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After the Industrial Revolution, British interest increasingly started moving away
form the prevailing mercantilist ideology, and move towards propounding „free
trade‟ values. As noted by some of its most forceful proponents (Adam Smith/
Ricardo), essentials of the doctrine was that the state shouldn‟t interfere in
economic affairs, establish monopolies, or hinder imports by levying high,
protective tarrifs.
In practise, this amounted to Imperialism of Free Trade (coined by Gallaher and
Robinson), as England was to gain greatly if other countries lifted all their tarrifs
on British imports.
- Free trade policies could be easily dispensed with wherever the interests of the
British manufacturers so directed, for example, the brazen „Buy British‟ policy
- Britain maintained an iron grip on India‟s foreign trade, maintaining consistent
export surpluses, which not only helped it realize the tribute, but also enabled
India to pay for imported English manufactures, notably textiles
- Imposition of countervailing excise in 1894 (duty on Indian made yarn cotton)
- Manipulation of the rupee to keep it overvalued
- All the risk of developing the railways via British capital was to be shouldered by
the Indian taxpayer (against free trade principles)
Consequences/ Critique
The composition of exports changed in favour of peasant exports. Exports not
only enabled India to pay „tribute‟ due to an export surplus. But it also financed
the textile imports from Britain. India was, thus, converted into an unprotected
market for British consumer goods, while there was little reason for Britain to
transfer capital beyond what was necessary for creating the necessary
infrastructure in India (railways, more or less). This led to de- industrialization.
As a result pressure on land increased, causing further pauperization of peasantry.
In 1910, Britain‟s share in India‟s exports was just 30% but it was 70% in its
imports. This means that apart from serving as a market, it also placed export
surpluses with other countries at its disposal, thereby enabling Briatin to source
raw materials from other nations.
Ranade‟s views
He saw predominance of agriculture and backwardness of industries as the root
cause of poverty in India. Ranade thought that Laissez faire policy had enchanced
India‟s mass poverty as it hurt the industry. o he advocated a policy of protection
to the Indian industries. Not only that, he wanted the government to follow a
positive policy for promotion of industrial development of India.
In the midst of the strong demands to provide tariff protection to infant indian
industries, the British government provide protection only to those industries
which had 'natural advantage‟. These were mostly those goods that did not face
competition from British goods but from other country. Hence industries like
cement, woollen and heavy chemicals were denied protection.
The policy of discriminating protection was backed by the clause of imperial
preference. It stated that imports from Britain and exports to Britain will enjoy
the most favoured nation treatment. Their main aim was to restrict the entry of
other nations goods, mainly Japan, in Indian market to eliminate the
competition.
This led to diversification of industrial base and new factories came up in
sugar, iron and steel, matches, paper.
However,India gained a little through the above stated protectionist measure as
• 3/4 of India‟s imports were form Britain
• Over valuation of rupee
• Excess capacities in the world, leading to cheaper imports.
• No positive support was provided due to worsening of finances.
• Lack of technological and management advancement
Drain Theory
Major components of the drain:
- After the Battle of Plassey in 1757, the English EIC began converting a large
portion of the tax revenue from conquered areas into funds for „investments‟.
These „investments‟ were then used to purchase Indian goods (from Indian
money), and these goods were then sold internationally. This represented a
wholesale transfer of Indian revenues to the Company‟s coffers in Britain
- This meant that Britain did not need to export anything to India in return for
what it obtained from India as imports. Thus, there arose a large excess of Indian
exports over imports pretty much all the way through before the WW1. Even in
face of ever-increasing British imports (textiles etc.), India almost
consistently maintained an export surplus of over 20% over imports till
1914; this didn‟t translate into any benefit for the economy
- The servants of the company, and later officials, themselves strove to make
personal gains through „gifts‟, bribes, and extortions of various kinds, profits
from local trading monopolies, and increasingly high salaries paid out to them
out of Indian revenues (this is the private portion of the drain)
- This situation was only worsened after the Charter Act of 1858, which made the
future dividends of the company, as well as all its debts and liabilities in England,
a charge upon Indian revenues
- The 1858 Act also led to the establishment of a large bureaucratic structure in
London geared towards Indian imperial governance. This was serviced by Indian
revenue, via the so called Home Charge (which comprised civil charges, such as
salaries and pensions of British civil servants, maintenance of India office in
London etc., and also military charges, which also included charges for military
affairs waged outside of India)
Agriculture
Growth trends.
