Indian Economic and Political History2014

Session 3Rajesh Bhattacharya

rb@iimcal.ac.in

Indian Institute of Management Calcutta 1

Land Revenue Systems under the

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

Ryotwari System: Individual cultivators (ryots)became proprietors of their land with right tosub-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, Jodhpur—38% of total cultivated area.

Land Revenue Systems under the

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 tobegin 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 system

Zamindari Areas: A class of absentee landlords was created.Proliferation of intermediaries. The zamindars found different waysof 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-19th

century, after which land revenue declined in importance as the source of government revenue.

…E m e r g e n c e of highly un e qual di s t r ibu t ion of r ural a ss e ts . E v e n t oda y , r ural a ss e t in e quali t y in India is v e r y high b y global s t andard s .

Concentration Ratio

Types ofHolding

1953-54

1960-61

1971-72

1981-82

1991-92

2002-03

OwnershipHolding

0.751 0.717 0.706 0.708 0.71 0.74

OperationalHolding

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, RoyalCouncil of Agriculture Research in 1929.

Commercialization of AgricultureCommercialization 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 CommercializationDrain from India to England. Since India already de-

industrialized/, agricultural commodities had to marketed and exported to meet this drain.

First half of the 19th century: Indigo, silk, opium, sugarcane Indigo, silk, opium—these 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, transportrevolution and commercialization of Indian

agricultureBritain was the ‘factory of the world’ by mid-19th century.

India supplied agricultural raw materials and foodcrops 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 In the second half of the 19th century, principal cash crops:

cotton, wheat, sugarcane, jute and tea. Much less coercioninvolved compared to the early period.

Just like indigo, silk and sugarcane before, cotton, sugarcane and wheat from India in the latter half of the 19th 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 Subsistence agriculture of a dependent peasantry. Distress

buying and selling under the compulsions of debt. Cash requirements of peasants—payment 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. Noincentive to invest in agriculture since no cost distribution.Risk of production is passed by the landowners tosharecroppers/tenants. Peasants’ consumption forceddown. Indebtedness.

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

Reasons for

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 andpeasants’ 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 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.