5.

Changing Perspective of Economic

Development and Economic History

1. Modern research has not sustained the narrative that

Britain impoverished India. India’s economic growth was
depressed as its productive capacity was low and a
maleficent government. The study of economic history in
India was conducted along opposing themes of development
and underdevelopment, industrialization, and
deindustrialization. This conclusion was based on five basic
ideas of exploitation and gain by the British—colonial
exploitation, misuse of social surplus, perilous
commercialization, deindustrialization, and exploitation
through public goods like railways and telegraphs. Most
writers of political economy and development used the
argument of India’s ruin by British to suit their ideological
ends. In 1963, Morris D. Morris gave a more positive view of
nineteenth century development in India, undermining the
orthodox position. There was a positive correlation between
commercialization and productivity growth. By the end of the
1980s a new link was beginning to emerge between history
and the present beyond the imperialist bugbear. After 1990,
the study of economic history nearly died. Grants dried up
and the government did not want to fund softer areas of
academic research. If we rethink economic history, we must
understand that development and underdevelopment were
not the two sides of the Indian story. The British government
did not create an effective mass education system in India.
The center of the discipline of economic history of India must
shift from imperialism to economic structure. The study of
economic history must be revived in Indian colleges.

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2. The study of economic history in India was
conducted along opposing themes of development and
underdevelopment, industrialization, and
deindustrialization. According to this perspective, markets
and institutions built during the colonial era made India poor
and Britain rich. In other words, Indian society and economy
without colonialism could have done better. Both nationalists
and Left historians attributed India’s economic backwardness
as a result of poor development of mechanized industry.

3. This conclusion was based on five basic ideas of

exploitation and gain by the British. First, colonialism
integrated India into world capitalism in a subservient
position of unequal exchange and ‘drain.’ The second,
explained that social surplus went into the wrong hands. The
peasants during this ‘forced commercialization’ became
victims of moneylenders who shied away from productive
investment. The third idea was called ‘perilous
commercialization’ where there was a shift from food to non-
food crops. This shift increased famines. The fourth idea was
deindustrialization, where industrialization in Britain
imposed high costs on India due to a decline in traditional
industry. The fifth idea was that public goods like railways
and telegraph exploited India as they were introduced to aid
imperial defense or foreign capital.

4. Most writers of political economy and development

used the argument of India’s ruin by British to suit
their ideological ends. It gave an easy explanation for
poverty and stagnation. It reassured politicians that they
were not responsible for India’s ills. It bridged the gap
between the past and the present. It enforced the philosophy
of self-reliance.

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5. In 1963, Morris D. Morris gave a more positive view
of nineteenth century development in India,
undermining the orthodox position. The orthodoxy faced
its first serious challenge in 1963 when Morris D. Morris
proposed a more positive view of nineteenth-century Indian
development. His main argument was that in the nineteenth
century India’s economic growth was depressed by
productive capacity rather than politics, which played a
benevolent role. After two decades empiricist economist
Dharma Kumar edited Cambridge Economic History of India.
After this publication, many detailed researches disputed
every aspect of the orthodox premise. Both British and Indian
economists, irrespective of their political status,
complimented the empirical conclusions. It was observed that
GDP growth rates in India and Britain were moving in the
same direction. They were quite high in the last quarter of
the nineteenth century and decelerated in the interwar
period.

6. There was a positive correlation between

commercialization and productivity growth. The idea of
moneylender power in forced commercialization was untrue.
The belief in perilous commercialization inflated shifts in
cropping patterns and the intensity of famines. The data
showed the great contribution of climate as the origin of
famines. Deindustrialization was an inaccurate description
for a region where millions pursued their business as usual
and saw a rise in output per worker. The use and benefits of
public goods such as railways and telegraph were not meant
only for ethnic groups. Today there is a new focus on
ecometrics and cultural history. Ecometrics means the use of
statistical methods to economic data to find empirical
understanding of economic relationships. Cultural history
interprets human societies by understanding distinctive ways

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of living, cultural activities, ceremonies, and interaction with
the environment. Influenced by these news trends economists
want to restate the subject by learning from the past.
7. By the end of the 1980s a new link was beginning to
emerge between history and the present beyond the
imperialist bugbear. But historians studying South Asia
have lost interest in economic growth. The three new areas of
economic history that emerged in the1990s were
environment, traditional industry, and factory labor.
Research was more focused on political and cultural history
and not economic growth. There was a shift away form the
idea of growth in historiography. Ashish Nandy asserted that
colonialism was “a matter of consciousness.” Many historians
still wrote from that perspective. But the shift from the
economic realm to culture was new. There was a disinterest
in the concept of economic “progress” which was
systematically attacked in postmodern cultural history. Also,
after the 1990s, archives-based research on economic issues
lost popularity among historians. Recently, a connection
between comparative economic growth and Indian history
has given some encouragement to the subject.
8. After 1990, the study of economic history nearly
died. Grants dried up and the government did not want to
fund softer areas of academic research. During this period,
history withdrew from economic research. It remained as
part of undergraduate study. In 2002, the UGC eliminated
the subject of economic history altogether from the
prescribed curriculum in Indian universities.

9. If we rethink economic history, we must understand

that development and underdevelopment were not the
two sides of the Indian story. In the nineteenth century,
Britain and India were two different entities influenced by

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global factors, mutual interaction, and differences. But for
colonization India and Britain would have followed different
paths. From 1800 until 1980, India had a large labor force
which was poorly equipped. India was also subjected to high
climatic risks. In the nineteenth century, India’s growth was
connected to labor-intensive growth. Public investment in
irrigation, railways and other public works brought new lands
under cultivation. The expansion of trade and
commercialization were based on public investments.
Agricultural, and handicraft labor was reallocated to new
occupations such as plantations, mines, and public works for
migration overseas. It was not just colonial labor
displacement, but after reallocation, overall labor demand
increased in the nineteenth century. By 1900, new land was
exhausted. During 1858-1920 there was only a small increase
in the supply of workers. But after this period the growth rate
of the population and supply of labor increased. Most labor
reallocation in India relied on contractors who mediated
between workers and employers. After 1900, internal
voluntary migration increased, and labor became
commercialized.

10. The British government did not create an effective

mass education system in India. Students enrolled in
schools increased from 3–4 percent in 1891 to 7–9 percent in
1931. These conditions changed only slowly after 1947. A
quarter-century later, the proportion of school-going students
remained low at 20–25 percent. Only about a fifth of the
students who started school in colonial India reached
secondary levels. Private education was for the few. In the
market for labor, it was harder for women to take part than
for men. The roots of this problem were cultural, an aversion
to working outside the home. Women’s presence in
manufacturing fell steadily and significantly between 1881

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and 1971.

11. The center of the discipline of economic history of

India must shift from imperialism to economic
structure. The constraints and opportunities that took shape
under resource endowment patterns took time to change. In
a labor surplus economy facing high risks, conditions of
manual labor and behavior toward risks must be the guiding
principles to understand past and present. It is important to
restore the links between economic history and culture. In a
labor-centered story of Indian culture can be used in four
ways. First, cultural exclusion in terms of gender and caste
determined the reallocation of labor. Second, the high
population growth rate for over 80 years must be taken into
account in labor. Third, both government and private
investment remain low. Cultural agency was also at play. A
hierarchical society discouraged private spending on public
goods. Fourth, the slow pace of formal schooling in South
Asia before and after 1947 is an important factor. For British
India, the slow development of education could be attributed
to a lack of government resources. For independent India
there are hardly any fiscal pressures. The economic history of
India would highlight these processes and shift its focus from
power to labor.