Conclusion

__________________________________________________________
Indrajeet Kumar
M Phil 2014
CDS
Presentation layout
1.Review :
- moot points.
- I dia’s e o o i history efore i depe de e.
- The century before British control.
- The central role of agriculture in India's economic history.
- Industry.
- Global flows of trade and capital.
- I dia’s growth duri g the olo ial period.
2. To sum up.
1. Review: moot points
• Questions raised- How large, of what nature and
how lasting was the impact of British rule in
India,1757-1857(company) and 1858-1947
(crown).
• Orientalist vs. Indian nationalist view.
• Orientalist: empire heralded modernity in India.
• Indian Nationalist: persistence poverty,
exploitation by Laissez-fair development of
underdevelopment.
Review: moot points
• Result( after 1947):1. strong sentiment against
foreign trade and investment, 2. Statism (role of
the state), till early 90’s, later a paradig shift.

• Roy: low rate of private and public investment,

low schooling, social inequality( gender and

resources underdevelopment.
caste) burden on physical and natural
Re ie : I dia’s e o o i history efore i depe de e:

• 1757-1857( English east India company)1858-

1947(British crown)British India.
• Three distinguishing feature of British India:
1. Structural features: natural resources(agrarian) &
labour based economy.
2. Global features: openness economy; railway,
telegraph & Suez Canal.
3. Colonial feature: BOP (large remittances to Britain).
Re ie : I dia’s economic history before independence:
• Restructuring of Indian society; formation of
institutions(legal, property rights) and classes(working
class).
• Later stages, import of manufactured goods( cotton
textile), export of non-manufacturing good(indigo and
opium ).
• Commercial crop production  declines in food grain production
frequent famines
• Sources of economic regression: 1. mills cotton textile,
and 2. taxation.
Re ie : I dia’s e o o i history efore i depe de e, cont…
(why decline in traditional and construction & increase in agriculture and allied ?)
Table-1
Employment (percentage share of main occupational classes)
Workers 1901 1931 1991
Agriculture and allied occupation 67.8 71 66.7
Modern industry 0.4 1.2 3
Traditional industry and construction 10.1 7 7.2
Services 14.4 15 20.5
Others 7.3 5.8 2.6
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Review: agriculture in India's economic history
(impediments of growth in agriculture)

• Deadly combination of- rice, rainfall and famines high

mortality  disequilibrium in land-labour ratio, later stages a
decline in ratio.
• Grading in society ensured early division of labour( who will
do what), rent earning class and tiller class.
• Eastern coast- abundant water, fertile land, dense
population, well developed foreign trade, hierarchies in
society.
• Gangatic plains- fertility of land created classes in gangetic
plains.
Review: Agriculture in India's economic history, cont…
(impediments of growth in agriculture)
• Different revenue arrangements for different parts of India, based on
land characteristics.
• Multiplicity of weight measures, risky transportation system, barter
system etc.
• Rich peasants gained from commercialisation of agriculture, returns
to capital increased, credit practice started.
• Real wage and income per worker differential increased, implies, a
non-labour income, an income from capital(1890-1950); capitalist
class formation.
• Later period low investment on agriculture sector.
Review: Industry
• Deindustrialisation of Indian economy during British and after
independence.
• Dichotomy of- traditional and modern industries; Modern industries,
a out o e of Britai ’s o ta t.
• Major large scale industries-cotton and jute mills. Labour intensive,
protoindustrialization.
• Traditional industries- handlooms textiles, leather manufactures,
metal utensils, pottery, food processing, wood work etc.
• Lack of capital market institutions high cost of capital emergence
of business class who invested their own money.
Review: Industry, cont…
• Reasons for limited modern industry in British India:
1. Morris(1983), market constraint of demand.
2. Bagchi(1970), Buy British approach.
Roy: 1. high cost of capital and 2. scarcity of skilled
labour.
Decline in leather and hand loom industry.
Review: Agriculture and industry
Production and wages
1900-01 to 1904-05 1934-35 to 1939-40
I. Index of production
a. Food crops 100 103
b. Non-food crops 100 146
II. Modern industry 100 293
III. Index of real income in
traditional industries 100 127
IV. Index of real wages
a. Modern industry 100 185
b. Non-agricultural
i. Skilled 100 160
ii. Unskilled 100 151
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Review: Global flows of trade and capital
• Trade to GDP ratio has been increasing from 1800 to
1947, 1-2% in1800, 10% in 1860s, 20% in 1914.
• But, is this trade to GDP ratio is increasing due to sell
of raw material to Britain and buying manufacturing
good from Britain.
• Till great depression, surplus merchandise trade.
• Money supply influenced by- BOP, primary objective
of monetary policy is to stabilise the exchange rate,
stabilisation in prices and output assumed to be
happen automatically; later, RBI act 1934inflation.
Review: Global flows of trade and capital, cont…
• Low rate of investment, 2-4 % of national income, root
cause of deceleration and stagnation.
• High remittance payment  low capacity to import
low investment( drain theory), but it accounted just
0.5 -1 % of national income.
• Hunger for- gold and silver, restricted productive
investment.
• Economic stagnation- 1. gold, 2. population(
mortality); 1800-1900.
Re ie : I dia’s growth during the colonial period:
Roy: living condition declined after 1914, from 1868-1914 economic growth and a
rising standard of living, income growth lesser than NDP.

Growth rates of net domestic products (NDP) and population, 1868- 1869 to
1946-1947.(year to year growth rates, percentage annual)
Years NDP population per capita NDP
1868-1898 0.99 0.40 0.59
1882-1898 1.29 0.51 0.78
1900-1914 1.85 0.61 1.24
1914-1946 0.61 1.18 -0.57
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2. To sum up
• Five theses of India's economic history:
1. Leftist nationalist: Totality of colonialism  unequal exchange
drain of capital.
2. Forced commercialisation: (peasants) subsistence markets; money
le ders’ trap.
3. Perilous commercialisation: food non-food famines(frequent).
4. deindustrialisation: industrialisation in Britain decline in traditional
industry.
5. Position of public goods: railways and telegraph(symbol of aid to
imperial defence or foreign capital).
References:
• Economic History and Modern India: Redefining the Link
Tirthankar Roy , The Journal of Economic Perspectives, Vol. 16, No. 3
(Summer, 2002), pp. 109-130.
• The Economic History of India, 1857-1947, Tirthankar Roy, Oxford
University Press.
Thank you