Aditya Mukherjee - Second Article

Social Scientist
The Return of the Colonial in Indian Economic History: The Last Phase of Colonialism in India Author(s): Aditya Mukherjee Source: Social Scientist, Vol. 36, No. 3/4 (Mar. - Apr., 2008), pp. 3-44 Published by: Social Scientist Stable URL: http://www.jstor.org/stable/27644268 . Accessed: 15/10/2013 06:03
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The Return of the Colonial

History: The
in Indian Economic
in India >
Last Phase of Colonialism
c
to the Executive Council of the Indian India History Congress for electing nie as the President of Modern section this year. I feel deeply honoured to be so associated with this Congress which has spearheaded the promotion of scientific, secular and anti-imperialist history in this country for over seventy years. thankful This is one reason why Indian historiography is one of the most advanced among the erstwhile colonial countries. However, this is not to say that the communal and colonial trends actively promoted the colonial trends have during period have died out. These some resurfaced and acquired influence even after periodically independence. these trends painstakingly
furthered.
I am extremely
? ?D *7d
There is thus the need to constantly contend with so that the civilisational so values promoted our are national liberation and by struggle preserved
I have in this address in a small way tried to contribute to this effort by questioning the resurgence of the colonial trend in the of economic it writing history of the colonial period.1 Paradoxically, was in the sphere of the economic of that colonialism impact colonialism was first critiqued effectively. Also, the economic critique of colonialism, relative to other critiques of colonialism, was the first to be widely accepted. Yet the colonial point of view in this area has again resurfaced, as for example in the recent work of Tirthankar Roy. Iwill very briefly go over the broad contours of some of the thinking and its economic impact since the mid nineteenth on a and then focus in its last century critique of how colonialism a has been historians with colonial phase perceived by perspective. I may add that I feel humbled at occupying this position, the sectional president-ship
teachers and mentors
on colonialism
of the Congress, which

some of whom are present
has been held by my

here today.
saw a rich debate on the impact of nineteenth century on the colony. Two journalistic pieces written by Karl Marx in 1853 for the New York Daily Tribune on British rule in India are of raised some key issues concerned with this debate which The colonialism
relevance even today.2 Marx in these articles wrote about the
Social Scientist
oo o o
"destructive"
and
the
"regenerative"
role
of
colonialism.
He
saw
in the very
< a
Indian society, the process of destruction by colonialism of the pre-colonial regenerative role of colonialism, as it opened up the possibility of growth of in the colony. This was because Marx, on the capitalism and industrialisation basis of information then available to him, erroneously characterized Indian society as a 'changeless' 'Asiatic society' which needed to be destroyed, even though the process was painful, before any social progress could occur. Further, along with the destruction of the old 'Asiatic' order he expected that new elements introduced by British rule, such as electric telegraph, railways,
steam navigation, private property in land, western education, free press,
t? 1 m 00 O Z m >
for the evolution of a political unification, etc., would modern western type of society. As he put it:3 in India: one destructive, the England has to fulfil a double mission other regenerating - the annihilation of old Asiatic society, and the society in India. laying of the material foundations ofWestern lead to the 'mirror image' of The hope was that colonialism would capitalism being produced in the colony. This position of Marx led to much create the conditions
controversy and misuse4 subsequently. This was because Marx's overall
position in these articles and especially his position as it emerged shortly after writing these articles in the enormous corpus of work produced by him was not fully appreciated.5 Before one looks at the complex position taken by Marx over time it is significant nineteenth Modern to note that the modern Indian intelligentsia in the first half of the century had a perspective similar to that which Marx was to state
later in his 1853 articles. For instance, Raja Rammohan Roy, the father of India, described British rule as the gift of divine providence not because he was comprador or a lackey of the British but because he saw of the Indian British rule as creating the conditions for the modernization
economy, polity, etc., much in the manner reflected in the position taken by Marx. It appeared to be the wisdom of the time. Indeed, it is for this reason that the Indian modern intelligentsia did not support the 1857 revolt against the British, which they feared would lead to a throwback to the pre-colonial too, had doubts about the progressive potential of the revolt. the Indian intelligentsia was to soon (by the late 1860s) abandon this position and over the second half of the nineteenth century or see as to route not to of the colonialism capitalist harbinger began order. Marx, However modernization but as the chief obstacle to the transition to capitalism in India, an understanding which was to lead them to demand the overthrow of British rule. In fact, the Indian early nationalists were among the first in the world, to evolve a multi Lenin or Rosa Luxemburg, before Hobson, pronged, detailed and sophisticated critique of colonialism. The remarkable decades
The
Return
of the Colonial
in Indian
Economic
History
of the Indian early nationalists in this respect is perhaps still not adequately appreciated among scholars in India and remains virtually ignored globally despite the definitive and monumental work on the early nationalists produced by Prof. Bipan Chandra as early as the 1960s.6 ^ In the context of the change in perception of the Indian intelligentsia 1853 position regarding British rule it is very important to look at Marx's carefully and particularly to note how it evolved over time. (It would be achievement interesting to investigate evidence of one being influenced by the other as their thinking on several aspects moved on similar lines). It must be noted that when Marx talked of the 'regenerative' role of British rule he was conscious that only the conditions of regeneration were being created under British rule and not regeneration itself. He was talking of a potential which had not yet emerged from the ruin brought on by British rule which he often described so graphically.7 He wrote, in June 18-53:8 of Indian society, England has broken down the entire framework without any symptoms of reconstitution yet appearing. This loss of his old world, with no gain of a new one imparts a particular kind of melancholy to the present misery of the Hindoo and separates Hindost?n, ruled by Britain, ... from the whole of its past history. In fact a few months later in his August 1853 article where he talked of the "destructive" and "regenerative" role he was still talking of England having to certain enable "fulfill" this "double mission" "new elements" were it to move on introduced in India (i.e., it was yet to happen) in Indian society which so that would
2> ^^
? j2. n>
the path of social progress. However, Marx with remarkable prescience (much before the modern National liberation struggle in India took root) was simultaneously the need for the anticipating overthrow of colonialism if India was to actually reap the benefits of the "new elements" that British colonialism was to engender. As he put it:9 The Indians will not reap the fruits of the new elements of society scattered among them by the British bourgeoisie, till in Great Britain itself the new ruling classes shall have been supplanted by the industrial proletariat, or themselves shall have grown strong enough to throw off the English yoke altogether. Marx suggests that British rule, or the onslaught of British capitalism on the Indian colony would "neither emancipate nor materially mend the social of the people", which would depend on "not only the of productive powers, hut of their appropriation by the people" presumably possible only with the overthrow of British rule. Yet he says "what they (British rulers) will not fail to do is lay down the material premises for condition development both" albeit at the cost of "dragging... c through misery and degradation".10 people through blood and dirt, of the mass till theHindus
Social
Scientist
OO o rsi CL <
"5
The question still remains that while Indians may not have been able to reap the fruits of the "new elements" that would lead to the "development of productive powers" till it achieved national liberation but did British rule create the "the material premises" for both the processes so that one could
"safely expect to see, at a more or less remote period, the regeneration of that
S ^ 00 OO
great and interesting country",11 India? That colonialism would create the but did it lay the "material conditions for its overthrow is understandable foundations" for the development of productive powers? o The answer to this question assumes importance not only to decide what view to take of colonialism as a whole but also in explaining certain positive developments in the late colonial period (in India) and particularly after the overthrow of colonialism. As we shall see later itwould involve seeing these developments either as the result of colonialism, though much restricted or or as a result of the break from colonialism. The central theme it, delayed by of this address will be to argue the latter. It appears to me that Marx began very quickly to distance himself from
on >
the position that colonialism, however "swinish", would introduce elements which would lead to the growth of productive powers and capitalism in the
colony.
It is significant of the that Marx never used the characterization even not 1853 in his effect of after colonialism article, August 'regenerative'
articles written later that year.12 He clearly was moving towards a different
especially after he and Engels studied a concrete position colonial situation closely, that of Ireland. In fact, in his later writings, including in Capital Vol. 1 (1867), he began to emphasise the destructive role of colonialism and identify some of the key structural features which the on colonialism interface was leading to which were not conducive to capitalism-colonialism the growth of capitalism in the colony though it helped the growth of or the colonising country. He clearly saw the capitalism in the metropolis in various unrequited transfer of capital from the colony to the metropolis forms, what the early nationalists called the 'drain', as a "bleeding process" ruinous to the colony but critical to the process of primitive accumulation and therefore to the transition to and growth of industrial capitalism in the
metropolitan countries. He now saw the Railways as "useless to the Hindus",
the dividend paid for the railways, like the military and civilian expenses which involved remittances out of India, as all constituting part of the drain or the "bleeding process". He notes that an unequal international division of labour was emerging, "a division of the chief centres of modern suited to the requirements industry" converting "one part of the globe into a chiefly agricultural field of and therefore counted ? production, for supplying the other part which remains a chiefly industrial
The
Return
of the Colonial
in Indian
Economic
History
field". As is well known, the Ricardian theory of comparative used to perpetuate this division of labour, a division which
productivity differences between the industrialised societies. Marx was perhaps the first to be able to see that apart from the fact ^ to that British industry benefited from the denial of industrial development was a so not in Britain India there obvious surplus appropriation favour of involved
trade as
advantage was led to growing and non-industrialised
5> ^^
in the trade between

opposed to the monopoly
the two countries

trade or trade
even in this so called free

involving non-economic
? j^. a>
typical of the earlier mercantile phase of colonialism. He saw the involved in trade between countries with different 'unequal exchange' with levels the country productivity high productivity exchanging from the low commodities with less labour input for commodities country which had a much higher labour input, though the productivity coercion
commodities exchanged had the same monetary/market value.13 The process
of
keeping
India
un-industrialised the process

Each
benefited
the other.
British
industry
but
simultaneously
"unequal
strengthened
of surplus appropriation
through
exchange".
process
reinforced
British agrarian policies were also no longer seen by Marx as producing private property in land but "caricatures" of it.He no longer saw the potential in agriculture of capitalism in these societies this emerging through
intervention. Here we see seeds of the understanding that the "new elements" that
emerged as a result of the impact of colonialism, because they came in a colonial form, they were incapable of having a regenerative effect on the colony. Hence Marx increasingly emphasised the necessity of the overthrow of colonialism, a position taken further within the Marxist tradition by Lenin,
Rosa Luxemburg and others.
The critique of colonialism was sophisticated further inmany dimensions as the later stages of colonialism unfolded themselves and their impact could
be studied. Major advances were made in analyzing the political economy of
colonialism Balandier
after the Second World War with in the 1950s and
the writings
of Paul Baran and
later, in the late 1960s and 1970s by the neo-Marxist world system analysts and others like theorists, Dependency Immanuel Wallerstein, Gunder Frank, Samir Amin, Nicos Poulantzas, Ernesto Laclau, Hamza Alavi and Bipan Chandra, to name just a few. [Since the early 1980s however, an alternate motley stream occupied by
post modernism, 'post-colonial' culture studies, subaltern studies, etc., has
partially
among
(and I hope
sections of first
temporarily)
world
hijacked
the
(fortunately
mainstream
as yet essentially
debate on the
academia)
political economy of imperialism. The focus has shifted from the political response, economy of imperialism to its 'representation'. The nationalist
Social
Scientist
o rs ^ < ~5 ^ Tf 00 OO vO >
is also characterised including of massive long drawn popular movements, (and thus virtually dismissed) as either being part of the 'colonial discourse' or 'elite' or 'official'! This setback to the study of colonialism and nationalism has paradoxically occurred through scholarly intervention in the name of the 'people', the oppressed without a 'voice', by scholars who, largely have, at least in the Indian case, shifted base to the FirstWorld or appear to aspire to do so. As Arif Dirlik asks: "When exactly... does the post-colonial begin?" and intellectuals have arrived in First goes on to answer, "When Third World o world
this
academe." A critique of this stream, however,
is outside
the scope of
address.]14
Bipan Chandra in his seminal work "Colonialism and Modernisation"15 delivered as a presidential address to this very Congress in 1970, thirty seven years ago, argued that colonialism did not lead to capitalist modernization, neither did it create certain conditions in that direction, i.e., itwas not as if it or that it had some "residual" led to 'partial' or 'restricted' modernization the overall benefits, despite exploitative character, which- could be of some
advantage after independence. He, along with Hamza Alavi, made a strong
plea for seeing colonialism

nor as an amalgam of
neither
'traditional'
as semi-capitalist
pre-capitalist
or backward
and 'modern'
capitalist
capitalist
as a distinct colonial structure.16 As Bipan Chandra put it, colonialism "is a well-structured 'whole', a distinct social formation (system) or sub-formation the basic control of the economy and in which (sub-system) a is in of the hands society foreign capitalist class which functions in the features but colony (or semi-colony) through a dependent and subservient economic, structure whose forms can vary with the and intellectual social, political, conditions of the historical changing development of capitalism as a world wide system." Further he argued that the new colonial social framework that came into being which
of social, as political, it was decaying being
included "not only the economy

administrative bornn, i.e., had and no cultural 'regenerative' life...
but also the patterns

