Janhavi Shah

Megha Chaudhary
Spriha Jaiswal
Project Submitted to: Dr. Ismail
2 March 2019

Industrialisation And De-

Industrialisation In British
India
And its impact on the Indian
Economy
Models of industrialisation and social change of various schools have been derived largely
from the historical context of Western Europe, especially Britain. Social theories increasingly
came to be constructed upon a specific understanding of historical development. These
theories or models, now entrenched in our historiographical studies and consciousness,
increasingly offer yardsticks against which industrial development elsewhere in the world is
measured. In spite of fundamental differences of intellectual traditions, conceptual
frameworks and political values, diverse models of economic development and
industrialisation have been built upon essentially similar assumptions which continue to be
pervasive in the analysis of economic development both in the West and the Third World.
Rajnarayan Chandavarkar offers some alternative perspectives on and draw attention to some
neglected questions in the history of Indian industrialisation in his essay - ‘Industrialisation in
India before 1947: Conventional Approaches and Alternative Perspectives’. In conventional
terms, India was substantially on the road to industrialisation from the mid-nineteenth
century onwards without perhaps ever having quite reached its destination. Furthermore, the
history of industrialisation in the West is taken primarily to mean the evolution of factory from
craft industry, generally presupposing the prior development of a market economy, the social
differentiation of the peasantry and changing legal and social structures. In India, all these
factors, says Chandavarkar, were working together at the same time; and if some showed signs
of acceleration in the late nineteenth century, their development usually had long historical
roots, pre-dating the imposition of colonial rule. In other words, no simple evolutionary

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schemata of social change and economic development can be readily applied to the Indian
evidence. The history of Indian Industrialisation is counterposed to the example of Western
Europe. Industrialisation in this conception was a process of technological diffusion,
inaugurated by the invention of the steam engine and spinning Jenny in Britain which spread
incompletely in various ways and at different times, over the rest of the world. Industrial
development in India can thus be seen as a part of the very broad movement which has its
origins in Western Europe. However the problem arises when we begin to answer the
question how ready, was India, to embark upon industrialisation? In one view, says
Chandavarkar, the necessary preconditions did not exist. Capital was scarce and immobile.
The quality of labour was poor, even if its quantity was abundant. Technology was simple,
static and backward. There was no ‘formal structure of public and private facilities that
minimises uncertainty’, no future markets, no ‘insurance devices’, no dependable flows of
statistical and other information. information'. Furthermore, 'the culture' was not
'preoccupied in any systematic way with the increase of man's control over his material
environment',while 'a scientific approach to technology was virtually non-existent'. Such
propositions have been sanctified by repetition but detailed scrutiny has more often
highlighted their weaknesses than their strengths. In contrast, others have argued that the
appropriate circumstances for industrial development did not exist because they were
systematically destroyed by colonial rule. In the course of this discussion, the method of
approach to a counter-factual question had necessarily taken on a counter-factual tone.
What the Indian society lacked in the 18th and 19th centuries- an exclusive array of basic
social, political and economic preconditions but also the development of an institutionalised
capacity to deal with dynamic problems- must have existed somewhere else in the inception
of industrialisation. In a classical account of the development of the British economy, Eric
Hobsbawm wrote: …industrial development was within the capacities of a multiplicity of
small entrepreneurs and skilled artisans. The factors which are now identified as the
‘preconditions’ of economic development have more often turned out to be the consequences
rather than the causes of growth.
In the existing literature, it is generally supposed to have been the consequence of India's
relationship with the West largely through the medium of trade and fortified subsequently by
formal colonialism. Technological diffusion occurred, occurred in this view through the 'great
presidency towns' or 'colonial port cities': Bombay and Calcutta, centres of an expanding
import and export trade, of finance and banking, and of course, of consumption. From the
I850s onwards, 'the first substantial manifestations of modern industrialism became
discernible. Once set in motion, the movement along the pat to industrialism was apparently
only forward. Although 'large-scale industry', presumably mass production and the factory
system, did not spread easily across the economy as a whole ‘the pace of its extension within
specific sectors was reasonably brisk. As soon as entrepreneurs recognised 'the commercial
possibilities of local factory production', and 'the opportunities must have seemed very
obvious’, they embarked upon industrialisation. Once begun, the process continued through
functional necessity. As their interests came to increasingly depend upon large-scale

