Tomlinson B.R. The New Cambridge History of India, Volume 3, Part 3: The Economy of Modern India, 1860-1970
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AGRICULTURE,1860-I95O
43
The
sole check on landlord power under this system in its original
form
was the requirement to pay the land revenue in
full.
By this means
the Company intended to ensure
that
only capable and efficient men
would
hold the title of zamindar. Those who could not make a profit
on their estates would be sold up to make good any arrears,
thus
ensuring the survival of the fittest through the active market in land. As
it
turned
out, many existing zamindars could not work the new system
properly. Economic conditions were disturbed by depression and the
aftermath of, the great famine of
1769-70;
furthermore, the
effective
power
of many zamindars to extract
rent
from their
tenants
and to
control their
officials
was often small. Between 1794 and 1807 the lands
on which 41 per cent of the government's revenue depended changed
hands at fairly low prices, although within twenty years or so a stable
landed interest had been established, and the 'rule of property' created
in
Bengal.
As
an instrument for agricultural improvement the Permanent
Settlement was a failure. The break-up of old estates put land and
power
into the hands of smaller landlords, mainly drawn from the rural
gentry
that
had grown up around local administration, service indus-
tries and trade. While some zamindars did invest in agricultural
improvements, and in promoting new crops such as indigo, the bulk of
their income came from rents. Whereas the Bengal Government had
thought
that
the
level
of land revenue assessment would leave a profit
margin of about 10 per cent for efficient landlords, by the 1830s the
profits on estates administered by the Court of Wards were often
higher
than
the revenue demand.
18
Below
the landlords substantial
peasants and under-proprietors also profited by the control of agri-
cultural output and the manipulation of social power. Yet by the 1830s,
in many
parts
of eastern India, rural population
levels
were such
that
the bulk of cultivators were dependent on non-farm income to survive.
The
spread of high-value cash crops
that
required labour-intensive
cultivation,
such as sugar and mulberry and, to a lesser extent, indigo,
opium and even rice for urban consumption, increased demand for
labour in some areas, but the rewards of this enterprise were usually
skewed
towards those who controlled land, credit and employment.
This
was especially a problem in those areas where imports of textiles
18
Marshall,
Bengal,
p. 152.
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THE
ECONOMY
OF MODERN INDIA
44
had displaced local handicraft workers, thus swelling the agricultural
workforce.
Zamindari settlements, on the lines of the Permanent Settlement in
Bengal,
were imposed in other areas of central, northern and south-
western India
that
the British acquired during the early nineteenth
century.
After
1820, however, the great settlements of most of north-
western, western and southern India were conducted on a very
different basis,
that
of a new
ryotwari
system of land settlement and
taxation
that
vested control of the land in the hands of peasants (ryots),
eliminating 'parasitic' landlords and stimulating growth through direct
assessments
that
rewarded careful husbandry. The ryotwari system
required a direct, temporary settlement with the cultivator, or with a
village-level
intermediary responsible for paying rent in the past. In the
large
areas of northern India where this new system was imposed after
1820,
tenurial arrangements were made with
village
zamindars holding
pattidari rights, or with joint-owning brotherhoods (bhaiachara),
that
had the right to raise revenue before British rule. Elsewhere, notably in
western and southern India where such groups did not appear to exist,
individual
or joint settlements were made with peasant proprietors
who
claimed to have traditionally paid revenue and managed land
rights in each
village.
Under these arrangements the state became the
landlord and the cultivator or
village
proprietary body was designated
the tenant, holding a lease granted for a
fixed
period at a
fixed
rent.
Settlements were renewed, upon resurveying, at thirty-year intervals;
in the meantime proprietary and cultivating rights in land were
alienable,
and proprietors could be sold up for failure to pay their rent.
