agriculture 1860

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AGRICULTURE 1860-1950: LAND, LABOUR AND CAPITALInadequate agricultural production lay at the heart of Indiasdevelopment problems in the late 19th and 20th centuries. The ruralsector comprising agriculture and ancillary activities such as animal

husbandry, forestry and fishing, was the foundation of the colonialeconomy. It employed three quarters of the workforce and producedwell over half of the national income between 1860s and1940s.however there were also severe productivity constraints, linkedto problems of labor utilization, as well as endemic scarcity of capitaland a lack of investment in irrigation and other capital inputs, creatingin turn shortage of productive land. This reading is all about theseconstraints and hence, agricultural development in the concernedperiod.Output and productivity

The classic work on Indian agriculture output and productivity in thecolonial period remains that of George Blyn. He argued that there wassmall expansion in per capita agricultural output during 1890s but aclear decline thereafter so that although overall yields per acre rosevery slightly over the first half of the 20th century, food grainavailability fell by about 1 % per year between 1911 and 1947.staticoverall yield figures do not mean that output everywhere wasstagnant, but rather that progressive forces were always cancelled outby regressive ones. Market productivity did stimulate significantincreases in crop production and productivity so that commercial

crops with favorable market opportunities such as cotton, sugar,achieved considerable yield increases and had consistently higheraverage productivity per acre than did food grains.

The available data all suggest that in the aggregate agriculturalyields were largely static in colonial India especially for the subsistencecrops that provided the basic needs of the rural population. Thus, whilefood grain and non-food grain output both have raised faster thanpopulation from 1860 to 1920 even optimists accept that food grainoutput lagged behind population growth between 1920 and 1947.

Parts of the western united provinces experienced a Punjab stylecanal based output boom between 1880 and 1920 and new cash cropsfor export such as cotton and groundnuts brought considerableadvance in dry regions of Maharashtra and madras in the decade after1900. In the same period expanding acreage in both central India after1880caused extensive changes in the economic activity and socialrelations.


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However these patches of growth were rarely sustained nor did theyusually transform the locality through a process of long term social oreconomic change, rather they ended with usual range of ruralpredators.(A small section from pages 73 to 79 talking about productivityis not here in the notes as of now but will be shortly included)The overall implication is that commercialization in agriculture offeringa wide range of new opportunities for Indian farmers and explainingfailures in the productivity and distortions in access to opportunity as aresult of infrastructural or technological inadequacies or adverseclimatic circumstances. infact they identify the availability of resourcesand the interaction between political systems, social structures andeconomic opportunity in creating the interconnected markets thatdetermined access to those resources , as a key set of variables that

underpinned the process of economic and social change in rural Indiaunder colonial rule.

Land: 1765-1820

The agrarian commercial economy of the 18th century was largelyorganised on mercantilist principles as the decentralisation of themughal empire led to the creation of the of independent subordinate

fiefdoms controlled by regional and local officials, military strongmenand political mangnets. Unban merchants and rural entrepreneurs withtax concessions and local power; market networks developed that metthe needs of these internal patterns of demand as well as serving theexternal requirements represented by the English east india companyand other foreign traders.

At the local level agricultural production and rural social and politicalrelations were determined by a complex mixture of ecological,customary and technological factors as well as military and politicalsuperstructure imposed by the new regional states of the 18th and

early 19th centuries.

One consistent variation in the density and complexity ofproduction and distribution systems was caused by the the presenceor absence of effective irrigation between dry and wet lands each ofwhich had distinctive patterns of agrarian relations. The wet wellwatered rice growing areas of the agricultural heartlands of the greatriver deltas sustained the hubs of traditional civilisation. These areas


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depended on capital and labour intensive rice cultivation with rigidsocial distinction between the status of landowners and the labourers.They were already supporting very high population densities by 18th

century and could not easily expand further without exhausting thesoil. By contrast, the dry areas of upland india (deccan, the punjab and

western gangetic plain) were sparsely settled , semi-arid and grewmillets and wheats irrigated by wells.