was stagnant and potential.17
of the features that a colonial economy demonstrated, though they to be capitalist, within the colonial framework, appeared they performed completely different and distinctly colonial roles. For example, a colonial situation could witness, as it did in India, a high degree of commercialization Many (or generalized commodity production), rapid growth in transport and with close the world market and a high degree of communications, integration investible within the economy all features 'potential surplus' raised from associated with capitalist development. Yet in the colonial context all these in the metropolis led to capitalist development but further developments colonial structuring in the colony. It ended up, to use Tilak's expressive phrase,
g "decorating another's wife", and one may add, while disfiguring one's own.
The
Return
of the Colonial
in Indian
Economic
History
colonial which was economy, forcibly internally and extroverted, the above changes did not stimulate internal inter-sectoral exchanges between Indian agriculture and Indian industry, or between Indian consumer goods industry and capital goods industry.18 The In the Indian disarticulated circuit of commodity circulation was completed via the metropolis where 5 was colonial linked to metropolitan agriculture industry, or colonial consumer goods industry (if and when it was allowed to develop) with metropolitan capital goods industry; the multiplier effects of these exchanges were thus transmitted abroad. Similarly, the surplus generated in the colonial economy did not lead to extended reproduction through investment (the key feature which modes of from pre-capitalist distinguishes capitalism production) to a higher facilitated
destroyed,20
3> ^-' ^ ? j3. a>
thus raising the organic composition of capital and productivity level on a significant scale within the indigenous economy, but this process in the metropolis.19 Traditional artisanal industry was
(i.e., a process of de-industrialization occurred in a country
which was the world's largest exporter of textiles in the pre-colonial era) and not replaced with modern capital intensive industry on a significant scale. in Capitalism did not grow in agriculture either. Commodity production
agriculture the colonial was in response revenue to a "forced demands commercialization" and not with a capitalist to primarily rationality, meet i.e., state's
to earn profit for investment. Typically, agriculture witnessed a high degree of but it did not lead to capitalist farming through extended differentiation The petty mode of production was perpetuated in agriculture reproduction. with continued the large estates being let out to tenants with to cultivate at more or less the same
Moreover, agricultural output and
small holdings who traditional levels of

even when they
technology.21
exports,
grew,22 they remained

needs.
articulated with metropolitan
industrial
and other
The basic point was that colonialism

overall structure. Growth in one or
had to be viewed and evaluated as an

sector of the economy or society
the other
could not be evaluated as 'partial' development (to be offset against the lack of such growth in another sector) if that sectoral growth was instrumental in creating the colonial structuring which led to overall stagnation and even arrived at by Marx and Engels in their decline. This was an understanding as in the the Irish situation itwas by the early nationalists of colonial study case of India.23The development of railways, foreign trade, telegraph, agrarian
transformation, a colonial civil service, etc., occurred in a manner that they
became
instruments in converting the pre-capitalist and sometimes emerging capitalist societies24 into a stillborn colonial structure. The very in favour of instruments of the subversion of modern capitalist development colonial structuring cannot be treated as the 'residual' or 'partial' benefits of
critical
Social
Scientist
oo O O
rsi Q_ < I a oj z ^
a fallacy which unfortunately colonialism, creeps into the thought of at the highest level and even some otherwise staunch liberal nationalists Marxists. The opportunity cost of failing to use the same resources, (which created centuries for colonial purposes) alternatively, often over domination and of having to undo the colonial structuring after freedom was won, ismind boggling. if it was not If colonialism was not leading to 'partial' modernization, the instruments colonial of
'transitional' to modernization, but was structuring-in backwardness, then
O Z vO m >
moving temporally further on the colonial path would not bring the colony closer to modernization. Only a break from itwould.25 The colonial path and the capitalist path are not even like parallel paths which do not ever meet,
they are actually divergent paths.26 The more a society moved on the colonial
path the more the colonial distortions would be structured-in and the more difficult it would be to make the transition to independent capitalist or for
that matter socialist development. The 'built-in depressors', to use an apt
term attributed
to Daniel Thorner,
that colonialism
and the task of independent development Itwas not only the task of un-structuring the colonial economic structure which was the challenge before the countries politically liberated from
colonialism. The task of 'de-colonizing' the non-economic institutions
created would get heavier that much more challenging.
spawned
education
by colonialism
system, etc.,
like the colonial

were to prove
bureaucracy,
daunting.
judiciary,
Sixty years
police,
after
equally
India is still struggling to decolonize these institutions. As we independence, will see later we still have textbooks taught in our schools and major universities such as the recent Oxford Economic History of India by Tirthankar Roy,27 which argues a blatant colonial position which would have embarrassed many British Governor-Generals it is and Viceroys. While understandable that Niall Ferguson, the no-holds-barred open defender of British imperialism, should find Roy's work praiseworthy; what is surprising is that scholars such as Ramachandra Guha and Sanjay Subrahmanyam, whom one would view.28 Decolonization not suspect of harbouring colonial sentiments, echo that of the mind is indeed a long and tortuous process. II
The colonial argument has a long ancestry. Being the argument emanating
from the more 'successful'/rich and powerful part of the globe, even though it was the argument of the ruling elite, it found takers among the oppressed as well. Its influence varied depending on the intellectual and political strength of the anti-imperialist movement at different points of time. Since the nineteenth century British colonial officials as well as some intellectuals put up a spirited defense of colonialism. They argued that British
The
Return
of the Colonial
in Indian
Economic
History
law and order and brought led to growth of foreign trade communications, in resources with the global market, brought investments (drain was persistently denied), made colonialism
and transport and integrated the colony to India through British major changes in property ^ in and all factors leading 5to rights agriculture improved irrigation, economic development in India.29 The "white man's burden" unprecedented or the "civilizing mission" did not end there. Indians had to be retrievedn> from their 'barbaric' and 'hideous' conditions through gradually training them for self government as well! Further, the inhibiting factors in Indian development
modern
>> R-" ^
c2.
were,
it was
argued,
over-population,
shortage
of
capital,
Indian
social
customs,
thriftlessness,
social institutions,
spending
values and habits

extravagantly on
like lack of ambition,

marriages, and also
apathy,
India's
and climatic conditions. The negatives, in other geographical not at within involved and colonialism. words, looking The early Indian nationalists, consisting of some of the best minds ofthat era, over nearly half a century of intense intellectual activity, questioned each one of the colonial claims and, as I pointed out earlier, created a sophisticated weaknesses critique of imperialism. Through books based on years of research, articles, newspapers, legislative assemblies, the British parliament, public meetings and numerous such forums they argued their position. Their success was that the essential elements of their thought became the common sense wisdom of colonialism the time and provided the basic structure of the economic understanding of not only to the Indian national movement but to the planners A major of colonialism after independence. resurgence of the colonial occurred position in academia with
and academics experience D. Morris
regarding the Indian the writings of Morris in the early 1960s,30 and the publication of the voluminous 2 A robust challenge 1980s.31 Economic Vol. in the History Cambridge early Toru with Matsui, Chandra, Bipan Tapan Raychaudhuri,32 Irfan emerged Habib,33 and others writing detailed critiques and by a number of research works such as that of A. K. Bannerji, Basudev Chatterji, Sunanda Sen, Michael R.W. Goldsmith, Kidron, George Blyn, Utsa Patnaik, S. Sivasubramonian, A.I. Levkovsky, V.B. Singh, Debdas Bannerjee34 (to name just a few) and the seminal work of A. K. Bagchi.35 The colonial position on the economic front however
century,
continued,
leading to an
particularly
interesting
regarding
debate.36
an
interpretation
of
the
18th
works since independence However, while most of the pro-colonial reiterated the colonial position regarding only some aspects of the economy the recent work of Tirthankar Roy, The Economic History of India, mentioned
above, tries to present, somewhat in a 'made easy' style, the colonial position
in its entirety covering all aspects of the colonial
economy.
Roy laments that
i i
Social
Scientist
o rs
in
the
"average for...
Indian's
sense
of
history", (The
"colonialism" 'guilt' of the
was early
seen
as
"responsible...
underdevelopment".
nationalists
^ < 5 n3
in creating
this
generalizations" outline, doing history. It is not possible to do here a detailed critique of Roy's work as it involve going over the entire colonial position. He has reiterated would almost all the arguments of the British civil servants and Viceroys about the benefits of British rule and the causes of lack of growth in India that are above and has ignored or summarily dismissed the rich anti colonial discourse that evolved over more than a century. (Given below in the footnote are some examples of Roy's position.)381 shall in this address limit > myself to amore modest and limited task. summarized Ill This address will focus on the last phase of colonialism in India particularly since the First World War.39 The period saw some growth of indigenous industry and a substantial growth of the indigenous capitalist class. Apart from this the period witnessed several other 'positive' developments which diverge from the classical colonial pattern that had got established in India. This has led to one group of colonial writers seeing these as the result of colonialism and its policies,40 which created conditions for rapid economic Morris D. Morris too sees the period after 1914 as one during advance later.41 which "rather substantial structural modifications occurred" when "the base was laid for a renewed upward surge after independence"; unfortunately, despite all the "growth benefits of nineteenth century" the "nineteenth century as a period was too brief to achieve all the structural changes needed to provide the preconditions for an industrial revolution."42 The implication impetus of the changes during 1914-1947 and post Independence India could just build on them, break without fundamental from colonialism. Other colonial involving any scholars see this period as one of 'decolonization' where colonialism was gradually pulling out, handing over to Indian interests.43 Some even see this remained period as one where England was being exploited by India!441 shall question this range of colonial views.45 Before I do a critique of the colonial view of this period I shall, however, first take a detour and in some detail enumerate what the positive that occurred in this period were and then go on to show how developments were not a result of colonialism or of a process of these developments
decolonization.
'sense' is evident). He wants us to "take leave of (such) and "step into history"37, ? history which then he proceeds to sense of little better than sketch the average colonialist's
in their writings colonial
is that the
First, it is generally undisputed
that a major
development
in the Indian
The
Return
of the Colonial
in Indian
Economic
History
colonial economy in the twentieth century was the initiation of a rapid phase of import substitution inmost of the major consumer goods industries and certain intermediate and capital goods industries like textiles, sugar, matches, soap, cement, magnesium paper, glass, sulphuric acid and other basic chemicals, chloride, tinplate, and iron and steel.46 (See table 1). This process, 1: Sea-Borne Imports Into British
m 1900-01 Cotton Piece-goods (million yards) Sugar (thousand tons) Soap (thousand cwt) Matches (thousand gross boxes 2003 1920-21 1510 1936-37 764
>
u> Z c fD ."? CD" fD
Table
India, 1900-1945
IV 1944-45
344
23 (net imports-17)a
nil
313 12399
48 55 (By 1938-39, 95% of total consumption met indigenously) 51 [1940-41] Insignificant in 1944-45, being 1/5th of 1940-41 in value terms at current prices._ During war imports rise due to shortages. No figures available for 1944-45.
Cement
(thousand tons!
165 [1914]
131
Paper 8c Pasteboard (Rs. Lakhs) Iron and Steel (thousand tons) 286
7,30 712
3,94 363
26.1
Source: Columns II, III and IVfrom S. Subramanian and P.W.R. Homfray, Recent Social and Economic Trends in India, Government of India, New Delhi ,1946, pp.48-49 and 6-8. Column 1 from A.K. Bagchi, Private Investment...op.cit., pp.238, 295 and 354. a- See Rajat Ray, Industrialization in India, Delhi, 1979, p.138. By 1937 India had started exporting sugar. Note: Up to 1936-37, figures included Burma.
a reversal of the general nineteenth century colonial trend began in the early twentieth century, picked up by the First World War and the twenties, got a major push in the thirties and during the Second World War, and took a different level in the years following leap at a qualitatively was more or less self-sufficient In India in case, any by 1939, independence. her major consumer goods requirements.47 Most important, the bulk of this process was occurring under the aegis of independent indigenous capital. quantum Second,
towards
apart from
orientation,
import substitution,
with indigenous
there was
producers,
a growing
who were
tendency
earlier
inward
for export, shifting towards the home market. Also, the link producing between agriculture and indigenous industry began to grow, reversing the earlier trend where the former was increasingly linked to metropolitan
13
Social
Scientist
o cvi ^ <
industry. A good example of this process was the cotton textile industry, the most important industry in India at that time. In the early decades of the twentieth century the cotton mill industry in Bombay was beginning to shift from export of yarn to the far-east (particularly China) to production of yarn and cloth for the domestic market. Also other textile centres in the interior areas, such as Ahmedabd, Cawnpore and Coimbatore, which grew faster than Bombay in this period, produced yarn and cloth mainly for the domestic market.48 Further, as the textile industry in India grew due to rapid import substitution, it began to pick up an increasing proportion of the domestic raw cotton production. The growing inward orientation was also a result of the export oriented industries like jute stagnating in this period, while the domestic market oriented industries like cotton textiles, sugar and iron traditional and steel registering relatively quicker growth rates.49 Third, reflecting the changes discussed above, India's total volume of in the nineteenth international trade, which had grown stupendously a century, when India became typical outward oriented colonial economy, began to decline afterWorld War I. Simultaneously, her internal trade began to grow, in some areas quite dramatically. For example, between 1920 and 1939, the volume of internal trade in sugar increased by three times, in cotton piece goods, iron and steel, raw hide and skins and cement (1933 to 1939) it nearly doubled and in tanned hides and skins and leather it increased by eight times.50 It may be noted that the spurt in Indian industrial growth in this period was not linked to growth in international trade (one of the so called benefits of colonial rule, see f.n. 38) but to growth in internal trade. Fourth, there occurred in this period a rapid shift of traditional 'pre in trade, usury and landlordism to industry, again capitalist' accumulations reversing
landlordism
>
the earlier
a process
pattern
of
of
such
accumulations
While many
being
of
diverted
the princes
to
're-feudalisation'.
into small capital went trading-usury big industry, wars two and the This world because the shift occurred enterprises.51 partially as Indian in world for well demand the fall (as primary products) Depression financed for investment in trade, indigenous opportunities same factors combined with the fact The and landlordism. banking, usury that the colonial state was forced to raise tariff duties on imports created for indigenous industrial investment (more on this later). opportunities reduced the traditional Fifth, as compared to the pre-World War I period, in the post-war period upto 1945 there was a gradual but consistent shift in the pattern of foreign trade with the proportion of manufactured goods in total exports showing a in total increase and imports showing an even more significant significant
decrease. Conversely, the proportion of raw materials in total exports showed
a lot of
14
a definite decrease
and the proportion
of raw materials
and capital goods
(as
The
Return
of the Colonial
in Indian
Economic
History
opposed
increase.52
to consumer
There was here
goods)
in total
however
imports
hesitant,
showed
a comparative
the reversal
>
?+
a tendency,
towards
colonial pattern of foreign trade, though the pattern still remained largely colonial till independence. The example of sugar illustrates consumer aspects of the new tendency. The import of sugar (amanufactured ? to commencement in the the fell inter-war dramatically period leading good) ^ of exports by 1937 (see table 1). On the other hand, the value of imports of sugar machinery shot up from Rs. 1.75 m. in 1920-21 to Rs. 87 m. in 1932-33, of India's traditional
at constant prices.53
*" Z
Sixth, contrary to traditional belief,54 the actual net inflow of foreign capital to India was never very large and virtually insignificant in the form of industrial investments. Most foreign capital in the twentieth century came in the form of loans to meet the balance of payment deficits caused in no small measure in the form of home by unilateral transfers made to the metropolis or and interest and debt dividends servicing accruing due to charges charges In fact, if one pitted outflows on earlier foreign loans and investments. current account due to interest, dividends and home charges against net
inflow due to foreign borrowing on the capital accounts, one would find that there was an outflow of capital from India virtually throughout the colonial even if one considers However, period and certainly since World War I.55 only the flows in the capital account, then also it is evident that foreign capital inflow fell off after the spurt of the early 1920s, and, by the early 1930s, Indian repayments and repatriation of foreign debt and earlier foreign investments
exceeded fresh investments, i.e., there was a net outflow of foreign capital.56
The process of repatriation which began in the early '30s picked up after 1935, and, with the onset ofWorld War II, both repatriation of sterling public debt and retirement of private foreign loans and investment increased rapidly.57 In fact, during World War II,when Britain made large war purchases in India, India ceased to be a debtor country and by 1946 had accumulated as credit against Britain awhopping sterling balance of nearly Rs. 17,000 million. on the London money the dependence market for Indian Further, government borrowing was also reduced dramatically after having peaked in in 1934 sterling debt (or external debt) represented While cent 43 of India's total public debt, by 1945 sterling debt accounted per nearly for only 4 per cent, i.e., 96 per cent of the public debt was raised internally.58 the mid-1930s.
Further, for a variety of reasons, areas where traditional foreign capital
(European controlled business in India where a large part of the investments were internally raised) dominated, e.g., plantations, jute and foreign trade, underwent a relative stagnation after the First World War. Also, a dual sectors and of of foreign capital from these process of repatriation Indianisation of ownership (and gradually control) in them set in.59On the ic
Social Scientist
o rsi ^ <C ~5
Z
00 o
other hand, the intrusion of the new type of foreign capital in the form of investments by multinational corporations during the twenties and remained small till thirties, very independence,60 especially when compared to the rapid growth of indigenous enterprise in this period. For example, between 1921 and 1938 the net foreign industrial investment was worth ?17 m., while the new investment in Indian industry was estimated to be ?144 m.61 ^ 1914-1947 the paid up capital of rupee companies Also, between (or companies registered in India) grew more than twice as fast as the increase in direct the paid up capital of sterling companies. In fact between 1929 and 1947 the of doubled while that of sterling companies rupee companies paid up capital an decline after actual the peak reached in 1932-33.62 stagnated showing Foreign after did increase considerably investments, however, were were to not strict but under control and allowed they independence kept a or most in in dominant either the of the overall economy acquire position
critical sectors of the economy.63
>
direct
Last, between 1914 and 1947, the Indian capitalist class, through a process of economic and political struggle, and taking advantage of the two wars and as well as the specific crisis faced by British the Great Depression64 was able to significantly increase its hold over these years, imperialism during the Indian economy vis-?-vis foreign capital. This was achieved chiefly the following three processes: (a) by entering new areas almost of the new and for the overwhelming exclusively accounting proportion through
investments made after the 1920s, e.g., in sugar, cement, paper, heavy
chemicals, iron and steel, etc.,65 (b) by edging out or encroaching greater or smaller degree the various traditional areas of European and dominance, foreign
investment
upon in influence
e.g., banking, life-insurance, jute, textiles, partially shipping, trade, coal, and tea,66 (c) through a faster growth, in terms of
and output, in economic sectors and geographical regions where
Indian capital dominated,