In designing the ryotwari settlements of the 1820s, 1830s and 1840s
officials
drew directly on Ricardo's theory of rent, as adapted to Indian
conditions by James
Mill,
Holt Mackenzie and
John
Stuart
Mill,
who
were
highly placed in the Company's London administration. Utili-
tarian doctrine held
that
rent was an 'unearned increment' which
represented the advantages of productivity and fertility enjoyed by
good
lands over bad. Land revenue was the state's share of this rent,
and could be
fixed
'scientifically' by careful survey and settlement
that
would
establish the product of each agricultural holding, enabling the
state to leave the cultivator enough to meet the costs of production,
subsistence and productive investment. The
level
of the revenue
demand was initially
fixed
at nine-tenths of output before 1820, then
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AGRICULTURE,
1860-I95O
45
modified
to two-thirds in 1833. The declared aim of the ryotwari
settlements was to revitalise the rural economy by setting cultivating
peasant brotherhoods free from the depredations of corrupt state
functionaries and greedy landlords. British
officials
believed
that
abolishing
intermediaries, demanding payment of land revenue in cash,
pitching these demands at a
level
high enough to ensure
that
only the
competent survived, and creating a land market fuelled by the sale of
the assets of defaulting ryots, were all essential
parts
of this pro-
gramme. The purpose of radical reform was to overthrow an old elite
seen as enervated and non-productive, and to encourage the emergence
of
enterprising farmers who would secure a proper
return
to capital
within
the limits of
village
corporate rights. This was not to be achieved
simply
by laissez-faire, however. The Utilitarians saw an important
role for the state as the provider of social overhead capital and a
redistributor of resources, and they remained ambivalent in their
attitude to the development of rural capitalism in India. For these
reasons James
Mill
and his associates held out against
giving
private
property rights in land, and insisted on trying to regulate the rental
rate;s charged by occupancy ryots to those beneath them.
Direct
revenue assessments of this type put tremendous strains on
the administrative capacity of the Company and its British
officials.
Calculating
the 'scientific'
rent
meant careful surveys of individual
fields,
and an accurate assessment of the market rental value of the land
where no such market yet existed. Surveys and settlements
that
tried to
impose Ricardian
rent
theory in any rigorous way ran into insuperable
theoretical and practical difficulties, aggravated by the use of Indian
subordinates who had their own preferences and contacts among the
surveyed.
Thus by the 1840s the Bombay Government, for one, had
deliberately abandoned the
rent
doctrine in favour of precedent as the
basis of settlement
policy.
Even so revenue demands tended to be
cripplingly
high, and the export-oriented sectors of the agricultural
economy
suffered further from a major price depression in the late
1830s
and early 1840s. In 1838 half of the arable land in the Bombay
Deccan
was reported to be waste, while elsewhere falling prices,
collapsing
trade
and a series of financial crises led to a general
depression, which frustrated hopes
that
agricultural development
would
follow
the introduction of ryotwari principles.
The
early land settlements in
northern
and western India were later
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THE
ECONOMY
OF MODERN INDIA
f>'i 'KASHMIR
1
TRAVANCORE
and COCHIN
1000km
~500 miles
k
_ _ *
Types of settlement
Permanent Zamindari settlement
Raiyatwari settlement
Government estates
Temporary settlement
(Taiuqdan.
Mahalwan,
Malguzari and related forms)
Amount of revenue payment to
government per male agriculturalist
High
(£1
+ percapita)
Medium(50p—£1 per capita)
Low (less than 50p per capita)
2.2 Systems of land revenue settlement. The land revenue paid by each
province in the late
nineteenth
century is indicated by the proportional
squares. The figures within each
square
specify the
amount
of payment in
thousands
of rupees in 1872.
46
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AGRICULTURE,
1860-I95O
47
widely
acknowledged to have been both onerous and inequitable. As
the Administration Report of the North-Western Provinces (later the
United
Provinces, now Uttar Pradesh) for 1882-3 confessed,
It is now generally
admitted
that
the
proportion
of the
rental
left to the
proprietors
by the old pre-1857
assessments
in the N.W. Provinces was
much
less
than
was
absolutely necessary to provide for the
support
of themselves and
their
families,
bad
debts,
expenses of
management,
and vicissitudes of season.