There was no substancial international market for indian agriculturalproduce in the 18th century.Attempts to supplement exports of cloth tobritain with sugar, indigo and pepper were largely unsuccessful beingunable to compete while opium trade with china only becameimportant after 1814. Internal economic networks certainly existedslthough they were limited to some extent by transport dificulties,financial constraints and political uncertainities. In most part of thesubcontinent transport costs inhibitted long distance trade in bulk

items except where military necessity demanded. However, viable longdistance transport was possible around the coasts and along the majorrivers of north india and overland elsewhere by carts or by nomadictraders.despite such observations the risks of trade remained high inlate-mughal india.

The most obvious impact of british rule n the rural economy wasthrough the imposition of new systems of land revenue. Agriculturaltaxation provided an important source of revenue for any indiangovernment, and especially for the company which had to pay adividend by using its surplus to purchase indian goods for sale in

britain.

Land revenue system

In the bengal presidency(the first area to come under british rule),the main difficulty concerned the company relations with the largezamindars, rural magnates who had built up hereditary fiscal powersas agents and and tax farmers for the nawab of bengal. British officialsgenerally agreed that the position of succh men would have to bemaintained since rural society required continuity and stability and astable landlord class would promote social order. For these reasons it

was decided in the 1790s that a permanent settlement should bemade giving rights in land to zamindars in perpetuity provided thatthey continue to pay their revenue. Security of property rights was alsointended to give landlords an incentive to improve your landincreasing the rent they could charge and hence the point they couldmake over the fixed land-revenue demand.the sole check on landlordpower under this system in its original form was the requirement topay the land revenue in full. It turned out that many existing zamindars


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could not workthe new system properly. Economic conditions weredisturbed by depression and the after math of the great famine of1769-70; furthermore the effective power of many zamindars toextract rent from their tenants and to control their officials was oftenso small. Betwen 1794 and 1807 the lands on which 41% of the

governments revenue depended changed hands at fairly low pricesalthough within 20years or so a stable landed interest had beenestablished and the rule of propert being created in bengal. Zamindarisettlemnt on the lines of the permanent settlement in bengal wereimposed in other areas of central, northern and south western century.

1820 -1860

After 1820, howeverthe great settlements of north-western,western and southern india were conducted on a verydifferent basis that of a new RYOTWARI system of land settlements and

taxation that vested control of the land in the hands of the peasants,eliminating parasitic landlords and stimulating growth through directassesments that rewarded careful husbandry. The ryotwari systemrequired a direct temporary settlement with the cultivator or with avillage level intermediary responsible for paying rent in the past. underthese arrangements the state became the landlord and the cultivatorof the village proprietory body was designated as the tenant, holding alease granted for a fixed period at a fixed rent. Lnd revenue was thestate share of this rent and could be fixed scientifically by carefulsurvey and settlements that would establish the product of eachagricultural holding enabling the state to leave the cultivator enough to

meet the costs of production, subsistence and productive investment.The declared aim of the ryotwari settlements was to revitalise the ruraleconomy by setting cultivating peasant brotherhoods free from thedepredations of corrupt state functionaries and greedy landlords. Thepurpose of the radical reform was to overthrow an old elite seen asnon-productive and to encourage the emergence of enterprisisngfarmers who would secure a proper return to capital within the limits ofvillage corporate rights. But even the ryotwari system wasnt free fromconstraints. Calculating the scientific rent meant careful surveys ofindividual fields and an accurate assessment of the market rentalvalue of the land where no such market yet existed. Thus, by the

1840s the bombay government deliberately abandoned the rentdoctrine in favour of precedent as the basis of settlement policy.evenso the revenue demands tended to be crippling high and the exportoriented sectors of agricultural economy suffered from a major pricedepression in the late 1830s and early 1840s. In the 1838, half of thearable land in the bombay deccan was reported to be a waste whileelsewhere falling prices, collapsing trade and a series of financial crises


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led to a general depression which frustrated hopes that agriculturaldevelopment would follow the introduction of ryotwari principles.

