Figure 1.--Spiridione Roma was an Italian artist known for his work in Britain. His work 'The East Offering its Riches to Britannia' (1778) was painted for East India Company House. This was soon after the East India Company seized control of India. It was how the British at the time and interestingly now modern Indian nationalists see the British role in India. In fact, Briain's role in India was far more complex with not just exploitation, but reciprocal benefits as well.

The British victory in the Seven Years War led to British rule which was divided into two parts. The first part was control by the British East India Company (1760s-1858). The second period was direct or crown rule, commonly called the Raj. It was brought on by the Great Mutinty. The British role in India is commonly an assessment of the Raj because it was during this period that Britain exerted the greates influence on India. Earlier the British rule through Indian rulers and had only a limited impact on India. With the Raj and direct rule, the British impact was profound. The impact of the Raj and British rule in general is still a widely debated topic. A united India, the English language, and democracy are three primary impacts, all with economic consequences. In more direct economic terms, the British brought modern technology and created the foundation of India's modern infrastructure. The British after establishing their predominante position, introduced new trading policies. The British were not only interested in Indian resources, but markets for the expanding output of the Industrial Revolution. This undercut domestic production which was largely handicrafts, thus adversely affecting the livlihoods of many Indians. Indian farming and industry (especially textiles) suffered. The result was increased imports rather than domestic production and exports. One Indian source cliams that about $1 trillion was shifted from India to Britain and the rest of the Empire. We are not at all sure about this. We have seen Indian authors make outrageous claims based on anti-British sentiment rather than factial basis. It should be understood that the British did not create poverty. Poverty in India was nothing new. It was basically due to inefficent agricultural methods resulting in low crop yields and essentilly handicraft industry, also highly ineffucent. Many Indians blame the British for destoying India's handicraft industry. This was Ghandhi's view. It is why he insisted on spinning his own thread and the spinning wheel is at the center of the Indian flag. Given the low yields of traditional agriculture and inefficency of handicraft industry, they and not the British assigned India to perpetual poverty. It was modernity that destoyed India's handicraft industries. The British were the agent, but it was inevitable. Along with modernity the British brought modern technology (most important the railroads), an education system, a common language, a banking system, democracy, capitalism, and the rule of law. Interestingly the Indians accepted part of this heritage more readily than much of the rest of the Empire. The British for all their mistsakes implanted the foundation for a robust free market econonomy. What it was slower to accept was capitalism, but it is difficult to criticize as Britain and much of Europe at the time of Indian independence was also embracing socialism. The British began moving toward home rule in the early-20th century. There were many incidents in which the British used force to maintain the Raj. Most were relatively small encounters. The most serious was at Amritsar(Jallianwalla Bagh) (1919). The most inexcusable British action, or more precisely inaction, of the Raj occured at the end--the British failed to deal with a terrible famine in Bengal during World War II. The British and Americans saved India from the rapacious Japanese, but several millions Indians died in the Bengal Famine, perhaps 4 million. The Congress Party has to share some reponsibility for the pressure they put on the British during the War, but the Bengal and earlier Irish famine are surely the blackest marks on British imperial rule.

Two British Periods

The British victory in the Seven Years War led to British rule which was divided into two parts. The first part was control by the British East India Company (BEIC) (1760s-1858). The BEIC was founded as a private company which Quuen Elizabeth I granted a trade monopoly with the East Indies (1600). Its success in extracting concessions from India's many divided principalities and battlefiekd victories over them and the French eventually led to its de facto control over most of the sub-continent (by 1757). It largely ruled indirectly through native Indian princes. The second British period was direct or crown rule -- commonly called the Raj. It was brought on by the Great Mutinty or Sepoy Mutiny. The British role in India is commonly an assessment of the Raj because it was during this period that Britain exerted the greates influence on India. Earlier the British rule through Indian rulers and had only a limited impact on India. With the Raj and direct rule, the British impact was profound.

Impact

The impact of the Raj and British rule in general is still a widely debated topic. There is no doubt that the British fundamentally changed India's role in the global economy in such a way as to promote British imperial interests. Jus how that impacted the Indin economy and people is much more complicated to assess. A united India, the English language, and democracy are three primary impacts, all with important economic consequences. In more direct economic terms, the British brought modern technology and created the foundation of India's modern infrastructure. The British after establishing their predominante position, introduced new trading policies. The British were not only interested in Indian resources, but markets for the expanding output of the Industrial Revolution. This undercut domestic production which was largely handicrafts, thus adversely affecting the livlihoods of many Indians. Indian farming and industry (especially textiles) suffered. Indian critics including Gandhi consider that absolute proof that the British damaged India. But it is not. What they are saying is that inefficent production methods should be protected because they employ people. That may sound good, but it also means that such workers would be comemned to a permanent life of poverty and slow decline of the economy. What happened in India wa preccisely what happened in England with the enclosures and industrial revolution resulted in the creation of an more productive economy and higher living stndards. Many of the criticims of the Raj are not much a criticism of the British, but of modernity. One author mintains that, "British ecomomic policynenefitted certin classes of Indians while causing great hardship and tragedy for others." [Bellenoit] Our contention is that it is not so much the British that had this impact, but modern production methods, in modern parlance -- globelization. The difference is that in England jobs were created in factories for the unemployed handicraft workers. This did not occur in India. there was no desire on the part of the British to build factories in India. And here the Raj can be justifiably crtiticized. It is not a given, however, that Indian elites would have handled this transition in a more compasionate manner. However one assesses the chnges, the result was increased imports rather than domestic production and exports. One Indian source cliams that about $1 trillion was shifted from India to Britain and the rest of the Empire. We are not at all sure about the precise anount necause his calculations are not clearly spelled out. But it certainly would be a substntil sum and it a fair assessment that needs to be made to assess the Raj. And while Indian sources are quick to make such an assessment, there is a general unwillingness on their part to even admit that there were also real benefits to the Raj.

