The Princely States

The princely states were the kingdoms that British India did not annex to itself. The states lived under an agreement with British India. The two main points of the agreement were that they would keep trade open and would not raise an army. How were the states affected by colonialism? Was their economic history significantly different from that of British India or more similar than different? Did their relationship with British India affected their ability to follow an independent policy on development? Chapter 12 answers questions like these.

The Economy and the Environment

The natural environment shapes long-term economic change via the quality or quantity of resources of potential economic value, climatic conditions that shape moisture or seasonal variations in agricultural conditions, and via the risk of natural disasters. These geographical conditions are lasting. They become active drivers of economic change when private enterprise and public policy become interested in the resources and try to mitigate the risks, and knowledge and information-gathering on these conditions for scientific or commercial purposes start to speed up. In colonial times, all of these processes speeded up greatly. Chapter 11 is about that change.

Population

India’s population, long-stagnant or growing only at a slow pace, began to grow rapidly from the 1920s. Given the large initial size of the population, demographic change in this region was a turning point in world population history. What had changed to produce this turn? Chapter 10 considers the demographic transition with attention paid to population growth, famines, epidemics, and migration.

Infrastructure

At independence in 1947, the visible legacy of colonial rule in South Asia was the modern infrastructure that the regime had left behind, the ports, canals, the telegraph, sanitation, medical care, urban waterworks, universities, postal system, courts of law, railways, meteorological office, statistical systems, and scientific research laboratories. All of it involved British knowhow, adapted to the Indian environment with Indian help, and assisted governance directly or indirectly. But once built, such assets did not serve only the empire but also helped private enterprise and ordinary people lead better lives. Chapter 8 shows the motivations that drove these projects and the effects they produced.

Plantations, Mines, Banking

In 1947, about 15 per cent of the Indian workforce was engaged in activities outside manufacturing and agriculture, many of them in the three modern activities, plantations, mines, and banks. Chapter 7 shows that, like large-scale industry, these enterprises used new organizational forms, had global connections, and attracted investment from Europeans and Indians. Many business houses had investments spread over industry, mines, plantations, and banks. Like large-scale industry, mines and plantations processed natural resources available cheap in India.

The Pattern of Economic Growth

Economic change in colonial India followed a definite pattern. Chapter 3 describes the pattern with statistical data. The chapter shows that the average rate of growth of national income per capita was low, but that the average picture is misleading since the experiences of agriculture on the one hand and industry and services on the other differed greatly. The presence of dissimilar trajectories complicates the task of explaining the pattern of change. The chapter suggests that instead of asking if colonialism and globalization made India rich or poor, we should be asking why colonialism and globalization made some livelihoods rich and left some others poor. Chapter 3 surveys the statistical data that enables asking question like this one.

Transition to Colonialism

The eighteenth-century economy of the Indian subcontinent was an uneven one. On the one hand, there were present a rich indigenous commercial tradition; territorial states that respected private property in land and trade; a literate elite running the fiscal administration; and rich cities that were home to highly skilled artisans. But much of that wealth was confined to the riparian, deltaic, and seaboard regions. The greater part of peninsular India consisted of drylands, poor peasants, few roads, slow traffic, few towns, forests, waterless uplands, and uninhabited deserts. With such divergent initial conditions, the onset of globalization and the emergence of British power led to a variety of trajectories, as Chapter 2 shows.

Indian Economy after Independence

Chapter 13 surveys economic change and shifts in the political context of economic change in the Indian Union, 1950–2010. Based on the survey, the chapter answers three larger questions. First, why was economic growth relatively low in the first 35 years after the end of colonialism, and why was there a turnaround in the pace of economic change in the 1980s? Second, why did human development lag achievements in income growth after the turnaround? If the quality of life failed to improve enough, then a third question follows, why did the democratic political system survive at all if it did not fairly distribute the benefits from growth?

Agriculture

Cultivation of land engaged more than two-thirds of the employed population. Cultivated land increased by 50 per cent between 1860 and 1920. The opportunity to trade encouraged the trend. Whereas commercialization made many merchants rich, it improved the lives of peasants and landlords in only a few regions, and it left agricultural wages nearly stagnant. As the population increased, and few people could find good jobs outside the village, more people shared the poverty of the village. Why did the village produce more and yet stay poor? Why was growth so uneven? Why was growth low overall? Why did regions differ so much? Chapter 4 describes agricultural change over the period, 1858–1947, and answers these questions.

How the Government Worked

In many respects, the British colonial rule created a more modern form of government than previous Indian regimes. But it spent little money on those heads that would make a real difference to the poorest earners. How did this government raise money and spend money? What policies and ideologies did it follow in deciding expenditure? Why did it have such a limited effect on poverty and development?