dominant, and e.g., cotton vs. the metropolitan
as opposed
jute, Bombay home
to those where European

and other interior market-oriented industries
interests were
vs. vs. Bengal export
regions
centres,
oriented
and
industries
like jute, plantations,
etc., internal trade vs. foreign trade,
so on.67
Thus before independence itself Indian capital had acquired considerable control over the domestic market. Rough estimates suggest that about 72-73 per cent of the domestic market was controlled by indigenous enterprise at the eve of independence. In the financial sphere also, where, earlier, European in capital was supreme, the Indian capitalists made massive inroads. While 1914 foreign banks held 70 per cent of the deposits, by 1937 they held 57 per cent, and by 1947 amere 17 per cent, i.e., 83 per cent of the deposits were in
iz Indian banks.68
The
Return
of the Colonial
in Indian
Economic
History
The various factors listed above suggest that what are considered to be some of the typical disarticulating colonial features of an extroverted
economy were, to an extent, however hesitatingly, getting reversed, even
2> ^" ^ ?f ^F J2. fD
within the overarching colonial structure. First, there was a growing tendency towards surplus value being appropriated through extended reproduction in the colony, and it was being accumulated and invested by an independent albeit within the constraints of a colonial economy. indigenous bourgeoisie, Second, there was a growing tendency towards indigenous industry being articulated with indigenous agriculture and the home market. Thus the typical colonial feature of the colony's agriculture and its home market being articulated with metropolitan industry was showing a decline. Third, the hold of foreign capital was declining; and the indigenous bourgeoisie had gradually sphere as well acquired a dominating position in the indigenous production as in the home market. Last, the colonial economy, like the indigenous strength and bargaining position vis-? bourgeoisie, had acquired aminimal centre. For example, the economy vis the metropolitan instead of being a balances by the down debt enjoyed foreign exchange by huge large weighed end of W.W. while II, and the colonial bourgeoisie was able to bargain effectively associating with foreign capital in setting up enterprises,69 or while
trade agreements with Britain.70
negotiating
IV
to understand these positive changes? As question earlier the colonial view was to see these changes as the beneficial mentioned result of colonialism or as the result of imperialism voluntarily pulling out. in scholars have focused on the increasing import substitution Colonial The how goods industry in India (see Table 1) and the sharp decline in the British market in India, particularly in cotton textiles, to basically argue that Britain was now 'surrendering its interests in India in favour of Indian industrial interests. The 1919 'Fiscal Autonomy Convention' was described as "a British self-denying ordinance"71 which led to the "deliberate surrender of the largest export market in the world for a staple British manufacture."72 The since the First World War India was fact that in the changed circumstances able to achieve a somewhat better bargain in the trade agreements of the 1930s (the Ottawa Agreement, 1932, the Mody-Lees Pact, 1934 and the Indo British Trade Agreements of 1935 and 1939), compared to the total surrender to British industrial and financial interests earlier, was interpreted as "the trade treaty clever and powerful Indians (having) forced a disadvantageous upon the weak and inept English."73 The 1939 agreement was described by as: "a 'capitulation' % the sort ofthing which Marxists tell us the Drummond force on the weak and helpless evil imperialist Western governments consumer
now was:
.7
Social
Scientist
o countries rsi who had
of
the Third
World. sacrificing
But most
in this
case,
as at Ottawa...
it was
Britain The
capitulated,
of her
preferential
advantages....
^ ~5 j$ ^f
?? 00
reader is left to ask himself who was exploiting whom."74 Itwas further argued that not only was Britain not exploiting India but it <? was actually encouraging Indian industrialization.75 The fact that India still did not industrialize was because the Indian entrepreneur was incapable of taking advantage of the government initiative, itwas just not upto taking on
the immense challenge.76
vO >
like what Tirthankar Roy was to echo later, Dewey and nationalists of being simplistic and indulging in "a conspiracy theory of imperialist exploitation".77 He accused them of ascribing "Indian tariff policy to a single dominant the determinant, principally cotton Lancashire not and the "remarkable lobby..." recognizing that had occurred since the First World War, where "the metamorphosis" somewhat accused Marxists of India were power-struggles within the India Office and the Government resolved in favour of factions allied with the Bombay mill owners, while the factions allied with Lancashire were reduced to virtual impotence." It was said, "in the 1870s the Secretary of State allied with Lancashire against the Government of India, while in the years after 1917 the Government of India In their aligned itself with Indian nationalists against the India Office...." battle with the Secretary of State the Government of India's "alliance with the nominal nationalist enemies" proved useful as did "the public opinion they helped manufacture" and the "upsurge of political unrest in India."78 It seems some 'manufactured' political unrest by the 'nominal nationalist enemies' still necessary despite the assertion that "an important attribute of sovereignty had passed from England to India, twenty-five years before
independence".79 A.D.D. Gordon argued a similar position saying that the
oAlso,
was
Government
by the Home government on the one hand and the fiscal demands of the local business interests on the other, with the government of India increasingly giving in to the latter, 'nurturing' Indian industrialists rather than industrialists of Britain. Subsequent events, it was influenced claimed, were
in 1947,
of India was
to "illustrate this point" as with

industry was to grow
the ugranting of independence"

from "strength to strength".80
manufacturing
Evident
since again is the tendency to see continuity between developments the First World War and the failure to and those after independence understand the decisive structural break that 1947 represented in the political economy of the colonial situation in India. While all this is bad economic history it is even worse political history. It goes one step further backwards from the so called "Cambridge School",
which
saw
Indian
nationalism
as
'tamasha'
'manufactured'
by
the
Indian
I g
elite, and argues
the early nineteenth
century Whig
or liberal imperialist
The
Return
of the Colonial
in Indian
Economic
History
position, which
saw the role of British rule as gradually training Indians for ^ self-government.81 Itwas now the Government of India which was helping to 'manufacture' nationalist opposition! The colonial people are robbed even of
^" ^ ^ ?r
es.
their own liberation struggle. With elements of 'sovereignty' already being passed on to India with Government help one is left wondering what the
Gandhian mass movement phase of the Indian national movement, between
World untold
War
1947, costing sacrifices by millions, was all about.82
I and
tens of thousands
of lives and involving
a>
for the explanation century, particularly between World War I and 1947. Instead of decolonization, what this period witnessed was not only the continuation of colonial exploitation (though in an altered form) but its in many respects at great cost to the Indian economy blatant intensification understanding, in the twentieth developments and its people. Britain did not afterWorld War I abandon itsmost important market for textiles in India, so ruthlessly captured in the nineteenth century, as a result of their now giving in to Indian industrial interests or merely due to Indian nationalist pressure. Britain was forced to concede substantially her imperial industrial
interest, remittance
In my
there
V is a completely
different
interest
i.e., or using 'drain'.
in the colonial market

the colony It was as a switch a source from
in favour
of one capital imperial
of
imperial financial
unrequited to another, interest
through
not a switch from
imperial to Indian national interest. The tussle between the two imperial interests had already surfaced by the late nineteenth of India was facing some century when the Government in raising the revenue necessary
The Government of
difficulty politically
revenue,
for meeting
India, unable
the sterling remittance

economically and
requirements.83
to raise the required

salt tax, etc., was keen to
revenue from
levy some revenue
any other
duties on
source
Indian
like land
imports
the Secretary of State under pressure from (not protective British textile manufacturing interests was adamant in not allowing. It is of India was not bending to national important to note that Government duties) which only trying to facilitate remittance and 'drain', a critical interest. Eventually, in the 1890s the dilemma was resolved, financial imperial at India's cost, by levying revenue duties on imports along with expectedly interest but was
countervailing excise duties of the same amount on Indian manufacture of
textiles to avoid even a semblance of any protection to Indian industry. The dilemma of adjusting the two imperial interests, of finance and industry, followed a somewhat different trajectory in the twentieth century, on India increased since 1914. British financial demands particularly
.g
Social
Scientist
o ?s ^ < -5 ^ ^ 00 OO o ^ ^2 >
manifold
since W.W.
approximately
expenditure to ? 14.3 million external public debt increased from about ? 6 million between 1913-14 and 1934-5.85 In 1917 India supplied goods worth ? 100 million without any payment and in 1918 decided to make another gift of ? 45 million to the British war effort.86 During World War II defence over crores in 1939-40 nine from Rs.50 increased about times, expenditure by The proportion of the total expenditure of the accounted for by the Defence Services (an expenditure Tirthankar Roy fully approves) was about 55 per cent in 1920-21 rising to 75 per cent by the end ofWorld War II.87 Far from decolonizing, retaining India had become even more critical for Britain. Central Government The huge rise in India's sterling 'obligations' or 'commitments' (often used as an euphemism for, if not denial of drain)88 or the 'external drain' required large increases in the revenues raised by Government of India or the 'internal drain' in order to pay for the external drain. Again,
area where revenue could be increased substantially was
example, Home Charges84 increased from in 1924-25. Military in 1913-14 to ? 32 million doubled from ?5 million to ? 10million and interest charges on ? 20 million
I. For
to Rs.458
crores
in 1944.
the only possible

customs revenue,
primarily meant import duties. Thus between 1901-05 and 1936-37 while the total revenue raised by Government of India more than doubled, customs alone met about 72 per cent of the increase in total revenue. Customs which had overtaken land revenue as the principal source of revenue by 1921 25 was thus critical in the maintenance of the rapidly increasing remittances which of the Government
etc.89
of
India
on
account
of home
charges,
military
expenditure,
The import duties on cotton goods had gone up from 3.5 per cent in the 1890s to 25 per cent for British cotton goods in 1931. (Duty on non-British, mainly Japanese goods had risen to 75 per cent by 1933). The countervailing excise of 3.5 per cent levied in 1896 however could not be increased in the mass circumstances with a powerful changed political anti-imperialist movement this change in Significantly, having come up in the meantime. scenario was not seen by the British government as the surrender of imperial interest, even if that may have been the view of some imperialist scholars.
Samuel Hoare, the Secretary of State for India, quite conscious of the crucial role played by import duties inmaintaining imperial interests, argued against the Lancashire agitation for removal of cotton duties. Apart from the "disastrous" political consequences such a course of action would produce, he urged that itmust
cotton goods" was
be recognized
for
that "the present

