Indian Economic and Political History

2014



Session 3
Rajesh Bhattacharya
rb@iimcal.ac.in






Indian Institute of Management Calcutta 1
Land Revenue Systems under the

British


Zamindari System (Permanent Settlement):

Zamindars and jagirdars were declared proprietors
of the land with fixed revenue obligations to the
state (90% of rent).
Peasants became tenant farmers, rents were
collected by a series of intermediaries (inflating
the rent burden on the peasants.
Covered present-day Uttar Pradesh (except Oudh
and Agra), Bihar, West Bengal, most of Orissa,
Rajasthan (except Jaipur and Jodhpur)--57% of
the total area cultivated.
Land Revenue Systems under the

British



Ryotwari System: Individual cultivators (ryots)

became proprietors of their land with right to
sub-let, mortgage and sell land.
Short-period settlement of rent and the rent
obligation could be changed by the government.
Land becomes a transferable property.
Covered Maharashtra, Karnataka, Andhra Pradesh,
Tamil Nadu, Kerala, most of MP, Assam, Jaipur,
Jodhpur38% of total cultivated area.
Land Revenue Systems under the

British


Mahalwari System:

Revenue settlement was made with entire villages
as collective units.
Peasant farmers contributed shared of the total
revenue obligation (83% of gross produce to
begin with, later decreased) in proportion to their
respective holdings.
Covered Punjab (in both present-day India and
Pakistan), Haryana, parts of MP and Odisha,
Oudh and Agra. 5% of cultivated area.
Consequences of colonial land revenue

system
Zamindari Areas: A class of absentee landlords was created.
Proliferation of intermediaries. The zamindars found different ways
of levying taxes and other obligatory payments on the peasants.

Ryotwari and Mahalwari areas: Land alienation and polarization of
society into landlords and rich peasants on the one hand and
tenants and agricultural laborers on the other hand. Alienation of
land due to very high initial assessment of land revenue. The
pressure of land revenue continued to be very high till the mid-19
th
century, after which land revenue declined in importance as the
source of government revenue.



Emergence of highly unequal distribution of rural assets. Even today,
rural asset inequality in India is very high by global standards.
Concentration Ratio


Types of
Holding
1953-
54
1960-
61
1971-
72
1981-
82
1991-
92
2002-
03
Ownership
Holding
0.751 0.717 0.706 0.708 0.71 0.74
Operational
Holding
0.621 0.583 0.583 0.624 0.641 0.624



NSSO: Report 491 and 492
Technological change




Technological improvements as a response to
famines.
Large investments in irrigation in Punjab, Sind
and United Provinces by 1920s.
Tank Irrigation in South India revived. By 1924,
18% of Net Sown Area came under irrigation.
Imperial Research Institute in 1905, Royal
Council of Agriculture Research in 1929.
Commercialization of Agriculture




Commercialization is often interpreted as a sign of transition
from pre-capitalism to capitalism. Was such transition
taking place in India in the colonial period?



Agricultural commercialization was forced and artificial.
Peasantry was dependent and subordinate.
A normal process of commercialization of agriculture:
increased marketed surplus from increased production over
self-consumption requirements of the peasants. Sign of
high productivity.
An artificial process of commercialization of agriculture:
Forced to sell a high proportion of their output to meet
immediate cash requirements, Sign of low productivity.
Reasons for Commercialization




Drain from India to England. Since India already de-
industrialized/, agricultural commodities had to marketed
and exported to meet this drain.


First half of the 19
th
century: Indigo, silk, opium, sugarcane
Indigo, silk, opiumthese were not really peasant crops,
though grown by peasants. European planters or the
government controlled production. Considerable amount of
coercion was involved. Peasant cultivation was preferred
because unpaid family labor reduced labor costs.

Production of these crops was oriented towards international
markets. Highly volatile and distant markets. Peasants often
revolted or defied government orders.
British/European Industrialization, transport
revolution and commercialization of Indian
agriculture
Britain was the factory of the world by mid-19
th
century.
India supplied agricultural raw materials and food

crops to industrializing nations, importantly Britain.

Opening of Suez canal made transport of bulk
commodities easier and cheaper. Development of
railways made inland movement of commodities
cheaper.
Jute, for example, was needed as a packing material
because of the movement of huge amounts of goods.
The Jute industry in Bengal grew by successfully
challenging the Dundee (Scotland) mills. The Jute
industry was entirely European controlled.
Reasons for commercialization





In the second half of the 19
th
century, principal cash crops:
cotton, wheat, sugarcane, jute and tea. Much less coercion
involved compared to the early period.
Just like indigo, silk and sugarcane before, cotton, sugarcane and
wheat from India in the latter half of the 19
th
century were
often used to supply the needs of the European industries or
consumers whenever traditional sources of these agricultural
commodities/ raw materials were cut off due to political or
other reasons.
Instability of the international markets for cotton and wheat was
compensated by the stability of the growing domestic market.
Reasons for commercialization




Subsistence agriculture of a dependent peasantry. Distress
buying and selling under the compulsions of debt. Cash
requirements of peasantspayment of rent, debt
obligations. The role of advances for cash crops in meeting
their subsistence needs.
Marketing behavior of peasants was a survival strategy.
Chains of tenurial leases. Rent burden multiplied. No
incentive to invest in agriculture since no cost distribution.
Risk of production is passed by the landowners to
sharecroppers/tenants. Peasants consumption forced
down. Indebtedness.

No industry-agriculture linkage. Peasants sold food crops/cash
crops to buy food crops.
Reasons for commercialization








Interlocking of credit and tenancy. Landlords had
no interest in investment in agriculture or
innovation, as his income from interest on loans
from tenants would have gone down if
agricultural productivity increased and
peasants need for loans decreased.

Sugarcane cultivation in the Gorakhpur district of
U.P. lack of correspondence between rent
calendar and harvest calendar.
Price-responsiveness of peasants





Peasants producing jute in Bengal did not depend
majorly on advances. For them, relative prices of
jute and rice was the main determinants of jute
production.
However, the benefits of jute price changes were
hardly passed on to the peasants.
In sugarcane, too, advances were not only used for
subsistence purposes, but also for investment
purposes in the production of gur from
sugarcane.