Colonial Impact on the Economy of Eastern India (1757-1787) Essay Sample

Colonial Impact on the Economy of Eastern India (1757-1787) Pages Download
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During the colonial era, the government’s economic policies in India were concerned more with protecting and promoting British interests than with advancing the welfare of the Indian population. Identifying and characterizing the agrarian changes that occurred over the vast area of eastern India, during a period of about hundred years is difficult task, nevertheless the first vital contact between British rule and rural society occurred mainly through the drive of the Company for maximizing the traditional share of the state in the produce of the company in the form of land revenue. Trade and commerce affected the rural society in various ways, and it is notable that the measures towards increasing land revenue were necessitated primarily by the needs of trade and commerce.

A large revenue was essentially a larger mercantile capital. The first reaction of the Court of Directors to the jubilant news from Calcutta in 1765, about the acquisition of the Diwani, which gave the Company for the first time an exclusive control over the land revenue of Bengal, Bihar and parts of Orissa was to ask the Company in Bengal, to enlarge every channel for conveying to them as early as possible the annual produce of their acquisitions and to increase the investment of the Company to the utmost extent. Parts of the resources were later diverted to the fulfillment of other needs of the Company’s two other Presidencies, Bombay and Madras, and those of the Company’s treasury at Canton. Such diverse needs which were more pressing than those of the old Mughal state, led the Company to demand a much larger revenue. The demand between 1765-66 and 1793 nearly doubled.

The Permanent Settlement of 1793 made the zamindars proprietors of the soil. It did not mean a complete freezing of the land revenue and the Company could secure an increase in it from time to time. The number of estates of defaulting zamindars, which for want of bidders in the early years of the depressed land market, remained with the government, and the portions of the immense wasteland which at the time of settlement were not included in the zamindar’s estates, became increasingly profitable with the growth of cultivation and rising prices. The largest part of the increase came from the resumption of ‘rent-free’ lands, lands exempted from the payment of revenue under the previous governments, so that the income from them could be spent on what the government judged worthy causes, such as the maintenance of temples, mosques and educational institutions. In the Patna district the increase in the revenue through such resumptions between 1790 and 1870 amounted to 48%.

Despite such occasional increases the share of the government in the total agricultural output tended to diminish over the years. The land revenue demand which is 1793 was fixed at 90% of the rental declined by the end of the nineteenth century to about 28%.The Bengal model was however, rejected in Orissa and Assam owing to a growing feeling that the freezing of the land revenue demand, which constituted by far the most important source of the government income at that time, would be sheer folly , particularly in view of the tendency of the financial needs of the state to increase , and also of the probable depreciation of silver in the future. Both in Orissa and Assam the revenue demand was increased from time to time. In Orissa compared with the last twelve years of Maratha rule 1791 to 1802, the land revenue income of the new government in 1804-5 increased to about 12%.Between 1805 and 1897 occurred a further increase of 93%.Peasants in Assam evidently surrendered to the state a larger proportion of their total agricultural output than peasants in other parts of eastern India, and they suffered all the greater till about the end of the nineteenth century because of certain developments in the economy.

In Bengal and Bihar, the initial point of contact between the alien rule and the rural society, the hunt for a maximum revenue, gradually lost its potency as an agent of change in the agrarian society. In Orissa the period of this potency was longer, though the initial potency gradually diminished also there. The land revenue policy produced the severest strains on the peasant economy in Assam. The policy of maximizing land revenue however necessitated certain institutional innovations which eventually considerably affected the composition of the agrarian society. Such innovations related at first to the choice of social groups to which the collection of the increased revenue could be trusted. The social foundation of the new set up of 1793 was the old landed aristocracy, was only a sprinkling of the new men here and there. In Orissa also the British had from the beginning relied on a traditional group. Here the relative insignificance of the Bengal type zamindars, owning large estates was striking and lesser landholders called talukdars predominated. It was only in Assam that the search for a maximum and secure revenue necessitated a complete supersession of the traditional set-up, which had evolved during Ahom rule(1228-1818).With the British conquest of Assam(1826) things changed and Assamese gentry were reduced to poverty overnight.

Till 1793, government punished the defaulters in much the same way as the Mughals –by imprisoning them. After the Permanent settlement, the government was understandably anxious that the stability of its income should not be endangered in any way and judged sales of estates to be the best possible device towards this, since it presumed an inevitable increase in the market value of landed property, now put upon a more desirable and more permanent footing. The exact impact of the sales of zamindari estates, public and private, on the old zamindars of Bengal and the composition of the new zamindars, with reference to their social and economic roots, are only partially known. A different kind of control over land and the peasantry, and a significant one was exercised by rural creditors. They were however a mixed group and it is notable that relations of rent and relations of credit occasionally reacted on each other, one reinforcing the other in some cases. Rural credit provided two sources of control the dependence of a considerable number of peasants on a regular supply of credit, eventually involving surrender by them of a large part of their produce to the creditors, and the acquisition in some cases by creditors of the lands of defaulting peasants.