purposes for
level of tariff on British

"without this revenue
necessary
revenue
India would 20 and provide
be unable for military
to discharge
its financial
obligations
in this country
expenditure."90
The
Return
of the Colonial
in Indian
Economic
History
India to Britain at any cost became the centre piece of British economic policy in this period for yet another reason. ** Britain, having lost its industrial supremacy in the world (first in consumer goods and later in capital goods as well) by the end of the nineteenth century and particularly by the beginning of the twentieth century, was increasingly Maintenance of remittance from emerging as the major financial centre of the world with the pound sterling as to an> its foundation91 - a position that Britain was able to maintain tillW.W.II extent of her with the aid India, by manipulating currency, blatantly large exchange and budgetary' and financial policy. It is small wonder, then, that finance was one portfolio the British refused (even in the limited sense of appointing an Indian of their choice to the Viceroy's Executive Council) till the very end, i.e., till the formation of in 1946. Several other economic portfolios such as the Interim Government and supply were those of commerce, industry, planning and development, to part with that. Even when the colonial long before given to Indian members set up the Reserve Bank of India in 1935, itwas barely given any Government autonomy, with the British government insisting on "the last word" on financial matters. The bank, seen as an instrument for safeguarding imperial financial interests, was not to be allowed to be misused by Indians who "like a spoilt, willful, naughty child" would financial responsibility.92 instantly want to use it to demand
3> .R-* ?r 5 o.
An India Office document of December 1930, marked 'secret' and called "The Position of the Secretary of State in Relation to Indian Finance,"93 brings out clearly some of the reasons for the crucial importance attached to the issue of finance by the British. It was stated that about 60 per cent of the Indian Government's budget, i.e., about ? 60 million out of ? 100million, was by military expenditure, sterling debt charges and liabilities in of for and officials for which the Secretary of State salaries respect pensions was responsible. Of this, defence expenditure alone absorbed 45 per cent of absorbed
the central revenues.94 When such a large proportion of the revenue was
earmarked for charges for which the Secretary of State was responsible, itwas pointed out that "it is hardly open to doubt that Parliament should retain the
power to secure that its obligations are duly honoured".95 Since the "revenues
from which
'commitments' State to see
these commitments
were "that in sterling, and
must be met are collected

it was exchange "incumbent" are being so upon
in rupees", and the

the Secretary as to "permit of
currency
managed"
of the remittances of the requisite funds from India to London". Also, he had of India were to ensure that the revenue and expenditure of the Government
balanced.96 In other words, the Secretary of State needed the "power to impose
on the Indian Executive such measures as are needed to provide thefunds and to facilitate their transfer... from India to London.97 Some decolonization!
9 I
Social
Scientist
rs ^
o Before I go on to outline other aspects of the fiscal and monetary policy followed by Britain in this period to meet its growing imperial financial must it be the noted that tariffs did not mean that Britain was interests, rising <ready to withdraw from trying to maintain its industrial interest in the even in this limited sense. While it is true that ~5 colonial market, i.e., decolonize since W.W.I, exports to India were shrinking rapidly (except in chemicals where they increased) India still remained, as late as 1938, the as it did for largest single market for British exports of cotton piece-goods other market and items.98 The Indian general machinery though shrinking was thus far from redundant, on the contrary its importance increased as British British share in world demonstrated and Britain would trade kept declining. Basudev Chatterjee has ably how Lancashire was desperate to hang on to the Indian market tried to ensure that it did, as much as the new circumstances
^ ^ 00 OO o ^ ?? o >
permit.99 By introducing the principle of Imperial Preference at Ottawa and through the various trade agreements of the 1930s Britain was making a last ditch effort to retain as much of the Indian market as was possible at a time when Britain was no longer able to compete effectively with other
countries in various commodities, such as Japan in cotton textiles. There were
however limits to how much imperial preference could be given to British goods as it could lead to retaliation by other countries, which in turn would affect Indian exports. This could not be permitted as India had to generate an export surplus at any cost so that the smooth flow of remittance to Britain could be sustained as imperial financial interests would not countenance any
interruption in that process.100
It is to ensure that India remained a constant source of capital to Britain through remittances, during a period when Britain just flitted from one crisis to the other (especially the two world wars and the depression), that the most
gross use of imperial authority was made to turn the instruments of economic
policy in her favour and against Indian interest. To the great agitation of Indian nationalist
government, in order to "manage" the currency
opinion,
and exchange
the colonial
in such a
manner
that the process of raising revenue in India and its remittance to Britain remained undisturbed, constantly followed a deflationary policy in India, including by severely contracting the currency in circulation, in order to push up the exchange value of the Rupee which it tried to keep at Is. 6d. by in Government deflationary policy including severe cuts was followed even during the Depression capital expenditure
its negative consequences.101
virtual decree. A fiscal and monetary

years, severely aggravating
22
the onset of the Great Depression, the situation in India changed World those of prices, especially drastically. primary produce, plummeted and India's export earnings collapsed. With agricultural prices being so low, With
The
Return
of the Colonial
in Indian
Economic
History
was unable to collect full revenue.102 Also, with the fall in export earnings, there was great difficulty in securing remittance to meet ^ India's sterling obligations or the Home Charges.103With both revenue and remittance in jeopardy, the colonial Government was in the throes of a major the Government financial
of India
^ 9 ^" ^
^.
crisis. Under
sought to ease
continuous
remittance
pressure from London,104 the Government 5

by resorting to severe deflation, contracting
currency
money
repeatedly,
causing havoc
in the Indian economy,
especially
in the
a>
market.
A massive period.
India's
total breakdown
was averted by the of the remittance mechanism from the of India that export government gold encouraged in this The gold exports were crucial in compensating for the drastic drop in
surplus on commodity transactions.105 Between 1931-32 and
export
1938-39, on an average, more than half (about 55 per cent) of the total visible and (positive) balance of trade (i.e. balance of transactions in merchandise treasure) was met through the net exports of treasure, with the exports of gold the commodity balance of trade was sharply in years when For in low. 1932-33, particularly example, gold exports constituted about 95 cent the visible total balance trade.106 per of positive of Clearly remittance had to at all costs, if the export surplus in commodities be maintained (necessary to convert the rupee revenues into remittance) fell short itwas made up through increasing a smooth flow the role of gold exports in India's maintaining or of remittance of the 'sterling obligations' the Home Charges as well as the as other invisibles such profits, dividends and interests earned on foreign investments, it played another critical role for British interests at home. At a time when Britain was facing a balance of payment crisis it played a major the value of sterling vis-?-vis part in strengthening gold and other
currencies.107
export of gold. Apart from
which
then that the gold export from India was one issue on remained very firm, though many government countries including Britain were following an opposite strategy themselves. It appears that the Governor of the Reserve Bank of India, Osborne Smith, had to resign partially because of his taking a position on this question which was the British home
Itwas small wonder
far too independent of the India Office and the Finance Department. He took a position similar to the nationalist demand for devaluation of the rupee to prevent outflow of hoarded gold from India.108 However the blatant and cynical manner in which Britain used Indian finances for its own benefit during the Second World War was breathtaking or in its audacity. It puts paid to any notion of imperialism withdrawing decolonisation occurred till the bitter end of colonial rule. Britain having took massive forced loans from India (popularly called the Sterling Balance) 93
Social
Scientist
of about Rs. 17,000 million (estimated at seventeen times the annual revenue of of the Government India and one-fifth of Britain's gross national product a in 1947)109 at time when over three million Indians died of famine! The Sterling Balances got accumulated as a result of the "large purchases in India", against of goods and services...made by the British Government, reserve or in For in these securities London. bills large exports placed sterling of goods and services, India, thus, received no "tangible quid pro quo" other
than "I.O.U.s of His
that adopted during World War I - the Reserve Bank of India expanded currency or issued notes against its sterling holdings held in reserve in London to pay for the British war purchases in India.111The rapid expansion of currency that occurred as a result (the total notes issued increased by nearly 1939 and 1944) combined with the fact that large of and services were made available to England for which no goods quantities or came to India in return, led to severe shortages and a services back goods was What inflation.112 runaway shocking was that this policy could be pursued four times between at a time when famine conditions prevailed in India. To cap it all, after the War was over, Britain made a serious bid towards defaulting on repayment of
the loans raised at such tremendous cost to India.113
Majesty's
Government".110
The
procedure
was
similar
to
The Second World also saw British colonialism to make an industrial breakthrough another opportunity War
deny India yet an opportunity seized by the 'White' colonies. Indian entrepreneurs, who had already in the inter-war years shattered the bogey of India facing a lack of capital or or of Indian capital being 'shy' and unwilling to take risks, entrepreneurship,
by growing rapidly, much faster than foreign capital in India and venturing were poised for amajor industrial push during the Second into new areas,114 World War. The persistent efforts of Indian entrepreneurs to enter frontier areas of industry in India such as automobile, aircraft and locomotive
manufacture, shipbuilding, manufacture of armaments, engineering goods,
machine monetary Control',
tools, etc., were smothered by the colonial state using fiscal, and other instruments of state policy such as the 'Capital Issues all in the name of the "War effort," but in actuality in deference to colonies.115
imperial interests and even the interest of the white
VI To return to the question of the positive 'non-colonial' type of developments I listed in section III, clearly they were not the result of any since W.W.
process of decolonization because, as I argue above, there was no such process
the result of colonialism itself. these developments occurring. were I it it. the As earlier116 wrenched from have of space They product argued that all the developments is easily demonstrable listed above, occurred (to list Neither
were
The
Return
of the Colonial
in Indian
Economic
History
some of the causes) either (a) as a result of the struggle, political and economic, against imperialism, whether through the national movement,^ ^ or legislative assemblies, business chambers directly by entrepreneurs, asmost case or in the of shipping,117 (b) when the grip of imperialism demonstrably weakened colonial or loosened due to world system in the colony, the principal metropolis Britain, lost out in Depression,118 or (c) when centres to to permit other and competition metropolitan preferred to in the allow than rather other grow indigenous enterprise colony foreign
powers to capture the colonial market, e.g., protection to cotton, iron and
3>
of the logic of the factors autonomous such as the World Wars and the Great
?=* ? ^3. n>
steel, matches Belgium

inner
and sugar was related respectively, to competition from Japan, and Germany, Sweden, and Java, a Dutch colony,119 or (d) due to the
of colonialism itself, e.g., the increasing need for revenue
contradictions
the colony to meet imperial financial interests could no more be met from a by now stagnating or even declining agriculture but had to be met through revenue tariffs on imports, which provided indigenous manufacture from words,
it.
certain amount of protection against imperial industrial interests.120 In other the specific non-colonial in the twentieth type of developments a as not or in occurred result colonialism but in opposition to century of spite of
The very limited growth of the positive, non-colonial developments was an occurring in embryonic form in the hostile womb of colonialism whose continuation was making the birth of capitalism in India more and more difficult. The structural distortions created by colonialism made the future transition to self-sustained growth much more difficult. It required the
overthrow of colonialism, and the 'un-structuring' of the colonial structure
for India to start its attempt to build independent capitalism after colonialism for nearly two hundred years ravaged its economy and society and deprived it in the process of modern of participating of the opportunity industrial
transformation occurring in other parts of the world. Despite the post W.W.I
the Indian economy till 1947 remained essentially positive developments backward and structurally colonial. The Indian economy at independence was still basically dependent on a stagnating, low productivity, 'semi-feudal' agriculture with modern industry (in 1950) contributing a mere 6 to 8 per cent of the national income and (in 1951) employing 2.3 per cent of the labour force (in 1946).121 What India inherited after two hundred which
to the world market', and
years of colonial 'benevolence', India of the 'commercialization', allegedly gave 'advantages' 'exposure
'transport communication', 'a strong state',
'western scientific skills', etc., benefits that Tirthankar Roy could hardly stop listing, was a very sorry state of affairs indeed. 25
Social
Scientist
rsi ^ <? ~5 ^ ^00 OO
work shows, India was the largest oAs Angus Maddison's monumental economy of the world for the entire thousand years of the first millennium accounting for close to 30 per cent of the world's GDP. Till as late as the beginning of the eighteenth century India's was still the largest economy with United
India
25 per cent of the world's GDP, more than eight times that of the Kingdom. The decline started soon after and at the end of nearly two hundred years of colonial rule (during which Tirthankar Roy claims "colonial about
experienced positive economic growth")122 India's share had been
vO m >
4.2 per cent in 1950. It was a few decades before India could sufficiently shrug off the colonial legacy and begin to gradually claw her way back into improving her share of the global pie.123 The impact of colonialism in human terms was traumatic and all too reduced visible. At independence the average life expectancy was barely 30 years. The poor obviously died much younger. India was faced with acute food shortages creating near famine conditions repeatedly in different areas. The Bengal famine of 1943, just four years before the British left, claimed more than three million lives.124 (A great tragedy which Tirthankar Roy predictably underplays, putting the famine deaths only at "some half amillion", a figure much lower than even the official famine Inquiry Commission and other government tons of food grains worth estimates.)125 Between 1946-53 about 14 million
to a mere
Rs. 10,000 million had to be imported, seriously affecting India's planned In 1951, 84 percent of the people (92 after independence. development were The illiterate. women) percent legacy of colonialism which Tirthankar so completely126 was anticipated by the poet Rabindranath before his death in 1941, in his inimitable way:127 Tagore, shortly The wheels of fate will some day compel the English to give up their Roy misjudged Indian Empire. What kind of India will they leave behind, what stark runs dry at misery? When the stream of their centuries' administration a waste of mud and filth will they leave behind them. last, what VII The growth
on
that India witnessed

