Economic Impact of British Rule

UPSC CSE PYQs

Judicial Reforms

• Discuss the basic features of the judicial administration under the East India Company.

Did the British introduce the modern concept of the rule of law in India? [1986, 60 m]

Zamindari Settlement

• Trace the circumstances that led to the introduction of the Permanent Settlement in

Bengal. Discuss its impact on landlords, peasants and the Government. [1981, 60 m]

• "The Permanent Settlement of land revenue in Bengal was a‚ bold, brave and wise

measure." Comment. [1983, 20 m]

• Showhow Britishruleledtothespreadof landlordismincertainpartsof India,andhow

the peasant was progressively impoverished under this rule. [1985, 60 m]

• "The permanent system of Bengal though initiated with best of best of intentions, was

a sadly blundering affair." Comment. [1993, 20 m]

• "The Permanent settlement was a bold, brave and wise measures." Comment. [1997,

20 m]

• "Absentee landlordism was a consequential feature of Bengal's Permanent land

settlement." Comment. [2003, 20 m]

• "Permanent Settlement disappointed many expectations and introduced there results

that were not anticipated." Comment. [2004, 20 m]

• "Though the Permanent Settlement had serious defects, it gave tranquility to the

countryside and stability to the government." Comment. [2009, 20 m]

• "The passing of the land from the hands of the peasant proprietors into the hands of

non-cultivating landlords brought about increasing polarization of classes in agrarian

areas." [2018, 10 Marks]

• Explain how the Permanent Settlement initiated a rule of property in Bengal and what

were its consequences? [2022, 20 m]

Lord Cornwallis

"If Clive founded the British Indian state Warren Hastings gave it coherence and made it

politically viable, it was Cornwallis who gave it definite form and stamped on it

characteristics of its own.": Percival Spear

The arrival of Lord Cornwallis as the Governor-General marked the beginning of a new era in

the history of British India.

• The appointment of Cornwallis as Governor-General was the direct result of the

controversies aroused by the acts of Clive and the rule of Hastings.

• British had already lost America → So, they tried to strengthen its rule in India through

various reforms of Cornwallis.

• Certain broad principles of the relationship of India with Britain were worked out.

• The impeachment of Warren Hastings showed that henceforth, no one could act

tyrannically in India and hope to get away with it. It was clear that there was to be

no private mercantile British dominion in India.

• Cornwallis was guided by a sense of racial superiority of the British.

• "A landed gentleman, English to the backbone, and proud of his heritage, he

(Cornwallis) was convinced that English ways were right and best." - C. H. Phillips

• His reforms gave social and political stability to Bengal but neglected Indian from

administration and ignored the rights of lesser landholders.

Cornwallis Code (1793)

Cornwallis sought to address issues of corruption and inefficiency in the East India Company's

administration and focused on restructuring the administrative and judicial systems in India,

to provide a new framework conducive to trade and investment.

The early stage of Company's law making came to a climax with the Cornwallis Code (1793).

It contained a series of Regulations regarding governing, policing, judiciary and civil

administration that remained in force till 1833.

(A) Legal Reforms

Cornwallis was the real architect of the modern Indian judicial system. He tried to bring Rule

of Law to ensure a uniform system of justice based on the principle of equality before law. He

tried to create a more standardized, predictable, transparent system.

• Humanization law:

• Cornwallistooksomeprevailing Muslimcriminallawsasbarbarousandsohetried

to make them a bit humane.

• He insisted on British-like procedure in the courts.

• It was clearly laid down that all district courts were to administer fixed forms of

law.

• Open trials were to be conducted.
• Everybody had the right to approach the court either personally or through a

Vakeel.

• Now, a witness could belong to any caste.
• Intention, rather than type of weapon, was more emphasized.

• Separation of powers:

• Cornwallis separated judicial and revenue functions which had been clubbed

earlier.

• District collector → revenue collection
• Civil justice → district judge

• Control of judiciary over executive.

• All executive officers, including the collector, were made amenable to the

jurisdiction of the court personally. Thus, for the first time, the privilege was given

to the people against Company's officials who might commit any wrong against

them. (earlier, only remedy was to move a petition in the GG-in-C at Calcutta)

• Government liability

• For the first time, the liability of the Government for its wrongs and wrongs

committed by its officers during their duties was recognized.

• British subjects were made amenable to the Diwani Adalat.

Thus, he created a system of European style courts independent of the executive, replacing

thecorruptandinefficient Mughalsystem.Thiswassupposedtoimproveaccesstojustice and

helped to curb corruption. It was expected that the new system would stabilise landed

relations, provide security for property, and make people right explicit.

(B) Father of Civil Service

• Personnel is divided into three branches: revenue, judicial, and commercial.

• Now, commercial services of the company were clearly demarcated from the

administrative services.The servants of the Company were directed to make their

choice between the two.

• To curb potential corruption,

• Cornwallis suspended the whole Board of Revenue for irregularities and enforced

the new rules against private trade.

• While a merchant one could still trade on one's own, an official had to be content

with a handsome salary. He insisted on the company providing generous salaries

in its place.

• Collector's fixed salary Rs. 1500/- pm + 1% share of revenue. (highly paid)
• Cornwallis implemented a district-based administrative structure.

• He divided the provincesinto districts. Each district was headed bya collector who

was responsible for revenue collection and administration.

• Foundation of Thana/Police station system.

• The modern Indian police dates back to the days of Lord Cornwallis.
• Earlier, zamindars were supposed to do the policing work but Cornwallis divested

them of this right.

• Thepolicepowerwashenceforth,tobevestedin the Magistratewhowasdirected

to divide his district into police jurisdictions or thanas.

• Each such thana was to be headed by a darogah.

• For nearly every 400 sq miles = an officer, Daroga appointed as in-charge.

• The duty of the darogah was restricted to apprehension and production of

criminals before the Magistrate.

• The police reformsof Cornwallis, despite later modificationsremained the basis of

the police organisation in colonial India for nearly two centuries.

• Europeanization and Exclusion of Indians:

• All high Indian officials were dismissed and all posts worth more than £500 a year

were reserved for Europeans.

• All these reforms marked the beginning of the civil service. The tradition myth of "law-

abiding, incorruptible" British rule in India starts from the era of Cornwallis. Steel-frame

of the civil service started to emerge in this era, and it was Europeanized.

(C) Permanent / Zamindari Settlement

• Economic background: The attempt to maximise revenue collection found manifestation

in the various revenue experiments of Warren Hastings.

• However, his schemes were unsuccessful. Under the farming system, landowners

had no incentive to augment production as the revenue farmers were only

interested in short term appropriation. Such a situation was not conducive to the

development of the agrarian economy.

• The condition of the peasants became deplorable. After his arrival in India

Cornwallis found,"agricultureandtradedecaying,Zamindarsandryotssinking into

poverty and the money lenders the only flourishing class in the community."

• Thisfailurecreatedinstabilityin the Company'srevenuesatatimewhen the British

were hard pressed for money. Thus, the Company's government in India was

looking for a stable income, which was required to maintain the trade surplus.

• Itwasatthiscritical juncturethat Lord Cornwalliswas appointed asthe Governor-

General. He was expected to end the uncertainty surrounding revenue collection.

Cornwallis himself belonged to feudal class of landed magnates in Britain and

therefore, had some knowledge of land and agriculture.

• Ideological background: French physiocrats

• Mercantilism gave primacy to the accumulation of gold through commercial

activity (balance of trade). Physiocrats emphasized agricultural production as the

source of national wealth.

• Mercantilism tried to create a monopoly over trade while physiocrats were

strongly opposed of all kinds of monopolies as well as to feudal privileges.

• Physiocrats believed in the institution of private property. A programme for

strengthening of property rights in land figured prominently in physiocratic

prescriptions.

• Cornwallis also supported permanent zamindari because of his own background.

• Prevailing Indian system:

• During Mughal period, individual private ownership was not fully established.

Different contenders claimed different parts of production.

• This system confused Cornwallis who was in search of a viable system.

Features of the Zamindari System

• Region: Bengal, Bihar, Orissa (and

also in Banaras division of UP and

North Karnataka) constituting total

of around 19% of British India.

• With whom: Zamindars (earlier

neglected by Hastings)

• The zamindars were

construed as the original

hereditary owners of the

landandtheywererequired

to collect land revenue from

the ryots as agents of the

Company.

• Thus, free peasants were

converted into tenants-at-will. Therefore, the traditional rights of the ryots on

land were abolished. Community land was also placed under zamindari control.

(Barren land, irrigation, pasture, forest land etc.)

• Land was now made a private property and a transferable commodity.
• Sunset Law (1793) mandated that if a zamindar failed to pay the stipulated amount by

sunset of the due date, his land was seized, and zamindari rights were auctioned.

• Rate of Revenue: Tax fixed based on taxes collected in 1790-92 as the base year. (which

was equal to Rs. 2.68 crore)

• 10/11 parttothe Company,whilethe Zamindarswerepermittedtoenjoy the 1/11

share.

• The government share was fixed initially for 10 years (in 1790) and then

permanently (in 1793). All future increase in total income (either through

extension or through revenue increase) would go to the zamindar.

The expectations:

• Economic Motive

• Fix stable and secure income for the state.
• Magic touch of private property + permanent settlement: Progressive zamindar

→ investment in agriculture → improvement in productivity → boost to trade

(NOT increase in revenue)

• model of zamindar as landlord-entrepreneur
• Administrative Motive

• Permanent settlement directly with zamindar without involving government

officers. Company's officers would remain free from revenue collection

responsibilities. They could be appointed for other duties.

• Easy to collect revenue from a few hundred zamindars instead of lakhs of

peasants.

• Check over corruption.

• Political motive:

• zamindar as a friendly class, pillars of support
• Company would not be target of popular reaction because Zamindars were

collecting revenue.

• Zamindars:

• Zamindars would also be immensely benefited because the amount of Land

revenue paid by them was fixed till perpetuity.

• Zamindars were expected only to collect the bid amount from peasants.
• Zamindars were expected to take care of welfare of peasants as fulfilment of their

interest was dependent on peasants.

The outcome: For the government

• The state secured a stable and fixed income from the people.

• In case the Zamindarsdidnotpaytherevenue,thelandofthe Zamindarswassold.
• The Government became free from the problem of fixation of revenue every

year/periodically.

▪ It avoided the evils of periodical settlement whichproduced harassment of

cultivators,evasionoftaxes,concealmentofwealth,atendencyonthe part

of the peasants to leave the land uncultivated etc.

• Absolute land property created a land market in Bengal.
• Instead of Progressive Zamindars, there were absentee zamindars. (failure)

• Against expectation, Zamindars did not take interest in investing in agriculture.

There was no flow of capital from urban to rural areas.

• Rather the reverse situation emerged whereby many zamindars turned absentee

landlords.

• In the long term, by making the Zamindars the owners of the land, the settlement created

a class of loyal landlords who formed a stable element in the state.

• It secured the political support of the Zamindars of Bengal who stood loyal during

the great mutiny of 1857.

The outcome: For Zamindars:

• The assessment was arbitrary.

• Thus, the immediate effect of the settlement washarmfulupon the landlords who

failedtocollecttherevenuefromthepeasants and sowereunabletopaythefixed

revenue at fixed time. As a result, they lost their ownership right over the land.

• Absolutelandpropertycreatedalandmarketin Bengal.Thenewclassoflandlords,which

emerged because of the Permanent Settlement, had commercial interests. Most of the

landlords did not take any interest in the improvement of the land. The landlords became

indolent and led luxurious lives staying in the cities. Thus, this settlement created a class

of absentee landlords.

• Manyof them were residents of Calcutta who decidedto investtheir capitalin the

purchase of land in the countryside.

• There developed a complex rent collecting structure with various grades of intermediary

tenure-holders.

The outcome: For Peasants:

• The cultivators were deprived of their traditional rights of land.

• Asthelandlordswerecontract-boundtoremittherevenuewithinashort time,theyraised

rent to an unprecedented degree.

• The farmers had to give 50-60% yield in the form of land revenue.
• Ruthless appropriation of the rural surplus, the peasants were adversely affected.

• The cultivators were put at the mercy of the Zamindars. Their grievances remained

unheard as they had no attachment to the government.

