By: Dr.Dipak Basu
June 10, 2006
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(The author is a Professor in International Economics in Nagasaki
University, Japan)
Related articles:
Good Things, the
British Left Behind in India
How Did India Get so Poor
Benefits of the British Rule in India
Drain of Wealth during British Raj
India Shining and the British Media
UK: It’s the Policies, Stupid!
A number
of historians both India and foreign writers and historians have started
justifying the empire and even asking USA to take up the “White Man’s
Burden” to bring civilizations and justice to the dark world of the dark
skinned people. The views of the Western historians like Neil Ferguson or
Michael Ignatief are being reflected by their Indian counterparts like
Triankar Roy, Dipak Lal, or even Man Mohan Singh in his lecture in Oxford
University recently. The surprising matter is that even the Sangha Parivar
writers like M.S.Menon, and Priyadarshi Dutta are also propagating the
benefits that the British rule has brought to
India.
Before the British came,
India
was one of the richest countries in the world. In 1800, India, China and
Egypt (and probably many of the kingdoms of central
Africa)
were economically more developed than Britain. Indeed the British had
nothing for sale that was of interest to the Indians or Chinese. When the
British left in 1947, India was poor and industrially backward.
Britain
did bring free trade to
India
and China. Britain had extracted large surpluses from India, and forced it
into a free-trade pattern, which obliged India to export commodities and
become a dumping ground for British manufactures. Historians estimate that
the net transfer of capital from India to Britain averaged 1.5 percent of
GNP in the late nineteenth century. The wealth transfer was financed by a
persistent trade surplus of India, which was sent back to
Britain
or spend to expand the
British Empire.
India’s
export-import ratio was 172.5 percent in 1840-69, 148 percent in
1870-1912, and 133.4 percent in 1913-38. This export orientation was a
tool of colonial exploitation, and free trade a British ploy to force its
manufactures on India and crush domestic industry.
Instead of enriching the world, the
British Empire
impoverished it. The empire was run on the cheap. Instead of investing in
the development of the countries they ruled, the British survived by doing
deals with indigenous elites to sustain their rule to extract maximum
amount of revenues for Britain itself, which the British historians now
deny.
Whether in 18th-centuryIndia, 19th-century Egypt or 20th-century Iraq, the
story is the same. As long as taxes were paid, the British cared little
about "the rule of law". They turned a blind eye to Indian landlords who
extracted rent by coercion or indigo and opium - planters who had forced
Indian farmers to cultivate and their products were forced upon the
Chinese. Unable to sell anything to the Chinese, Britain sent in its
gunboats, seizing
Hong Kong and opening up a market for opium
grown in
India.
Despotic repression was fostered where it protected British interests.
India
is the prime example. Ruled by Muslims before the British, India was a
prosperous, rapidly commercializing society. The Jagat Seth, India's
biggest banking network and financier of the East India Company, rivaled
the Bank of England in size. British rule pauperized India. The British
restricted Indian weavers' ability to trade freely and the result was a
drastic drop in living standards.
Dhaka,
now the capital of impoverished
Bangladesh,
was once a state-of-the-art industrial city. Its population fell by half
during the first century of British rule. Now, average Indian incomes are
barely a tenth of the British level in terms of real purchasing power. It
is no coincidence that 200 years of British rule occurred in the
intervening time.
Rabindranath Tagore wrote “The chronic want of food and water, the lack of
sanitation and medical help, the neglect of means of communication, the
poverty of educational provision, the all pervading spirit of depression
that I have myself seen to prevail in our villages after over a hundred
years of British rule make me despair of its beneficence.”
The impact of British rule in
India:
As
Davis concludes: "If the history of British rule in India were to be
condensed to a single fact, it is this: there was no increase in India’s
per-capita income from 1757 to 1947." (in Late Victorian Holocausts: El
Nino famines and the making of the
Third World
by M. Davis, London, Verso Books, 2001)
In fact, incomes may have declined by 50 percent in the last half of the
19th century.
Shares of world GDP (percent)
|
|
1700 |
1820 |
1890 |
1952 |
|
China |
23.1 |
32.4 |
13.2 |
5.2 |
|
India |
22.6 |
15.7 |
11 |
3.8 |
|
Europe |
23.3 |
26.6 |
40.3 |
29.7 |
Source: Davis, 2001
Destruction of agriculture:
Karl
Marx wrote in Consequences of British Rule in India,
“England has broken down the entire framework of Indian society, without
any symptoms of reconstitution yet appearing. The British in
East India
accepted from their predecessors the department of finance and of war, but
they have neglected entirely that of public work s.”