the 'good' work started
after
during
independence
colonialism.
was
It was
not
a
all about
of a
carrying
product
structural break painstakingly crafted through amulti pronged planned effort an unique effort of trying to industrialize and build capitalism with democracy and civil liberties. Jawaharlal Nehru and other leaders were deeply aware that India was experimenting with a hitherto uncharted path as none of countries of the world had. democracy and civil liberties I the initial during period of transition to capitalism and industrialization. have evaluated elsewhere the nature of this stupendous effort since independence.128 Iwill only outline here a brief comparison of some of the the industrialized
~,
The
Return
of the Colonial
in Indian
Economic
History
features
of
the
colonial
period,
and positive growth after independence. This may help underline period
required, and to a considerable extent achieved.
decolonisation
the period of so called especially since World War I with those of the the enormity of the break
> g.
z c or a> 0>
The growth of per capita income in India in the colonial period was either zero or very low, remaining way below that of the independent countries of 1820 and 1913. See table 2. In the last Europe, USA and Japan between had had its full impact, the per an annual rate of -0.22 per cent in at India actually declined capita income between 1913-1950.129 After independence, on the other hand, it grew at 1.4 per cent in the first couple of decades (about 3 times faster than the best phase, 1870-1913, under colonialism) and much faster at 3.01 per cent in the next 30 years, 1973-2001 (a rate considerably higher than that achieved by West Europe,130 USA or Japan) and in the last four years (2003-4 to 2006-7) at an astounding 7 per cent (itwas over 8 per cent in 2006-7) comparable to the explosive rates achieved by Japan (though in very special circumstances)
between 1950-73.131
decades
of colonial
rule after colonialism
TABLE2
Rate of Growth of per capita GDP (annual average compound growth rates) (1)
1820-70 France UK 1.01 1.26 1.34 0.19 0.00
(2)
1870-1913 1.45 1.01 1.82 1.48 0.54
(3)
1913-1950 1.12 0.93 1.61 0.88 -0.22
(4)
1950-73 4.04 2.42 2.45 8.06 1.40
(5)
1973-2001 1.71 1.86 1.86 2.14 3.01
(6)
2001-2007
USA
Japan India *
5.65*
per capita net national product
Source: Column 1 to 5 from Angus Maddison, op. cit., Table 8b, p. 643. Column 6 is based on Economic Survey, 2006-07, Government of India, New Delhi 2007, and Aditya Mukherjee, "Indian Economy in the New in Bipan Chandra, Mridula Mukherjee and Aditya Mukherjee, India Since Independence, Millennium," Penguin, Delhi, forthcoming, 2008.
where Similarly, the colonial period saw a process of de-industrialisation traditional industry was largely destroyed and modern industry grew very slowly. Despite the growth of modern industry since W.W. I, at about 3.8 per cent per annum, it contributed amere 6 to 8 per cent of the national product in 1950, having
product in
started from an extremely

Moreover, modern
low level of 4 per cent of national

industry was yet dominated by
1913.132
consumer
goods industry with a near total and debilitating dependence on the advanced countries for capital goods and technology. Contrast this with
27
Social Scientist
o
rsi
the period after independence.

grew at 7.1 per cent per annum.
Industry during the first three plans ( 1951 -65)

More important "the three-fold increase in
^ < "5 S
xj-
1951 and 1969 was the aggregate index of industrial production between result of a 70 per cent increase in consumer good industries, a quadrupling of the intermediate goods production and a ten-fold increase in the output of This of industrial led to a structural pattern capital goods."133 development
transformation of the colonial legacy. From a situation where to make any
00 OO o ^ ^2 >
capital investment, virtually the entire equipment had to be imported (in 1950, India met nearly 90 per cent of its needs of even machine tools through imports) the share of imported equipment in the total fixed investment in the form of equipment in India had come down to 43 per cent in 1960 and amere 9 per cent in 1974, whereas the value of the fixed investment in India increased by about two and a half times over this period (1960-74).134 This was a major achievement, and it considerably increased India's autonomy from the advanced
or growth.
countries
in determining
her own rate of capital accumulation
the largest sector of the Indian economy, was in a state of Agriculture, ruin under colonialism. Per-capita agricultural output actually fell at the rate of 0.72 per cent per year during 1911-1941. Per-capita food grains output fell even more sharply by 1.14 per cent per year, a 29 per cent fall over the period.135 All crop yields per acre declined by 0.01 per cent per year between 1891-1946 and again food grain yields declined more rapidly by 0.18 per cent,
and even more sharply by 0.44 per cent per year between 1921-46.136 No
wonder
massive
the food shortages and famine conditions mentioned above. After a combination of institutional changes (land reforms) and independence,
state sponsored technological change transformed this situation.137
During
agriculture
the first three plans

grew at an annual
(leaving out
rate of over
1965-66,
3 per cent,
a drought
a growth
year),
rate more
Indian
than
eight times faster than the annual growth rate of 0.37 per cent achieved during the half a century (1891-1946) of the last phase of colonialism in India.138The a rate of growth ranging from Green Revolution in the late 1960s maintained about 2.5 to 3.5 per cent (primarily through increases in yield) till the mid areas like Punjab and Haryana did not have 1990s139The Green Revolution in the colonial period as Tirthankar Roy, for continuities with trends any
example, argues.140 Haryana was largely an extremely backward area in
colonial times and even Punjab showed meager growth rates in terms of all crop yields per acre of 0.36 per cent per annum between 1901-1941 by one estimate and of only 0.06 per cent between 1906-7 and 1941-42 by another. The highest increases in yield seen in Punjab were in non-food crops of an
average of 1 per cent per annum between 1891-1951.141 In contrast the value
2g
productivity
of eleven major
crops in Punjab
increased between
1950-51 and
The
Return
of the Colonial
in Indian
Economic
History
1969-70
by
255
per
cent,
i.e.,
an average
annual
increase
of more
than
12.5
per
> a.
r+" ^< z c 7\ IX a> <T>*
cent.142The huge productivity Gross Domestic
difference
certainly
signifies a structural break.
Table 3 Capital Formation (GDCF) as percentage of GDP, Public Expenditure at Current Prices and Public Expenditure as Percentage of GDP 1901-2006 (All figures are annual averages)
GDCF as % of GDP Public Expenditure Rs. Crore (current prices) Share of Public in Expenditure GDCF as % of GDP
1901-1913 1914-1946 1950-1955 1955-1960 1960-1970 1970-1980 1980-1990 2004-2006
6.92* 6.75* 9.04 13.30 14.66 17.63 21.23 32.65
75.4 41.7 331.8 769.6 1912.1 8003.4 26416.9
(1925-30)# (1930-38)# 3.14 5.62 6.96 8.19 9.98
Source: Computed from Economic Survey 2006-07, Government of India, New Delhi, 2007, Tables 1.4 and 1.5, S-6 to S-9. * Goldsmith, op.cit., Table 1-10, p.20 and Table 2-9, p.80. # Computed from Rajat K. Ray, Industrialisation in India, OUP, Delhi, 1979, Table 40, p.257.
rate of capital formation, the key to economic development, at a very slow pace during the colonial period. India was in fact if not more, of what losing to Britain as drain or tribute an equal proportion, was invested in India. The drain has been variously calculated to be between 5 The occurred
to 10 per cent of her national income.143 The average annual rate of capital
formation between 1901 to 1913 was 6.92 per cent of GDP, falling to 6.75 per cent between 1914-46 (see Table 3). Public expenditure, an important engine of capital formation in backward countries, declined sharply from Rs. 75.4 crores annually during 1925-1930 to Rs. 41.7 crores during the Depression the opposite needed to be done. The massive cut in government expenditure along with other deflationary fiscal and monetary on the policies greatly exacerbated the negative effects of the Depression years 1930-38, when
Indian economy.
the colonial and the post independence scenario is public expenditure was low and declining during the last decades of colonial rule144the initial forty years of independence (1950-1990) saw it rise by more than three times (see Table 3, column 2 and 3). Similarly, saw the gross while the last fifty years or so of colonial rule (1901-1946) to 7 cent of GDP 6 in hover around formation the economy per capital saw rate the first after of capital the independence annually, fifty years evident. While
The contrast between
29
Social
Scientist
OO o rs CL < 5 z
rise consistently and sharply, ending up at a rate of 33.8 per cent in about five times the colonial rate.1 There was also a rapid per capita increase in the availability of some of the infrastructural and social benefits as they grew several times faster than the In 1965-66, as compared to population immediately after independence. formation 2005-06 1950-51, installed capacity of electricity was 4.5 times higher, number of town and villages electrified was 14 times higher, hospital beds 2.5 times higher, in schools was a little less than 3 times higher and very enrollment importantly admission capacity in technical education (engineering and was at and levels the technology) diploma higher by 6 and 8.5 times, degree respectively.
> period.146 Also, Jawaharlal Nehru and the early Indian planners were acutely aware
This when
population
increased only by 37.3 per cent over the
of India's backwardness barren

overcome
in the colonial
this shortcoming.
in science and technology (an area left consciously and therefore made massive efforts to period)
An unprecedented increase occurred in the
in science and technology in the universities and opportunities institutes. National expenditure on scientific research and development kept growing rapidly with each plan. For example, it increased from Rs. 10million in 1949 to Rs. 4.5 billion in 1977. Over roughly the same period the stock of educational India's scientific and technical manpower increased more than 12 times from 190 thousand to 2.32 million. A spectacular growth by any standards, a towards a growth whose benefits India reaps today as the world moves
'knowledge' society.147
The health,
in quantum jump in investments, growth rates, improvements education etc., listed above did not occur because of any dramatic
endowments," feasts," some of "hunger the causes for gold," listed by
in India's "climatic "resource risks," change or to "have sumptuous tendency marriage
Tirthankar
Roy for the Indian economy stagnating in the colonial period.148 because of the concerted effort to break away from the occurred They disabilities created by the colonial structure. However still faced with
India is despite the paradigmatic change since independence intolerable levels of poverty and backwardness.149 Undoing the ravages of nearly two hundred years of colonialism was never going to be an easy task.What is certain, however, is that the answers to the future challenges would not lie in building on the continuities with colonialism but on the
breaks.
We Acknowledgement: this article. publish