• As taxes had then to be paid in cash, the peasants were compelled to have recourse to

moneylenders or mahajans.

• The condition of the peasant became even more miserable as the new rule of property

was backed up by the new judiciary and the police introduced by Lord Cornwallis. The

police and the judiciary responded to the interest of the wealthier classes alone. The

peasants were invariably denied justice.

• In the process, a class of landless sharecroppers and agricultural labourers emerged in

Bengal. Thus, the introduction of the Permanent Settlement led to the evolution of anew

set of agrarian relations that was extremely regressive.

The misery inflicted by the British on the Indians was of a different kind, which was never

experienced before. It reduced the peasants to extreme poverty and ushered in a period of

chronic famine, starvation and hunger.

By the 1820 s, it was clear that the permanent settlement had failed to meet its original

expectations.

Economic Policies

Drain of Wealth (Do W):

• Meaning

• In 17 th and 18 th c Europe, Drain of Wealth meant negative Balance of Trade and

outflow of precious metal (bullionism).

• In colonized India, it meant excess export and unilateral transfer of surplus from

India to Britain.

• Pipeline during the Mercantile Era: "investment"

• Before 1750 s, the EIC struggled to finance one-sided Indian trade. It was

compelled to bring precious metal from Britain.

• However, after getting the Diwani of Bengal, it invested the plunder, profit from

inter-regional trade, and land revenue into trading activities. Indian goods were

nowpurchased through Indianmoneywhilecompanycurtailedtheimportofsilver

from Britain - unilateral transfer of surplus.

Decline of Handicraft:

• Earlier:

• Various European companies competed with each other to purchase Indian

handicraft products.

• Bengal textile purchases used to happen through Dadni system (putting-out

system) through Banians (brokers)

• After Plassey and Buxar:

• British eliminated European rivals from this race. Once that was achieved, British

put severe pressure on the artisans of Bengal.

• Now, Dadani system → Agency System (complete control over artisans and

production)

• Dual pressure by Gumastas (agents):

• The company developed a monopoly over the raw material supplies and

started to provide it to the artisans at higher cost.

• Simultaneously, the Company compelled the artisans to sell the product

cheap (with legal backing)

• Worst exploitation of artisans in Bengal

• Murshidabad & Dhaka became desolate. Dhaka (Lancashire of India), a great

supplier of cotton and Muslin (Malmal) now lost its position.

• Unemployed artisans moved to already crowded agriculture: impoverishment.

Weavers also, upon their inability to perform such agreements as have been forced from

thembythe Company'sagents...havehadtheirgoodsseized,andsoldonthespot,tomake

good the deficiency: and the winders of raw silk, called Nagaads, have been treated also

with such injustice, that instances have been known of their cutting off their thumbs, to

prevent their being forced to wind silk. - William Bolts (1772)

The bones of the cotton weavers are bleaching the plains of India - William Bentick (1834)

Indian Opium - Chinese Tea Triangular trade

In 1773, the then British Governor-General, Lord Warren Hastings brought the whole of the

opium trade under the control of the Government. Very soon, there emerged an Opium-Tea

triangular trade between India-China-Europa.

Socio-cultural Policies: Orientalism

UPSC PYQs

Orientalism produced a knowledge of the past to service the needs of the Colonial States."

Elucidate. [2011, 20 m]

"Every accumulation of knowledge and especially such as is obtained by social

communication with people over whom we exercise a dominion founded on the right of

conquest is useful to the state… it attracts and conciliates distant affections; it lessens the

weight of the chain by which the native are held in subjection and it imprints on the hearts

of our countrymen the sense and obligations of benevolence."

Warren Hastings

"Many of the advances in the sciences that we consider to have been made in Europe were

in fact made in India, centuries ago."

• 19 th century British historian Grant Duff

If Iwereaskedunderwhatskythehumanmindhasmostfullydeveloped

some of its choicest gifts, has most deeply pondered over the greatest

problems of life, and has found solutions of some of them which well

deserve the attention even of those who have studied Plato and Kant, I

should pointto India.And if Iwereto askmyself from what literature we

who have been nurtured almost exclusively on the thoughts of Greeks

and Romans, and of the Semitic race, the Jewish, may draw the

corrective which is most wanted in order to make our inner life more

perfect, more comprehensive, more universal, in fact more truly human

a life... again I should point to India.

Max Muller

The victories at Plassey and Buxar and acquisition of the Diwani rights opened a new chapter

in the life of the East India Company.

Imperialism did not merely create structures of political and economic domination. In order

to legitimize this domination, they had to create a series of stereotyped images and ideas on

which basis the legitimacy of Imperial control could be established.

In the early stage of imperial rule, in the second half of the 18 th century, the imperial attitude

towards India is known as Orientalism. The years from 1770 s to 1820 s under British colonial

rule in India can be described as the golden era of Orientalism.

Meaning:

• Orientalism believes in the study of the east.
• Ideology:

• Sensitive and sympathetic approach towards Indian past and culture.
• Though Indian culture is different from European, it is not inferior to it.
• Orientalists appreciated the rich heritage of Indian past.

• Policy: Encouraging the British officials to learn Indian languages to become acclimatized

in Indian conditions to become assimilated in the Indian environment.

Reasons:

• Administrative Need:

• British had decided not to interfere in the history and culture of people they had

conquered. However, under the leadership of Warren Hastings and his friends,

they embarked on an intellectual project to learn more about the country they

were ruling. This project was in consonance with the needs of governance.

• The Company was clever enough to understand that an adequate knowledge of

India's culture, religion, history, language, social structure was necessary to keep

India under its thumb. It was all the more necessary as the ruled (Indian) people

were entirely different from their rulers (the British) in terms of culture, religion

and history.

• Political logic: Orientalism in British policy was the consequence of a relatively weak

empire.

• Atthattime,the Britishwerenotsoconfidentaboutthefutureoftheempire,they

had to come to terms with powerful Indian classes, Indian beliefs and practices.

• Not to antagonise the popular consciousness in Bengal: The idea was to minimize

opposition from Indians as well as win Indian collaborators. For that, British

wanted to rule in India, as Indian rulers would, using Indian notions and customs.

• Economic rationale: Limited objective of Mercantilism

• Focus on trade - maximize revenue to finance Indian trade. Thus, need to avoid

any unnecessary expenses and responsibilities like social reform.

• Intellectual Pursuit

• The establishment of British rule in India was roughly coincidental with the

development in Europe of a strictly scientific spirit in historical reconstruction

(enlightenmentspirit).Ahighlycriticalattitudeinthetreatmentofthesourceshad

come in the wake of the Scientific Revolution of the seventeenth Century, a

revolution which had brought about Enlightenment attitude itself.

• Socio-cultural Mileu:

• The first generation of British civil servants were from ordinary backgrounds, they

were not meant from aristocratic classes. They came to make fortune. They came

usually at a young age and became more assimilated naturally in the Indian

environment.

Orientalist Initiatives:

Indology may be defined as the scientific study of data relating to Indian history and culture,

a study in which little emphasis is laid on the political aspect. The missionaries-particularly

the Jesuits had begun the Indological quest long before the British efforts in that direction.

But the missionary scholars, for all their studies made no real attempt to know the historical

background of the culture of the people amongwhom theyworked,for in them, the religious

motive had a preponderance over the historical.

In this area of work, the first name that occurs is that of

Alexander Dow, who wrote History of Hindustan during

the period of 1768. Actually, this work was based on a

Persian book called Tehrikh-e-Ferozeshahi. Dow gave a

detailed description of the culture and religion of the

Hindus.

The first major initiative on the part of the government

was taken when in 1772 Warren Hastings became the

Governor of Bengal. (Knowledge for Governance)

• He fully understood the need for detailed information

about the tradition, culture and social behavior of the

people of India in the very beginning of his rule. His

idea was that British need to know India better to be able to rule India better.

• Warren Hastings didn't believe that India didn't have any laws. Unlike his contemporaries,

he believed that India had its own traditional legal system which is required to be

understood. Hastings made it clear that in respect to inheritance, social behaviour and

contracts, these ancient codes would work as the main reference book.

• On the initiative of Warren Hastings, a code of law was developed for Hindus with

the help of pandits and old scriptures of India. It was published in 1776 by N.

Halhed titled A Code of Gentoo laws.

• So, British needed to learn the languages.

• There were Sanskrit colleges or madrasahs where Persian studies, and Sanskrit

studies were encouraged.

• Establishment of Calcutta Madrasa (1784) and Benaras Sanskrit College (1794),

Sanskrit College Calcutta (1824)

• These institutes emphasized on the indigenous education and knowledge system,

and were funded by the Company.

It was during the same period that William Jones, the primus among the Orientalists, came

to India.

• His role as a supreme court judge led him to learn Sanskrit and translate Manusmriti in

English.

Warren Hastings with Mullah

and a Brahman (Victoria

Memorial)

• Sanskrit Literature

• William Jones translated Abhijnana Shakuntalam in English and said that Kalidasa

was the Shakespeare of India.

• Comparative Religion

• He compared the European past

with the present of India.E.g. Indian

deities were compared to Roman or

Greek gods and goddesses. So,

William Jones was the progenitor of

a discipline of comparative religion.

• Philology

• To establish a certain commensality

between Indians and the Europeans, William Jones came up with the idea of the

Indo-European language family.

▪ He said in 1786, 'Sanskrit language, whatever may be its antiquity, is of a

wonderful structure, more perfect than the Greek and more copious than

the Latin, and more exquisitely refined than either. Yet bearing to both a

stronger affinity, both in the roots of verbs and in the forms of grammar

than could possibly have been produced by an accident.'

• So,comparative language wasalso anotherveryimportantcontribution of William

Jones.

• Institutional work

• Hewasalsoinstrumentalinfoundinganorganization called Asiatic Societyin 1784

in Calcutta. The birth of the Asiatic Society was an event of momentous

importance. Jones extended to Indology the methods of organized scientific

research then spreadingin Europe. It was consciously modelled on the Royal Society

in London and it ushered in the age of scientific and specialized study in Indian history

and culture. Thus, the Oriental intellectual project was institutionalized.

▪ The Asiatic Society became a centre for organized research and hundreds of

articleson Indianantiquitieswerepublishedinits Journal.Systematicattempts

were madetosearchforoldmanuscripts,andtranslations andcriticaleditions

of important texts on Indian history and culture were published in the

Bibliotheca Indica series.

• He also started an academic journal called the Asiatic Researches under the

auspices of the same society. That journal became a chief medium for the

publication of serious research work.

Jones certainly represents the best that oriented his scholarship had produced at that stage.

The Asiatic Society's unremitting labor bore its first fruit in important translations from

Sanskrit literature:

• William Jones: Shakuntala (1789), Geet Govindam, Manusmriti (published

posthumously), Hitopadesha.

• Henry Colebrooke: Translation of Samkhya Karika, a book on Sanskrit Grammar, Essay on

Vedas (1805)

Sir William Jones sitting under a banana

tree taking notes from Hindu pundits

explicating ancient texts.

• Charles Wilkins: Bhagvad Geeta (1785), Hitopadesha (1787) He also wrote a book on

Sanskrit Grammar.

• William Carey: Ramayana
• HH Wilson: Meghdootam, Vishnupurana

• He also wrote Sanskrit-English dictionary, Survey of Indian theatre/drama,

compilation of local ayruvedic traditional practices, catalogue of Mackenzie

collection, and updation of Mill's History of India.

• Codification of Indian laws: Henry Colebrooke: Digest of Hindu Laws (unfinished by

William Jones, publishedin 1801), Law of Inheritance (both Mitakshara and Daybhaga)

Thus, the interest in understanding India's past, her geography, mineral and natural wealth

began at the turn of the 18 th century for the purpose of trade and commerce. Later on, it

became more serious research and the documentation of India's history, the study of birds,

animals, trees and plants.

Calcutta Madrasa (1781) Asiatic Society, Bengal (1784) Sanskrit College, Banaras

(1791)

Fort William College,

Calcutta (1800)

Asiatic Society, Bombay (1804)

by Sir James Mackintosh

Indian Museum, Calcutta

(1814)

Fort William College, Calcutta (1800):

It was established for the purpose of training of Civil Servants. With this, Lord Wellesley

attempted to give professional training to the European Civil Servants and make them

efficient. The idea was to teach the fresh British recruits so that they can understand the

Oriental Culture, tradition, law and administration.