19
British
administrators were becoming aware of the destructive effects
of
their new administrative system by the middle decades of the
nineteenth century. Land settlements were now modified in pitch and
methodology,
with a statutory limitation of the revenue demand to
half
the rental assets laid down for the whole country in 1864. In the
Bombay
Deccan, in particular, new settlements in the 1840s based on
more sensitive criteria and a lower tax, encouraged agricultural recov-
ery
directly. However, raising adequate amounts of revenue remained
a
major concern of British land
policy,
especially as the costs of
administration rose after 1870. The main systems of land revenue
that
were
to last for the rest of the colonial period were now in place; their
geographical
coverage, and the revenue burdens associated with them,
are shown in map 2.2.
Even
with a more pragmatic approach to revenue assessment, the
ryotwari
system had a distruptive impact on rural society. The
village-level
propritors with whom the British were dealing in most
parts
of India were distinguished as holders of proprietary,
rather
than
cultivating,
rights. They represented the local elite with whom pre-
vious
rulers had made agreements to farm revenues or collect taxes.
Such
groups often reinforced their local influence by acquiring a place
in
the local administrative hierarchy, usually as
village
headmen or
village
accountants (who had the duty of registering landholdings).
These
posts in Bombay and Madras in particular, brought remunera-
tion partly through dues in cash and kind and partly through rights to
revenue-exempt
inam
land. Even in
northern
India many
village
proprietors
lived
largely on the profits of their role as local revenue and
political
managers for the state,
rather
than
from direct rental income
or agricultural production.
In most of the ryotwari areas at the time of British conquest
19
Quoted in
Eric
Stokes, The
English
Utilitarians
and
India,
Oxford,
1959,
p. 133.
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THE
ECONOMY
OF MODERN INDIA
possession
of government
office
remained the key to economic super-
iority
in the
village.
Like
the zamindars of
Bengal,
the
village
pro-
prietors of
northern,
western and southern India had used an implicit
licence
from the state, backed up by military leadership, kinship ties,
custom, and sometimes caste and ritual systems, to manage local
society.
But although this role had an economic function, and could
secure economic rewards, it was not based
solely,
or mainly, on
economic
criteria. Only where mamland ratios were unusually high (as
in the 'wet' irrigated regions of the great river deltas) could local
landlords exercise immediate command over agriculture by direct
control of labour through dependent tenancies. Elsewhere, the less
clear-cut
and more delicately balanced systems of
rural
social, political
and economic relations were submitted to great
strains
as a result of the
imposition of British rule. Military service was no longer an option for
most local elites and population increases diminished the shares of
proprietary rights for each inheritor. The Company's demand for
regular (and
rather
high) revenue payments was a considerable burden,
especially
in the 1830s when cash prices for agricultural produce
fluctuated
wildly.
The
village
proprietors and superior ryots with
whom
the revenue settlements were made did not necessarily control
either the marketing network inside or outside the locality, or have
access
to the liquid resources
that
were now so vital to meet
fixed
revenue payments
that
had to be paid in cash and could no longer be
renegotiated annually. As a result the
rate
of
attrition
among such
groups was quite high and
there
was a considerable volume of transfers
of
land titles, especially in
north
India.
The
creation of a land market in India in the first half of the
nineteenth century was identified by nationalist historians as one of the
most drastic effects of colonial rule
that
acted, especially in
north
India
and
Bengal,
as a mechanism for transferring control of land out of
traditional proprietors into the
hands
of merchants and moneylenders
(mahajans). As demand for export crops such as sugar, indigo and
cotton rose in the 1820s and 1830s, so the use of credit to finance
agricultural
trade
and production increased. Cash revenue payers also
borrowed extensively, especially since tax demands rarely coincided
with
harvest-times. These developments certainly
gave
merchants and
moneylenders a greatly enlarged function in the
rural
economy, and in
some
parts
of
northern
India revenue rights in up to 10 per cent of
48
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AGRICULTURE,1860-1950
villages
changed hands, although they usually came under the control
of
service gentry groups
rather
than
traders.