Growth Rates

When assessing economic performance, the single most important factor is a country's GDP growth rate. Thus we need to consider growth rates before during and after the British to assess performance. The GDP data can not be considered in a vacuume. The GDP numbers hace to be adjusted for population growth as this affects per capita calcultions. Now we do not have GDP a population growtn data during the 18th and 19th centuries to compare to the pre-British period. It would be interesting to know about the 19th century, but we hve not yet found comparative data. This would include periods in which the industrial revolution was just beginning and the British touch on India limited. We do have data for the 20th century. And the growth rate during the 20th century era of the Raj (1900-50) was about 0.8 percent. And when the population growth is computed, the percapita growth rate is virtully nill. This might be used to criticize the Raj, but recall that the period included World War I, the Great Depression and World War II. Thus compared to other countries during this time, the performance of the Raj was not all that bad. Economic growth did pick up after independence, something like 3.5 percent. but percapita growth when the birth rate is considered was only 1.3 percent (1950-80). [Das] Given the vehemence of the Indian criticism of the British and charges that hundreds of billions of dollars even a trillion dollars was extracted by he British, a growth rate of 1.3 percent does not seem all tht impressive. It is strong evidence that the Raj was not nearly as explotive as Indian natiinalists suggest. One excellent Indian analyst writes, "How does one begin to explain India's economic performance over the past hundred years? The Indian nationalist blames the first fifty years' stagnation on British colonialism. But a trade economist will counter this by showing that the world economy was also stagnant in the first half of the 20th century (especially after World War I) when world per capita GDP grew annually at just under one percent. [Maddison] The main culprits, he would say, were conflict and autarky. Disgraceful protectionism by most governments between the Wars slowed both the world and the Indian economy." [Das]

Confidence

One Indian analyst believes that loss of confidence was a factor both during the Raj and the early independence era. We are less sure of this and believe that India's traditional society and the inefficencies associated with it was more of a factor. But we are so impressed with the analysts scholarship and knowledge of India that we cannot dismiss his contention that this was an important factor. He writes, "I believe that national confidence also plays an important role. The more damaging impact of colonialism may well have been to Indian minds�it created an inferiority complex from which they have only recently recovered. Douglass North has rightly emphasized the importance of beliefs. [North, p 348.] Businessmen understand the value of confidence in entrepreneurial success and in creating a climate for investment; Historians too emphasize the power of self-belief in national success--Roman history and Britain's rise in the 19th century are examples of this. After Independence, India's confidence certainly rose, especially as democracy took root, but flawed economic institutions of Nehruvian socialism damaged that confidence. Once these socialist institutions began to be replaced by capitalist ones in the Reform period, confidence returned and young Indian minds finally became decolonized. I traveled extensively across India in the 1990's when I discovered this changed mood, and I think it also explains the current economic success." [Das]

Poverty

It should be understood that the British did not create poverty. The very idea is absurd. Poverty in India was nothing new. It became more of a problem in the modern era because of the growth of population. It was basically due to inefficent agricultural methods resulting in low crop yields, This was not such a problem with a small population, nut as population increased and fsmily plots declined, it became an inreasing problem. Along with ibcreasing population, agricultural technology did not improve. Many Indians also blame the British for destoying India's handicraft industry. This was another factor in growing poverty. This was Ghandhi's view. It is why he insisted on spinning his own thread and the spinning wheel is at the center of the Indian flag. Because the trends occurred at the same time that the British sezed control of India, many Indians, especially the nationlits, believe that Britain impoverished India. What was at play here, however, was not the British but the growth of population and technology--an early example of globlization. Given the low yields of traditional agriculture and inefficency of handicraft industry, they and not the British assigned India to perpetual poverty. It was modernity that destoyed India's handicraft industries. The British were the agent, but it was inevitable. Now the British can reasonbly be criticized for not ending abject poverty or at least substantially reducing it. Self rightous Indian nationalists making such charges ignore the difficylties that Indian Government have had in ending abject poverty. They admitedly have made an real effort which the British did not. But their efforts have been very disappointing, largely because of the failure of the Socilist economics which they adopted. And even today in modern India, poverty continues to be a major problem. Actually the most important advances have been the American Green Revolution which increased crop yields. India's dynamic economy as aesult of mrket reforms have also had an impact. But here the impact has been indirect and actually much of the resistance to mrket reforms has come from the poor rural population.

Sources

Bellenoit, Hayden J. A History of British India The Great Courses.

Das, Gurcharan, "India: How a rich nation became poor and will be rich again," Peter Berger and Laurence Harrison, eds. Developing Cultures: Case Studies (Routledge: 2005). For a fuller discussion see Das' book India Unbound (Knopf, New York, 2001).

Maddison, Angus. The World Economy in the 20th Century (OECD: Paris, 1989). Maddison world calculations refer to a 32-country average made based on 80 percent of world output.

North, Douglas. North writes, �Belief structures get transformed into societal and economic structures into institutions�both formal rules and informal norms of behavior. The relationship between mental models and institutions is an intimate one.� Douglass North, �Economic Performance through Time� in Lee Alston, Thrainn Eggertsson, Douglass North. Empirical Studies in Institutional Change (Cambridge: Cambridge University Press. 1996).

Created: 1:16 AM 4/27/2016
Last updated: 5:56 AM 1/24/2017