• Most of the British officers stationed in India were guided by Orientalism here. Lord

Wellesley himself designed a three-year course of study for fresh recruits (between 16-18

years old upon arrival in India).

• Manyofthepioneersoforientaliststudiesandscholarsassociatedwith the Asiatic Society

were associated with this institute.

• By 1805 the college had become a veritable laboratory where Europeans and Asians

worked out new transliteration schemes, regularized spoken languages into precise

grammatical forms, and compiled dictionaries in languages relatively unknown in Europe.

• Alongwith the Asiatic Societyof Bengal, thiscollege wasthe centreof the creation

of colonial knowledge.

• Thousands of books translated from Sanskrit, Arabic, Persian, Bengali, Hindi, and

Urdu into English.

• The college was instrumental in publishing dictionaries, grammar textbooks, and

translations.

Impact and Significance

• Orientalist scholars had deep interest in the history, culture and religion of the Indian

people. It inspired a number of colonial administrators to collect and collate a huge

amount of research materials in respect of the Indian society and culture. For example,

Thomas Munro, John Malcolm Colin Mackenzie in South India, G. Duff in Maharashtra,

James Todd in Rajasthanhad collectedvaluable informationpertainingto their respective

areas.

Their work led to many great historical discoveries:

• With the discovery of Indo-European langauge family and the idea of Aryan Race, Jones

had demonstrated the importance of linguistic studies in historical inquiry.

• Beginning of modern sciences of comparative religion, modern philology, comparative

mythology etc disciplines.

• Not only for India, it was a major breakthrough in the world history.

• They attempted to link up the history of India with that of Europe. They lay

great emphasis on the common sources of the people of India with those of

Europe.

• A.A.Mac Donnel: "Since the Renaissance there has been no event of such

worldwide significance in the history of culture as the discovery of Sanskrit

literature in the latter part of the eighteenth century."

• Bya supremeironyofhistoryevenas Indiawashelplesslypassing under British

rule, the British Orientalists were holding up before the world an image of the

Indians as one of the creative peoples of the world with an impressive

continuityofdevelopment and civilizationfor more than threethousandyears.

Oritentalism by Edward Said:

Edward Said, in his book Orientalism (1978), argued that the Orientalist

scholars of the eighteenth and the nineteenth century pursued their studies in

respect of the Eastern countries on wrong hypotheses and intellectual

formulations. According to Said

• Their understanding of the people of Asia was based on prejudices. It

established as an ideology which;

• Created a set of ideas/images and underlined a certain unbridgeable difference

between the East and the West.

• It was done to establish inferiority of the East. The west was considered superior

racially, intellectually, scientifically, technologically…

• These ideas were imposed by a imperialist authority from above on a weaker society.
• Thus, it created a justification for the presence of the imperial western power.
• Therefore, oriental knowledge was not an outcome of the innocent curiosity but the

production of colonial knowledge, these scholars were working in the interest of the

Western countries.

Orientalism outlined the basic features of the East, to help distinguish East and West (idea

of difference)

• Cultureofdespotism:Therewaswidespreadimpressionamongasectionof the European

scholars that while in Europe a civilised monarchy flourished which allowed people

enough property and rule of law to accumulate wealth, in India, it was the Oriental

despotism that led to its decadence.

• Oriental despotism didn't allow people private ownership leading to wealth

generation. Also, due to the despotic nature of polity, there was no scope for rule

of law.

• Some Orientalist scholars tried to remove such misunderstanding through their

studies.

• Changelessness: Indians were resistant to change. This idea of changelessness would

recur repeatedly.

• Themajorweaknessof the Orientalistswasthattheywerenotinterestedinta king

into consideration the 'deterioration' in the old Indian cultural tradition. Thomas

Metcalf believes that the basic flaw in the Orientalist way of looking at the Indian

situation was that they had refused to consider and analyze the Indian historical

developments that took place after the ancient India.

Thus, negative effects of Orientalism:

• Scriptural Supremacy

• Orientalist scholars pinned their faith in the ancient books and scriptures of India

as they looked upon them as the main source of Indian culture and civilization.

• Monopoly over knowledge → Distortion

• Thesewerenotsimpletranslations,buttheyhaveencodedwithinthemthe power

structures. With this, British gained Monopoly over interpreting Indian culture to

promote colonial interest.

• The colonial administration did not want to interfere much in the social and

religious life of the people of India. Still, the attempts at collection, collation and

categorization of data led to interference and distortion.

• Examples:

▪ Indians more indulged in other-world, religion and spiritualism thereby

neglecting this world. Centrality of religion became the basic underlying

theme.

▪ Max Muller declared that whereas for Greeks,

life was full of joy, and it was real, for Indians it

was simply an illusion.

• They believed in the golden period of the ancient Indian

history. They painted the picture of regressive and degenerating present of India to gain

legitimacy.

• However, they did not concern themselves with the basic question as to what

extent those old social and cultural values were relevant in their times.

• Uncritical understanding of the past → Distortions

• Colonial understanding of the caste system in India. William Jones translated

Manusmriti (1784) which greatly impacted the colonial policy.

▪ In the initial years of the colonial rule, the administrators believed that the

traditional codeof law shouldbe adheredto aslongasit did not goagainst

the colonial rule. Such an understanding led to a widespread acceptance

of Brahminic tradition.

• William Jones's notion of the language-race nexus and the theory of the Aryan race has

now been generally discarded. The theory, however, came to have a harmful influence on

future thought.

• The belief in the superiority of the white Aryan race became a basic assumption of

European imperialism everywhere.

• The interpretation not only contained an explanation of upper caste superiority,

but also suggestion of an Aryan-Dravidian racial divide. Future revelation and

research would caste many of these assertions into the realm of motivated fancy.

• The race theory in the hands of the British imperialist historian also came to mean

that everything of value in Indian life and culture, at least above reproach in

European eyes, was of European origin.

• While being appreciative/discerning about Indian knowledge, Orientalists did not raise

any bigquestion markagainst European culture, civilisation and their epistemology and

ontology. So, they were not oblivious of the interests of colonial rule.

Thus, Orientalist school played a crucial role in the initial evolution of the colonial knowledge

andpolicy,whichinturngavestabilityandlegitimacytoit.Butitisequallytruethatthe policy

also strengthened the retrogressive forces of the Indian society.

Commercialization of Agriculture

Itmeans cultivation of cash cropsin placeof foodcrops. The food cropslikewheat,barleyand

rice were replaced with cash crops like tea, indigo, sugarcane, tobacco, opium and coffee etc.

Agriculture in India so far had been a way of life rather than an out-and-out business

enterprise. However, from now onwards, agriculture began to be influenced by commercial

consideration and fluctuating prices as certain specialized crops were grown not for

consumption in the village but for sale in the regional, national and even international

markets.

This change in the character of Indian agriculture was the outcome of circumstances created

by British colonial rule.

Objective/Causes:

1. To make the collection of the increased land revenue easier.
• In order to pay taxes in cash it became obligatory for peasants to cultivate cash

crop and get money to pay the higher taxes.

1. British Industrial policy:
• To secure raw-material for the British industries. (e.g. Jute, raw cotton, indigo)
• To facilitate export of food grains from India to Britain.
• The British policy of one-way free trade
2. To maintain balance of trade globally (Tea-Opium Triangle)
3. Infrastructural developments like railways, shipbuilding and roads led to the favourable

environment for businesses.

1. The world events like opening of Suez Canal and the American civil war also speeded the

commercialization of the agricultural.

Regional variation

• Cotton: Encouraged in western India
• Indigo: For dying of clothes in north and east India
• Opium: Warren Hastings made opium production a company monopoly first in 1773. It

was exported to China.

• Tea: encouraged in northeast, mainly based on British capital. It gave rise to the

problem of indentured labour.

• Coffee: encouraged in south India
• Jute: encouraged in eastern India
• Sugarcane: it was encouraged after 1830 s in various parts, especially in north India.

Pattern and Effects:

1. There was production for market but:
• It was focused on European market: Only those crops which were required by

British industries or were having market in Europe were cultivated such as indigo,

cotton and sugarcane.

• It helped in the emergence of a subservient economy in India because Indian

economic system was used to fulfill the needs of British economy. (Classical

colonial economy)

• It facilitated for drain of wealth from India because commercial crops could be

sold easily in European market. It benefitted only European. It failed to benefit

Indian peasants in any significant manner.

• Monetization of agriculture
• The earlier self-sufficient village economy was shattered. The peasants were

encouraged to cultivate those crops which were having greater demand in the

global market. The life of the Indian peasant was tied to the highly fluctuating

international market. He was no longer a deciding factor in agricultural practices.

1. It didn't leadto modernizationof agriculture: There washardlyanycommercializationof

'input' and it was merely commercialization of 'output.'

• It was carried out by using the traditional old tools and no modern technology

was introduced.

• The use of small farms for cultivation of cash crops was another typical feature.

1. It was a forced process for the majority of peasants. It was not adopted by them under

free will.

• Different strategies were adopted to induce production of the exportable goods

by Indian peasantry, which ranged from binding the producers by advancing a

paltry sum to open use of force and fraud. Different kinds of tenancy practices

were used by Europeans to cultivate cash crops in India.

• Teenkathiya (3/20) used in Champaran district of Bengal for Indigo cultivation.

i. The worst effect of commercialization was the oppression of Indian

peasants at hands of European. This found full expression in the famous

Indigo revolt in 1859.

• The Charter Act 1833 allowed European to purchase immovable property in India.

As a result of this tea, coffee, and jute plantations emerged contract farming was

practiced by European in plantations.

i. The Company did not hesitate to treat the workers in tea-gardens of

Assam as virtual slaves.

1. It was exploitative in nature. The peasants suffered immensely due to cultivation of cash

crops.

• There was no capital formation.

i. Indian peasants were not free to market their goods at competitive prices.

They had to supply these goods to the Company under the threat of force.

Hence by producing these goods, they did not get enriched, instead they

were impoverished.

• Rather, it led to rural indebtedness.

i. The growing commercialization helped the money lenders to exploit the

cultivator.

ii. Peasants had to take loans from money leaders to buy new seeds and

implements. They could not repay these loans.

iii. If the poor farmers fail to repay the loans the land was confiscated.

• Cultivation of cash crops reduced production and increased the prices of food

grains. It led to hunger and famine became a regular phenomenon in Indian

economy.

• It resulted in rural instability because the prices of commercial cropsfluctuated in

accordance with the availability of those crops in the international market. This

instability triggered crises many times. The Deccan riots of 1870 s was an example

of the same.

1. Environmental Impact:
• Cultivation of cash crops like indigo adversely affected the fertility of soil. In the

long run these crops ruined agriculture.

It is true that in subsequent years a number of steps were taken by the British to improve the

state of affairs in the field of Indian agriculture. This included new irrigational facilities bynew

canal systems particularly in Punjab, western UP and some parts of Madras. Besides, the new

tenancy laws of 1859 and 1885 did give some relief and protection to the impoverished

tenants. But all these measures proved too inadequate to tackle the problem actually faced

by the Indian cultivators. Even where some positive results came out of these measures; they

were confined to some areas like Punjab, western UP and parts of Madras. And there too, it

was only a small group of privileged few who actually benefited from it.

Decline of Handicraft (de-industrialization)

India held the title of the world's largest manufacturing nation until the mid-18 th century.

European countries, in particular, had a high demand for Indian products. The British during

colonial rule systematically dismantled India's handicraft industry, and by the mid-19 th

century, it was almost decimated.

Destruction of Cotton Textile Industry

Causes:

Dr. D.R. Gadgil mentions three principal causes which operated in the first half of the 19 th

century in bringing the rapid deindustrialization in India with the special reference of the

decline of craft industry- The disappearance of native ruling power, the establishment of an

alien rule and the competition of a more developed machinery.

Mercantile Phase:

• Initial oppression by the Company: As soon as the Company established its political

supremacy in Bengal, it began to exploit the artisans of cotton and silk cloth. As a result,

the cloth trade did not remain a source of profit for the artisans and the cloth industry of

Bengal disintegrated.

• Appointment of intermediaries for exploitation of artisans. The weavers were

forced to accept dadan or advance from the English merchants. There was a

blatant use of force and fraud to force the Indian producers to sell their goods at

the minimum price. At times, the forcibly fixed price was less than 35% of the

market price.