The companys demand for regular revenue payments was aconsiderable burden, especiially in the 1830s when cash prices for

agricultural produce fluctuated widely. The village proprietors andsuperior ryots with whom the revenue settlements were made did notnecessarily contolr either the marketing network inside or outside thelocality or have access to the liquid resources that were now so vital tomeet fixed revenue payments that had to be paid in cash and could nolonger be renegotiated annually. As a result the rate of attrition amongsuch groups was quite high and there was a considerable volume oftransfers of land titles, especially in the north india.

The creation of land market in india in the first half of the 19thcentury was identified as a mechanism for transferring control of land

out of traditional proprietors into the hands of merchants andmoneylenders (mahajans).with commercialisation the use of credit to financeagricultural trade and production increased. Cash revenue payers alsoborrowed extensively especially since tax demands rarely coincidedwith harvest times. These developments certainly gave merchants andmoney lenders a greatly enlarged function in the rural economy, and insome parts of northern india revenue rights in upto 10% of villageschanged hands. In the first half of the 19th century , the indian ruraleconomy was made up of self sufficient and self governing villagerepublics which required no exchange economy.

Whom the british tried to identify as landowners had the right toraise taxation rather than the capacity to cultivate soil suchlandownership was usually less important in giving access to scarceland resources than was land control which is much harder to identifyin the aggregate. Many individual cultivating households cannot beidentified unambigously y the conentional labels, landlords tenants labourer , creditor debtor and so on as they were not just employed inone buta wide range of economic activities, often combining someownership with tenancy or sharecropping and even labour and withemployment in the urban or rural handicraft sectoe as well as incultivation.

1860 onwards

From 1860 onwards the indian rural economy began to be dominatedby a new force, te great expansion of overseas trade in primaryproduce that continued with only minor fluctuations until in the late1920s.in the first half of 19th century, great expansion of overseastrade in primary products such as indigo, opium, cotton, and raw anf
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manufactured silk, depended upon state support. By contrast, theexport staplesof the later 19th century were much more fimly rooted ina peasant economy. While exports of indigo & opium fell away,thereplace was taken by raw jute ,food grains(rice frm Burma & wheat frmIndia)oilseeds & tea,while raw cotton remain the largest single items of

export by value in most years through out the colonial period.

In all of these crops Indian producers succeeded in breaking in tothe worlds major markets,largely by virus of the enterprise &adaptability of peasant farmers,specially cotton.Before 1850 Indiaexported substantial amounts of raw cotton, mostly to China.indiancottons were short-staple varieties,& therefore largely unsuitable forlancashire mills , which meant that exports to britain were limited atfirst until the opening up of new demand for indian cotton in thecontinental europe. Between 1840 and 1860 the british governmenttried to teach the indian peasant how to grow a better crop by

importing american experts, setting up agricultural research stations,and creating a set of inducements recommended by the britishbusinessmen. This effort was largely unsuccesful and the great boomin indian cotton exports to europe was delayed until the suply crisis inlancashire caused by the american civil war sustained bu increasedproductivity resulting from the development of new hybrid cottonstrains. The boom of the 1860s proved unstable and short lived butfrom the 1870s indian cotton built up a substantial market incontinental europe and after 1900 exports from bombay became techief source of supply for the japanese cotton textile industry. Theshare of cotton in indias export values ran at between 10 and 20%

down to 1939. Other commodities like jute, wheat, oilseeds and teawere also products of the last third of the 19th century. And theyallowed india to play significant role in the emerging internationalprimary commodity market made possible by improvemnents in globalcommunications and transport networks. The opening of suez canal in1869 made bulk shipment of grain and other produce from asia andaustralia to europe cheaper and more practical. Indian wheat andoilseeds benefitted from the transport improvements directly whilejute provided the bags in which most of the worlds grain trade wascarried. In addition, the steady depriciation of silver based currencysuch as the rupee against the gold-based currencies of the europe and

the north america kept indian export prices competitive in the 1870s,1880s and early 1890s. Raw and manufactured jute was the singlelargest export by value in most years from 1900 to the late1920s.wheat only became important when harvests failed elsewherein the world , india could be an important supplier and provided nearly18% of britains total wheat imports between 1902 and 1913. Indiancompetitiveness in oilseeds was more assured and by 1914 she wasworlds largest supplier of rapeseedand groundnuts much of which went


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to the expanding margarine industry of continental europe. Tea alsobenefitted from the transport improvements and from a phenomenalgrowth in demand in europe and north america associated with risindreal living standards for the mass of the population.