20
However, the
sig-
nificance
of these developments can be exaggerated. The largest
volume
of transfers of proprietary rights took place in the confused
years before 1820. Where moneylenders and merchants did acquire
proprietary rights in the 1830s it was usually in settlement of debts, or
to secure an institutional link with
village
markets. Often such titles
were leased back to their previous holders, in
return
for a tighter
business connection. In poorer regions
there
were few rental profits to
be had, and management could not be exercised without customary
power. In the rural uprisings of 1857 the communities involved most
extensively
in the revolt were led by
village
brotherhoods
that
had
succeeded in maintaining their independence from outside incursions.
British
officials
imported much ideology and many misconceptions
to their analysis of the Indian rural economy in the first half of the
nineteenth century. Perhaps the most important and lasting of these
was
the notion
that
the Indian rural economy was made up of
self-sufficient
and self-governing
village
'republics', which required no
exchange
economy with the outside world, and were linked to it only
by
the extraction of political
tribute
in the form of taxation. This
analysis dominated nineteenth-century thinking about rural economic
development because it could be adapted to fit a wide range of
intellectual prejudices and preconceptions. To paternalists it justified
the imposition of British rule and taxation as a more
'civilised'
form of
traditional government. To radical modernizers in the British admin-
istration trained in classical political economy, especially those con-
cerned with land
rent
and revenue schemes based on Utilitarian
principles, it pointed the way forward for releasing the pent-up
energies of the Indian people, by transforming institutions, taxing the
inefficient
out of business, and creating economic incentives for
cultivators. It also provided a convenient stick with which to beat the
landlords, who could be seen as leeches sucking the surplus out of the
peasantry.
The
English Utilitarians who formulated the administrative prin-
ciples
by which the British raj was governed in the 1830s and 1840s
wanted to transform traditional India from the bottom up. Their
20
Kessinger,
'North
India',
CEHI11,
p. 264;
Stokes,
Peasant
and Raj, p. 86.
49
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THE
ECONOMY
OF
MODERN
INDIA
greatest critic, Karl Marx, shared their prejudices to a large extent and
argued
that
Company rule in these decades was dissolving 'these small
semi-barbarian communities by blowing up their economical basis',
and bringing the 'greatest, and to speak the
truth,
the only
social
revolution ever heard of in
Asia'.
21
To Marx the consequences of the
social
revolution unleashed by British rule were not very happy, a
view
shared by many later conservative commentators on British policy.
This
contrast between 'traditional' village India, built around non-
material values, self-sufficiency and continuity, and the 'modern'
countryside of markets, social differentiation and rural exploitation,
continued to
haunt
analyses of South Asian agriculture throughout the
colonial
period and beyond, achieving perhaps its most pervasive
influence in the selection of community development programmes to
secure agricultural growth under the Indian five-year plans of the
1950s
and early 1960s. However, the distinction it was built on was
largely
false as we have seen, for it misinterpreted or overlooked the
large and significant continuities between 'traditional' and 'modern'
economic institutions in the Indian rural economy of the eighteenth
and nineteenth centuries.
The
staple units of analysis
that
colonial officials devised to identify
and categorise rural systems of production have now largely been
abandoned by historians of the agrarian economy. Many of those
whom
the British identified as landowners had the right to raise
taxation,
rather
than
the capacity to cultivate the soil; such land-
ownership was usually less important in giving access to scarce
resources
than
was land control, which is much harder to identify in
the aggregate. Such control was closely bound up with the working of
the rural labour and capital markets, especially the supply of credit, but
analyses of the structure and workings of these markets must go far
beyond simple categories
that
can be derived from, or applied to,
generalised data. Most disconcerting of all, perhaps, is
that
many
individual cultivating households cannot be identified unambiguously
by
the conventional labels of 'landlord',
'tenant',
'labourer', 'creditor',
'debtor', and so on. Many examples exist of household survival
strategies
that
involved a wide range of economic activities, often
21
These
phrases
occur in Marx's articles for the New
York
Daily
Tribune
published
in
1853,
cited
in
Stokes,
Peasant and Raj, p. 24.