30
are grateful
to Studies
inHistory
for permission
to
The
Return
of the Colonial
in Indian
Economic
History
Aditya Mukherjee Studies, Jawaharlal
is Professor Nehru
of
University,
Contemporary New Delhi.
History,
Centre
for Historical
> Q. ^"fu C ZT
Notes 1 Imust over at the outset I have my debt to the Delhi Historians' Group. acknowledge of the comraderie, and otherwise, the years been a beneficiary academic of Iwill particularly like to thank Bipan Chandra, this group. Mridula Mukherjee, Sucheta Mahajan, Salil Mishra, Tadd Rakesh Fernee, Mahalakshmi, Batabyal, Menon, Bhuvan Bhupendra Jha, Sanjay Yadav, Verma Shin Minha, Medha and and Vagish Jha for comments Gyanesh on this
Vishalakshi Kudaisya, address. 2 'The British New
Rule
in India' Tribune,
and
'The Future 8 August
Results
of
the British
Rule on
in India' India in as relevant
York Daily
25 June and articles
1853. Marx's
this newspaper along with extracts from Marx-Engels useful volume extremely 2006. Marx's Marx, of 3 New India, 4
written
in an been Correspondence compiled on India, Tulika, edited by Iqbal Hussain, Karl Marx The volume also contains contributions "Introduction: by Irfan Habib, of India" and Prabhat The Other Patnaik, Perception "Appreciation: " which and and thus increase the value analyse explain Marx's position immensely. Tribune, 8 August 1853, in Iqbal Husain, ed., Karl Marx on
by Frederick 1853-62 have
writings as well Engels
the volume York Daily p. 46.
Pro-imperialist colonialism
scholars
like Morris remarks.
D.
Morris See for
have
Delhi, the Left, works such as those of Bill Warren, Pioneer Imperialism: of Capitalism, a mockery New Left Books, of Marx's 1980, have made position. Writing after the role of Imperialism decades had been laid bare, Warren the critiqued anti-imperialist capitalism. on More some (Marx that position, arguing in the 1853 articles imperialism actually had suggested this only led to the growth of as a possibility.
Reinterpretation in the Nineteenth Economy
Marx's through of Nineteenth
Indian Century Century: A Symposium,
example Economic
sought his
a defence "Towards
of a
in Indian History" 1969, p.3. Even within
on stronger this below). Warren is somewhat in his critique of ground to equate of the Dependency school's which tended positions imperialism with the world and which market excluded the possibility of any by definition . third world 160 Ibid. progress. p. non-dependent capitalist a detailed discussion his and of Marx's analysis position of Asian Theories Societies on and India, Colonial see Bipan
5 For
Chandra, Mimeo., UNESCO, Irfan Habib, Habib, Delhi, 6
"Karl Marx, CHS,
in and JNU 1980, an abbreviated "Marx's Perception in Indian History:
Rule", Theories: Race and Colonialism, Sociological see in Review, 1981. Also version 1, Summer of India" cited in footnote 1 and also Tulika, in Irfan New Towards a Marxist
Essays 1995.
Perception,
See Bipan
Chandra,
Rise
and
Growth
of Economic
Nationalism
In India,,
New
Delhi, 1966 31
Social
Scientist
CO o o
CNl CL < a ai Z en
7 Bipan Mimeo,
Chandra, 1980,
"Karl Marx,
his Theories
of Asian this
Societies aspect
and
Colonial
Rule", the
regeneration 8 New I York Daily p. 12, emphasis
pp. 36, 41, has as a future potential. Tribune, mine. Tribune, 25 June,
emphasised
of Marx
seeing
1853,
in Iqbal Husain,
ed., Karl Marx
on India,
9 New
on in Iqbal Husain, 8 August 1853, ed., Karl Marx was to see the In fact a few years later Marx of the class following the emancipation emancipation working on the Irish colonial In 1869, while colonial situation, people. commenting a precondition in Ireland was Marx for a that a "national revolution argued "Karl Marx, in Britain" his Theories successful revolution See Bipan Chandra, York Daily p.49, India, mine. emphasis of the British of Asian Societies and Colonial Rule", Mimeo, 1853, p.58. ed., Karl Marx on
>
10 New India, 11 Ibid.,
York Daily p.49,
Tribune, mine.
8 August
in Iqbal Husain,
emphasis mine.
emphasis
12 This
For all is a point Chandra. by Bipan emphasized I am basing myself 1853 article, after the August writing "Karl Marx, his Theories of Asian Societies and Colonial Irfan Habib, Marx's "Introduction: on India, Tulika, 2006. Perception of India"
references on
to Marx's
Chandra, Bipan and Rule", Mimeo Karl
in Iqbal Hussain,
Marx 13
awareness to note that a similar involved It is interesting of "unequal exchange" in in trade between with levels was expressed countries productivity divergent in the 1880s and by Indian business India by the early nationalists 1930s. See Bipan Chandra, India: British versus the mid "Colonial leaders Indian since Views
of Development", Braudel Center, Vol XIV, No.l, Review, A Journal of Fernand Federation of Indian Chambers Annual Winter 1991, p. 106, G.D.Birla, Report, and S.P.Jain and B. M. Birla in of Commerce and Industry 1934, p.173 (FICCI), and Annual FICCI, 1943, 1946, Report, p.129 pp.104-5, respectively. 14 For a useful collection on see Peter J. Cain and Mark Harrison, ed., imperialism 3 in Historical 2001, Studies, Routledge, London, to this series the 19m the material from surveys
Critical Imperialism: Concepts volumes. The Introduction
in this collection, till the late 20m century. Another useful article included century to A century from Marx and Imperialism: of Theory Patrick Wolfe, "History is also critically the literature. The Arif Dirlik Postcolonialism", surveys quotation from this article. For an nationalism associated and popular important resistance and detailed to colonialism critique by the Peasants 2004, of the treatment studies' Non-violent II in this Marxist of and 'subaltern in India's
Revolution, work Practice and
see Mridula scholarship Mukherjee, Practice and Theory, Sage, New Delhi, Peasant titled Interrogating Historiography: and Subaltern Theory. Consciousness Political Weekly, Also see Mridula in Colonial
Book especially Peasant Perspectives,
Peasant and
Economic 'subalterns',
to my
knowledge,
(hereafter have not responded Nationalism 1979.
"Peasant Resistance Mukherjee, and Beyond", India: 'Subalterns' 8 and 15 October, 1988. The EPW), to this critique. Colonialism in Modern India,
32
15 Reprinted in Bipan Chandra, Orient New Delhi, Longman,
and
The
Return
of the Colonial
in Indian
Economic
History
16
See
Bipan
Chandra, Stages Asia, Vol. of and
"Colonialism of Colonialism 10, No. 3,
and 1980
Modernisation", the Colonial Nos. and Hamza
1970, State", Alavi, 33-35, EPW,
Ibid.,
and of the
>
"Colonialism, Contemporary Colonial Mode August 16, Nos. London Modes 17 Bipan 18 The 1975,
and
Journal "India and
Production", "Structure and Hamza 1982. EPW,
EPW, of Colonial Alavi, See also
Vol.10,
Formations", etal., Capitalism
Special Number, Vol. Annual No., Production, of Colonial
10-12,1981 and Canberra, of Production",
and Colonial "For a Theory
Jairas Banaji, 23 December 1972. and Modernisation",
Z c 7T ZT a>
.-s (T)' fD
Chandra, question goods of
"Colonialism
1970,
op.cit.
emphasis
mine. for the
capital 19
industry Alavi, on
between the sector producing exchange and the capital goods did industry "Structure a World of Colonial Scale, Model", of what New
capital goods not arise.
See Hamza Accumulation Development: for a brilliant as opposed Habib that unrequited
York,
Samir Formations," op.cit, 1974 and "Accumulation of African a colonial Political
Amin, and 1974
a Theoretical enumeration
Review constitutes
to a metropolitan / central one. Also in 1801, at a crucial industrial revolution, stage of Britain's to Britain transfers from 9 per India represented about formation in Britain. The
Economy, structure / peripheral it has been calculated by Irfan Drain cent of or the
GNP of British India which was equal to about 30 per cent of British domestic
together out formation per cent of British capital Utsa Patnaik it to be 84.06 per calculated from available for capital savings from Asia and West Indies put was transfers unrequited to be 70 Habib by Sayera of domestic in the same year. savings cent. This shows how critical transfers calculated
to the process the colony were of capital accumulation and how for Britain it was for the colony. See Irfan Habib, of the Indian "Colonisation a Marxist in Essays in Indian History: Towards Tulika, Economy", Perception, New Delhi, "Colonial and Capital 1995, pp. 304-6, Sayera Habib, Exploitation debilitating Formation of the Indian in England History in the Early Stages of Industrial Revolution", Proceedings "New Estimates of 1975, Utsa Patnaik, Congress, Aligarh, to Transfers British Trade and Their from Relation "The Indian Economic Moosvi, in The Making Essays Study" of History: Delhi, 2000, pp. 386-390. Shireen Experience, Presented to
Eighteenth-Century and Colonies," Tropical 1600-1900: A Quantitative Tulika, New Irfan Habib, 20 In some cases of even the
destruction Mohd. V. Ali
Lutsky, 1969.
in Egypt Modern History
modern existing textile, shipbuilding in the 1830s, through of the Arab
was witness the industry destroyed, and armament started industry, by See for example colonial intervention. Countries, Moscow, Publishers, Progress
21
This which
claimed wrongly by Mridula agriculture, Mukherjee, Punjab Exceptionalism, Sage, New "Agrarian Conditions in Assam
tendency it has
has been
been
shown
to be
true
even
in areas in the
was
moving
like Punjab of direction
in India, capitalist
Delhi, 1880-1890:
Colonialising 2006. A Case and on
The Myth Agriculture: of See also Aditya Mukherjee, of the Study of Five Districts Social how History colonial (from Review, XVI, 2, of structuring Punjab). 33
The Indian Economic Valley", for a discussion 1979, pp.207-232 Apr-June, occurs Indian agriculture in a vastly different Brahmaputra
situation
Social
Scientist
CO o o rS ? u
22
In some century, technology no positive
instances, they were
in the late 19*" of Indonesia sugar plantations at high and levels of investment operated by foreign capital to colonial needs and had but yet they remained totally articulated See for in Indonesia. effect towards of capitalist growth agriculture such of Ecological India, New
as the
The Process Clifford Involution: Geertz, example Agricultural 1963 and J. S. Furnivall, Netherlands in Indonesia, Change Berkeley, New 1956. 1944 and Colonial and York, York, Practice, Policy 23
and Colonial See Bipan Chandra, his Theories of Asian Societies "Karl Marx, on Indian Economic Ideas "British and Indian Mimeo, Rule", p.62, and in his Nationalism and Colonialism...,op.cit 1858-1905" Development, versus A of Development", Indian Views India: British "Colonial Review, Journal of Fernand Ali's Braudel Egypt Center, Vol XIV, No.l, Winter 1991, p. 87.
>
24 Mohammad 25 Bipan Frank
for example. to empirically that of demonstrate spurts colonialism with the of for India (as Gunder that growth a to 1947 was rather on than this
Chandra had
was
the first for Latin
shown
India witnessed result because later. 26 Those it was on the who argue transitional colonial of the of
during
America) the last phase of the
industrial 1914
from
"loosening it. See his
links"
or breaks
colonialism
"Colonialism
and Modernization",
op.cit. More
that
colonialism in
was
to modernization
development, argue. 27 Tirthankar
path would a position even
to partial modernization leading to accept that moving have would to closer the country fact bring hard imperialists would find
or
that
further
the die
capitalist to difficult
The Economic Roy, Press, New Delhi, 2000, Second to the first edition. See Niall London, Ferguson, for 2003,
History edition,
of India: 1857-1947, 2006. All references
Oxford
University are in this address
28
Praise empire. are quoted and Subrahmanyam Guha Roy's work by Ferguson, for the book. edition of Roy's book, ibid,, as an advertisement defence of the 29 has in considerable detail Bipan Chandra and the issue of development colonialism versus Center, Economic Indian Vol Views XIV, No.l, of Development", 1991 Winter and
Empire: How an unabashed
Britain
Made
the Modern
World,
Penguin, of Tirthankar in the second
ideas on and Indian the British given in India in, "Colonial India: British Review, A "British in of Journal and Indian his Fernand Ideas on Braudel Indian and
Development,
1858-1905"
Nationalism
Colonialism...,op.cit. 30 See Morris Indian 31 Dharma 1982. 32 Morris D. Morris's 1963 article in Journal to and responses History of Economic and Morris's rejoinder Raychaudhuri and Review (IESHR) were compiled D. Morris, History," ed., "Towards Journal a Reinterpretati?n History, of Economic History of Nineteenth VoLXXIII, Vol. No. Century 4, 1963.
Economic Kumar,
Cambridge
Economic
of India,
II, Cambridge,
34
it by Bipan Chandra, Toru Matsui, Tapan all in Indian Economic and Social History
The
Return
of the Colonial
in Indian
Economic
History
published Delhi, 33 See
as Indian 1969.
Economy
in the nineteenth ? Indian
Century:
Symposium,
IESHR,
> g. PJ C
Irfan
Habib, Vol. 3, No.
"Colonization 8, March 1975
of
the and
Scientist, Perceiving reproduced Perspective, 34 Bannerji, Accounts
Colonialism", in Irfan Tulika, A.K., New
Modern Habib, Delhi, Balance
Asian
Essays 1995.
Economy "Studying Vol. Studies, 19, No. 3, in Indian Towards History:
Economy a Colonial
1757-1900",
Social Without !985, both a Marxist
a>
India's of Payments: Estimates of Current and
Capital to 1938-39, 1921-22 1963 and Aspects from Bombay, of Indo-British Economic 1858-1898, OUP, Relations, 1982; Basudev Trade, Bombay, Chatterji, and British Policy in India 1919-1939, OUP, Delhi, Tariffs and Empire: Lancashire and the Empire: India Orient 1992; Sunanda Sen, Colonies 1890-1914, Longman, Calcutta, 1992; Michael Blyn, Agricultural Kidron, Trends Foreign in India, Investment 1891-1947: Essays OUP, India, in India, London, 1965; and The
George
Productivity, Long Income
Philadelphia, Transition, Tulika, of India The in the Financial
1966; Utsa New Delhi, Twentieth
Patnaik, 1999,; Century,
Output, Availability, on Political Economy: New 1860-1977, Delhi, Yale 2000;
S. Sivasubramonian,
The National R.W.
Goldsmith,
Press, New 1983; Haven, Capitalism ed., The Economic V.B.Singh, History of India, Bombay, articles the colonial Colonialism view; Debdas questioning Bannerjee, and Dependence in Late Colonial Trade, Development India, New Delhi, 35 See Private : Mankind his The Investment and Political differences in India, 1900-1939, Cambridge, OUP,
Development of A.I. Levkovsky,
University in India, Delhi, 1966; a series of 1965 contains in Action: 1999. Passage See also some
1972 and Perilous New Delhi, 1982. 2006. I have
the Global
Ascendancy
of Capital,
serious
Economy of Underdevelopment, Cambridge, however with Bagchi's treatment of some
and especially of his characterization phase of colonialism as "neo-colonial" in this work. See, for example, Aditya Mukherjee, Century", and the Growth "Imperialism Economic and Political Weekly, of Indian
of the last aspects of post colonial India
Nationalism Imperialism 1947, Sage, New Delhi, 36 See Irfan Habib, Blusse "The
and Mridula Mukherjee in the Twentieth Capitalism 12 March 1988 and Aditya Mukherjee, and the Making 1920 Class: of the Indian Capitalist 2002. See also f.n. 45 below. in as a for a
Leonard Category critique Century 37
of Asian of positions India.
in Indian Economic Eighteenth Century History", Femme the Eighteenth Gaastra, ed., On Century Van Leur in Retrospect, 1998 History Ashgate, Hampshire, and taken by people like Chris Bailey and others on
eighteenth
The Economic are
History
of India,
op. cit., Introduction, selected
p.18.
38 Here
from various parts of the an updated version and shorter of the Cambridge Economic He Vol.II." "...Colonial India, (i) argues: History of India experienced economic In the nineteenth ...it century positive growth.... .... Other was driven a India's in world market by integration rapidly growing a strong ...were economic state and modern key factors encouraging growth book transport and communication." "Real in industry income and services grew that commercialization (ii) "The notion or debt, and not driven by profit motive,
of Roy's just a few samples position which he himself calls "no more than
the colonial rule." rapidly throughout was forced upon the peasants by taxes
35
Social
Scientist
CO o o rs Q. <f JC a Z
is seriously of the peasantry "indebtedness" (iii) The proverbial disputable." could be "a sign of prosperity and not poverty of the peasants" of (iv) "Drain resources nor correctly measured". from India can neither be precisely defined In any case "economic as crucial nor imagined industrialization' "alternative of British were from colonies neither gains to the origins of industrialization." as large as was 'de (v) The by an
to be is unsatisfactory thesis and needs (vi) "The most story" that of "commercialization" rule was modern and infrastructure public India could not believably close political have
replaced important
created....assets
O z m "5 >
had it not quality was for necessary benevolence, on luxuries infrastructure must
developed India's transition
goods in such extent acquired links with i.e., British Britain,"
legacy that it and rule
of the colonial and more and
state was
on the focus hold colonialism for stagnation responsible within India" such as: (a) "scarcity of water"
on the genuine institutions." (viii) "Any role of local characteristics
to modernity, if not (vii) The modernity, also seen from the fact that "it spent less duties of the state such as defence, welfare, of slow explanation and peculiarities..." one had to look at investments growth Rather rates than
"conditions made by the
despite
British which "go to the credit of this (British) regime"; (b) "scarcity of capital
was and always rates; acute"; (c) accelerated always present population growth institutions like "caste...introduced market (d) social (e) the imperfections"; for gold and silver" and inclination Indians' "to spend the extra income "hunger on sumptuous or road rather than on irrigation feasts and jewelry marriage " to climatic risks"; (f) building"; subject (g) poorly "agriculture...was high developed History emphasis 39 In this institutions... of India...op.cit., mine. section I have Aspects Period, 1982 and drawn such as banks and insurance ," etc. The 273, Economic 310-11, pp.vi, 14-18,91,130,217,240-43,257,
read at Indian History paper Congress, in S. Bhattacharya and Romila eds., Thapar, Indian History, 1986 and Aditya Mukherjee, OUP, Delhi, Situating Imperialism Nationalism and theMaking Class: 1920-1947, Sage, New of the Indian Capitalist 2002. Delhi, 1927-47", Kurukshetra, reprinted 40 41 Tirthankar A.D.D. Economy Economic example, 42 See Indian Roy, op.cit., particularly Ch. 4 and 5. and Vera Roy, aModernising Anstey, op.cit, The see for
Class: Capitalist in the Colonial
heavily of its Economic,
from
Aditya Mukherjee, Political and Ideological
"The
Indian
Development
Gordon,
Businessmen
and Politics: Manohar, etc.
in Bombay,
1918-1933,
Rising Nationalism New Delhi,
of India, London, Development 136-7, 152-3, pp. 51, 116-17,
1957 and Tirthankar
in the Nineteenth 1969, pp. Delhi, Economy Century: A Symposium, mine. about the nineteenth Morris is writing Shockingly, too brief, in 1963, when India, making century being genuine independent to change structural of the industrial landscape changes was already beginning 13-15, emphasis in less than 15 years of planning. the country "Indian Economy, 1947-65: The Nehruvian Legacy", See for example Aditya Mukherjee, in Bipan Chandra, Mridula Penguin, (in press). Eclipse of the
and Aditya Mukherjee, Mukherjee edition 2000, revised and enlarged
India After Independence-1947-2000, called India Since Independence, Imperialism of Free Trade: The
36
43
See,
Clive
Dewey,
"The
End
of
The
Return
of the Colonial
in Indian
Economic
History
Lancashire Dewey of Africa Industrial
and the Commission Lobby and A.G. Hopkins, eds., Imperial and India, London, 1978 1900-1925", Essays op.cit. British Economic
to India", in Clive Autonomy in the Economic Impact: Studies History and "The Government of India's New and K.N. Chaudhuri, Dewey Economic and Social History, Delhi, eds., 1979;
of Fiscal
> Q.
Policy and Society, Economy and A.D.D. Gordon, 44 Drummond, 1972. I shall not argued I.M.,
in Clive in Indian
c ZT a> CD
Policy
and
the Empire,
1919-1939,
London,
45
discuss
here in the
the "Left" variant late 1920s in an
of the decolonization this period seeing
thesis which
was
imperialism therefore
initially continued the
to explain form altered had no and Peasant
it as one where and it. See
colonial
Aditya Mukherjee, Communism in India", Chandra, ed., The
bourgeoisie "The Workers' Studies
industrialization encouraging basic contradictions with s' Parties, 1&2, 1926-30:
Indian
of the communist summary India and the Colonial Question, continued Indian Left, to argue a similar
An Aspect of in Bipan reprinted New Delhi, 1983, for a brief Left: Critical Appraisals, view. Datta Gupta, See, also, Sobhanlal Comintern, in History, III, 1981, 1920-1937, which Calcutta, has 1980. a A. K. Bagchi has in a section of the state on of the unilateral advanced
position,
persisted
dependence
that this period adding only on Britain for that of multilateral setting the stage
"exchanged
countries" capitalist 1947. The Political See also, A.K. Schematic Revolution elsewhere 46 See A. K.
dependence for a "neocolonial, retarded
Economy of Underdevelopment, Cambridge, and Economic in India; A Bagchi, Capital "Foreign Development in K. Gough and H.P. and View", Sharma, eds., Imperialism in South Asia, New York, 1973.1 have critiqued this view extensively 35 above). Private Investment...,
society" after 1982, pp. 90-94.
(see f.n. Bagchi,
Chs. 3, 7 and 9-14; Rajat Ray, 145 ff., 161 ff. And 196 ff.; B.R. 1979,pp. The Political Tomlinson, 1979, pp. 31-32 London, Economy of the Raj, 1914-47, and Subramanian and Homfray, Social and Economic in India, Recent Trends New Delhi, and 6-8. 1946, pp.48-49 Industrialization in India, Delhi, A.K. A.K. Ibid., Bagchi, Bagchi, pp.83ff. Private Private and Investment..., Investment..., 433 ff. op. cit., p.51. in India, Delhi, 1966, pp.233 ff. and 319. pp.440-41. Chs. 3 and 7.
47 48 49 50 51 52
Subramanian See, See
and Homfray,
e.g., A.I.Levkovsky, R.L. Varshney, op.
Capitalism "Foreign Trade", 1965;
in V.B.
India,
1857-1856x
Tomlinson, 53 A.K.Bagchi, 54 It was foreign Indian
Bombay, cit., p.31
Subramanian
ed., Economic Singh, History of and Homfray, op. cit., p.47; B.R.
Private that
Investment...,
table the See,
12.2, p.367. third e.g., stage necessarily R.P. Dutt, India meant Today, massive (second
assumed investment edition),
of imperialism in the colonies. 1970, ch.6.
Calcutta,
37
Social
Scientist
CO o O rN CL < I
55
See A.K.
of Payments: Bombay, 56 A.K. 57 58 Ibid, See Table 59 60 Kidron,
Private Investment..., p. 160 and A.K. Bagchi, and Capital Accounts Estimates of Current and 200. 1963, pp.195 Ibid. Kidron, op. Foreign cit., Investment and
India's Balance Bannerji, to 1938-39, 1921-22 from
Bannerji, and Michael B.R. XX,
in India^Lon?on, Subramanian and
1965, Homfray,
pp.53
ff.
Tomlinson, p.75. op. cit., pp.
p. 155
op.cit.,
10-11
and 40
ff.
m O >
in them Some the scholars their sometimes role, exaggerate seeing greatly in of'dependent See, A.K. Bagchi, Capital...," capitalism'. "Foreign ushering the balance of payment do not suggest op. cit. However figures of this period investment. inflow of foreign direct See, e.g., A.K. Bannerji, any massive op.cit., of fact the entry of multi pp. 195, 200 etc. As Rajat Ray put it, "As a matter nationals op.cit, did p.274 Tomlinson, op. cit., pp.48-49. and Homfray, Big Business table op.cit, Deals, Delhi, not bring any appreciable addition to the level of investment".
61 62
B.R.
table 10, p.42; Subramanian See Rajat Ray, op.cit, Indo-British XVII, A and B, pp. 63-5 and Arun Bose, 1947, p. 9-10 and Mridula See Aditya Mukherjee, Mukherjee in Twentieth Indian Capitalism op. Century", in V.B. Capital", Singh, 1991 that the position extent. considerable ed., op.cit. It is only foreign
63
"Imperialism cit., and Arun the economic investments
and Bose,
Growth
of
after direct
"Foreign reforms since to a
regarding
changed
64
See Bipan Colonialism Indian were
Chandra, inModern
"Colonialism India, New
and Modernization Delhi, 1979,
", in Nationalism of how for a demonstration
and the
economy loosened
experienced during
the links with spurts of growth when imperialism of crisis faced by the advanced metropolitan periods
countries. 65 A.K. Rajat 66 M. 67 68 A.K. Bagchi, Ray, Private op.cit, Ch.3. and A.K. 83ff., 433 Bagchi, ff. Private Investment... Investment..., Chs.3 and 6, particularly, pp.83 ff, 192ff.
Kidron, Bagchi,
op. cit., Ch.2 ibid.., pp.
See Aditya Mukherjee, Nationalism..., pp. 28-30, R.W. Goldsmith, Imperialism, New Haven, and G. The Financial 1983, p.102 1860-1977, Development of India, K. Shirokhov, in India, Moscow, Industrialisation 1973, pp.48-49. See Aditya See I. M. Clive ibid., Mukherjee, Chs. 7 and 8. p. 124 ed., op.cit, p.36. Imperialism, Nationalism..., Ch. 10.
69 70 71 72
Drummond, Dewey
op.cit,
in Dewey
and Hopkins,
38
The
Return
of the Colonial
in Indian
Economic
History
73 Drummond, 74 140.
op.cit.,
p. 132 that the loss of 'preferential advantage' by Britain
> o.
<?' PJ c 7T zjr n> <t> fD
Ibid., p. is seen as exploitation. Ibid., p. 122-3
It is to be noted
75 76
and Clive
Dewey
in Dewey the massive should arise
and Chaudhuri, economic about upsurge the various
ed.,
op. cit. of Indian business
Given Ibid., p. 249-52. Dewey, in recent years at least doubts of the Indian entrepreneur.
alleged
incapacities
77 Dewey in Dewey and Hopkins, ed., op.cit., p. 38 and Tirthankar Roy, op.cit., pp. accuses and Marxists 'left-nationalist' of scholars 10-18,309-11. e.g., Roy of the early nationalists "that were for them not much up the arguments picking more tools" and political 311. Ibid. p. descriptions." than then "reestablishing" them "as correct and valid
78 Dewey in Dewey and Hopkins, mine. ed., p. 50, 55-56, op.cit, emphasis Somewhat in the same work talks of rival factions within the inexplicably Dewey India Office and the Government of India and again a few pages later sees the as rival factions. two themselves Tirthankar of State Roy too sees the Secretary the Viceroy and Indian interests with "the balance representing Imperial in favour of India in the twentieth He goes one step further and tilting century". adds a third layer, that of the provincial Governors "who were concerned with or welfare local developmental related This third layer of issues", op.cit, p.247. colonial favour. 79 Dewey in Dewey Gordon, and Hopkins, ed., op.cit, p.67, emphasis mine. Politics also mine. a also of critique in Bombay", Indian sees the Government of See Governance presumably would tilt the balance even further in India's and
80 A.D.D. Gordon Historical India
emhasis pp. 238-241, op.cit, in Aditya "Business and Mukherjee, 1981. B. R. Tomlinson Review, 9.1-9.2,
the "imperial and domestic the former commitment" and balancing War dominated till the First World and presumably the latter after that. B. R. Political the 1914-47: The Economics Tomlinson, Economy of Raj of Decolonization 81 Tomlinson, achieved not natives that may 82 The the for in India, Macmillan, London, 1979, p. 28. "successfully "We must to bring the in a manner
as sees "British rule in India" example, having 1947" the nineteenth of century by objective Elphinstone: dream of perpetual but must ourselves possession, apply into a state that will to our perhaps of the admit interests have 'elite' of their as well litde be beneficial would a position of governing as their themselves own...", to seeing the real school.' remittances
Ibid. p. 152. this movement aspirations of as the
colonialists 'official' people,
objection
movement
Indian 83 The
favoured
down keeping by the 'Subaltern or
Government
India's amount
utilizing purchase
hard earned her export currency by India through remittance Smooth therefore could occur if the Government of surplus. only a India could generate and the export budgetary surplus equal to the remittance, was to convert sufficient the former into the latter. When these surplus
an equivalent the necessary
sterling obligation out of in Rupee
were
met
the Government's
revenues
by to
39
Social
Scientist
co O O CL -C Z
84
conditions as
did
not
introducing India's currency
was forced to adopt measures the Government such prevail, revenue at home and/or abroad, tariffs, borrowing up using rate or resorting to a the Rs./Stg. reserves, Exchange altering and monetary manipulation. More on this later.
combination The Home
of fiscal
of Government of India incurred the sterling expenses Charges cost in Britain civil and of the of State's office, including maintaining Secretary interest on Railway interest on public debt and the guaranteed military charges, to British etc. The , pension investments civil and military and furlough officers, Home India Charges correctly Ray, to a very large extent what the early nationalists represented as drain of resources or capital described from India. in India, in India, OUP, PPH, Delhi, Delhi, 1979, 1966, pp. p. 96. 11-13. in
were
vO O >
85
Rajat
Industrialization Capitalism
86 A.I. 87
Levkovsky,
and Homfray, Recent Trends in India, Subramanian Social and Economic 1946, 1914-1947: The Political The 15, 72; B.R. Tomlinson, pp. Economy of the Raj, in India, Macmillan, Economics The early 1979, p.93. London, of Decolonization on the nationalists focused their critique incurred by huge defence expenditure out to meet British that India's defence India pointing imperial designs expenditure advanced Chandra, as a proportion revenue was of annual larger than that spent by See Bipan and militaristic like Britain and Czarist Russia. nations
Rise 580 ff. Tirthankar however and Growth...op.cit., pp. Roy of this expenditure that the colonial approves government by "spent arguing on the and more less on luxuries duties of the state such as defence..." genuine mine. p. 273, emphasis op.cit, It is, for example, said that to explain the Government "we do not of India's two need a conspiracy running theory of imperialism" of its own business" revenue adequate remittance enough Political Economy
88
"day-to-day
which to meet
"in financial
terms meant
its commitments
to pay its sterling debts" in India, Macmillan, London, of the Raj 1914-4: The Economics of Decolonization was 25-6. Tirthankar favoured 1979, pp. Roy's government's euphemism commitments". is to question The point, however, "expenditure p.254. Op.cit, or 'obligations' to begin with. the very legitimacy of the 'commitments' 89 See Thomas, India's Public P.J., The Growth from 1833 of Federal to 1939, Finance London, pp. in India: 1939, 177-180, Being
things only % obtaining and Britain, and securing or See B. R. Tomlinson, obligations. in India
Finances Imperialism,
Mukherjee, 90 Samuel
Nationalism...op.cit,
pp.500-01 6.1 Tables
a Survey of and Aditya and 6.2.
to Kirpatrick, Hoare 3 February M.P., 1933, Secretary of State's Private For a detailed India Records London. Office L/PO/270, (IOR), Papers, Office on the fiscal discussion since W.W.I and maintenance of imperial policy see Aditya Mukherjee, Chs 5-8 on interest, Nationalism..., Imperialism, op.cit, Tariffs p.180. , Trade and Industry froml916 to 1947, the figures in this para are from
91
See E.J. Hobsbawm, particularly, pp.
Industry 148-153. Chancellor meeting,
and
Empire,
Harmondsworth,
1969,
Chapter
7,
92 Neville
40
State
Chamberlain, at a cabinet
Minutes
of Exchequer and Samuel Hoare, of the Cabinet of Meeting
Secretary Committee
of
The
Return
of the Colonial
in Indian
Economic
History
Financial regarding India Office 191, Chamberlain's. Mukherjee, EPW, 27.5, V. 93 8 Dec. similar Kershaw 94 Basudev annual 1930,
Safeguards, Records, For a detailed
"Controversy 1 February
L/F/5/ Collection, statement is child' 'naughty on see Aditya the Reserve discussion Bank, over Formation of Reserve Bank of India, 1927-35", 1992 and Imperialism, ch. 4, sec. Nationalism..., op.cit,, 1932, London. The
4 November
Financial
> g. PJ C ZT
n>'
Finance
document and C.H.
Department dated June 17, Kisch, L/F/5/191,
(L/F)/5/191, 1931,
IOR,
London.
See H.
also
another L.J.
signed by R.A. Mont, IOR, London. says
Strakosch,
1931 document the June citing Chatterjee the heads under of defence, debt charges ... of 'would ...absorb three quarters pension Federation'" p.21. op.cit, 8 Dec. of the Secretary of State...', Government the Indian Federal 1930,
that
"the
servicing the total
and
aggregate and salaries of the
revenues
95
'The position Assurances as a first
L/F/5/191, meet
that
would
on the government were clearly not budget in this regard and rejected with Australia anticipated parallels were drawn and nationalist leaders with repeatedly by Indian capitalist is a country where that "Australia, however, argument, rarely made publicly, charge The note
op. cit., pp.3,8. these obligations considered enough. that the the
mine. Many is of our own kith and kin.n colonial ibid., p.9 emphasis government and more Niall scholars like Drummond fail to note recently Ferguson, op.cit, in USA, Canada, the critical differences between British Australia and presence like India or West Indies when in colonies talking of the British 'empire'. 96 97 98 99 Ibid., Ibid., pp.2, 4. mine. p.46 Lancashire and British Policy in India 1919-1939, OUP,
p. 11, emphasis op.cit,
Tomlinson, Trade, Delhi, Tariffs 1992.
and Empire:
100
See Aditya Mukherjee, Imperialism, to froml916 Trade and Industry in the inter-war trade agreements See Aditya 51, Mukherjee, Issue, August Special Indian Capitalists' Critique 1929-39",
Nationalism..., 1939 for a detailed period Question
Chs op.cit, discussion
5-7 of
on Tariffs the various
101
"The Currency 2007,
in Colonial "The
India",
Yojana,
Vol. Years:
in Amiya From Early Medieval chs. 3-4 on Finance British Indian policy and
in India, Policy in and Credit Indian ed., Money History: Bagchi, 2002 and Imperialism, Times, Tulika, Nationalism...op.cit, and Monetary for a detailed discussion of 1926-39, Policy on this question. Much of the advantage Indian that response Financial Kumar was smothered See, Bagchi, by the Private
Aditya Mukherjee, of British Monetary and
Depression
got due to the rise in tariifs in this period industry of the government. fiscal and monetary deflationary policy Investment... op.cit, p.66. 102 Schuster, Finance Member to Irwin, Viceroy, 1 June 1931,
Private
Office
Papers,
(L/PO)/269, IOR, London. 103 Ibid.