A brief about railways

Growth and expansion: the expansion of indian exports was assistedby the extension domestic trade and transport networks , notably afterthe building of railways. The first railwayline was laid out of bombay in1853 followed by others from calcutta and madras. By 1910, india hadthe fourth largest railway system in the world. In 1860 there wereabout 850miles of track open in the subcontinent, 16000 by 1890 and40000 by 1946 which meant that 78% of the total land area was nomore than 20miles from a railway line. The quantity of freight carriedincreased from 3.6million tonnes in 1871 to 42.6million in 1901, to

116million in 1929-30 and to 143.6 million in1945-6.Opprortunitiesexpanded crop prioduction for sale at home or abroad increased in thelast tird of the 19th century and exercised a major influence on the ruraleconomy from about 1870 un till the late 1920s.

By 1900, Indian agricultural performance was closely linked to anetwork of external commodity markets, and remained so until thecollapse of international demand in the 1930s. This was particularlytrue for cotton, jute groundnut, which depended heavily on overseassales to sustain demand. By the late 1920s, 62% of cotton crop, 45% of

jute crop and 20% of the groundnut crop was exported, with a furtherpercentage sold abroad in processed form.

Prices and terms of trade

The price history of the 50 years from 1880 to 1929 suggests thatthere were considerable profits to be made from the rural economyduring the period of commercial expansion. The pattern of food grainsconsumed largely in the domestic subsistence economy, such as riceand jowar, were significantly influenced by yields, while the prices ofmajor crops traded in the domestic and international markets, such as

cotton and wheat, were not. While export returns were distorted by thesilver rupees devaluation against gold in 1870s and 1880s, theyprobably provide a better overall guide to the effect f internationalsupply and demand conditions on the profitability of Indian agriculture.

Increased demand and currency depreciation brought about byrising international prices for agricultural commodities from the 1880sto 1915, followed by a sharp increase during and immediately after the


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First World War. During the 1920s agricultural prices fell back slightlybut remained well above their pre-war level, then almost halvedbetween 1929 and 1931; export prices fell more consistently duringthe 1920s and just as sharply in the depression at the end of thedecade. The reasons for high prices can be sighted as

Rise in cost Terms of trade moving in favor of agricultural sector Incidence of taxation Serious famines Land revenue and tenancy system

Capital market

19th century

The commercialization of the agricultural economy and theexpansion of long distance trade in primary produce put new demandson the rural credit market. Revenue demands had long had to be paidin cash, which had helped to draw urban moneylenders and tradersinto local levels economic relations in the 1830s and 1840s. now thespread of new cash crops for sale outside the locality increased theneed for local credit , and also the rewards for its use. Many cultivatorsneeded loans to provide seed, implements and cattle, to dig wells,store grain or simply to obtain food between harvest. British officialsobserved the growth of peasant indebtedness with alarm in the lastthird of 19th century arguing that it represented yet another threat to

the homogeneous character of tradtitonal village communities. Thechief evil was thought to be the growth direct lending by moneylendersto cultivators who could then be sold up if their debts were not repaid.

This identification of alien, urban moneylenders as the chiefpredators of rural enterprise was politically important to britishofficials, who were trying to find the reasons for periodic slumps inagricultural growth and the volatility of political protest in the 1870sand 1890s. The extent of transfer of land from peasants to mahajansas a result of commercialization in Bombay presidency increased from6% to 10% between 1875 and 1910.in 1911 even the Bombay

government was forced to admit that its fears about land transfers hadbeen greatly exaggerated. Acquiring land by foreclosure or bypurchases at debt sales gave scattered holdings tat could not bemanaged as a single entity, so few mahajans obtained viable farms.