S Sivasubramonian Agriculture Annual Population growth rate
estimates. growth rate
1860-1920 ~1% 0.5%
1900-1946 ~0. (3% over entire 1%
period)
Commercialization of Agriculture
Commercialization can be defined as the process wherein farmers start producing
primarily for sale in distant markets rather than for localized consumption or for
sale in domestic markets (distant doesn‟t necessarily mean exports; long-distance
in-country trade, made possible by railways, also counts).
Cash transactions become the basis of exchange and largely replaced the barter
system, thereby disturbing the traditional self-sufficient village economy of India.
The world demand for food and raw materials was immensely stimulated by
industrialization in Europe. As a result ToT of agriculture wrt industry improved.
Cultivation in India of many commercial crops likecotton, jute, tea, tobacco was
introduced/ expanded to meet the demand in Britain.
Increasing demand for some of the commercial crops in other foreign countries
The American Civil War caused the British cotton demand to divert to India.
This demand was maintained even after the civil war ceased because of the rise
of cotton textile industries in India
Global changes: opening up of the Suez canal in 1869, invention of the steam
engine, steam ships etc.
Between 1870 (Suez opened in 1869) and 1914, exports increased 500% in
value(about 80% of all exports were non-manufactured) Commercialization
affected not only the volume, but also the commodity composition of the trade.
It was no longer practically confined to „drugs, dyes, luxuries‟, and now included
in large quantities foodgrains, fibres, and other great staples of universal
consumption. Peasant exports dominated the export basket.
Linking of the agricultural sector to the world market: Price movements and
business fluctuations in the world markets began to greatly affect the Indian
farmer. Choice of crops was determined more by market demand and price than
home needs. By the 1920s, world agricultural markets had started facing
persistent oversupply and price depression; in India, major cash crops faced
stagnant or falling prices.
Economic theory says that agricultural productivity should have increased, but
this didn’t happen because of poor agricultural organization, obsolete
technology, and lack of resources among most peasants.
Labour market developed due to
o Coercion: European owned plantations recruited labour from tribal belt of Bihar
and Central Provinces on contract for 3-5 years. They were subjected to
punishment for criminal breach of contract. Such labourers increased from 5 lakh
to 7 lakh between 1890- 1910.
o Institutional changes: Moreover, caste based attached labourers were replaced by
casual wage labourers, the women in rural labour markets in increased as men
migrated to work in urban industries.
o Proletarianisation : Landlessness due to new property rights system and
impoverishment
o Over the period 1857- 1946, Tirthankar Roy showed that average real wage were
stagnant. Hence commercialisation mainly benefitted the landed class due to its
asset ownership and social status.
Land market:
o These mainly developed in fertile pockets. Land came into auction in zamindari
areas and was mortgaged in ryotwari areas to pay revenue and finance
production.
o However there was no major change in pattern of land holding as it still
depended upon rural power equations and recognition of customary inheritance
laws led to high transaction costs, making market sluggish.
o With no scope of expansion since 1920s, the prices sored. In Punjab they
increased 10 fold between 1900 and 1945.
o Sub lease market got a boost as superior tenants got occupancy rights.
Rise of middle peasantry as they were willing to farm themselves and had
privileged access to capital- physical and social. This is in line with A Sen‟s theory
of opportunities. In ryotwari regions, they got ownership while in zamindariareas,
their cooperation was needed for tax collection.
Stages of industrialization:
1. Pre-war period: After the Suez canal opened in 1869, transcontinental shipping
rates came down massively, and new forms of industry began to grow in India
especially in cities of Calcutta and Bombay where communities had benefitted
from foreign trade. A key episode was the American civil war (1861-65) which
cut-off supplies of American cotton to Britain‟s textile industry, which turned to
India, creating a temporary boom. Profits earned during this boom found its way
in cotton mill industry. Primary industries that came up in this period were
cotton and jute spinning and weaving. In this period there was no
industrialization policy of the GoI.