• To make the system more ruthless, the Company replaced the middlemen by a

system of gomastas who followed a no-holds barred policy to force the producers

to sell their goods to the Company at unremunerative prices.

• Compelling Indian artisans to reveal their trade secrets.
• The Company regulations in 1770 s-1800 had made the weavers sink into the

position of indentured workers.

▪ Indian craftsmen were made to work for company at a very low wage and

at times without any wage at all.

▪ These craftsmen were forced to sell their goods to the company at cheap

rate and by company's raw material from company's merchants at high

prices.

▪ Many craftsmen cut their thumbs to escape this exploitation.

• Destruction of Guilds

• With the entry of British traders, Indian guilds lost their power. As soon as

supervising bodies were removed, many evils began to appear. These were, for

example, the adulteration of materials, shady and poor workmanship etc. This at

once led to a decline in the artistic and commercial value of the goods produced.

Industrial Phase:

• Industrial development:

• Theforeignmachine-madeproductsweresuperiorinqualityandcheaperinprice.

Theprimitivetechnologyof Indianhandicraftscouldnotcompetewiththe modern

technology of an industrial economy.

• Lancashire and Manchester exports flooded Indian markets.

• Commercial Policy: The British commercial policy ruined the artisans and craftsmen.

• Commercialization of Agriculture: The British pressurized farmers in India to take

cash crops needed to their industries. So, it turned India into a supplier of raw

materials for British Industries. The Export of raw materials made them dear for

Indian artisans and made their products uncompetitive.

• Market Capture

• Manipulationofexportandimportdutywithaviewtoma king Indiangoods more

expensive in the British markets and the British industrial goods less expensive in

the Indian markets. This was an unnatural competition.

▪ Indian cotton products were banned in Britain (protectionism). Heavy

duties were imposed on the Indian handicraft products in Britain. Import

duty of 67.5% on Indian cotton cloth and 37.5% on Indian muslin in 1824.

▪ A condition was imposed upon EIC whereby it was mandatory to carry

British goods of around 3000 tons free of cost to India in 1793.

• British also ousted Indian products from other markets (West Asia, Africa etc)
• Diminishing local markets

▪ With the gradual decline of the Indian states and their courts, who were

the chief patrons of Indian weavers and spinners, there was no chance for

the Indian cotton industry to survive.

▪ Flooding Indian market: The monopoly of the EIC for trade with India was

abolishedbythe Charter Act of 1813/1833 whichopened Indiacompletely

forthe Britishgoods.Thefateofthe Indiancottonindustrywassealed with

the arrival of railroad. Opening of the Suez Canal reduced the distance

between England and India.

▪ Spread the network of the British administrative machinery even to the

remotest area and new legal and judicial system,so asto ensure the safety

of trade routes as well as to make secure the British financial-commercial

interests. The entire structure of the legal system, including Indian Penal

Code (IPC) and Criminal Procedure Code (Cr PC), was raised during this

phase.

▪ Policy of westernization changed demand by Indian middle class too.

(English education produced a new class)

The cumulative impact of the new strategy was the total destruction of the entire structure of

Indian handicrafts, making it possible for the British goods to reach each and every corner of

the country. From 1814 to 1835 the export of the British cotton clothes to India increased by

51 times, whereas that of India to England decreased by 13 times. Cotton Mills of Lancashire

were built up on the ruins of Dacca, Murshidabad and Surat.

Thus, India soon became a supplier of raw materials for the British industries. India went

through a process of what historians have called 'de-industrialisation', which was primarily

responsible for mass pauperisation and impoverishment of our people.

Destruction of other Industries

• Jute Industry (handicraft in Bengal): Collapsed due to the competition with the

products of modern factory system at Dundee (Scotland).

• Silk Industry: Indian silk industry flourished in various regions. In Kashmir, it employed

nearly 45,000 workers. Competition from industrial silk products of Paisley (Scotland)

decimated it.

• Iron Industry (world famous wootz): Indian industries could not produce low quality

steel, thereby eliminating a huge chunk of market from them.

• Ship building industries at Surat, Malabar and Bengal were crushed. In 1814, another

law was passed under which Indian built ships were refused to be considered 'British-

registered vessels' which could trade with America and the European continent.

Impact of De-industrialization

"The misery hardly finds a parallel in the history of commerce. The bones of the cotton

weavers are bleaching the plains of India." - Lord Bentinck

The substantial influx of resources and capital from India to England naturally elevated the

standard of living for the English population. This outflow of wealth also facilitated increased

investments in English agriculture (thus playing a significant role in agricultural revolution of

18 th c in England) and industry post-1750 (thus contributing to the onset of the industrial

revolution).

In India, however, the impact was the opposite. Karl Marx has cited the impact of the

deindustrializationprocess.Accordingtohim,itwasthe Britishrulerswhobrokeup the Indian

handloom and textile handicrafts.

• It ruined India's prosperity and resulted in excessive unemployment.

• It has been estimated that about 10,00,000 people were thrown out of

employment by 1828. The industry was totally shattered. The affected persons

were weavers, cotton growers, spinners, dressers, embroiderers, and others.

• The disaster was heightened by the fact that the decline of the traditional

industries was not accompanied by the rise of modern industries in India as was

the case in the West.

• Urbanization:

• De-urbanization: The destruction of the Indian cotton industry was mirrored in

the decline of the towns and cities which were famous for their manufacture.

Cities like Dacca,Murshidabad,Mirzapur, Tanjoreand Suratbecamedepopulated.

• Growth of commercial towns: There was a migration of the people from the old

industrial towns to the new trading centers. Among the important cities that

developed were Delhi,Bombay, Calcutta,Madras, Bangalore, Nagpur Karpura and

Karachi,Lahore,Chittagong,Rangoonetc.Thesecitiesgrewinimportanceasgreat

commercial towns.

• The connection between agriculture and industry was snapped. Rather with the

dislocation of traditional crafts, there was an increase in the burden on agriculture

(ruralization, peasantization)

• The weavers thus overthrown, had no other option but to turn to agriculture for

survival. Thousands of them became sharecroppers or agricultural labourers.

• Theyaddedtothegeneralpressureonlandandfurthercontributedtothegeneral

impoverishment of agriculture.

• Fragmentation of land-holding converted many of them to landless labourers for

survival.

• Reduction in per capita income, rural poverty (immiseration, pauperization)

• There ushered in a period of chronic famine, hunger and starvation.

Even the western world went through such phase of decline. However, unlike India, the

decline of handicraft industries in the west was compensated by the foundation of modern

industries.In India,the wilfuldestructionoftraditional structure wasnotreplacedbyanynew

structure.

Contents

1. Mercantile Phase (1757-1813)............................................................................................................2
2. Industrial Phase (1813-1857)..............................................................................................................2
3. Financial phase (1858-1947):..........................................................................................................3

Political Policy.....................................................................................................................................4

1. Queen`s Proclamation (1 st November, 1858):...........................................................................4
2. Act for the Better Government of India, 1858:...........................................................................5
3. Indian Councils Act, 1861:...........................................................................................................5
4. Royal Titles Act, 1876..................................................................................................................5
5. Indian Councils Act, 1892............................................................................................................5
6. Policy of Befriending the Indian Princes.....................................................................................6

Administrative Policy..........................................................................................................................8

1. Secretary of State for India:........................................................................................................8
2. Act for the Better Government of India, 1858- Through this,....................................................8
3. Indian Councils Act, 1861............................................................................................................8
4. Legislative Devolution:................................................................................................................9
5. Military Reforms: .......................................................................................................................9
6. Nationalist sentiments:.............................................................................................................10
7. Reforms in the Civil Services:....................................................................................................10
8. Police Reforms ..........................................................................................................................11
9. Famine Policy:...........................................................................................................................12
10. Press Policy..............................................................................................................................13

Practice question ..............................................................................................................................14

Q. Highlight the transformation of the colonial administrative policy over the industrial and

financial phase. (15 marks)...........................................................................................................14

Economic Policy ................................................................................................................................16

1. Drain of wealth..........................................................................................................................16

Practice Question..............................................................................................................................18

Q What do you understand by the term home charges. Discuss its impact on the Indian

economy?......................................................................................................................................18

1. Influx of British Capital in India.................................................................................................20

1. Prevention of the development of Indian capital.....................................................................21
2. Indian Capital and Nationalism.................................................................................................23

Practice Question..............................................................................................................................23

Q Discuss the British Policy towards Indian industrialization. What role does the class of Indian

industrialists played towards nation building?.............................................................................23

Social Policy.......................................................................................................................................25

Cultural Policy...................................................................................................................................25

Practice Questions............................................................................................................................27

Q Trace the evolution of the colonial cultural policy with respect to India from the mid-18 th

century onwards...........................................................................................................................27

Q Discuss the changes in the political policy of the British in India from the Battle of Plassey up

to independence. (200 words, 15 marks).............................28

Rise of Nationalism...........................................................................................................................30

Factors for the rise of Indian nationalism-....................................................................................30

Debate on Indian Nationalism......................................................................................................31

Practice Question..............................................................................................................................32

Q Highlight the differences between European and Indian nationalism. Compare historical

evolution over time. (200 words 15 marks) ........................................................32

The British Colonialism in India is categorized into three phases:

1. Mercantile Phase (1757-1813): During this phase

Europeans were competing with each other to buy Indian finished products and earn hefty

profits by selling them to Europe. So British had to depend on British bullion to buy Indian

goods which was a drain of wealth on their economy. This led them to annex Bengal in order

to earn Indian bullion which could be reinvested into Indian trade.

1. Industrial Phase (1813-1857): Industrialization was well

established in Britain by now and thus it converted India into a supplier of raw materials and

buyer of finished British products through discriminatory policies.

Here, we shall try to understand the developments of the third phase i.e. financial phase

which lasted till Indian independence.

1. Financial phase (1858-1947):
2. As the Industrial revolution reached saturation in 1850 s, Britain faced the problem of

middle income trap- rise in wages and industrial expenses but less potential for profits

through investment.

 Thus, British investment needed other avenues. In this scenario, India with its vast

resources emerged as the obvious choice.

1. Secondly, the revolt of 1857 gave the rude shock to British colonial enterprise in India.

 Thus the era of self-confident annexation within the framework of "New Victorian

imperialism" was discarded and new cautious policy was adopted.

 British also realized the anger caused by liberal social reforms and henceforth worked

consciously in what is known as Conservative liberalism. It looked on to befriend

conservative and elitist sections of the society in order to have a strong alliance within

the Indian society.

1. Thirdly, Britain`s monopoly over Industrialization had ended as many other countries like

France, USA, Germany etc. had started emerging on the horizon. But Britain did not want to

lose its monopoly over Indian commerce.

 As such the British enacted a mechanism of tariff and non-tariff barriers to maintain the

monopoly.

These factors motivated Political, administrative, economic and cultural policy of the British

in India.

Political Policy

Industrial phase Financial phase

 Imperialism was supported by

territorial expansion through war

and unequal alliances.

 British Paramountcy relied either

on direct or indirect political

control.

 British supported liberal reforms

such as Abolition of Sati and

Widows` Remarriage Act.

 During Financial phase too, British had to

maintain their Paramountcy but it was based

on unequal partnership.

 The direct rule of the crown was established

to solve the issue of absentee rule of British

monarch.

 Now it focused on conservative liberalism

which only created an impression of reforms

but were meant to further British control.

1. Queen`s Proclamation (1 st November, 1858): It was organized at Allahabad.

Although the Queen did not attend herself but she sent a dispatch to be delivered to the

Chamber of Princes organized by Viceroy Lord Canning.

He announced that from then onwards:

 No Indian state shall be annexed- This convinced Indian ruling classes that from now

onwards the sovereignty will lie in the hands of the queen herself and they will not have

to deal with annexations.

 No forcible religious conversion should take place- It was a sigh of relief for conservative

class.

 No discrimination in the recruitment for the services- It was aimed at conciliating

middle classes. They will not face discriminations in civil services or other jobs.

The significance of the Queen`s Proclamation was that:

 It clearly established the British Queen as the sovereign of the whole of India.

 It ended the policy of the Imperial expansion.