As a consequence of such difficulties, indigenous bankers often triedto avoid sinking their capital resources into land. When moneylenderswere forced to take over land, they often released it to its existing
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cultivators, with the ryot repaying the interest on the old debt as rent.Even so it was hard for those not directly involved in agriculturethemselves to make a profit from the land. Productivity and labourintensity were usually lower on mahajans than on peasant land, andmoneylenders too could bankrupt themselves in agricultural

enterprise. On the whole, it can be seen that the agricultural enterpriseof the years from 1870 to 1929 was largely financed by rurally basedentrepreneurs, drawing capital from those who had profited from theexport led expansion of cash crop farming.

The commercial expansion of the late 19th century required newcrops, new transport networks and increased market activity.Substantial sums were made by shipping firms and commissionagents, and by traders and bankers who moved the crops from markettowns up-country to the port cities on the coast, but some profitsremained for the agriculturalists themselves. The distribution of these

profits was heavily influenced by the exercise of economic and socialpower in a rural society that remained stratified throughout thecolonial period, giving highly differentiated access to resources,wealth, power and market opportunities. Control of credit, carts,storage facilities and agricultural capital brought advantages to somegroups in the village society. The protection tat the colonialgovernment gave to agriculturalists against non-agriculturalmoneylenders made it easier for surplus peasants and local landlordsto dominate the supply of credit and the power that accompanied it.

By the end of the 19th century economic success was more likely tocome to those who could use a privileged position in local society tosecure favored access to credit, markets and infrastructure, althoughsuch success did not really necessarily mean great wealth or newopportunities for profit. In the over- populated unproductive areas,such as the eastern districts of united provinces , the rural magnateswho were the best able to take advantage of the new opportunities incultivation were the same elite tat had determined agriculturaldecision making since well before the coming of the british butconnections between the rural and social stratification and agriculturaldevelopment were complex and confused. In much of thesubcontinent, the commercialization of the rural economy in the half

century after 1860 was not force or compulsive in the sense that it wasnot designed or manipulated solely by dominant groups to expropriatethe surplus or determine decision making of mass of the cultivators.

1920 onwards

Indian produce was subject to the global pressures of over-productionand under-consumption that affected trade in the primary produce in


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the 1920s, especially since the most of her exports had obvioussubstitutes and were in many markets, the marginal source of supply.By the 1920s ,population densities were building up in many of theagricultural heartlands, and overproduction and credit supply problemswere becoming serious for jute, cotton, and other export crops. The

1920s marked the peak of market integration in the colonial India withthe commodity and credit markets linking all areas of the subcontinentand unifying port and inland prices everywhere for the first time . thelabour market too became more flexible and wide ranging as transportimprovements and the spread of information made long distancemigration more practical.

One of the weakest links in the Indian export economy was the supplyof credit for trade in agricultural produce. There were some internalmechanisms for credit creation within the Indian monetary systems ofthe 1920s, but the bulk of rural trade depended on depended on

liquidity imported in the form of short term trading firms hoping to doexport business. The increasing liquidity shortage in the internationaleconomy from 1928 onwards, as short term funds moved to US andthe resulting dollar gap caused transfer problems for the debtornations of Europe, Latin America and Australasia, reduced Indias shortterm capital imports. The prices of her export goods turned downdecisively in 1928, and her position was damaged by further by theonset of worldwide recession in late 1929 and y political uncertainityover the rupee exchange rate that discouraged foreign firms fromholding surplus funds in rupees. By 1929-30, the government of Indiawas also experiencing problems in securing the foreign exchange

needed to make its transfer payments to London and tightened creditin India still further by contracting the money supply to release assetsfrom the currency reserves. It was this liquidity crisis that transmittedthe fall in prices in exported goods so speedily to the internaleconomy.