Despite certain elements of continuity the pre –British agrarian and system was not quite the same as that which evolved during British rule. The continuity of the small peasant economy as the basic organization of agricultural production and the continuities in terms of certain agrarian institutions, and of the numerical sizes of some economic groups such as sharecroppers and agricultural labourers’ concealed a significant process of change. The nature of the decisive influences on the agrarian society during British rule considerably changed over the years. Some of them derived directly from the immediate administrative policies and the related institutional innovations. In the cases of some others British rule formed merely the background, or created conditions in which the influences would probably have been effective even in the absence of British rule. Initially throughout eastern India, the most decisive influence was the British policy of maximizing land revenue, which gradually lost its potency, particularly in Bengal and Bihar, with the share of the state in the total agricultural produce eventually shrinking to insignificance.

At first the policy caused a great deal of dislocation in the rural society-in the form of diminished power of the old zamindars and of the increased misery of the peasants in very many regions, though the decision of the government to depend on the old zamindars in connection with the collection of the land revenue arrested this immediate process. Assam was the only exception, where the security of revenue necessitated a thorough overhauling of the old set-up. In other parts of eastern India too, the old order could scarcely be wholly preserved, and the composition of the landed society considerably changed, mainly as a result of growth of a land market-an altogether new development in the rural society. It is however notable that the new system of auction and private sales of estates did not lead, contrary to widespread impression, to an elimination of the old zamindars altogether and their replacement by predominantly urban elements, who as usually believed, finding other channels of investing their liquid cash nearly blocked ,readily transferred it to purchases of estates.

Though the Regulations of Settlement of 1793 aimed at making land a secure property, the constraints on the transfer of accumulated cash to its purchases were very many. The urban groups did purchase estates and indeed the number of purchases by traders, merchants, moneylenders and bankers tended to increase over the years, but they could not dominate the land market, at least in the initial phases of its growth , when auction sales were far more numerous than later. The main beneficiaries at that time were the frugal and astute zamindars, persons belonging to the zamindari bureaucracy and also to the official bureaucracy. The process of admission of new members to the old landed bureaucracy was strengthened where the widening gap between the rental income of estates and the revenue due from them on the one hand and the increasing value of land on the other, encouraged leases of portions of zamindari estates and some of them like patni leases of Burdwan and other districts were far from a mere continuation of the old system of delegation of responsibility to the subordinate members of the zamindars bureaucracy and brought into existence new landed interests.

Notable changes also occurred in regard to the position and powers of zamindars in relation to peasants. The Settlement of 1793 did not necessarily reduce the old owner peasants, as was once argued, to wretched tenants at will. However, relations between zamindars and peasants changed. The superior legal powers of zamindars, both old and new, were considerably reinforced by the developments leading to an increased demand for land among peasants, so zamindars keen on increasing rent could largely do without exercising the old kinds of coercions , which were quite common at about the beginning of British rule, as also for long afterwards. The nature of the control over land derived from the provision of rural credit also changed. Though it is difficult to conclude whether rural indebtedness increased during British rule in eastern India as a whole this increase occurred at least in some places. Changes also took place in the composition of moneylenders in the organization of credit and in the forms of appropriations by creditors.

A strikingly new form of appropriation was the distress sales of peasant holdings, such sales increasing in number over the years and being far from confined to periods of famine or to similar periods of exceptional distress. The general debt situation and the kinds of the creditors appropriations inevitably affected the economic performance of the indebted or the dispossessed peasants, where they were not driven out of their lands by the creditors. Agricultural labourers at about the beginning of British rule were mostly domestic servants, recruited from the lowest castes, and the beginning of their status as agricultural labourers derived mostly from their chronic indebtedness and, only to a marginal extent, from loss of lands. On the other hand the role of loss of land, of the gradual diminution of percapita holdings, and of the impoverishment of a section of small peasants in the origins of agricultural labour during British rule is generally admitted, an inevitable consequence of the process being the broadening of the social basis of the agricultural labourers.

The exact impact of British rule on the Indian rural society continues to be a debatable issue. Early British rule saw a series of reverses in the agrarian economy of Bengal, Bihar and Orissa too, the most disastrous being the famine of 1769-70.However later with growing years advances occurred. Certain administrative measures and lapses also adversely affected the stability of the agricultural system. The land revenue demand, often an excessive one, at least initially was collected with ruthless rigour even during large scale natural calamities, while the old irrigational works were inadequately looked after. The price situation in the eastern region visibly improved only after 1855, the notable factors in this being the growing external demand for ‘Bengal rice’, particularly since the expedition against Burma in 1852, the increasing investment of Bengal capital in Indian railways, and the Mutiny of 1857.


1.Berstein,P.H.T, Steamboats on the Ganges(New Delhi,1960).

2.Bhattacharya,D and B. Report on the Population of India 1820-1830(Delhi.1963).

3.Bhattacharya, S, The East India Company and the Economy of Bengal(1784-1840).

4.Ghoshal, H.R. Economic Transition in the Bengal Presidency 1793-1839(Patna, 1950).

5.Marshall,P.J. East India Fortunates: The British in Bengal in the Eighteenth Century(Oxford, 1976).

6.Martin, R.M. The History, Antiquites, Topography and Statistics of Eastern India,3 vola,(London, 1838).

7.Rennell, J. Memoirs of Map of Hindustan( London, 1793).

8.Sinha, N.K. The Economic History of Bengal, vol1.(Calcutta, 1956), vol ii.(Calcutta, 1970).

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10.S.Bhattacharya, The Cambridge Economic History of India, vol II c.1757-2003.

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