The Colonial Legacy

Learning Outcomes:

1. Understand the complex integration of India’s economy into the world capitalist system during British rule.
2. Analyze the peculiar structure of production and international division of labor imposed by colonialism.
3. Recognize the minimal investment in India’s economic growth by the colonial administration.
4. Examine the role of the colonial state in sustaining economic underdevelopment in India.

Basic Features

India’s colonial past drastically influenced her economic, agricultural, and industrial development. British rule transformed India, but the changes that occurred were part of what A. Gunder Frank termed the ‘development of underdevelopment.’ The four basic features of the colonial economic structure were:

1. Subservient Economic Integration: India’s economy became integrated with the global capitalist system but was relegated to a subservient role. From the mid-18th century, India’s interests were subordinated to those of Britain, which benefited from this integration.
2. Forced Production Structure: India was compelled to produce and export foodstuffs and raw materials, such as cotton, jute, and oilseeds, while importing British manufactured goods, including biscuits, machinery, and cars. This international division of labor persisted even when India developed labor-intensive industries like jute and cotton textiles.
3. Insufficient Economic Surplus: From 1914 to 1946, India’s savings were a meager 2.75% of GNP, contrasted with 12% in 1971–75. Capital formation was similarly low, with machinery accounting for only 1.78% of GNP during the colonial period, compared to 6.53% by the 1970s. A significant portion of social surplus was appropriated by the colonial state, indigenous landlords, and moneylenders, stifling investment in agriculture and industry.
4. Colonial State Control: The British state played a pivotal role in shaping and sustaining the colonial economy, determining policies in Britain’s favor. State support for Indian industry and agriculture was denied, further reinforcing India’s economic dependence on Britain.

Important Note: The ‘Drain’ of wealth refers to the unilateral transfer of India’s surplus to Britain, contributing to India’s poverty. Estimates suggest 5–10% of India’s national income was drained out annually.

Economic Backwardness

Colonialism hindered India’s agricultural and industrial progress. The following points illustrate the extent of economic backwardness:

1. Stagnating Agriculture: Agricultural output stagnated, with per capita agricultural production dropping by 14% between 1901 and 1941. Food grain production fell by more than 24%, as a consequence of rising landlessness and increasing tenant farming.
2. Dominance of Landlords: By the 1940s, landlords, moneylenders, and the colonial state controlled over 70% of land, appropriating more than half of agricultural production. The colonial state showed minimal interest in agricultural improvement, focusing instead on revenue collection.
3. Commercialization Without Development: While roads and railways facilitated the commercialization of agriculture, it did not lead to capitalist farming or improved agricultural technology. A large part of agricultural land was used for commercial crops instead of food crops, contributing to rural distress.
4. Primitive Technology: Indian agriculture lacked modernization. In 1951, only 930,000 iron plows were in use, while wooden plows numbered 31.3 million. The use of improved seeds and fertilizers was minimal, with only 11% of cropped land under improved seeds by the late 1930s.

Industrial Decline

The decline in handicrafts and artisanal industries, coupled with underdeveloped modern industries, illustrates India’s industrial backwardness:

1. Collapse of Handicrafts: Indian handicraft industries collapsed in the face of competition from cheaper British imports and the imposition of free trade. Many artisans were forced to seek refuge in agriculture, exacerbating rural poverty.
2. Limited Modern Industry: By the mid-20th century, modern industries like cotton, jute, and tea dominated, but their contribution to employment and production was minuscule compared to traditional handicrafts. In 1950, India produced 1.04 million tons of steel, compared to 6.9 million tons by 1984, illustrating the slow industrial growth.
3. Underdeveloped Capital Goods Industry: India imported 90% of its machine tools in 1950. The lack of a robust capital goods industry reflected India’s dependency on Britain and highlighted the stunted nature of Indian industry.
4. Rural-Urban Disparity: In 1951, 82.3% of the population was rural. The number of people employed in processing and manufacturing fell from 10.3 million in 1901 to 8.8 million in 1951, underscoring the lopsided development.

Role of Foreign Capital

Foreign capital, especially British capital, played a dominant role in India’s industrial and financial sectors:

1. British Domination: British capital controlled critical sectors such as coal mining, jute, shipping, and plantations. British managing agencies further extended control over Indian-owned enterprises, hindering independent industrial development.
2. Rise of Indigenous Capital: Despite British dominance, an indigenous capitalist class emerged, controlling 60% of large industrial units by 1947. Indian capital also made strides in banking and life insurance, with 64% of bank deposits and 75% of life insurance business under Indian control.

Important Note: Indigenous capitalists were not intermediaries for foreign capital but operated independently. This provided a foundation for post-independence industrial growth.

Positive Features of Economic Development

Several positive aspects of India’s economy by the 1940s contributed to its potential for post-colonial growth:

1. Transport and Communication: The development of roads and railways played a significant role in unifying the country. By the 1940s, India had 42,000 miles of railway track and 65,000 miles of paved roads, creating a basis for post-colonial infrastructure growth.
2. Small Industrial Base: A small, Indian-owned industrial base emerged, consisting of consumer industries like cotton, jute textiles, sugar, soap, and matches. Intermediate capital goods industries, though small, also began to take shape.
3. Scientific and Technical Manpower: By 1947, India had a core of scientific and technical personnel, despite the inadequate number of engineering colleges and technical education facilities. Indian capitalists were also more enterprising than foreign investors.

Colonial State Structure

The colonial state in India had paradoxical features, being both authoritarian and featuring certain liberal elements.

1. Authoritarian Rule: The colonial state was autocratic in nature, but certain liberal aspects, such as the rule of law and an independent judiciary, provided limited checks on the bureaucracy. However, laws were often repressive, with civil servants and police holding arbitrary powers.
2. Limited Civil Liberties: Although freedoms of speech, press, and association were granted in normal times, these liberties were curtailed during periods of mass struggle. The franchise was extremely limited, with only 3% of Indians able to vote after 1919 and 15% after 1935.
3. Divide and Rule: The British adopted a divide-and-rule policy, exacerbating social and political divisions within India, culminating in the Partition of 1947. Despite this, the colonial state laid the groundwork for a unified administrative and political entity in India.

The Cost of Colonialism

The legacy of colonialism in India was one of economic impoverishment and human misery.

1. Stagnating Income and High Death Rates: Throughout the 20th century, per capita income stagnated. Between 1941 and 1950, the death rate was 25 per 1,000, and the infant mortality rate was 175-190 per 1,000 live births. Life expectancy was a mere 32 years for those born between 1940 and 1951.
2. Poor Health Services: Health services were dismal, with only 10 medical colleges in 1943 and 18,000 doctors in 1951. Large parts of the country lacked basic sanitation, electricity, and modern infrastructure.
3. Widespread Illiteracy: Educational access was limited, with 84% of Indians illiterate in 1951. Educational facilities for women were particularly lacking, and the neglect of mass education left vast human potential untapped.
4. Famines and Poverty: Extreme poverty, disease, and famine were pervasive

. The 1943 Bengal famine, which claimed nearly 3 million lives, was a stark reminder of the British failure to ensure food security.

Important Note: The socio-economic legacies of colonialism, such as widespread poverty, famines, and illiteracy, contributed to India’s underdevelopment, reinforcing the need for economic and political restructuring after independence.

MCQ: What was a significant cause of India’s economic stagnation under colonial rule?

• A) Lack of natural resources
• B) Forced production structure and export of raw materials
• C) Limited access to modern education
• D) Rapid industrialization

Answer: B