Effect of depression on liquidityThe onset of depression wasmarked by a fundamental shakeout of capital and liquid funds from theagrarian economy. The most striking development of the 1930s wasthe export of substantial amounts of privately owned gold from Indiaafter the rupee accompanied sterling off the gold standard in

September 1931, which turned India into a net exporter of preciousmetals for the rest of the decade. After 1931., gold bullion becameIndias single most important export commodity, contributing about30% of the total value of exports from 1931-2 to 1934-5 and between8 and 19% thereafter. There were large profits to be made from theexport of gold but part of the flow was caused by distress selling bylandlords and tenants to meet fixed demands for rent and landrevenue, and part by the bankruptcy of traders and indigenous


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bankers whose business had collapsed in the liquidity crisis. Thesebullion export represented a disinvestment in agriculture and ruraltrade; but such sales did not diminish, and may even have increased,the available purchasing power in India, and also served to transferinvestment funds from agriculture to other sectors of the economy.

During the 1930s, the growth of urbanization, the shifting of termsof trade in favor of urban economies, and the collapse of externaldemand for a range of primary product, meant that the balance ofadvantage in agriculture shifted to those producers who could growcrops for which there was still a buoyant home market. The mostimportant beneficiaries were:

Sugar producers of northern and western India whoseproduction expanded enormously Groundnut and tobacco producers received demand

stimulation fron new consumer tastes Cotton producers finding buyers in the domestic mills

The existence of new areas of demand ensured that theagricultural sector retained some earning capacity throughoutthe 1930s.however, the benefits were skewed. Although demandfor goods held up, the real cost of capital increased considerablyand so many farmers retrenched ton capital-intensive methods,cutting back on irrigation and new seeds. alongside the real costof labour also rose in many areas reducing employmentopportunities for deficit agrarians.

The depression helped to concentrate the power of dominantpeasants over the rural economy once more. With the retreat ofurban moneylenders, and of alternative sources of creditrepresented by the agents of an active export trade, peasantfamilies emerged as the controllers of the rural surplus and thesocial structure based upon it. Their position was not alwayssecure, and at times the tensions caused by the collapse ofagricultural networks led to riots and social disorders as tenantsand debtors rounded o their landlords and creditors. While thepropertied classes prospered by the increase in the relative value

of capital, those without adequate resources under their owncontrol to ensure reproduction suffered accordingly. Thecurtailment of employment and of windfall opportunities in cashcrop production threw the deficit producers back still further ontotheir inadequate resources. According to the report on marketingof wheat in India in the Delhi area 40% of the cultivators had nosurplus to sell, 33% had to part with all of their surplus to paytheir debts, and only remaining 27% just over a quarter of the


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total were free to market their surplus for profit.After 1939 thedepression of demand and activity in the rural economy wasreplaced by a sharp expansion fuelled by considerable monetaryinflation which lasted throughout the Second World War and theperiod of economic reconstruction and political crisis from 1945

to 1950.

The terms and conditions for supply of agricultural credit wasanother area of intense market failure during the 1930s. theinitial shock of depression was a liquidity crisis which was spreadthrough the economy by its impact on internal credit supply andthrough the economy by its impact on internal credit supply andtrading networks. Money lenders curtailed their activities inthese circumstances for a number of reasons:

o Many money lenders were themselves in financial

difficulties during the 1930s especially those who hadlent heavily to peasants who could not repay or who haddepended on high profit margins for exportable crops toremain in businesso Agriculture was making low profits and land had sucha low price that repossession was not a viable option-these together built up pressures to discourage lendingo Customary and legal barriers to money lendingactivities increased as peasants used violence againsttheir oppressors in some places

In response to these problems anti moneylenders legislation wasintroduced in most provinces during 1930s imposing ceilings oninterest rates and drastically reducing the amounts that debtorswere required to pay. For this reason sharecropping increasedduring the 1930s notably in Bengal where the debt settlementsboards set up by the agricultural debtors act of 1935 werecomposed of local jotedars who used their position to replacethe mahajans as suppliers of credit. With the onset off the war,however, the land market revived, and large traders wereprepared to lend again because the land itself was once more aneffective security.

Section on output and productivity (page 73-79)Labor market

Rural labor came from two chief sources of supply.