“There have been in
Asia, generally, from immemorial times, but
three departments of Government; that of Finance, or the plunder of the
interior; that of War, or the plunder of the exterior; and, finally, the
department of public works. Climate and territorial conditions, especially
the vast tracts of desert, extending from the
Sahara,
through Arabia, Persia, India, and Tartary, to the most elevated Asiatic
highlands, constituted artificial irrigation by canals and water-works the
basis of Oriental agriculture. Hence an economical function devolved upon
all Asiatic Governments, the function of providing public works. This
artificial fertilization of the soil, dependent on a Central Government,
and immediately decaying with the neglect of irrigation and drainage,
explains the otherwise strange fact that we now find whole territories
barren and desert that were once brilliantly cultivated, as Palmyra,
Petra, the ruins in Yemen, and large provinces of Egypt, Persia, and
Hindostan; it also explains how a single war of devastation has been able
to depopulate a country for centuries, and to strip it of all its
civilization.”
Destruction of self-sufficient rural economy:
“British steam and science uprooted, over the whole surface of Hindostan,
the union between agriculture and manufacturing industry.”
“The
third form of destruction was the destruction of the self-sufficient
village society of
India.
Under this simple form of municipal government, the inhabitants of the
country have lived from time immemorial. These small stereotype forms of
social organism have been to the greater part dissolved, and are
disappearing, not so much through the brutal interference of the British
tax-gatherer and the British soldier, as to the working of English steam
and English free trade.”
“Those family-communities were based on domestic industry, in that
peculiar combination of hand-weaving, hands-spinning and hand-tilling
agriculture, which gave them self-supporting power. English interference
having placed the spinner in
Lancashire and the weaver in
Bengal,
or sweeping away both Hindoo spinner and weaver, dissolved these small
communities, by blowing up their economical basis”
De-industrialization of India under the British:
After destroying its agriculture British had embarked upon the destruction
of Indian industry. Several Indian historians have argued that British
rule led to a de-industrialization of India. By the Act 11 and 12 William
III, cap. 10, it was enacted that the wearing of wrought silks and of
printed or dyed calicoes from India, Persia and China should be
prohibited, and a penalty of £200 imposed on all persons having or selling
the same. Similar laws were enacted under George I, II and III, in
consequence of the repeated lamentations of the afterward so “enlightened”
British manufacturers. And thus, during the greater part of the 18th
century, Indian manufactures were generally imported into England in order
to he sold on the Continent, and to remain excluded from the English
market itself.
Ramesh Chandra Dutt argued (in Economic History of India, London, 1987):
“
India in the eighteenth century was a great manufacturing as well as a
great agricultural country, and the products of the Indian loom supplied
the markets of Asia and Europe. It is, unfortunately, true that the East
India Company and the British Parliament, following the selfish commercial
policy of a hundred years ago, discouraged Indian manufacturers in the
early years of British rule in order to encourage the rising manufactures
of England.
Their fixed policy, pursued during the last decades of the eighteenth
century and the first decades of the nineteenth, was to make India
subservient to the industries of Great Britain, and to make the Indian
people grow raw produce only, in order to supply material for the looms
and manufactories of
Great Britain”.
According to Karl Marx, ” However changing the political aspect of India’s
past must appear, its social condition has remained unaltered since its
remotest antiquity, until the first decennium of the 19th century. The
handloom and the spinning wheel, producing their regular myriads of
spinners and weavers, were the pivots of the structure of that society.”
“It
was the British intruder who broke up the Indian handloom and destroyed
the spinning wheel.
England
began with driving the Indian cottons from the European market; it then
introduced twist into Hindostan, and in the end inundated the very mother
country of cotton with cottons.”
From
1818 to 1836 the export of twist from Great Britain to India rose in the
proportion of 1 to 5,200. In 1824 the export of British muslins to India
hardly amounted to 1,000,000 yards, while in 1837 it surpassed 64,000,000
of yards. But at the same time the population of
Dacca
decreased from 150,000 inhabitants to 20,000. This decline of Indian towns
celebrated for their fabrics was by no means the worst consequence. “
There is a good deal of truth in the deindustrialization argument. Moghul
India did have
a
bigger industry than any other country, which became a European colony,
and was unique in being an industrial exporter in pre-colonial times. A
large part of the Moghul industry was destroyed in the course of British
rule.
