators sometimes came to experience revenue demands they could not meet.[28] In the 1850s, a scandal erupted when it was discovered that some Indian revenue agents of the Company were using torture to meet the Company's revenue demands.[13]

Land revenue settlements constituted a major administrative activity of the various governments in India under Company rule.[29] Additionally, a tax was imposed at each stage of production. This tax extended to the majority of goods sold, even those within the local community. However, only a small portion of the tax revenue was allocated towards the development of infrastructure such as roads, bridges, and waterways.[30] In all areas other than the Bengal Presidency, land settlement work involved a continually repetitive process of surveying and measuring plots, assessing their quality, and recording landed rights, and constituted a large proportion of the work of Indian Civil Service officers working for the government.[29] After the Company lost its trading rights, it became the single most important source of government revenue, roughly half of overall revenue in the middle of the 19th century;[29] even so, between the years 1814 and 1859, the government of India ran debts in 33 years.[29] With expanded dominion, even during non-deficit years, there was just enough money to pay the salaries of a threadbare administration, a skeleton police force, and the army.[29]

Trade

"It was stated in evidence (in 1813) that the cotton and silk goods of India, up to this period, could be sold for a profit in the British market at a price from 50 to 60 per cent. lower than those fabricated in England. It consequently became necessary to protect the latter by duties of 70 or 80 per cent. on their value, or by positive prohibition. Had this not been the case, had not such prohibitory duties and decrees existed, the mills of Paisley and of Manchester would have been stopped in their outset, and could hardly have been again set in motion, even by the powers of steam. They were created by the sacrifice of the Indian manufactures. Had India been independent, she would have retaliated; would have imposed preventive duties upon British goods, and would thus have preserved her own productive industry from annihilation. This act of self-defence was not permitted her; she was at the mercy of the stranger. British goods were forced upon her without paying any duty; and the foreign manufacturer employed the arm of political injustice to keep down and ultimately strangle a competitor with whom he could not contend on equal terms."

 — H.H. Wilson footnote in The History of British India by James Mill[31]

After gaining the right to collect revenue in Bengal in 1765, the East India Company largely ceased importing gold and silver, which it had hitherto used to pay for goods shipped back to Britain.[32]

Export of Bullion to India, by EIC (1708–1810)[33]
Years Bullion (£) Average per Annum
1708/9-1733/4 12,189,147 420,315
1734/5-1759/60 15,239,115 586,119
1760/1-1765/6 842,381 140,396
1766/7-1771/2 968,289 161,381
1772/3-1775/6 72,911 18,227
1776/7-1784/5 156,106 17,345
1785/6-1792/3 4,476,207 559,525
1793/4-1809/10 8,988,165 528,715

In addition, as under

manufactured goods.[32] More specifically, in the 1750s, mostly fine cotton and silk was exported from India to markets in Europe, Asia, and Africa; by the second quarter of the 19th century, raw materials, which chiefly consisted of raw cotton, opium, and indigo, accounted for most of India's exports.[34] Also, from the late 18th century British cotton mill industry began to lobby the government to both tax Indian imports and allow them access to markets in India.[34] Starting in the 1830s, British textiles began to appear in—and soon to inundate—the Indian markets, with the value of the textile imports growing from £5.2 million in 1850 to £18.4 million in 1896.[35] The American Civil War too would have a major impact on India's cotton economy: with the outbreak of the war, American cotton was no longer available to British manufacturers; consequently, demand for Indian cotton soared, and the prices soon quadrupled.[36] This led many farmers in India to switch to cultivating cotton as a quick cash crop; however, with the end of the war in 1865, the demand plummeted again, creating another downturn in the agricultural economy.[34]

At this time, the East India Company's trade with China began to grow as well. In the early 19th century demand for Chinese tea had greatly increased in Britain; since the money supply in India was restricted and the Company was indisposed to shipping bullion from Britain, it decided upon

British Crown.[37] Towards the end of the second quarter of the 19th century, opium export constituted 40% of India's exports.[38]