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industries, they indulged into a process of technical and administrative reorganisation,
summed up as a ‘purgation’ which resulted in healthier and more efficient industries. however,
this liner view of industrialisation has led to an almost exclusive concern with a few major
industries and important centres among them. For Morris, the economy itself appears to have
been constituted by actual entrepreneurial choices. The decision of private businessmen
determined the allocation of resources in the economy as a whole; they also serve to explain
why the scope of industrial development was restricted. But the effect of this argument is
simply to reformulate the question about what determined the range of alternative profit-
making opportunities which in turn decided the rate at which businessmen invested. Yet
despite the central role assigned to the entrepreneur, there are few studies of individual firms
or of entrepreneurial behaviour. Existing interpretations of the course of industrial
development in India, based upon models of apparently successful industrialisation elsewhere,
have taken over pervasive assumptions about the nature o industrialisation: that it was a
technologically determined process beyond the realm of social choice; that it was a serial
process whose imperatives were similar in each case; that it was inevitably an inexorably
progressive; that, flowing from the West, it constituted the only dynamic force acting upon a
passive 'indigenous' economy. Th result has been the development of a Whig historiography
of industrialisation whose unflinching focus is the so-called lead sector of the economy, and
which faithfully chronicles the continuing discovery and application of increasingly efficient,
'rational' and modern methods of production. In this perspective, the role of supposedly
backward sectors in determining the structure of the economy as a whole is obscured
Moreover, in this view, industrialisation is ripped out of its historical context. The influence of
the agrarian economy, the role of the colonial state, the effects of international capitalism, or
the impact of labour is often neglected; at best their interplay in the process of economic
development broadly defined receives cursory attention (Ray’s synthesising history of
industrialisation combines an interesting treatment of the colonial state with an almost total
neglect of labour or indeed the wider economic context; Morris touches upon the role of
labour but finds its impact minimal). The investigation of the early colonial economy is
largely evacuated in favour of guiding themes such as the expansion British power and the
development of land revenue systems.The economic history of colonial India is thus
generally commenced on from the mid-nineteenth century onwards. It is at this point that
historians discern the first signs of modern industrialism, bringing in wake a period of
quickening social change. One turns to words like "anglicisation", "modernisation",
“secularisation” 'to describe the processes at work’ and trek along the path to discernible,
modern industrialism bringing in its wake a period of quick social change. Most often, the
focus of Indian economic history was bent more towards exploring modernisation, when and
how it came to India and why it failed to transform the Indian economy and finally why were
the so-called preconditions missing resulting in a counterfactual history. Since the possibly and
prospects for economic development are so closely associated with the growth of large-scale
industry, its not surprising says Chandavarkar, that the general problem of backwardness of
the Indian economy and slow rate of industrialisation seem to warrant the same explanation

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and even pose as identical. The diffusionist approach has contributed to the
identification industrialisation as the focal point not only for assessments of the
prospects for economic development in India but also for explanations its failure in the
colonial period. Similar 'causes' are held to account for both underdevelopment and the
limited extent of industrialisation. An inherent tautology comes into existence: if economic
backwardness, reflected by the absence of preconditions is held to explain the modest scale of
industrialisation, economic backwardness itself is explained in terms of the failure of
industrialisation. Writers on this subject have invited us to choose between colonial rule and
Indian social structure as the main cause of Economic backwardness, however, a better
historical analysis of the social and economic changes in India will require us to decline this
choice and explore more fully the interplay of the two.

INDUSTRIALISATION

Underdeveloped countries are greatly handicapped by shortage of capital for industry

and enterprise.Finance is the prime maker of growth. Anyway, capital for industry and
entrepreneurial zeal were severely and conspicuously scarce in India when the East India
Company (1600-1874) stepped into this country. It was very difficult to raise capital on
private initiative in the days of the Company rule and, thereafter, because of damped
forces of demand and supply capital remained shy.Naturally, under the circumstance,
the state is supposed to act as a godfather for promoting and financing industries. Since
India was under the British rule for almost 200 years (1757-1947), the British
Government, found it unprofitable and unnecessary to go for industrialization in India.
However, imperialist capital came in this country as a matter of colonial policy—the
policy of subordination of Indian to British capital. It was only after the First World War
(1914-1918), that state patronage for industrial development was visible as Britain’s
supremacy all over the globe came under serious threat.Against this backdrop, a “new”
pattern was evolved to overcome the obstacles of (i) shortage of entrepreneurship; (ii)
non-availability of, mainly, venture capital; and (iii) dearth of managerial skill and
knowhow.This new pattern of industrial organisation that evolved came to be known as
the Managing Agency System (MAS)—a peculiar business entity in the early years of the
nineteenth century. Before we embark upon this form of industrial organisation, we will
make a brief review of the industrial development during the British rule.
Early Efforts of Industrialisation:
Modern industry or the large-scale industry is a mid-19th century phenomenon. Before
the British conquest, India’s supremacy in the industrial field reached its high
watermark—India was called ‘the industrial workshop of the world’ during the 17th and
18th centuries. Demand for Indian cotton goods in England during this time was