 It helped British in securing the loyalty of Indian rulers

 It dispelled the fears of orthodox Indians scared of Christianization

 It indicated emerging middle class that they could flourish under the policy of non-

discrimination under British rule.

1. Act for the Better Government of India, 1858:

 Company`s rule ended. All its positions, assets, liabilities and privileges were transferred

to the crown. British Crown was converted from an outsider to insider.

 India Council/ office headed by new cabinet minister Secretary of State consisting of 15

member replaced Board of Control- It meant that Government of India would work as

an extension of the Imperial Government. Secondly, British government would have an

absolute control over all its functionaries.

 The Governor General of India was given the additional title of Viceroy. While Governor

General of India was overall in charge of British administration in India, Viceroy means

the direct representative of British crown towards Princely states.

 It Formalized the beginning of Crown`s rule and marked the beginning of British Raj. It

also created the emotional link between British crown and princely states and provided

the continuation of British Paramountcy.

1. Indian Councils Act, 1861:

 Although the Act introduced the Principle of representatives of non-officials in

legislative bodies, still it was practically confined only to elite sections of the Indian

society in order to secure their loyalty towards the British rule.

1. Royal Titles Act, 1876 during Viceroyship of Lord Lytton.

 According to it, the power to confer titles among individuals to Government of India.

 Accordingly, in Delhi Durbar of 1877, the title of `Kaiser-i-Hind' (Empress of India) was

conferred to the British Queen.

 Similarly, hierarchical gun salutes were decided for Indian rulers according to respective

titles.

It was significant because:

 It transformed the British Queen from an outsider to the insider in the context of British

Raj.

 It integrated the Indian rulers into a common hierarchy subordinate to the Viceroy.

 It created an avenue for the integration of ordinary Indian into the imperial aristocracy.

1. Indian Councils Act, 1892- The Act tried to enlarge the representation to Provincial

Assemblies through indirect election (without actually using the word election). However,

members were recommended by Universities, District boards, Municipalities, Zamindars,

trade bodies and Chambers of Commerce which again belonged to the elite section. Thus,

there was a conscious attempt to keep the masses away.

1. Policy of Befriending the Indian Princes- Canning noticed that Indian rulers

had actively helped the company during the revolt and thus adopted this policy to ensure

their continued loyalty.

 Princes were guaranteed support and protection against external and internal threats.

 Secondly, they were assured that British would not interfere in their internal matters.

 Thirdly, they were also offered cooperation in commerce, defence and communication.

 Superficially it seemed to be a major departure from the predatory attitude of Dalhousie

but in reality, it represented more continuity than change.

• The initiative defense, communication and commerce were monopolized by the

British. Indian states virtually surrendered their prerogatives.

• The real aim was to benefit British rule because on the one hand this made

Indian rulers complacent vis-à-vis their responsibility as they had the assured

support of British and on the other hand, the actual rule was exercised by British

residents.

• Also, the impression of rule of Indian rulers shifted the blame of misgovernance

on the native princes.

 However, British carried stick in the other hand as in 1870 Lord Mayo made the

protection conditional on good governance. In reality, they even interfered in internal

affairs of the Princely states. Secondly, in 1900, Curzon denied visa application of Indian

princes on account of poor governance.

 Gradually, the rise of nationalism took the national movement to the princely states

under the banner of Praja Mandal movement. In 1927, All India State People`s

Conference was established under the leadership of Pt Jawahar Lal Nehru thus

furthering the integration of princely states with India.

 As per the recommendations of the Harcourt-Butler Committee and Simon

Commission, Go I Act of 1935 provided for the All India Federation but conditional on

the approval by stipulated number of Princely states which did not happen thus proving

the symbiotic relation between British and the Princely states.

 While the national movement was trying to integrate Princely states into Pan Indian

movement, the British tried to halt the process for their strategic interests:

• They acted as Colonial collaborators;
• Allowed the British to pass off their responsibility of providing governance;
• Helped the British during severe crises such as both world wars;
• Allowed British to enforce their trade regimes;
• Allowed the British to keep the nationalists divided.

 The same attitude was continued by British throughout 1940 s-

Cripps Proposal- Princely states would nominate members to the Constituent Assembly.

It was not accepted by Congress.

• Cabinet Mission Plan- Similarly, the right to nominate was given to Princely

states.

• Attlee`s Proclamation (Feb 1947) - "It is not the objective of His Majesty`s

Government to force the Princely States to merge with Indian Government". The

British Government was thinking of creating a constant problem for Indian

nationalists.

• Mountbatten Plan ( 3 rd June 1947)- also provided Princely states three options-

a) Join Indian Union

b) Join Pakistan Union

c) Remain Independent

• It was only as a result of compulsion that the British finally accepted that

maintenance of Princely states as independent domains would no longer be

possible. It was due to

a) The inability of the British to protect the princely states following the second

world war

b) Growing pressure from the USA and the USSR to decolonize India

c) Practical weaknesses of the Princely states politically, strategically,

geographically, economically and defensely.

 Chambers of Indian Princes Meeting (Delhi July 1947) - Mountbatten clarified that

independence of the Princely states is a 'mirage'. Thus by this time British guarantee of

independence of Princely states was weakening.

• The Principle of Geographical Proximity was laid down as per which Princely states

should merge either with Indian or Pakistani Union considering their Geographical

closeness.

Conclusion: This way British colonialism entered its financial phase post 1857 and thus

began the process of 'drain of wealth' which became a major issue of national movement.

However, British managed it by befriending elite sections such as Princely states. In the

coming sections, we shall try to understand how this problematic impacted administration,

society among other things.

Administrative Policy

As we have read earlier in the context of Political policies, British Administrative policies,

too, were guided by two objectives-

1. To maintain effective control over India
2. To reduce discontent among Indians.

It was important because:

 To prevent another revolt;

 To suppress nationalism;

 To protect Indian markets from other industrialized nations.

To achieve these objectives following steps were taken:

1. Secretary of State for India: After the revolt of 1857 the Indian Administration was

taken over by the British crown, and a post of Secretary of State for India was constituted.

He was assisted by a council of 15 members.

 Initially it was difficult for the Secretary of State to supervise the Indian administration

due to lack of transport and communication.

 However after the development of modern transport and communication this problem

was solved. For e.g.

• In 1869 Suez Canal was opened. Thus Arabian Sea was directly linked to

Mediterranean Sea.

• Steamships made travel easier and faster.
• Furthermore, by 1870 the undersea cables were laid, directly linking India and

Britain.

• Indian Postal system, Telegraph and Railways' infrastructure introduced by Lord

Dalhousie penetrated deeper to integrate the nation further.

1. Act for the Better Government of India, 1858- Through this, the offices of

Governor General of India and Viceroy was merged and was authorized to oversee the

postings, transfers and promotions of British residents and agents of Princely states thus

aligning the administration of British government with Princely states.

1. Indian Councils Act, 1861

 Portfolio System introduced by Lord Canning was accepted. Thus each Executive

Councilor was given a specific portfolio such as finance, military, communication, public

welfare etc.

 Secondly, all Executive Councilors were made directly responsible to the Governor

General of India.

 Beginning of Legislative devolution- Legislative powers were vested in Government of

Bombay and Madras (later in Awadh and Punjab as well) thus reversing the peak of

centralization reached in 1833 which we shall discuss in length later.

 Principle of Representation of Non officials in legislative bodies became accepted.

 Laws were to be made through deliberations.

However the Act contained following limitations which shows the insincere attitude of

British government towards India-

 Councils could not discuss important matters and no financial matters without

government`s approval;

 Legislative councils possessed no real power with no control over budget at all;

 It could not discuss executive action;

 Passage of bill needed Viceroy`s approval;

 Indians associated as non-official members were only from elite sections thus only

allowing loyal members to enter.

Therefore, while the impression was given as that of Administrative reform, in reality it was

another tool to strengthen British position in India.

1. Legislative Devolution: The process began through the Act of 1861 as we saw above.

It was conveyed that it was done to strengthen Provincial administration.

 However, lack of resources with provincial governments only constrained their power.

 Secondly, the central British government could shift the blame of maladministration to

provinces thus relegating its responsibility.

The process of devolution got further boost in the 1870 s when Mayo started the policy of

financial devolution i.e. the right of taxation and finances were also given to the states.

Later Lytton and Ripon further encouraged it.

The Government of India Act of 1919 finally led to the demarcation of power between the

central list and state list.

It was the Government of India Act of 1935 which accepted the provision of Provincial

autonomy leading to almost complete decentralization, the principle on which federalism is

still working in India.

1. Military Reforms: The revolt of 1857 forced British to introduce changes in the

military structure. The following measures were taken in this direction:

 A better balance was created in the army between the European and Indian elements.

For e.g. the ratio of European soldiers to Indian sepoys in Bengal army was increased

from 1:4 to 1:2.

 The post of officers was secured in the hands of the British.

 Artillery was placed only under British command.

 Policy of balance and Counterpoise- Indian regiments were consciously created in the

name of region and caste so that national consciousness should not develop among

soldiers.

 It was observed that ordinary Indian sepoy was nothing but 'Peasant in Uniform' and it

was felt necessary to check this connection. Thus it was attempted to isolate sepoys

from ordinary peasants- separate townships, separate schools for their children,

separate canteens for shopping etc. which are continuing even till today. Secondly, it

was even tried to separate sepoys ideologically from ordinary citizens.

 The concept of Martial and non-martial races was introduced. It discouraged

recruitment from Awadh and Bengal claiming that these 'rice eating' people are weaker

than 'wheat eating' people of North West and western India. Whereas actually the

motive was to control Awadh and Bengal as they were the hotspots during the great

revolt. This was another instrument of 'divide and rule'.

1. Nationalist sentiments: One of the basic objectives behind administrative reforms

was to satisfy the sentiments of Indian people. The nationalists were demanding

participation in the government.

 So under Lord Ripon, the government introduced the Principle of Local Self Government

and Indians were allowed in the local administration.

 Although British apologist scholars hailed this as British benevolence but in actual sense

this decision was guided by following objectives:

• Through the provision of local self-government they were looking to shift the poor

governance on Indians.

• It would save the government from the accusation that it was doing nothing for

development.

1. Reforms in the Civil Services:

 The civil services consisted of two types-

• First was the Covenanted Civil Services (1793) introduced by Lord Cornwallis which

represented the highest positions and was exclusively reserved for British officers.

• Indians could join only the second category i.e. Uncovenanted Civil Service (1853).

The same year Civil Services Examinations were provided.

• In 1856, 1 st Civil Service Examination was conducted. However there were significant

challenges-

a) No simultaneous examination. It could only take place in Britain.

b) Secondly, the subjects were highly Anglicized and syllabus was deliberately

prepared in a manner to exclude Indians.

c) Discrimination was observed against Indians during personality test.

 Lord Lytton introduced Statutory Civil Service in 1878-79 through which 1/6 th of the

Covenanted posts were to be filled by Indians of high families through nominations by

local governments subject to approval by Secretary of State and Viceroy. The system

was designed to introduce only 'noble blood' into the administration that would remain

loyal to the British. However, the system failed.

In fact, Lord Lytton also reduced the maximum age for Civil Service Examinations from

21 to 19.

 In 1892, Statutory Civil Service was abolished. This was in response to the demands of

Indian nationalists.

 Alternatively, it was provided that some officers of the PCS will be promoted to the ICS

after a given period.

 It was only through Government of India Act 1919 that the demand for separate exam

(not simultaneous) was accepted. First such exam was conducted in 1922 at Allahabad.

From this time onward number of Indian civil servants started increasing reaching above

40% by the 1940 s. This Indianised bureaucracy played an important role in ousting

British and also provided the much needed administrative continuity post-

independence.

1. Police Reforms

Before the 1860 s, the concept of military police was prevalent because the purpose was to

control rebellions rather than maintaining law and order. But by this time, change was

necessitated.

 Thus a Police Commission was appointed in 1860 and Indian Police Act, 1861 was

enacted on its recommendation. It paved the way for civilian police.

Civil Constabulary Village

Sub Inspector Thana

Inspector Circle

Superintendent of Police District

Deputy Inspector General Range

Inspector General Province

Another Police Commission was appointed in 1901 and it recommended greater

representation of Indians at both lower and higher levels in the police system. However, it

was not implemented effectively.

