Anand V. Swamy
Forthcoming in Debin Ma and Jan Luiten Van Zanden eds. Long-term Economic Change in Eurasian Perspective, Stanford University Press.
The East India Company’s conquest of various territories in India typically brought one issue to the forefront right away: How would land taxes, the principal source of governmental revenue, be collected? But taxation was not a thing unto itself; it was inextricably linked with “ownership” and indeed with the entire structure of land rights. For this reason, among others, the Company also created/adapted legal systems that would adjudicate the disputes that, inevitably, followed in the wake of its land-rights interventions. The legal and land tenure arrangements chosen also affected credit markets: to the extent land ownership is secure and transferable, land can be used as collateral, or seized in lieu of repayment of debts or other contractual obligations. Land, law, and credit in colonial India generated a huge (and ongoing) discussion: debates preceding policy choices; later commentary within the colonial administration; “nationalist” criticisms from the late 19th century onwards; and current research linking present-day economic outcomes to colonial era choices. In this paper we provide an overview of this literature, focusing on the period 1765-1900. In the interest of brevity and coherence we focus two regions, Bengal, which was first conquered (1757-64), and the Bombay Deccan, which was annexed in 1818, though we make references to other regions as well.
From the very beginning, Company rule in India generated an extraordinary amount of documentation. Policy discussions characterized the nature of pre-colonial regimes and land tenure systems, invoked the theories of contemporary economists and philosophers in Europe, and might even use surveys to gather information. Much of the discussion was conducted in terms that would be familiar to contemporary economists: secure property rights and contract enforcement, and, more generally, good governance, would promote investment, trade, and economic growth. The Company would (it was argued) provide this essential support for economic development far better than the despotic and mutually hostile regimes that had preceded it. However, the intellectual sophistication of the discussion notwithstanding, the Company (and later the Crown) continually struggled with the three related problems: (i) A lack of understanding of existing institutional arrangements, (ii) Limited administrative capacity, and (iii) Especially after the “Mutiny” of 1857, concerns with political stability. Decision-making was also complicated by the fact that there were three key players: the administration in India, the Court of Directors in London, and the British government’s “Board of Control,” whose relative influence varied over time.
Given the complex and evolving interplay of these factors, it is difficult to classify the policy choices made by the colonial administration.
However, at the risk of over-
simplification, we can identify three broad phases. The first, which is closely identified with the Permanent Settlement in Bengal, was overwhelmingly concerned with one task: tax collection. The second, which we illustrate with the experience of the “mature” Raiyatwari system in the Bombay Deccan and tenant protection in Bengal, reflected the increasing administrative capacity of the colonial state, and its ability to intervene more extensively at lower levels of the agrarian structure. In the third phase, after the rebellion of 1857, political concerns repeatedly came to the fore: the state was willing to abandon cherished notions of political economy and curb market transactions, thereby altering some of the rights granted earlier. The next three sections of the paper sequentially describe these phases. In the final section we take stock, and...