Indian Economic and Political

History

Term I Pre- Mid-Term

2021-22

Session 4

Rajesh Bhattacharya
Email:
Virtual Lounge: Friday, 4pm to 6pm
30 June - 2 July 2021 IIM Calcutta
The Land Revenue Settlements
under the British Rule and
their Impact on the Agrarian
Structure

30 June - 2 July 2021 IIM Calcutta

Permanent Settlement: zamindari land
Revenue 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, Rajashthan, except Jaipur and
Jodhpur)--57% of the total area cultivated.

24-26/06/2019 IIM Calcutta

 Land Revenue Systems under the
British: Zamindari System
(Permanent Settlement)
Zamindars were declared proprietors of the
land with fixed revenue obligations to the
state. If improvements were made and the
rent increased, the benefits will go to the
zamindars.
The British thought that the zamindars
would regenerate agriculture, preserve
local custom and protect rural life.

30 June - 2 July 2021 IIM Calcutta

Consequences of the
Permanent Settlement System
Instead, a class of absentee landlords was
created employing a series of intermediaries
that increased the rent burden on peasants
who have become tenant farmers.
The zamindars found different ways of levying
taxes and other obligatory payments on the
peasants.
The political structure was altered forever with
the zamindars enjoying unchecked power
over peasants.

30 June - 2 July 2021 IIM Calcutta

Land Revenue Systems under
the British: Ryotwari System
Individual cultivators (ryots) became
proprietors of their land with the right to sub-
let, mortgage and sell land.
Short-period settlement of rent and the rent
obligation could be changed by the
government.
Land became a transferable property.
Covered Maharashtra, Karnataka, Andhra
Pradesh, Tamil Nadu, Kerala, most of MP,
Assam, Jaipur, Jodhpur—38% of total
cultivated area.

30 June - 2 July 2021 IIM Calcutta

Land Revenue Systems under
the British: Mahalwari System
Revenue settlement was made with entire
villages as collective units.
Peasant farmers shared 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.
30 June - 2 July 2021 IIM Calcutta
Consequences of Ryotwari and
Mahalwari Systems
Land alienation and polarization of society into landlords
and rich peasants on the one hand and tenants and
agricultural laborers on the other hand.
Land markets develop.
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-19th century, after which land revenue declined
in importance as the source of government revenue.
Emergence of highly unequal distribution of rural assets.
In 1924-25, 86% of cultivated land in Bombay was held
by 12% of cultivators. In Punjab in 1939, 38% of
cultivated land was held by 2 % of cultivators. (The
inequality of land distribution was higher in zamindari
areas)
30 June - 2 July 2021 IIM Calcutta
Commercialization of
Agriculture
 Drain from India to England--Since India was de-
industrialized, agricultural commodities had to be marketed
and exported to meet this drain. India supplied agricultural
raw materials and food crops to industrializing nations.
 First half of the 19th century: Indigo, silk, opium, sugarcane.
Production of these crops was oriented towards international
markets.
 In the second half of the 19th century, principal cash crops:
cotton, wheat, sugarcane, jute and tea.
 Britain was the ‘factory of the world’ by mid-19th century.
India supplied agricultural raw materials and food crops to
industrializing nations, importantly Britain.

30 June - 2 July 2021 IIM Calcutta

Commercialization of Agriculture: ‘Normal’
or ‘Forced’ ?
Commercialization is often interpreted as a sign of
modernization. Was that the case in India?

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.

30 June - 2 July 2021 IIM Calcutta

Commercialization and Rural
Indebtedness
In the second half of the 19th century, there had
emerged a class of landlords and rich peasants
who wielded rural power and collected high rent
from peasants.
The moneylender appeared as claimant to a large
share of the rural surplus, sometimes even
rivalling the landlord. Rural indebtedness was
widespread.
This increased the cash requirements of peasants for
payment of rent, to meet debt obligations and as
advances for meeting their subsistence needs
when they engaged in cash crops.

30 June - 2 July 2021 IIM Calcutta

 Concentration Ratio: Persistence
of concentration even after
independence
Types of 1953 1960- 1971- 1981- 1991- 2002-
Holding -54 61 72 82 92 03

Ownership 0.751 0.717 0.706 0.708 0.71 0.74

Holding

Operational 0.621 0.583 0.583 0.624 0.641 0.624

Holding

NSSO: Report 491 and 492

Even today, rural asset inequality in India is very high by global

standards. 30 June - 2 July 2021 IIM Calcutta
Land Reforms in Independent
India
 Abolition of Intermediaries
 Tenancy Reforms: Reduction of Rents, security of tenure,
ownership rights of tenants
 Ceiling on land holdings and distribution of surplus land
 Consolidation of holdings
It is generally agreed that abolition of intermediaries has been
relatively successful.
With respect to the remaining land reforms, the result has been mixed.
Landowners resisted the implementation of these reforms by directly
using their political clout and also by using various methods of
evasion and coercion, which included registering their own land
under names of different relatives to bypass the ceiling, and
shuffling tenants around different plots of land, so that they would
not acquire incumbency rights as stipulated in the tenancy law.

30 June - 2 July 2021 IIM Calcutta

The Third Phase of
Colonization: The Second
Half of the 19th Century

30 June - 2 July 2021 IIM Calcutta

Crown Rule
 Under the new regime the emphasis shifted from the
levy of direct tribute through land revenue to the
exploitation of India as a market and as a source of raw
materials and a destination for British capital.
 Zamindars were transformed into true landlords and the
political ally of the British rulers who were scared by the
Sepoy Mutiny.
 About the middle of the nineteenth century, factory
production was extended to all industries in Britain. The
search for new profitable outlets for British capital
began.

30 June - 2 July 2021 IIM Calcutta

British foreign investment and
development of railways
 British 'net foreign investment' was equal
to 42% per cent of the net domestic
capital formation in fixed assets during
1860-69; 80% per cent during 1880-89
and peaked at 114% during 1905-14.
 British capital pouring into railways
construction in India. Fantastic expansion
of railways in India, with a guaranteed
rate of return of 5 % by the Government
of British India.

30 June - 2 July 2021 IIM Calcutta

Expansion of the market for
British commodities
Higher inflow of imports from Britain as the
railways opened up markets.
Cotton textiles, silk goods, wool manufactures,
metal manufactures, machinery tools, equipment
and rolling stock for railways expanded
tremendously.
As modern Indian industries emerge, all the
machinery goods begin to be imported from
Britain.
Indian exports also expanded. Western Indian
cotton, Punjab Wheat, Bengal jute, Assam Tea,
South Indian oilseeds and hides and skins etc.
Opium falls behind.

30 June - 2 July 2021 IIM Calcutta

Impact of Railways
Railways fastened India more securely to
England as it strengthened the colonial
pattern of trade—India as an exporter of
raw materials and agricultural products
and the importer of manufactured
consumer and capital goods.
Rural industries were now hurt as Railways
reached them. Deindustrialization is
complete by late 19th century

30 June - 2 July 2021 IIM Calcutta

The ‘Tribute’ in the Third Phase of
Colonization (1857-1900)
 The burden of EIC’s London establishment
and of dividends to its shareholders was
replaced after 1858 by the costs of Secretary
of State’s India Office.
 “Home charges” also included pensions to
British Indian officials and army officers,
military and other stores purchased in
England, costs of army training, transport
and campaigns outside India but charged on
Indian finances and the guaranteed interest
on railways.
30 June - 2 July 2021 IIM Calcutta