Indian industry faced both cheap imports (due to excess capacity in the world
and overvalued rupee) and falling world prices (Great Depression period). Within
older industries such as cotton and jute, the situation became worse; greater
competition came from other centers such as Japan as well as domestic industry.
In jute, which was mostly sold abroad Indian capacity grew faster than world
demand, and falling world prices hurt it badly.
4. World War II: Similar effects as WW1- excess demand (=> high prices), but
supply constraints . But Indian industry was better equipped, hence growth and
diversification was greater. But it was hit by rising food prices in Easten India as
it too became theatre of war unlike WW1
Business organisation
Early industrial firms often originated as either individual undertakings or
partnerships, but the amount of capital invested in these remained relatively
small. Joint-Stock companies, later, were able to gather a much larger amount
of capital. This institution grew largely after 1857, when an act clearly made such
companies „limited liabilities, unlike before, where all investors used to be liable
for company‟s debts, which could be recovered by enroaching on the investor‟s
personal property, if needed.
'Land' being a state subject, every state has its own Land Reforms laws.
The Land Reforms (Fixation of Ceiling on Land) Acts, were enacted during 1960s
to further the Directive Principles of State Policy, provided under Part IV of the
Constitution of India in Art.39(b) & (c).Art 39 provides that the State should, in
particular, direct its policy towards securing that the ownership and control of the
material resources of the community are so distributed as best to subserve the
common good and that the operation of the economic system does not result in
concentration of wealth and means of production to the common detriment. To
achieve this purpose the land reforms are brought about.
Land reforms are applicable only to the agricultural lands. However there are
separate enactments to deal with urban land holdings. They also impose
restrictions on holdings in urban areas and impose ceiling.
The Acts exempt lands belonging to the central and state governments, local
authorities, universities, educational institutions, trusts for a public purpose or of
an educational nature and cooperative societies.
For the purposes of the Act a family of five members is the unit. A family of five
members shall hold no more than one standard unit of land. A standard unit varies
from state to state. In case of Madras 30 acres is the standard holding. A family
with more than five members shall be entitled to 5 additional acres per member. A
joint hindu family is considered a single unit. The number of acres calculation
differs according to the nature of the land, i.e wet or dry.
Within a specified period of time, after the notification issued by the government,
every person holding land is required to file a return with the authorized officer
regarding the particulars of the land held by him. The authorized officer shall
prepare a statement of the surplus land held by the person and notify the same.
The concerned owners may raise their objections regarding the extent declared as
surplus. The officer shall give them a reasonable opportunity and hear their
objections. In case of any dispute, on a request, he shall refer the matter to the
Land Tribunal. The questions of title are not gone into by the authorized officer,
they are decided by the Land Tribunal on reference.
Any gift or settlement of land after the relevant date of notification is deemed to
be void.
After the declaration of the surplus, the government shall commence the land
acquisition proceedings, stating that the land is required for a public purpose. The
government created a separate machinery to deal with the claims on compensation
in matters of acquisition.
The land thus acquired, is distributed to the landless poor under the various
government schemes. However, there are no provisions in the Act which provide
norms for distribution.
The land reforms Acts were challenged as being violative of the fundamental right
to acquire and hold property. The right to property was, deleted from the list of
fundamental rights by a constitutional amendment (42nd) and it is only a legal right
now. The land reforms laws were included in the ninth schedule of the
Constitution and judicial review was excluded regarding the ninth schedule
The act passed today, repeals Section 79(A) that sets a limit of non-agricultural
income at Rs 25 lakh to buy agricultural land, Section 79(B) that bars non-
agriculturists from purchasing agricultural lands, and Section 79 (C) that deals with
penalty for falsely claiming eligibility to hold agricultural land
It also inserts a new Section 80 (A) which states that no conditions laid in this act
shall be relaxed in respect of lands granted to persons belonging to the SC/STs,
during the period of prohibition under the Karnataka SC and ST (Prohibition of
Transfer of Certain Lands), Act, 1978.
LABOUR MOVEMENTS
In 1870, Sasipada Banerjee started a Working Man’s Club and
newspaper ‘Bharat Shramjeevi’.