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One was the traditional landless groups who were usuallybound to dominant cultivators by custom, sometimes on ahereditary basis and often reinforced by debt bondage. Thisgroup of farm servants was clearly defined in many regionsbefore the British conquest and they probably remained the only

major rural group without any access to all through the colonialperiod. The terms on which such labor was employed variedovertime as different systems f agricultural production evolved.

The second source of rural labor came from the largenumbers of deficit cultivators, families that did not have enoughland to provide employment or subsistence for all theirmembers. This was supplied both directly through casualemployment t harvest and other times of high seasonal, and alsoindirectly through debt bondage, share cropping arrangements.A 2.5 acre plot in a dry region absorbed perhaps 125 Labor Days

year most of which could be supplied by women and children,leaving male family members free to seek seasonal employmentelsewhere. Indebtedness and hypothecation produced a furthersupplementary source of rural labor, as smallholders struggled toretain their normal independence while working under theinstruction of their creditor.

Despite some moves towards more flexible hiringarrangements and cash wages over the late 19th and early 20th

centuries, the rural labor market was always stronglydifferentiated, especially for those workers who were paid in

kind, either directly or through sharecropping. While the marketfor cash labor or cash credit did become more competitive attimes this was less marked in the market for labor paid in kindand bound by customary relations. Sharecroppers without capitalassets of there own and consumption debtors usually had lessopportunity than independent peasants to switch betweenlandlords or creditors. The rural labor market was unified incertain important respects: subsistence wage levels were notsimply fixed by custom but responded to the cash market priceof grain and commercial crops, and the relationship betweenthem.Capital investment and irrigation as a bottleneck toagriculture

Many historians have pointed out that Indian agriculture wasconsistently undercapitalized throughout the modern period. Inthe 19th century the most important item of capital equipmentwas the animal power supplied by bullocks, which were needed


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to pull carts and ploughs, draw water form wells and downirrigation channels and to supply rich and cheap manure. Inmuch of the peninsular India, as a result, land remainedunmannered and was sometimes ploughed only once every threeor four years.

The supply of capital goods may have eased somewhat duringthe second half of the 19th century. Cultivated acreage grewsubstantially and windfall gains in overseas demand as well asconsistent improvements in road and rail transportationnetworks, all increased the profits to be made from the ruraleconomy. However, such benefits were often skewed, and alsofluctuated wildly in time and space; Indian agriculture remaineda gamble in rain when monsoons failed badly in the 19th centuryfamine could still be devastating, especially in the late 1870s andlate 1890s. It is probable that the increased mortality of these

years, which was exacerbated in the 1890s by a large scaleoutbreak of plague in western India, fell more heavily on thosewho relied on returns from labor market to meet theirsubsistence needs. Famine years also damaged capitalequipment for bullocks starved when the rains failed. for eg: Inmany parts for Bombay presidency cattle numbers fell sharply inthe famines of the mid 1890s and had not recovered theirformer numbers by the late 1920s.

By the 20th century the key to agricultural improvement throughcapital investment lay in irrigation. Increasing the provision of

water for cultivation was a technological problem in part but onethat existed in a distinct socio-economic context. The delivery ofwater from canal schemes and large scale irrigation systems orfrom local dams and reservoirs through gravity fed channelsrelied on gravity or animal power... bullocks required feed andcareful breeding, resewrvoirs, dams and channels needed hardlabor for maintainence and repair. Using government irrigationfacilities required paying a water-rate, and preparing land forirrigation involved considerable work and some prior capitalexpenditure.

The link between water, agricultural growth and local powercould have the effect of limiting investment in irrigation in somecircumstances. However, the emergence of local elites ofsubstantial cultivators in the 19th century led to increasedinvestment in rural capital goods such as wells, and also othereconomic and social activities, as an expression andunderpinning of their increased power and wealth.