50
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AGRICULTURE,
1860-I95O
combining
some ownership with tenancy or sharecropping, and even
labour, and with employment in the
urban
or
rural
handicraft sector as
well
as in cultivation.
From the
1860s
onwards the Indian
rural
economy began to be
dominated by a new force, the great expansion of overseas
trade
in
primary produce
that
continued, with only minor fluctuations, until
the late
1920s.
In the first half of the nineteenth century India had
exported indigo, opium, cotton (first cloth and yarn,
then
raw cotton
as
well)
and raw and manufactured silk. While all of these were
traditional products, much of the new export-oriented enterprise
(except
for raw cotton, but including also sugar which was tried in
plantations in Bihar in the
1830s)
depended at least initially on
European enterprise and
state
support, and offered limited opportuni-
ties to peasant cultivators. This was certainly the case with crops such
as opium and, especially, indigo, over which collusive purchasers were
able to exercise partial coercion by using their market power to secure
monopsonistic control. By contrast, the new export staples of the later
nineteenth century were much more firmly rooted in the peasant
economy.
While exports of indigo and opium
fell
away, their place was
taken by raw jute, foodgrains (rice from Burma and wheat from India),
oilseeds
and tea, while raw cotton remained the largest single item of
export by value in most years throughout the colonial period, as table
2.1
demonstrates. Of these products, tea was grown on plantations, but
the remainder were produced as
part
of the peasant crop
cycle.
By the
1880s
wheat in north-western and central India, cotton in Bombay
Presidency,
groundnuts in Madras, and jute in Bengal had become
major staples of agricultural production.
In all of these crops Indian producers succeeded in breaking in to the
world's
major markets, largely by virtue of the enterprise and adapta-
bility
of peasant farmers. The best example is
that
of cotton. Before
1850
India exported substantial amounts of raw cotton, mostly to
China
(as a complementary bulk cargo for the opium trade). Indian
cottons were short-staple varieties, and therefore largely unsuitable for
Lancashire mills, which meant
that
exports to Britain were limited at
first, until the opening up of new demand for Indian cotton in
Continental Europe. Between
1840
and
i860
the British Government
tried to teach the Indian peasant how to grow a
better
crop by
importing American experts, setting up agricultural research stations,
5i
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Table
2.1. Composition
of
Indian
exports, 1860-1
to
1935-6
(percentage
share
in
total export value)
Raw
Cotton
Food
Raw
jute Manufactured
Hides
Oil-
cotton
goods
Indigo
grains
jute goods
and skins Opium
'
'
seed
Tea
1860-1
22.3
2-4
5-7
10.2
1.2
1.1
2.0
30.9
5-4
0.5
1870-1
35-2
M
5.8 8.1
4-7
0.6
3-7
19-5
6.4
2.1
1880-1
17.8
4-2
4
.8
17.1
5-2
J-5
5-o
18.2
8.6
4-2
I890-I
16.5
9-5
3-
1
J
9-5
7.6
M
4-7
9-2
9-3
5-5
I900-I
9-4
6.4
2.0
13.i
10.i
7-3
10.7
8.8
8.
3
9.0
I9IO-II
17.2
6.0
0.2
18.4
7-4
8.1
6.2
6.1
12.0
5-9
I920-I
17-4
7.6
-
10.7
6.8
22.1
3-5
-
7-o
5-i
1930-1
21.0
1.6
-
5.8
14-5
5-3
-
8.1
10.7
1935-6
21.0
J
-3
8.
5
J
4-5
-
—
—
12.3
Note:
These figures include exports from Burma, which explains
the
relatively high percentage
of
foodgrain exports.
Source:
K.
N.
Chaudhuri, 'Foreign Trade and Balance
of
Payments
(1757-1947)',
CEHI,
2,
table
10.11.
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