In 1878, Sorabjee Shapoorji Bengalee drafted a bill for providing better working
conditions to the labourers and tried to pass in the Bombay Legislative Council
In 1880, the Bombay Mill and Millhands Association was set up by Narain
Meghajee Lokhanday. He also started newspaper „Deenbandhu‟.
In 1899, first strike took place in the Indian Peninsula Railways. Tilak‟s
newspaper i.e. Kesari and Maharatta supported the strike and launched the
campaign for months.
During Swadeshi Movement, Indian working classes came with wider political
issues. Ashwini Banerjee, Prabhat KR Chaudhari, Premtosh Bose and
Apurba Kumar Ghosh organised mass level strikes in the government press,
railways and the jute industries. The biggest strike was organised when Bal
Gangadhar Tilak was arrested and faced trial.
Formation of Trade Union: On October 31, 1920, All India Trade Union
Congress was founded. Lala Lajpat Rai was then became the first
president and Dewan Chaman Lal was the first general secretary. Lala Lajpat Rai
was the first person who linked capitalism with imperialism and gave the
statement, „Imperialism and militarism are the twin children of capitalism’. CR Das,
Jawaharlal Nehru, Subhas Chandra Bose, CF Andrews, JM Sengupta, Satyamurthy,
VV Giri and Sarojini Naidu supported the formation of trade union.
In 1918, the trade Union has emerged as a pressure group in a capitalist society
because during this year Gandhi helped to organise the Ahmedabad Textile
Labour Association and their demand in wage hike which was arbitrated 35
percent instead of 27.5 percent.
In 1926, British government came with the trade union Act to formalize the trade
union as a legal association. It also laid down eligibility criteria for registration and
regulation of trade union activities. This act not only secured the immunity for
both civil and criminal from prosecution for the legitimate activities of the trade
union act but also imposed restrictions on their political activities.
Important personalities and their contribution in Indian History
10. In 1928 during Bombay Textile Mills, strike led by Girni Kamgar
Union changed the picture of Trade union politics due to the emergence of
Communist. SA Dange, Muzaffar Ahmed, PC Joshi and Sohan Singh
Joshi were the famous trade union leaders of that time. This strike was an alarming
situation for the British government that laid the formation of the Public Safety
Ordinance of 1929 and the Trade Disputes Act of 1929. These acts made
compulsory to the appointment of courts of Inquiry and Consultation Boards for
settling industrial disputes. It also made strike in public utility services like posts,
railways, water and electricity as an illegal action unless working class union prior
notified to the administration a month before.
Meerut Conspiracy Case of 1929: The British arrested 31 labour leaders and trial
of three and a half year resulted in the conviction of working class leaders
like Muzaffar Ahmed, SA Dange, Joglekar, Philip Spratt, Ben Bradley and
Shaukat Usmani. This case and trial received worldwide publicity, but weakened
the working class movement in India.
After 1930, the working class union of India fractioned as the communist
approach of trade union and corporatist approach. NM Joshi set up All India
Trade Union Federation in 1931. In 1935, All India Trade Union
Congress (AITUC) was reaffirmed by communists, congress socialist and leftist
nationalists like JL Nehru and Subhas Chandra Bose.
Impact of Second World War: Initially, working class opposed the war when
Russia joined the war on the behalf of the allies supported by the working class. In
1945, dock workers of Bombay (now Mumbai) and Calcutta (now Kolkata) refused
to load ships taking supplies to the warring troops in Indonesia.
Bengal
Forced by the planters to take advance money and enter into fraudulent contracts
which were then used against the peasants
Digambar Biswas and Bishnu Biswas of Nadia district (WB)
PabnaSome lords forcefully collected rents and land taxes, often enhanced for the
poor peasants and also prevented the tenants from acquiring Occupancy Right
under Act X of 1859. Due to the decline in the production of Jute in the 1870s, the
peasants were struggling with famine. Some of the lords declared an enhancement
of land taxes and that triggered the rebellion.
Tabna Agrarian Leagues
1870s and 1880s, large parts of Eastern Bengal witnessed agrarian unrest caused by
oppressive practices of the zamindars
Yusufshahi Pargana in Patna district
Struggles spread throughout Patna and to other districts of East Bengal.