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The canal colonies of western Punjab used canal irrigation toconvert semi-arid scrubland for productive agriculture, beginningwith 3 million acres in 1885 and rising to 14milion in 1947.however, the economic effects of the establishment of these newsettlements were somewhat muted, since the Punjab

government used the creation of the colonies to indulge in awide reaching programmed of social engineering, making landgrants directly to those it wished to favor for political or socialreasons, rather than to those who were necessarily best able tomake use of the new resources of land and water for efficientagricultural production.

In 1900, when the Indian irrigation commission was set up toconsider the future of large-scale public works, about one fifth ofthe total cultivated area of British India was served by some formof irrigation works. Private sources, chiefly wells tanks supplied

60% of this area, only one quarter of it was watered by any ofthe major public works schemes built in the second half of the19th century. Furthermore, such works were concentrated in arelatively few areas of the subcontinent. As ecological, climaticand economic circumstances changed and offered newopportunities for growing different crops, the old system was notable to adapt very well t the demands made of it.Social structure

In setting up company rule over the subcontinent, British

administrators brought with them a package of policy initiativesthat by the second half of the 19th century had helped to createand sustain a wide band of privileged groups who benefited fromstate action over land revenue, tenancy and agriculturalinvestment. Favoritism by the state brought some directeconomic advantages, the most important, being the control ofproduction that came from manipulation of the scarce resourcesof land and the local markets for employment, rural capital andsales of output. Such control was most often derived from socialpower, reinforced by the privileges of a position in local organs ofthe state such as the land revenue hierarchy and village

administration.

The direct economic returns from such activities were oftenremarkably small. in the first half of the 20th century incomeobtained directly by rural money lending possibly contributed nomore than 10% of total agricultural income. Buying land for rentwas not usually a profitable investment in itself. Real returnsfrom rent in the 1920s and 1930s have been estimated at 3-4%


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of the purchase price of the land in western India. By far thebiggest share of rural income was derived from the returns fromagricultural production and trade, but this remained a risky anduncertain business in the difficult conditions f the interwar years.Given the limited and unstable nature of the market

opportunities that faced the agricultural sector, maximizingsecurity was often more important than maximizing output.Consequently, some dominant groups invested the surplusderived from their command of scarce resources ultimatelydepended. Between 1860 and 1930 dependent cultivators had anumber of opportunities to produce commercial crops directly ontheir own account, and thus move partially out of thesubsistence and into the cash economy.

The benefits of rising demand could help weaken the ties ofthe social hierarchy in other ways. In boom times the price of

land rose faster that interest rates, so that peasants could hopeto recover some of their land holdings by selling or mortgaginganother part at a higher value. Where agricultural profitabilityincreased, demand for labour also rose , returns to laborincreased accordingly and freer wage labore markets grew up toreplace custom-based system.

Commercialization did not lead to any major changes in thedistribution of land holdings by size. large farms secured nosignificant advantages over small ones, provided thatsmallholders could super-exploit their own labor and obtain ff

farm employment. Thus economic growth did not necessarilylead to changes in social structures or in the factor mix used toproduce the staple crops.Conclusion

By 1950 the failings of the Indian rural economy were obviousbut there causes were complex and remain somewhat obscure.The institutional networks of the rural economy were animportant variable determining performance, since the socialmechanisms for allocating capital and credit , and for providing

access to land and employment acted as replacements orsubstitutes for missing markets . but there was nothinginevitable about the dominance of social structure over economicopportunity in Indian agriculture nor did the apparent shortageof productive resources and the increase in man land ratioconstitute by themselves an insurmountable barrier to sustaineddevelopment . it is true that at the end of the colonial periodthere were sever problems of food supply and that institutional


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control had once again become more important thanresponsiveness to market opportunity in ensuring economicsurvival and success. However, these phenomena were largelythe result of the specific institutional inadequacies and marketfailures of the last 20 years of british rule. Social mechanisms

were strong only because market stimuli were often weak, andstate agencies were virtually non-existent. With more favorableand stable markets networks, linked to sustain positive stimulifrom the export trades and coupled to a more diffused andefficient system for allocating capital and labor thedevelopmental thrust of Indian agriculture could have beenstronger, more universal and more consistent.

agriculture 1860

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