  • Photograph of East India Company factory in Painam, Sonargaon, Bangladesh, a major producer of the celebrated Dhaka muslins.
    Photograph of East India Company factory in Painam, Sonargaon, Bangladesh, a major producer of the celebrated Dhaka muslins.
  • "Mellor Mill" in Marple, Greater Manchester, England, was constructed in 1790–93 for manufacturing muslin cloth.
    "Mellor Mill" in Marple, Greater Manchester, England, was constructed in 1790–93 for manufacturing muslin cloth.
  • Opium Godown (Storehouse) in Patna, Bihar (c. 1814). Patna was the centre of the Company opium industry.
    Opium Godown (Storehouse) in Patna, Bihar (c. 1814). Patna was the centre of the Company opium industry.
  • Indigo dye factory in Bengal. Bengal was the world's largest producer of natural indigo in the 19th century.
    Indigo dye factory in Bengal. Bengal was the world's largest producer of natural indigo in the 19th century.

Another major, though erratic, export item was

non-violent resistance against the British Raj.[42]

See also

Notes

  1. ^
    ISBN 978-1-317-13522-7
    .
  2. ^
    ISBN 978-0-19-516520-3
    .
  3. ^
    ISBN 978-1-136-82552-1
    .
  4. ISBN 9781136168284
    .
  5. ^ a b Broadberry, Stephen; Gupta, Bishnupriya (2005). "Cotton textiles and the great divergence: Lancashire, India and shifting competitive advantage, 1600-1850" (PDF). International Institute of Social History. Department of Economics, University of Warwick. Retrieved 5 December 2016.
  6. ^ Paul Bairoch (1995). Economics and World History: Myths and Paradoxes. University of Chicago Press. p. 89. Archived from the original on 12 October 2017. Retrieved 18 August 2017.
  7. ISBN 9781317252931
    .
  8. ISBN 9789047429975
    .
  9. ISBN 978-92-64-02261-4
    . Retrieved 1 November 2011.
  10. ^ Metcalf & Metcalf 2006, p. 20
  11. ^ a b c Metcalf & Metcalf 2006, p. 78
  12. ^ a b Peers 2006, p. 47, Metcalf & Metcalf 2006, p. 78
  13. ^ a b c d Peers 2006, p. 47
  14. ^ a b c d Robb 2004, pp. 126–129
  15. ^ Brown 1994, p. 55
  16. ^ a b c d e f Peers 2006, pp. 45–47
  17. ^ Peers 2006, pp. 45–47, Robb 2004, pp. 126–129
  18. ^ Bandyopadhyay 2004, p. 82
  19. ^ Marshall 1987, pp. 141–144
  20. ^ Robb 2004, p. 127
  21. ^ Guha 1995
  22. ^ a b Bose 1993
  23. ^ Tomlinson 1993, p. 43
  24. ^ a b c d Metcalf & Metcalf 2006, p. 79
  25. ^ Roy 2000, pp. 37–42
  26. ^ a b c d Brown 1994, p. 66
  27. ^ Robb 2004, p. 128
  28. ^ Peers 2006, p. 47, Brown 1994, p. 65
  29. ^ a b c d e Brown 1994, p. 67
  30. ISBN 978-81-250-2731-7
    . Retrieved 20 April 2024. Quote="Further, the duty was levied on every stage of manufacture......The duty was levied on nearly all goods sold even within the village.......A minute fraction of the tax collection was spent on roads and bridges and almost nothing on inland navigation"
  31. ^ Mill & Wilson 1845, p. 539Jayapalan 2008, p. 207
  32. ^ a b c d Robb 2004, pp. 131–134
  33. ISBN 978-1-351-99749-2
    .
  34. ^ a b c Peers 2006, pp. 48–49
  35. ^ Farnie 1979, p. 33
  36. ^ Misra 1999, p. 18
  37. ^ a b Peers 2006, p. 49
  38. ^ Washbrook 2001, p. 403
  39. ^ a b Metcalf & Metcalf 2006, p. 76
  40. ^ a b Bandyopadhyay 2004, p. 125
  41. ^ a b Bose & Jalal 2004, p. 57
  42. ^ Bose & Jalal 2004, pp. 57, 110

References

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