The main form of struggle was that of legal resistance. There was very little
violence
In 1885, the Bengal Tenancy Act was passed.
Young Indian intellectuals support-Bankim Chandra Chatterjee, R.C. Dutt and the
Indian Association under Surendranath Banerjee.
Deccan Riots
Taken by the active members of Home Rule League in UP – Gauri Shankar Misra,
Indra Narain Dwivedi supported by Madan Mohan Malviya.
The UP Kisan Sabha, set up in 1918, had established 450 branches in 173 tehsils of
the province by mid-1919.
In the mid-1920, Baba Ramchandra emerged as the leader of peasants in Avadh
and led a few hundred tenants from Jaunpur and Pratapgarh districts to Allahabad
and apprised Jawaharlal Nehru of the conditions of the peasants.
Nehru made several visits to the rural areas and developed close contacts with the
Kisan Sabha Movement.
Late 1920 an alternative Awadh Kisan Sabha at Pratapgarh with the efforts of
Jawahar lal Nehru, Mata Badal Pande, Baba Ram Chandra, Dev Narayan Pande,
and Kedar Nath bringing under its umbrella over 330 Kisan Sabhas.
The Sabha exhorted peasants to refuse to till bedakhali land; not to offer har and
begar ( forms of unpaid labour), boycott those who did not accept these
conditions and to solve their disputes through panchayats.
In 1921, the nature of peasant movement underwent a marked change with
peasants indulging in looting of bazaars, houses, granaries and clashes with the
police. The Government easily suppressed these outbreaks of violence & passed
the Awadh Rent ( Amendment ) Act which though brought little relief to the
tenants.
Eka Movement
Towards the end of 1921, peasant discontent surfaced again in the districts of
Hardoi, Bahraich and Sitapur
Causes-Relating to the extraction of a rent that was generally 50 percent higher
than the recorded rent.
Congress and Khilafat leaders provided the initial thrust to the peasant grievances
and the movement grew under the name Eka or unity movement.
With grass-root leadership not in favour of non- violence taking over the
movement, the authorities succeeded in bringing it to an end.
The Kisan movements were also over shadowed by the Non-Cooperation
Movement in UP.
Mappila Revolt
Muslim tenants inhabiting the surging where most of the landlords were Hindus.
Particularly encouraged by the demand or the local Congress body for a
government legislation regulating tenant- landlord relations.
Mappila movement merged with the ongoing Khilafat agitation.
Khilafat-Non-Cooperation Movement like Gandhi, Shaukat Ali and Maulana Azad
addressed Mappila meetings.
Worse in August 1921 when the arrest of a respected priest leader, Ali Musaliar
By December 1921, all resistance had come to a stop.
Bardoli Satyagraha
Surat district had witnessed intense politicisation after the coming of Gandhi on
the national political scene.
Sparked off in January 1926 when the authorities decided to increase the land
revenue by 30 per cent.
In February 1926, Vallabhbhai Patel was called to lead the movement.
The women of Bardoli gave him the title of “Sardar”.
Under Patel, the Bardoli peasants resolved to refuse payments of the revised
assessment
Bardoli Satyagraha Patrika was brought out to mobilise public opinion.
M. Munshi and Lalji Naranji resigned from the Bombay Legislative Council in
support of the movement.
Gandhi stand for emergency
The Civil Disobedience Movement which took the form of no-rent, no-revenue
movement in many areas.
Andhra
Bihar
Punjab
Punjab Naujawan Bharat Sabha, the Kirti Kisan Party, the Congress and the
Akalis.
A new direction to the movement was given by the Punjab Kisan Committee in
1937.
The main targets of the movement were the landlords of western Punjab who
dominated the unionist ministry.
The immediate issues taken up were resettlement of land revenue in Amritsar and
Lahore and increase in water rates in canal colonies of Multan and Montgomery
where feudal levies were being demanded by the private contractors.
Mainly concentrated in Jullundur, Amritsar, Hoshiarpur, Lyallpur and Shekhupura.
Tebhaga Movement
Telangana Movement