The
second blow to Indian industry came from massive imports of cheap textiles
from
England
after the Napoleonic wars. In the period 1896-1913, imported piece goods
supplied about 60 per cent of Indian cloth consumption, 45 and the
proportion was probably higher for most of the nineteenth century. Home
spinning, which was a spare-time activity of village women, was greatly
reduced.
It
took India 130 years to manufacture textiles and to eliminate British
textile imports. India could probably have copied Lancashire's technology
more quickly if she had been allowed to impose a protective tariff in the
way that was done in the USA and France in the first few decades of the
nineteenth century, but the British
imposed a policy of free trade. British imports entered India
duty free, and when a small tariff was required for revenue purposes
Lancashire pressure led to the imposition of a corresponding
excise duty on Indian products to prevent them gaining a competitive
advantage. This undoubtedly handicapped industrial development. If
India had been
politically independent, her tax structure would probably have been
different. In the 1880s, Indian customs revenues were only 2.2 per cent of
the trade turnover, i.e. the lowest ratio in any country. In Brazil, by
contrast, import duties at that period were 21 per cent of trade turnover.
British rule had not promoted industrialization in India either. Japan and
China were not colonized by the British; they remained independent. The
Indian steel industry started fifteen years later than in China, where the
first steel mill was built at Hangyang in 1896. The first Japanese mill
was built in 1898. In both China and Japan the first steel mills (and the
first textile mills) were government enterprises, whereas in India the
government did its best to promote imports from Britain.
Until the end of the Napoleonic wars, cotton manufactures had been India’s
main
export. They reached their peak in 1798, and in 1813 they still amounted
to £2 million, but thereafter they fell rapidly. Thirty years later, half
of Indian imports were cotton textiles from
Manchester.
This collapse in India’s main export caused a problem for the Company,
which had to find ways to convert its rupee revenue into resources
transferable to the UK. The Company therefore promoted exports of raw
materials on a larger scale, including indigo, and opium, which were
traded against Chinese tea. These dope-peddling efforts provoked the
Anglo-Chinese war of 1842 in which the British drug-pushers won and forced
China to accept more and more opium.
Financial Exploitation of India:
Until 1898 India, like most Asian countries, was on the silver standard.
In 1898, India under British rule, had to adopt a gold exchange standard
which tied the Rupee to Pound at a fixed value of 15 to 1, thus forcing
India to export more for smaller amount of British goods. This was another
kind of exploitation of the Indian people making them poorer and poorer.
Another important effect of foreign rule on the long-run growth potential
of the
economy was the fact that a large part of its potential savings was
siphoned abroad. There can be no denial that there was a substantial
outflow, which lasted for 190 years. If
these funds had been invested in India they could have made a significant
contribution to raising income levels.
The
first generation of British rulers was rapacious. Clive took quarter of a
million
Pounds for himself as well as a jagir worth £27,000 a year, the Viceroy
received £25,000 a year, and governors £10,000. The starting salary in the
engineering service was £420 a year or about sixty-times the average
income of the Indian labor force. From 1757 to 1919, India also had to
meet administrative expenses in
London,
first of the East India Company, and then of the India Office, as well as
other minor but irritatingly extraneous charges. The cost of British staff
was raised by long home leave in the
UK,
early retirement and lavish amenities in the form of subsidized housing,
utilities, rest houses, etc. Under the rule of the East India Company,
official transfers to the UK rose gradually until they reached about £3.5
million in 1856, the year before the mutiny.
In
addition, there were private remittances.
D.
Naoroji, (in Poverty and Un-British Rule in India, London, 1901)
suggests that the annual remittances including business profits from
mainly India and to a limited extent from China were already 6 million in
1838. R.P. Dutt argues that 'the spoliation of India was the hidden source
of accumulation which played an all important role in helping to make
possible the Industrial Revolution in England' (in Economic History of
India, London, 1897)
In
the twenty years 1835-54, India’s average annual balance on trade and
bullion was favorable by about £4.5 million a year. During the period of
direct British rule from 1858 to 1947, official transfers of funds to the
UK by the colonial government were called the “Home Charges”. They mainly
represented debt service, pensions, India Office expenses in the UK,
purchases of military items and railway equipment. Government procurement
of civilian goods, armaments and shipping was carried out almost
exclusively in the UK. By the 1930s these home charges were in the range
of £40 to £50 million a year. Some of these flows would have occurred in a
non-colonial economy, e.g. debt service on loans used to finance railway
development, but a large part of the debt was incurred as a result of
colonial wars. Some government expenditure was on imports, which an
independent government would have bought from local manufacturers. Of
these official payments, we can legitimately consider service charges on
non-productive debt, pensions and furlough payments as a balance of
payment drain due to colonialism.