1. Famine Policy: Famine was a recurring phenomenon of colonial rule. In the first

century of colonial rule, more than hundred small and big famines had occurred across the

British Empire.

 It was the major cause for peasant discontentment that had played an important role

during the great revolt.

 However, the British could easily ignore the Indian suffering since famines affected

isolated regions and the suffering was largely limited to the poorer sections who had no

political representation.

 Following the revolt of 1857 this began changing as Indian nationalism began taking

route along with the development of the Indian press.

 Thus the British came under the increasing pressure to address the problem of recurring

famines. As a consequence three famine Commissions were appointed:

• Strachey Commission (1880)
• Lyall Commission (1896)
• Mc Donnel Commission (1901)

Each of them was constituted after the outbreak of a major famine. This reveals that the

British did not have any proactive policy to address famines. Rather they were adjusting

to the rising nationalist pressure.

 Expectedly their response to frequent famines also remained halfhearted and apathetic.

In response to the recommendations of these commissions different famine codes were

introduced in which British famine policy was codified with the following general provisions-

 Automatic suspension of rent/revenue collection.

 Food/fodder supply in the affected areas to be ensured by the state.

 Alternative sources of income should be encouraged.

 Rehabilitative grants/loans.

 Improve transport and communication infrastructure.

On paper this policy appears to be well designed, however the British were unable to

prevent the future recurrence of mass famines. This was largely the result of administrative

insympathy and apathy towards Indian subjects.

Further this failure was also borne out of the deliberately fraud understanding of the

phenomenon of famines in the mind of the colonial administrator.

A famine refers to an episode of mass death due to starvation as a result of non-availability

of food.

Colonial administrators and scholars were quick to write off recurring famines as a natural

phenomenon resulting from the unpredictability of the Indian monsoon.

Further they blamed this natural process for the poverty of Indian peasants.

On the other hand, nationalist scholars have taken more rational and scientific approach

towards understanding famines.

According to them, famine is primarily man made phenomenon resulting from

administrative failure such as

 Inability to address food shortages by organizing additional supplies

 Inability to prevent black marketing and hoarding leading to artificial shortages.

 Insensitive administration including depriving communities of essential services and

assets that may be crucial for their survival.

 Insufficient attention towards the development of agriculture resulting in high

dependence on rainfall;

 Lack of economic diversification resulting in higher vulnerability;

 Excessive burden of taxation resulting in poverty, landlessness and indebtedness.

 Nationalist scholars further argued that contrarily the colonial argument that Indian

poverty was the result of frequent famines, the reverse is actually true. Recurring

famines are a product of Indian poverty for which the exploitative colonial

administration is solely to blame.

The British due to their flawed understanding of the phenomenon of famines continued to

ignore this problem and then after the great revolt, the problem of recurring famines

continued unabated with major famines occurring in 1876, 1880, 1896, 1900, 1910, 1914,

1922,1928,1936,1943 and 1947.

Peasant discontent was also resulting from their exploitation by other Indians such as

Zamindars and moneylenders which prompted he colonial administration to introduce

certain acts-

• Bengal Tenancy Act, 1859 which provided protection against summary evictions f

tenants by Zamindars for non-payment of rent and other dues.

• Deccan Agriculturist relief Act, 1879 which provided that property of an individual

could not be confiscated for non-repayment of loans. Further defaulter could not be

arrested.

Despite these reforms, no structural changes were witnessed in the condition of the

peasants who continued to be intensely exploited by the colonial administration and its

Indian collaborators. As a result peasant discontent continued building up resulting in their

mass participation during the national movement.

1. Press Policy

In any modern society, the press plays an important role in educating the masses and

spreading critical awareness among them. It acts as a check against the misuse of powers

against the state functionaries and institutions and acts as an advocate of the general public

interest.

 Further the press lays a crucial role in shaping the public opinion and mobilizing it

towards the political action.

 Progressive state seeks to encourage the growth of robust, ethical and free press since it

performs the crucial public service. On the other hand, an exploitative state always

seeks to restrict the press freedom and undermine its public role.

 As expected from the very beginning, the attitude of the alien exploitative British

colonial regime towards the Indian press was extremely hostile. Thus colonial policy

toward the Indian press was always characterized more by restrictions rather than

freedoms.

This phenomenon was more visible and in fact became more intense following the great

revolt as this period coincided with the emergence of the nationalist press. This restrictive

approach is evident in the series of the draconian colonial legislations as follows:

 Vernacular Press Act, 1878

 Criminal law (Amendment) Act, 1898

 Official Secrets Act, 1904

 Indian Press Act, 1908

 Defence of India Regulation Act, 1915

 Press ordinances (1919, 1921, 1930 etc.) claimed in the backdrop of major mass

movements.

Despite these restrictions the nationalist press emerged as an effective tool not only to

criticize the failures of the colonial administration but also to propagate the nationalist

sentiments and draw out in masses during mass movements.

In the twentieth century, radio emerged as another prominent tool of nationalist

propaganda. It was used by the Indian masses to reach the masses directly. However, the

British also regulated and restricted the access to the airwaves.

 During the Quit India Movement, an absolute radio blackout was imposed. However, in

some pockets, revolutionaries such as Usha Mehta succeeded in operating a secret radio

service by bypassing the colonial surveillance before being ultimately captured.

Practice question

Q. Highlight the transformation of the colonial administrative policy over the

industrial and financial phase. (15 marks)

Answer Pointers:

As the situation and practical considerations for British colonial enterprise changed, the

administrative policy was logical to change from industrial to financial phase. While

Cambridge school looks at it from the theory of "weak imperialism", B.R. Tomlinson finds

the cause in fiscal crisis of the British Indian Empire. However, the growing strength of

Indian nationalism cannot be underestimated.

Industrial phase Financial phase

 The administration was

controlled by the British East

India Company through the

Governor General of India.

 Council of Director of East India

Company was responsible to

the British government through

the Board of Control.

 The centralization has reached

its peak through Act of 1833

and the Governor General of

Bengal became the Governor

General of India.

 Earlier there was no

participation of Indians in

administration.

 During Industrial phase, British

embarked on various military

adventures in which Indian

sepoys were the main force.

 An arrogant British civil service

was more or less exclusive to

Indians.

 Till 1857, British Police acted as

military police as the aim was

only to check rebellion and

overawe the natives.

 Famine was a recurring

phenomenon of colonial rule

and in the first hundred years

more than 100 famines took

place. There was utter inaction

of administration.

 With regards to press, British

were always cautious of its

impact. Newspapers such as

Bengal Gazette were banned.

 After the Great revolt of 1857, crown realized the

limitations of Company rule and hence began its

direct rule in India.

 Offices of Viceroy and Governor Generals were

merged (Act of 1858) and the use of title Viceroy

began who was the direct representative of the

crown in India. The post of Secretary of state for

India was constituted who was assisted by 15

members.

 The process of legislative devolution began by the

Act of 1861 and reached its peak in through Act of

1935 which provided provincial autonomy.

However it was a ploy to shift the responsibility of

administration and consequently blame of

maladministration to provincial administration.

 In this phase the participation of Indians began

gradually (1861) but it was always attempted to be

extended only to loyalists which the government

was seeking for support against rising nationalist

sentiments.

 Post 1857, government became cautious and the

ratio of Indian soldiers to European soldiers was

reduced significantly.

 By now British realized the need to include Indians

to check the growing discontentment. However it

was only in the second quarter of the 20 th century

that Indians started entering civil services in

significant numbers. However, continuous hurdles

were imposed to facilitate entry of only loyalists.

 Police reforms were carried out during this phase

(1861) to establish a hierarchy of civilian police.

 In this phase, although some commissions were

established yet its nature was post mortem. No

proactive policy was devised ultimately leading to

the grave Great Bengal Famine of 1943.

 Due to growing nationalism, Press policy evolved

to a large extent during this phase. Strict

interventions through acts such as Vernacular

press act were aimed at controlling nationalist

fervor.

Any change in British administrative policy was aimed only at maximizing their benefit in

changed circumstances. However, nationalist sentiments could not be caged forever and

gradually the nationalist movement started taking shape ultimately leading to the rise of a

strong nation.

Economic Policy

The British mechanism of exploitation is most visible in its economic policy. During this

period, it can be studied under three headings:

 Drain of Wealth in the form of home charges;

 Influx of British Capital in India;

 Discouraging industrialization in India.

Let us look at them one by one-

1. Drain of wealth in the form of home charges- As we have noticed, the nature of drain

of wealth had been changing with time.

 In the mercantile phase, Indian handicraft products, after being purchased through

Indian revenues, were exported to Britain.

 In the Industrial phase, raw materials and agricultural products were exported from

India to Britain.

 In the financial phase, the mode of drain was in the form of home charges i.e. the

amount that the Indian government was liable to pay to the British government and

private British capitalists.

 It consisted of many items such as the

• Guaranteed profit of railways,
• Interest on government loans,
• The amount which was spent in Britain for military purchase for the British Indian

army,

• Pension to retired British officers,
• A portion of the salaries and dividends of British officers and investors, remitted to

Britain, etc.

 In 1901-02, the amount of home charges was estimated at 173 million pounds; of which

64 million pounds was only the guaranteed interest on the railways .There was definite

mechanism for the repayment of home charges.

• Secretary of State used to issue Council Bills in London that was bought by British

traders who were the future buyers of Indian products.

• They used to pay in pounds to the Secretary of state.
• Then that Council bill was used to draw Rupees from the Indian Revenue account

and purchase Indian merchandise.

• In this way, payment of home charges was done by Indian revenue account.
• On the other hand, through this council bill, British officers and British private

traders working in India would send their dividends to London. This can be

understood through following diagram:-

Council Pounds Council bill Rupees

Bill

Council Rupees

Bill

Pounds Rupees

Rupees

There is a debate among scholars regarding the impact of home charges:-

 Nationalist scholars like Dadabhai Nauroji and RC Dutt tried to prove that the total

amount which was transferred from India to Britain (home charges) belonged to the

category of drain of wealth. RC Dutt even calculated that in 1901-02 roughly 174 million

pounds were transferred from India to Britain as home charges.

 According to them, the home charges contributed to the drain of wealth due to the

following reasons:

• Major bulk of the home charges was constituted of the unproductive revenue

expenditure such as salaries, pensions, military expenditure and interest servicing.

• The amount which was brought to India as a capital was lesser than the amount

which was taken by the British from India to Britain as profit and remittances.

• Instead of focusing on irrigation projects, agriculture credit, British capital was

primarily channelized towards railways construction.

British traders, investors,

officers

Secretary of State Indian Revenue

Account

EXIM Bank Indian branch of

EXIM Bank

London branch

of EXIM Bank

Indian Economy

• The nationalist scholars also argued that by draining India`s surplus production, the

British deprived India of capital creation that was necessary to facilitate Indian

industrialization.

• In other words, home charges played an important role in deindustrialization and

underdevelopment of India.

• Had the civil service been Indianised, there would have been no need to send the

pension amount to Britain

 On the other hand this Indian view was vehemently challenged by colonial scholars. Old

Cambridge scholars such as Morris D. Morris have argued that the amount that was sent

from India to Britain as home charges should not be characterized as drain of wealth

because:-

• A major portion of this amount was invested back to India to facilitate investment

into India.

• Additionally the total amount of home charges was not that much. New Cambridge

scholars have estimated that it accounted to roughly 2% of the total Indian Revenue

Account.

• Above all, they have emphasized that this amount was essential for the development

of India through British capital investment.

 Conclusion-

• After closer observation we can say that the total amount of home charges should

not be placed under drain of wealth and part of it was invested back in India.

• However it is undeniable that it facilitated kind of capital investment that was

predatory and exploitative resulting in poverty and underdevelopment.

• Additionally home charges prevented native capital formation which may have

resulted in the growth of Indian industries.

• At the same time, it must be kept in mind that in the late 19 th century, India was yet

to experience large scale social transformation which facilitates industrialization. The

Indian society was dominated by the feudal elements who were more interested in

the private consumption rather than the investment. Thus it is uncertain that the

native capital formation could have resulted in Indian industrialization.

• But there is no denying that amount was huge and if it was not transferred then

Indian economic condition would not have deteriorated that badly.

Practice Question

Q What do you understand by the term home charges. Discuss its impact on

the Indian economy?