41
Social
Scientist
CO o o rs xi CL < I jC u
wrote to Irwin on 1 June 1931: "We have 104 George the Finance Member, Schuster, to force us to contract, the usual been from London getting telegrams trying contract rate - in their own words and put up the bank 'to create a contract, famine', money sell for sterling. IOR, London. 105 See A.K. which They will make say if you to it impossible here to get rupees for people do that you will get remittance". L/POI'269,
only
Subramanian pp.45-46 106 The above
India's Balance 1963, pp.22,27. Bombay, Bannerji, of Payments, in India, Recent and Homfray, Social and Economic Trends 1946, and G.D. Birla, Indian Currency..., p. 17.
m >
107
cit., Table figures Industry, Kasturbhai See G. Between India
and Homfray, have been from Subramanian op. figures computed of Bombay Bullion cites similar C.B. Mehta XII, pp.45-46. Exchange, of Commerce and of Indian Chambers for 1931 to 1938, Federation Annual Lalbhai, Report, President, John Richmond, (hereafter FICCI, Bullion's 1996, FICCI, A.R., Empire: A.R.,) 1935, p.6. Gold 178 Delhi, Mehta Problem ff.; D. and India 1938, pp.46-50. See also
Balachandran, the Wars, the in Great
Britain's pp.
particularly 1929-39, Manohar, Depression, FICCI, A.R., 1933, p.5; C.B. Hirachand, President, 1932 5 Feb. 1933, p.423; N.R. FICCI, A.R., Sarkar, (PT Papers), press Papers, ?.76. 1934, PT Papers, 108 L/POI321, clippings, fl.ll, NMML,
Rothermund,
1992; Walchand and M.R. Parikh, 5 May Thakurdas
, Purshotamdas and Purshotamdas,
For a detailed account difference IOR. ,of the unusually strong not quite with the celebrated British understatement) gentlemanly (expressed the Finance Smith and the Government of India, especially between Osborne Member, terrified dirty State a "weak ass, Smith ended the Viceroy up calling Grigg, where "a liar, undercover and mongrel...a failure" and Grigg slanderer see exchange of telegrams the Secretary of scurrilous between etc., swine", to and the Viceroy, and Osborne Smith L/PO/321 1936, Sept.-Oct. James of 16 Nov. Political Currency Cabinet and 24 Oct. 1936, PT Papers, p.140. 1944, L/PO/325, pp. 18-21. See also, fl.105.
Purshotamdas, 109 B.R. Tomlinson, Birla,
Economy...,
110 G.D.
Indian of War
conclusions 111
meeting,
in Retrospect, Allahabad, 27 July 1943,
IOR, London.
on Economic 11 of State, L.S. Amery, Secret Note in India, Situation Secretary Note and War Cabinet 1943, War Staff Papers 1/581, IOR, London (L/WS), Aug. on Indian Sterling 1 Aug. 1942, L/PO/325, IOR, London. Balances, See L.S. Amery, 581, IOR. The using funds, the RBI Note Eastern to on Economic Economist British Situation (EE) criticized in India, 11 Aug., the Government 1943, of L/WSIll India for
112
without expenditures raising corresponding in e.g., by issuing rupee loans, but by simply issuing notes against sterling was the journal the worst form of inflationary This, finance, England. argued, on and the sterling credits the involuntary, forced inflicted represented savings 26 Nov. the Indian people, 1943, p.981. 113 For The a full discussion Controversy over of this India's issue see Aditya Mukherjee, 1939-1947", Indo-British Studies Finance: in History,
finance
Sterling
Balances,
42
The
Return
of the Colonial
in Indian
Economic
History
6.2, ch.5 114 See
new
series,
1990
and Aditya
Mukherjee,
Imperialism,
Nationalism...op.cit,
> Q. PJ C 7T ZT a>
fl>
section
III above.
In fact,
one
of
the -
crucial it was
was capitalists how to create investment more and
the "realization conditions
which
belligerent their unrealized
problem" resources for converting the available into productive bothered them. One may perhaps show a linkage between the of Indian the colonial vis-?-vis government phases capitalists accumulations. particularly ch.9. See Aditya Mukherjee, Imperialism,
faced by the Indian problems not shortage of resources but
Nationalism...op.cit.
115 1have dealt with this at some length in Ibid.