There were also substantial private remittances by British officials in
India either as
savings or to meet educational and other family charges in the UK. In the
inter-war period, these amounted to about £10 million a year, and Naoroji
estimated that they were running at the same level in 1887. These items
were clearly the result of colonial rule.
In
addition, there were dividend and interest remittances by shipping and
banking interests, plantations, and other British investors. The total
‘drain’ due to government pensions and leave payments, interest on
non-railway official debt, private remittances for education and savings,
and a third commercial profits amounted to about 1.5 per cent of national
income of undivided India from 1921 to 1938 and was probably a little
larger before that. Net investment was about 5 per cent of national income
at the end of British rule, so about a quarter of Indian savings were
transferred out of the economy, and foreign exchange was lost which could
have paid for imports of capital goods.
As a
consequence of this foreign drain the Indian balance of trade and bullion
was always positive. In spite of its constant favorable balance of
trade, India acquired substantial debts. By1939 foreign assets in
India
amounted to $2.8 billion, of which about $1.5 billion was
government-bonded debt and the rest represented direct investment (mainly
tea, other plantations and the jute industry).
India
did not reduce its foreign debt during the First World War as many other
developing countries did. Instead, there were two ‘voluntary’ war gifts to
the UK amounting to £150 million ($730 million).
India
also contributed one-and-a-quarter million troops, which were financed
from the Indian budget. The 'drain' of funds to
England
continued in the interwar years because of home charges and profit
remittances.
There was also a small outflow of British capital. In the depression of
1929-33, many developing countries defaulted on foreign debt or froze
dividend transfers, but this was not possible for India. The currency was
kept at par with sterling and devalued in 1931, but the decisions were
based on British rather than Indian needs. Furthermore, the salaries of
civil servants remained at high level, and the burden of official
transfers increased in a period of falling prices.
During the Second World War,
India's
international financial position was transformed.
Indian war finance was much more inflationary than in the UK and prices
rose threefold, so these local costs of troop support were extremely high
in terms of Pound, as the exchange rate remained unchanged.
For
the last fifty years of British rule there is no increase in per capita
income. The most noticeable change in the economy was the rise in
population from about 170 million to 420 million from 1757 to 1947. Very
little incentive was provided for investment and almost nothing was done
to promote technical change in agriculture. At the bottom of society the
position of sharecropping tenant and landless laborers remained wretched.
Meanwhile Indian taxes funded Britain's Indian army, which was used to
expand the empire into Africa and Asia and which made a major contribution
to defending the same empire in two world wars--all at no cost to the
'home' country! Lord Salisbury said India 'was an English barrack in the
Oriental seas from which we may draw any number of troops without paying
for them'.
Man-Made Famines in
British India:
The
British brought an unsympathetic and ruthless economic agenda to India"
and that "the creation of famine" was brought about by British
"sequestration and export of food for enhanced commercial gain." Three
important factors caused devastating famines in India under British rule.
First,
India’s
indigenous textile industries were destroyed by London’s high tariffs and
the import of cheap British manufactured products, impoverishing millions
of town dwellers, who were forced into the countryside to compete for
dwindling land. Second,
India’s
traditional granary reserve system, designed to offset the impact of bad
harvests, was dismantled. Third, India’s peasants were pressured into
growing crops for export, making them dependent on fluctuating world
market prices for their means of subsistence. As a result, tens of
millions of people died of starvation. These famines were not caused
by shortages of food. They took place at the very same time that annual
grain exports from India were increasing.
One
third of the population of the then province of Bengal, which includes
today’s
Bangladesh,
West Bengal, Orissa, Bihar and South Assam, were wiped out in the famine
of 1770, immediately after
Bengal
was occupied by the British Easy India Company, due to their inhuman tax
system. According to author Mike Davis, during the famine of 1876, "the
newly constructed railroads, lauded as institutional safeguards against
famine, were instead used by merchants to ship grain inventories from
outlying drought stricken districts to central depots for hoarding...In
Madras city, overwhelmed by 100,000 drought refugees, famished peasants
dropped dead in front of the troops guarding pyramids of imported rice."