Home charges were the amount that the Indian government was liable to pay to the British

government and private British capitalists. It was an artificial liability created by the British

Indian government on Indian coffers which became the mode of economic exploitation

during its financial phase (1858-1947).

Home charges consisted of many items such as the-

 Guaranteed profit of railways

 Interest on government loans

 The amount which was spent in Britain for military purchase for the British Indian Army

 Pension to the retired British officers

 A portion of the salaries and dividends of British officers and investors remitted to

Britain etc.

The Secretary of State for India in London used to issue Council bills that were bought by the

British traders to buy Indian goods. While they used to pay to the Secretary for state in

pounds, they received Rupees from the Indian Revenue Account in return for Council bills.

 Thus Rupee as a currency travelled to British through Indian revenue account as well as

through other modes of Indian economy leading to the Phenomenon of Drain of

Wealth.

Impact of home charges on the Indian economy:-

Regarding the impact of home charges there are two contrary views of scholars-

 Nationalist scholars like Dadabhai Nauroji and RC Dutt argued in favour of the dire

consequences of home charges:

• Major bulk of the home charges was constituted of the unproductive revenue

expenditure such as salaries, pensions, military expenditure and interest servicing

which ultimately are of no benefit to India.

• Although some amount was reinvested into India but it was far less than what was

drained out.

• Instead of focusing on developing infrastructure such as irrigation projects which

was the immediate necessity, it was primarily channelized towards railway

construction which itself was a mechanism of exploitation at that time.

• Fourthly it deprived India of using surplus wealth to be used in its own

industrialization. This ultimately led to deindustrialization and underdevelopment of

India.

 On the other hand, British scholars such as Morris D. Morris have refuted this

accusation on following grounds-

• The amount that was sent from India to Britain was reinvested into India itself.
• As per New Cambridge School, home charges accounted only to roughly 2% of the

total Indian Revenue Account.

• They also argue that this amount was essential for the development of India.

Although part of this wealth was reinvested into but it cannot be denied that such

unproductive utilization of surplus wealth definitely led to a missed opportunity of early

industrialization for India whereas supported British exploitative colonialism which gave

birth to the national movement under Moderates who highlighted the impact of Drain of

Wealth.

1. Influx of British Capital in India

By the second half of the 19 th century, British industrialization had started reaching stage of

capital saturation. Due to rising wages, marginal productivity of investment in the British

industry was declining. With the surplus wealth accumulated due to Industrial revolution,

the next question was that of its prudent investment. In this scenario, the colonies emerged

as 'attractive destinations' for British capital because of the following factors-

 Absence of any native or foreign competition;

 Presence of a large population that could be put to work;

 The availability of cheap and abundant labor;

 Complete Political control which could ensure high returns and protect the British

investment from the domestic disturbances.

 The beneficial effect that the British investment in railways, mining and plantation would

have for British industries.

Therefore from 1858 onwards, the British government of India began encouraging the

investment of British capital towards the development of connectivity infrastructure,

plantations and mines in India. In fact, the British government of India began

underwriting and assuming the risk of British Private investment into India. Example,

British investors were assured of a minimum 5% return on any investment in the Indian

railways that were constructed by the Government of India through British contractors

by issuing railway bonds to the British public.

Railway Bonds

Funds

5% return on investment

Government

Of India

British

Public

Indian

Taxpayers`

money

British

contractors

Corruption and wastage

 Over the late 19 th century, roughly half the British capital invested in India went towards

the development of the railways.

Impact of British Capital

Positive:-

 The Railways, ports, canals etc. were vital in integrating India internally and with the

Global economy.

 Further, railways, plantations and mines created by British were the roots of future

Indian industrialization.

 British Capital investment played a fundamental role in transforming India from a purely

agrarian economy to a partially industrialized economy.

Negative: - Despite the above mentioned steps, British capital could not be credited for

transforming Indian economy. These benefits were simply the unintended consequences of

colonial exploitation. Actual consequences of the British economic policies were following:-

 Unbalanced regional growth- The real aim of British infrastructural policy was to connect

Indian hinterlands to coasts in order to secure stable transport network for their goods.

In this endeavour those regions with less commercial value were ignored.

 Deindustrialization- Influx of cheap capital goods, decline of Indian ruling class, lopsided

impact of British capital, discriminatory trade and financial policies led to

deindustrialization.

 Neglect of Indian economic priorities- Neither the infrastructure, nor the benefits

accruing out of it were meant for welfare of India and Indians.

 Poverty and famines were prevalent.

 Underdevelopment of skilled and technical workforce- Indian workforce was generally

confined to unskilled tasks whereas skilled and expensive skills were outsourced to

Britishers.

1. Prevention of the development of Indian capital

Basic contradiction merged in the imperial economy during the financial phase-

 On the one hand, British capital investment in India had to be encouraged but at the

same time it was important to prevent the rise of Indian industries.

 Therefore the bulk of British capital investment was directed towards the construction

of connectivity infrastructure, mining and plantations.

 This would allow the British to secure sufficient mineral and agriculture raw material for

their industries while penetrating the Indian economy.

 Further during this phase, strict foreign trade regulations were imposed upon India to

isolate it from the global market.

 The development of native industry was strangled with the following mechanisms-

• One way free trade
• Introduction of foreign exchange and investment regulations to prevent the entry of

non-British capital to India while encouraging the entry of British capital.

• Discriminatory freight rates
• Exclusive British control over Indian shipping
• Non extension of credit to Indian entrepreneurs by British banks and Investment

houses.

• Further, native industries faced the following additional limitations:

a) Administrative apathy

b) Non availability of skilled labour

c) Shortage of technical and managerial experts

d) Shortage of raw material which was exported to Britain

e) Insufficient Power infrastructure

f) Lack of Capital goods

g) Social backwardness of Indian society

h) Lack of indigenous technical research

i) Lack of indigenous entrepreneurs (even the few which rose were dependent on

British)

 Despite this, some Indian industrialists established factories in India-

• Indian capital was invested in sectors where British capital was absent.
• Indian cotton industries appeared in the Bombay-Gujarat belt but the Jute industry

did not see significant Indian investment.

• Gradually by the early 20 th century, Indian industries began diversifying. A large

number of core, and heavy industries along with consumer goods industries

emerged.

• The general attitude of the British towards Indian industries remained hostile.
• Periods when British capital faced crisis bore golden opportunities for Indian

industries. For example when British capital was withdrawn during World wars and

the Great depression, Indian investment started increasing.

1. Indian Capital and Nationalism

 Initially Marxist scholars viewed Indian industrialists and British from the lens of class

collaborators. They considered capitalists as hostile to mass movements and an

exploitative class.

 However, even among Marxists, Bipan Chandra says that Indian capitalist class had

developed a long term contradiction with imperialism while retaining short term

dependence on and accommodation with it. Similarly, Aditya Mukherjee talks about a

multi-pronged capitalist strategy to overthrow imperialism but maintain capitalism.

Recent studies point out that at this time capitalist was not a matured class.

 Secondly, recent historiography also shows that there was a conflict between British and

capitalists. The British capital had traditionally been hostile towards Indian capital. They

hardly belong to the same class.

 Thirdly, Indian capitalists had always been supportive of national movement led by the

Congress. In fact a symbiotic relationship was shared by the two.

 Through the Congress, a bridge had emerged between the industrialists and the working

classes which resulted in greater class cooperation rather than conflict.

 But at the same time Indian capital definitely had a moderating effect on the movement.

They preferred constitutional and phased movement instead of a radical and phased

one.

 Probably their influence played an important role on Gandhian philosophy of

Trusteeship and Struggle-Truce-Struggle strategy.

 Therefore, Indian capitalist class worked as both the fuel and the brakes of the national

movement.

 In this scenario it would be difficult to dismiss them simply as an exploitative and

unpatriotic class.

Practice Question

Q Discuss the British Policy towards Indian industrialization. What role does

the class of Indian industrialists played towards nation building?

British Policy towards Indian industrialization was detrimental for India and facilitated

unidimensional drain of wealth towards Britain for satisfying the unending thirst of British

capitalist needs. This created a dilemma for Indian capitalist class which was scared of

growing left wing radicalism but equally frustrated by British discriminatory policies.

British Policy towards Indian industrialization:-

 Home charges: Indian surplus was channelized towards Britain through salaries,

pensions etc. of British Indian officers along with spending on military purchases which

was ultimately benefitting British colonial designs.

• The theory of free trade was used for one sided benefit of British economy.

 British capital investment: As the British industrialization started saturating, they

started investing in India but the mode of investment, fields of investment and aim of

investment were completely contradictory to the Indian needs.

• Thus investment was made in connectivity projects such as railways, in mining and

plantation.

• These were developed in such a manner so as to convert India into supplier of raw

materials and buyer of finished goods.

• Furthermore, assured return of 5% on Railways even if one leaves the project

midway opened the Pandora`s box for corruption and wastage.

 Prevention of development of Indian capital: Through Laissez-Faire policy Indian

economy was opened for British on one hand and on the other, strict trade regulations

were imposed upon India to isolate it from the global market.

• Discrimination against Indian industrialists and outsourcing skilled services to

Britishers disincentivised capital development in India.

Role played by class of Indian industrialists:

Marxist school has been of the opinion that Indian capitalist class and British were

complementary to each other and forged class collaboration. According to them, Indian

capitalists were hostile to mass movements.

However, even among Marxist scholars, Bipan Chandra has argued that India capitalist class

had developed a long term contradiction with imperialism while retaining short term

dependence on and accommodation with it. Similarly, Aditya Mukherjee talks about a multi-

pronged capitalist strategy to overthrow imperialism but maintain capitalism. Recent

studies point out that at this time capitalist was not a matured class.

More recent historiography has shed further light on this topic. They believe that there was

a conflict between British and capitalist class. The British capital had traditionally been

hostile towards Indian capital. Secondly, Indian capitalists had always been sympathetic

towards national movement under Congress.

However, capitalists were cautious of radical left wing but that was purely because of

economic reasons. They always supported conservative, phased and constitutional

movement against colonial government. This can also be seen through the cooperation

between Congress and capitalists since their participation in National Planning Committee in

Therefore, in a situation where British capitalist interests and policies lied in exploiting and

subjugating Indian capital, Indian business class too came under the Congress` umbrella and

displayed their patriotism in their own style.

Social Policy

The British approach towards Indian society during the Industrial phase had been

characterized by aggressive intervention in the form of Social reform legislation including

Female infanticide (1795), Ban on Sati (1829), human sacrifice (1846), Widow remarriage

Act (1856) etc.

Further Christian Missionaries who were working to spread Christianity since atleast late

18 th century got major boost after the Act of 1813 which allowed missionaries to preach and

propagate their religion. They used the education as a tool to spread Christianity and

westernize India.

This approach was primarily based on two objectives-

 Transform Indian taste thus creating demand for Indian goods

 To make British rule palatable to Indians by westernizing and Christianizing.

However it backfired as any social change cannot be brought from above. This social

resentment among orthodox sections of Indians gave way to channelization of anger against

the company rule during the Great revolt.

Understandably post- independence this policy was abandoned and conservative policy of

non-intervention was adopted in social matters.

However, it is not that no reforms were taken at all but in all cases the initiative of reform

was taken by Indian reformers rather than colonial administrators. This engagement is

clearly visible in cases such as The Age of consent bill, 1891 and Sharda Act, 1929.

Cultural Policy

The cultural policy during industrial phase was guided mainly by Utilitarianism and

Liberalism. Although there was a minor difference that Utilitarianism envisaged an

independent India in far future, Liberalism did not envisage so. But both ultimately were

'civilising missions' aimed at controlling India in order to 'civilise' Indians (white man`s

burden).

However, after the Great revolt, there was a drastic change in the colonial activities due to

the follow factors:-

 Indians had rejected the civilizing mission of the British;

 British industrial leadership was coming under threat from other powers.

 The desire to leverage India`s diversity against her in order to perpetuate British rule.

In response, the British abandoned their Utilitarian and Liberal principles in favour of a

much more conservative position.

 The abandoned their civilising missions and declared Indians inherently Barbaric and

unfit for civilization. Conversely, conservative thinkers such as James Fitzjames declared

the Europeans to be the 'master race' and thus justified the permanent subjugation of

Indians to the British.