116 117 See f.n. There and 39 above a direct correlation between
in the Indian national movement surges state. I have in great detail by the colonial as well as individually to the efforts documented of Indian business collectively resist the 'collective of British and wreak concessions from monopoly' capital state in my the colonial See also Bagchi, Imperialism, Nationalism...op.cit. economic concessions conceded Investment...op.cit, Chandra Ch.6.
was
Private 118 Bipan Indian
has documented how the spurts of growth by experienced a result of the in this period was of the link" with industry "loosening and the Great in Colonialism and the two wars colonialism during depression op.cit. The Indian study by B. P. Adarkar, and my Imperialism, Nationalism...op.cit, in section Goldsmith, New Jalan, 8-9. op.cit, p. 14. Economy. Indian 2006, Vol. Edition, IA Millennial New Delhi, Perspective, table 2007, Vol.II 8b, p. V above. The Haven, ed., The Also Financial 1983, Indian see Ibid. Development and p.68 Economy: of India: 1860-1977, Yale Fiscal Policy, ch.6. Allahabad, 1941,,
Modernisation, 119 See the classic
pp.468-73 120 As 121 discussed
Raymond University Legacy", Delhi,
W.
Press, in Bimal 1992, pp. Roy,
"Colonial Chandra, Bipan Problems and Prospectsx New
122
Tirthankar
123 Angus Maddison, Historical Statistics, 641. 124 See Amartya Sen,
The World OECD,
Poverty
and
Famines:
OUP, Delhi, Deprivation, in estimation of exercise Famine the figure Misery argues Famine 125 126
1982, Appendix famine deaths
on Entitlements and Essay for a comprehensive pp. 195-216 the Bengal famine. While the during An D,
Inquiry Commission is closer to around
in Modern BengahThe a higher and Rakesh figure, Batabyal, toNoakhali, 1943-47, Sage, New Delhi, Roy, op.cit, p. 257 and f.n.
Sen convincingly put it at 1.5 million argues why 3 million. See also, Paul Greenough, and Prosperity New Famine he 1982, where York, of 1943-44, Communalism 2005. in Bengal: From
See Tirthankar See f.n. 38.
124 above.
43
Social
Scientist
CO o o
CNl cl < i
127 Quoted
128
in Bipan Chandra, Mridula Mukherjee, Aditya Mukherjee, India After

op.citp.19. and the Growth "Imperialism and Political Weekly, Economic Century", in Ghanshyam 1988, Also Shah, ed., Capitalist reprinted 1990 Mridula and Bipan Chandra, Essays, Bombay, chs. 25-31. India After Independence, Mukherjee, op.cit, and Mridula Mukherjee, Period Social of the Modern XXI, 1, Studies,
Independence,
Ibid., Aditya Mukherjee of Indian Capitalism XXIII, II, 12 March Critical
in the Twentieth
Development:
O Z 129 m >
and Aditya Mukherjee See also Bipan Chandra, of the Transformation "Aspects and Contemporary Hitotsubashi World", Journal of 1989. August The figures are all from Table 2 which is based
indicated. except where p.643 rate of per annual growth at 0.26 and somewhat higher reflecting the sharp estimates op.cit, as a whole of
Sivasubramonian
on Angus and Heston's
Maddison, estimates to 1946 prove
op.cit, show an which our point M. is
1914 income between capita 0.13 respectively but nevertheless contrast and after between before income growth are much lower than
Mukherjee's See Goldsmith, 130 West op.cit, 131 Europe p. 643.
independence. even Maddison's.
Table grew
1.2, p.4. at 1.88 per cent between 1973-2001. Maddison,
in Bipan India Since Independence, Mukherjee, taken the per capita income growth S. Sivasubramonian's comprehensive break in aggregate 1900-1947 between Income Fig.
for 2001-2007 Figures 2007, India, New Delhi in the New Millennium,"
are based Table
on Economic
1.2, S-4,
Government of Survey, 2006-07, "Indian Economy and Aditya Mukherjee, and Aditya Mridula Chandra, Mukherjee 2008.1 have 8 per cent. the sharp
Delhi, Penguin, forthcoming, at a conservative rate for 2006-7 and as e.g., detailed
rates as well growth and 1947-2000. See, Century,
in different New
confirms study sectors of the economy S. Sivasubramonian, The National Delhi, 2000, Table
in the Twentieth of India 9.5, pp. 622-28. op.cit, p.68 and Bipan
OUP,
9.35,
132 Goldsmith,
Chandra
, Colonial
Legacy...
op.cit,
p. 8-9.33
44

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Social Scientist

The Return of the Colonial

Last Phase of Colonialism

of the Congress, which

has been held by my

advantage was led to growing and non-industrialised

in the trade between

the two countries

even in this so called free

un-industrialised the process

after the Second World War with in the 1950s and

of Paul Baran and

academe." A critique of this stream, however,

plea for seeing colonialism

included "not only the economy

but also the patterns

3> ^-' ^ ? j3. a>

small holdings who traditional levels of

grew,22 they remained

articulated with metropolitan

The basic point was that colonialism

had to be viewed and evaluated as an

created would get heavier that much more challenging.

like the colonial

values and habits

like lack of ambition,

and academics experience D. Morris

in its entirety covering all aspects of the colonial

Roy laments that

"colonialism" 'guilt' of the

in their writings colonial

First, it is generally undisputed

u> Z c fD ."? CD" fD

and the proportion

and capital goods

Indian capital dominated,

to those where European

like jute, plantations,

etc., internal trade vs. foreign trade,

2> ^" ^ ?f ^F J2. fD

o countries rsi who had

to "illustrate this point" as with

the ugranting of independence"

elite, and argues

the early nineteenth

1947, costing sacrifices by millions, was all about.82

of lives and involving

in the colonial market

not a switch from

the sterling remittance

to raise the required

the only possible

that "the present

level of tariff on British

India would 20 and provide

be unable for military

must be met are collected