The
British refused to provide adequate relief for famine victims on the
grounds that this would encourage indolence. Sir Richard Temple, who was
selected to organize famine relief efforts in 1877, set the food allotment
for starving Indians at 16 ounces of rice per day--less than the diet for
inmates at the Buchenwald concentration camp for the Jews in Hitler’s
Germany.
British disinclination to respond with urgency and vigor to food deficits
resulted in a succession of about two dozen appalling famines during the
British occupation of India. These swept away tens of millions of people.
The frequency of famine showed a disconcerting increase in the nineteenth
century,” under the British rule
(in
Famines in India,
Asia Publishing House, Bombay, 1963).
Very
few would be aware of the horrendous calamities inflicted on Indians by
the British. The annual death rate in 1877 in British labor camps during
the Deccan famine was about 94%. Extraordinarily low population
growth between 1870 and 1930 (due to famine, malnourishment-exacerbated
disease and cholera, plague and influenza epidemics) was due to this
exploitative policy. In 1943 Bengal Famine in British-ruled
India
about 5 million people were perished, but it was never mentioned in the
British history books, because it was caused by a deliberate British
“scorched earth policy” to deprive the Azad Hind Army and the Japanese to
receive any support from the local people.
The
annual death rate in
India
before 1920 was about 4.8% but this declined to 3.5% by 1947 and is
presently about 0.9%(
http://countrystudies.us/india/32.htm). Using a
baseline “expected” annual death rate value of 1.0% and assuming an
“actual” pre-1920 value of 4.8% one can estimated that the avoidable
(excess) mortality was about 0.6 billion during 1757-1837, 0.5 billion
during 1837-1901 and 0.4 billion during 1901-1947. Thus the British rule
of India was associated with an excess (i.e. avoidable) mortality totaling
1.5 billion – surely one of the greatest crimes in all of human history.
An
extraordinary feature of the appalling record of British imperialism with
respect to genocide and mass, worldwide killing of huge numbers of people
(by war disease and famine) is its absence from public perception. There
is no mention of famine in India or Bengal in the British textbooks of
history. New historians in India are now putting the blame on the victims.
Meghnad Desai in his article in Cambridge History of India puts the blame
on the Indian speculators; Amartya Sen suggested (in ‘Ingredients of
Famine Analysis’, Quarterly Journal of Economics, Vol XCVI, 1981) that
people in that area had eaten too much to create the famine.
Conclusion:
The
progress made in India under British Rule like the coming of railways,
Postal System, Telegraphic communications, etc., were all undertaken by
the British Administration to facilitate their rule. The aim of British
policy was to integrate the Indian economy with that of the British in way
such that India supplied Great Britain with cheap raw material for being
manufactured into valued-added (costly) finished products. It is not true
that if India
remained independent it could not have developed railways or telegraphic
system; Japan or Thailand was never colonized but they have today much
better infrastructure than that in India.
India during the British rule was to provide a ready
captive market for British goods made from Indian raw materials. The
resultant enrichment and industrial development was to take place in
Britain and not in
India. Thus at the dawn of independence, India inherited an economy that
had the worst features of both the feudal and the industrial ages
without the advantages of either. As Rabindranath Tagore wrote in 1941, in
his letter from the deathbed to British member of parliament Mrs.Rothbone,
that “…in the Soviet Union illiteracy was eradicated with two decades but
in India even after two centuries of British rule only 15 percent of the
Indians were literate”.
Priyadarsi Dutta,
parliamentary secretary to Balbir Punj, the chairman of the BJP’s
think-tank, wrote in The Organizer, the organ of the R.S.S on 28 May 2006,
that the British rule was only a learning process emphasizing the positive
aspects of the British empire as written in the history text books in
Britain. Thus, they are suggesting that thousands of our heroes and
heroines of the freedom struggle who had sacrificed their lives to
liberate India were all very stupid. This is the indication of cultural
imperialism, which is bound to take place in India along with the
‘globalization’, and the ‘economic reforms’ put forward by no other than
the Anglo-American economists and policy-makers.
Dr.Dipak Basu
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