 Additionally recent advances in science were co-opted in a corrupt manner to justify this

position. For example, Darwin`s theory of Evolution was used by Herbert Spencer to

propose the framework of Social Darwinism which tried to ply the maxim of the 'survival

of the fittest' to nation and the races.

The idea of racial superiority, the British began actively racially segregating the Indian

society.

 Racial discrimination which was earlier largely confined within the imperial apparatus

now emerged as a social phenomenon.

 The British consciously segregating whites and Anglo-Indians from the non-whites in

order to preserve the aura of racial superiority.

 Further, in response to rising industrial competition, the Utilitarian vision of a self-

governed India in the future was discarded. Instead, Indians were declared unfit for self-

rule. It was argued that the steady hand of the British was necessary to prevent India

from sliding back into darkness and backwardness.

 Further the British also began actively denying the presence of the so called 'Indian

civilization`. Instead they began highlighting the cultural diversity of India in order to

oppose India as a land of multiple cultural clusters.

Additionally, the British also realized that it was important for them to divide Indians

internally so as to prevent the emergence of wider alliance among them as it would have

been disastrous for the British rule. Thus the British devised their infamous 'divide and rule'

policy.

 It was designed to divide the Indian society along communal lines and criticize this

communal division resulting in permanent division of Indian society into hostile

segments.

 Initially it was used to divide Hindus and Muslims and later to divide different linguistic

caste and class and gender groups.

Therefore during the financial phase the British finally revealed their true face and

intentions towards India and Indians. Thus it is not surprising that Indian nationalism

emerged during this period.

Practice Questions

Q Trace the evolution of the colonial cultural policy with respect to India from

the mid-18 th

century onwards.

The colonial cultural policy with respect to India keeps evolving as per the changing

ideologies in Britain, socio-political circumstances of British Indian Empire and economic

needs of the company.

In the beginning, when British East India established its control over Bengal, the immediate

concern was that of establishing an administrative structure that would cater to the

economic needs of the company which was hard pressed for money owing to various wars.

It also needed stable trade for buying Indian finished goods to be old in Europe.

This gave rise to Orientalism in which ancient India was looked at with glory. Scholars such

as William Jones studies Indian history to restore to the Indians their own forgotten history.

 An attempt was made to establish connection between Sanskrit and Latin and Greek

(Indo-European language of families). It gave India a status equal to that of classical

West.

 Gauri Vishwanathan calls it Reverse acculturation- gaining knowledge of India to rule its

subject efficiently.

 During this time, Governor Generals like Warren Hastings used Indian laws,

administrative structure and mediators for administrative purposes.

Then, as British Empire started settling and gaining confidence, there could be seen the rise

of Anglicism in the policies of Governor Generals like Cornwallis.

 Whig Policies were dominating British political scene and it influenced the EIC`s

leadership.

 It led to greater Anglicisation of the administration. Oriental despotism was considered

as the reason for India`s backwardness and thus it was argued that British rule would

'emancipate' India and thus justified the 'Paternalism of the Raj'.

 This led to the limited government interference in public affairs.

Gradually with the industrialization of Britain, questions were started being raised on EIC`s

monopoly as the trade had been secured by then and everyone wanted to enjoy its fruit.

This paved the way for two new ideologies- Evangelicalism and Utilitarianism.

Evangelicalism started criticizing Indian barbarism and advocated the permanence of British

rule to 'civilize' India. Christian missionaries like Charles Grant prepared the ground which

led to the provision for preaching and propagation of Christianity through Act of 1813. Lex

Loci Act of 1850 allowed converted Christians to inherit their ancestral property, thus

opening the floodgates for religious conversion.

Likewise, Utilitarianism talked about reformative governance through law making in order

to 'civilise' Indians and promoted the idea of `white man`s burden'. Legislation was made a

tool for the emancipating India and its cultural heritage was discarded. Following policies

were enacted for the same-

 Ban on infanticide,1795

 Abolition of Sati Practice,1829

 Enactment of IPC in 1835

 Widow Remarriage Act,1856

However, the Great Revolt of 1857 significantly altered British approach of 'liberating India'

and converting Indians into 'Brown sahibs'. This gave rise to Authoritarianism. Policies of

Lord Lytton, Ripon, and reactionary nature of Curzon were all its part.

 Any reformative approach after that was simply confined to demand of Indians whereas

British started aligning with conservative sections.

 Arms Act, 1878; Ilbert Bill controversy, 1883; Partition of Bengal, 1905 etc. were few

such policies.

Thus British cultural policies were designed according to the emerging situations so as to

facilitate the perpetuation of British rule and Indian slavery.

Q Discuss the changes in the political policy of the British in India from the

Battle of Plassey up to independence. (200

words, 15 marks)

The British political policy throughout their rule was guided by their commercial interests. In

the context of political policy, Shekhar Bandhopadhyaya even argues that it was from

attempts to secure trade benefits through informal control that the necessity to secure

direct rule arose for the British.

Broadly, the changes in the political policy can be understood in three economic phases of

British rule:-

 Mercantile phase (1757-1813)

 Industrial phase (1813-57)

 Financial phase (1857-1947)

Mercantile Phase- While the British were contending with other European powers by

entangling Indian rulers since many decades, with the Battle of Plassey they entered the

Indian power circle and through Battle of Buxar had themselves become an Indian power.

However, throughout this phase, British consciously chose not to interfere in the internal

matters of the state. Thus they devised polices ranging from Dual rule in Bengal to

Subsidiary alliance through which they intended to secure foreign relations, trade and

communication affairs of Indian states.

During this phase, allying with Indian states through subsidiary alliance also helped British in

stabilizing their infant empire and check Russo-French ambitions of entering India via

Afghanistan (The Great Game).

Industrial Phase- This phase was marked by Imperial territorial expansion motivated by

self-confident neo-Victorianism. During this phase Company aspired for direct intervention

in states.

Only during Lord Dalhousie's tenure, the map of India had changed significantly. Direct

annexation, aggressive intervention and occupation through subtle means such as Doctrine

of Lapse led to establishment of British Paramountcy almost all over India.

However, this caused resentment among ruling class who provided leadership to the Great

Revolution of 1857. This forced British to change their approach.

Financial Phase- The lesson learnt from the great revolt led to the direct establishment of

crown rule over India. British Paramountcy altered its approach from direct or indirect

political control to unequal partnership.

A loyal ruling class was made the partner in order to check the growing nationalism and

further the interests of the British colonial enterprise. The policy of 'Divide and Rule'

became an integral part of Political policy to exploit various diversities of India.

Although some sort of political representation was started being given to Indians but it was

consciously kept confined to loyalist elite sections. Even under nationalist pressure since

20 th century, political concessions were given reluctantly, franchise was limited, principle of

separate electorate became cause of communal divide and Viceroy and Governors were

given significant veto powers to frustrate Indian political endeavours.

In this manner, Political policy kept changing in order to adjust for metropolitan needs and

peripheral situations but beneath it all was the selfish interest of an unethical political

system which was ultimately toppled by nationalist forces.

Rise of Nationalism

The origin of modern nationalism can be found in Europe during 16 th-18 th when it was going

through the phase of enlightenment. Benedict Anderson describes nationalism as 'an

imagined community' that shares some commonality.

Features of European Nationalism-

 Cultural homogeneity- European nationalism was based on linguistic homogeneity in

which people speaking same language developed a sense of oneness.

 Absolute monarchy emerged during this phase because of rise of enlightened despots

and weakening of feudalism leading to rise of Monarchical nationalism

 Treaty of Westphalia (1648) gave Europe the concept of territorial sovereignty, non-

interference in each other's internal affairs etc. which provided for fixed territories.

 Popular Nationalism- French Revolution transformed subjects into citizens. It gave

them popular sovereignty, natural rights, equality, limited government, and individual

liberty. These changes gradually spread throughout the world and paved way for

popular nationalism.

 After this, monarchical wars start taking the shape of National wars.

 When popular nationalism aligned with Industrial Capitalism, it also added economic

dimension to the conflict. This led to more and more demand for resources giving rise to

colonialism and even to two Imperial wars- World War one and World War two.

This way idea of nationalism imported through the process of colonization. In India, it

can be seen with the introduction of western education and rise of middle class in

second half of the nineteenth century.

Factors for the rise of Indian nationalism-

 Reaction to colonial rule

 Unintended consequence of British rule- education, press, rail and road, economic

integration, Political/administrative unity of India.

 Inspiration from Western Ideology by coming into contact with Western civilization.

 Inspiration from Indian civilizational past- CA Bayly has traced the roots of Indian

nationalism to its pre-colonial days. He describes it as Traditional Patriotism which was

a sentiment attached to land, language and cult that developed long before the process

of Westernization.

• Partha Chatterjee, while highlighting the local origins of nationalism countered the

view of Benedict Anderson which denies intellectual agency to the people of India in

shaping their own history.

• He argues that even before the political struggle for power began, the Indian society

was imagining its nation in a private cultural sphere.

 Role of Socio-Religious Reform movement which aroused the spirit of Indians and

provided them symbols of resistance and oneness. For example- 'India for Indians' by

Swami Dayanand Saraswati.

Debate on Indian Nationalism

Colonial Historiography- It has either tried to out rightly deny Indian nationalism on

account of lack of Cultural Homogeneity or has credited British for its rise.

 Benedict Anderson even goes to such an extent to say that nationalism in the

developing world of Asia and Africa followed one or the other model developed in the

West.

 Colonial scholars find its origin in following British policies-

• Political unity under a single umbrella
• Census which provided a sense of identity to common Indian
• Administrative unity- uniform laws, courts, offices, civil services etc.
• Western education and knowledge introduced modern ideas
• Print media was introduced by British which played a significant role in spreading

awareness among people.

Nationalist Historiography- Indian scholars argue that it is altogether a different brand of

Nationalism which is not dependent on cultural uniformity but it is a Spiritual concept that

transcends political boundaries.

Scholars have pointed out the historical connection of India nationalism-

 Rig Veda talks about 'Bharat Rashtra' in a sense of geographical entity ranging from

Himalayas to Indian Ocean.

 Jambudvipa is a geo-cultural entity which represents a whole region howsoever

politically divided it may be.

 Kautilya and Kalidasa`s literature too represents the cultural unity of whole Bharat in a

poetic manner.

 Bhakti Movement infused a cultural-spiritual flavour to such a diverse nation based on

same religious and cultural themes. It led to Cultural integration of India.

 Foreign sources too have always talked about the region east of Indus as India, Hind or

Hindustan.

Practice Question

Q Highlight the differences between European and Indian nationalism.

Compare historical evolution over time. (200 words 15

marks)

Nationalism is feeling of oneness among a community on some cultural lines. Modern

nationalism started emerging from around 16 th-18 th centuries in Europe when it was going

through major socio-economic political changes. With the spread of European colonialism,

colonies started evolving their own brand of nationalism partially because of contact with

Europe and partially as a response to it.

This difference in origin of nationalism has led to distinct forms of nationalism in Europe and

India:-

European nationalism Indian nationalism

European nationalism is based on cultural

homogeneity. Majorly it was based on same

linguistic identity. For example- English-

Britain, French-France.

It was a geo-linguistic entity.

European nationalism began as monarchical

nationalism during the period of absolute

monarchy and particularly after Treaty of

Westphalia.

Nationalism was an elite concept for a very

long time when finally French revolution

popularized it and took it to masses.

The ideological framework of European

nationalism is derived from modern

Indian nationalism was a different brand of

nationalism. It is based on cultural and

spiritual foundation.

It was a geo-cultural entity based on the

concept of 'unity in diversity'.

Indian nationalism`s origins can be found in

socio-religious reform movement of 19 th

century. Reformers carved an identity out of

latent cultural oneness of India.

In India also, nationalism originated as an

elite phenomenon but the aim of that

educated class was to take it to the masses

and thus it became a popular concept

without any revolution.

movements such as Enlightenment. The ideological framework of Indian

nationalism is derived from its ancient

philosophy. For example Vedic philosophy

for Arya Samaj, Vedanta for Swami

Vivekananda and Bhakti movement.

The difference in nationalism of Europe and India is more philosophical than conceptual.

However it creates a big difference as one becomes exclusive and the other goes on to

include every shade of society possible.