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unprecedented. Indian cotton cloth was considered by Englishmen as the badge of ‘style
and fashion’ of the time.
Woollen and silk items were also in huge demand. All this development brought untold
miseries in England and other parts of Europe. Firstly, import of Indian goods destroyed
the prospect of woollen and silk industries. Secondly, unemployment and suffering
among the weavers mounted up. Thirdly, change in the composition of India’s trade led
to the export of treasure from England to India.
To counteract these unhappy developments, some measures were taken to pacify the
British nationals, but with little relief. Ultimately, the way out was found through
legislations. Acts were passed, first in 1700, then again in 1720, to prohibit or restrict
import trade of Indian cotton good, silks, calicos, etc., by total prohibition or by
imposing heavy duties. As these measures did not yield desired result, one British author
commented in 1728: “two things amongst us are ungovernable: our passions and our
fashions”.
What was the net effect of this state of industrial development? What was
‘industrialisation’ to India by the standards of time was ‘de-industrialisation’ to Britain.
India, however, had not been fortunate enough as soon as the ‘ugliest’ thing came on us
in 1757—the loss of freedom through British conquest of India.

Growth of Indian Industries till World War I:

India had never been an industrial country in the modern sense of the term. In this
sense, even England and other industrialised countries of today had not been so, until
recently. What strikes most about India was that even being predominantly an agrarian
country large varieties of industries existed in India and some of them competed quite
successfully with many other countries.
But her industrial supremacy started crumbling when the English cotton industry raised
its head rapidly by the mid-18th century.
Two important developments of this were:
(i) The beginning of the era of industrial revolution in England around 1750 and
(ii) The battle of Plassey in 1757 that established the Company (foreign) rule.
The three important reasons behind such industrial development were:
(i) Young in experienced entrepreneurs,
(ii) Absence of State aid towards industrialisation,
(iii) Steep uninhibited competition with developed foreign machine manufactures.
R. C. Majumder then adds: “The pattern of industrial development which had emerged
in the 19th century—confined to a limited sector and concentrated in a few unevenly
distributed areas—remained virtually unchanged till the beginning of World War I,
though within these narrow limits the years 1905-14 witnessed a relatively rapid
growth”.

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Industries in the Inter-War Period (1919-38):
No country under colonial dependence could undertake any industrial transformation, if
not all-round development. Up to the First World War, India experienced the classic
period of imperialism of free trade and the British Government’s unsympathetic, hostile
policy against industry.
In addition, shortage of capital, management experience and technical expertise, as well
as the absence of a growing indigenous market, and, above all, general poverty, caused
slow expansion of Indian industries. Even then, one can safely conclude that during
1850-1914, the foundations of modern industries were laid in India.
Meanwhile, the outbreak of the First World War exposed the weakness of Britain’s
strategic position in the East as India had been deprived to develop the most elementary
basis of modern industry. In order to impress upon the Indian people and the
(industrial) bourgeoisie, Britain granted some political and economic concessions,
particularly future industrialisation during the War and immediately after the War.
As the issue of tariff protection crept into the heads of Indians, the British Government
appointed the Industrial Commission in 1916 and assured that industrialisation efforts
would henceforth continue with utmost sincerity. Unfortunately, industrialisation
scheme as prepared by the Industrial Commission ultimately came to nothing.
However, during the war-period, industries like cotton and jute made much headway.
Steel industry also experienced substantial growth. Consumer goods industries like
chemicals, cement, fertilisers, mineral acids, etc., for which India depended on foreign
countries, also progressed during the War.

Industries during 1939-47:

The Second World War, however, opened a new phase in India’s industrial history. As
the character of the World War II was different from that of the First, the latter created a
far more urgent and intense demand for the rapid growth of India’s basic and key
industries. Against the backdrop of this favoured ambience of industrial development
and the near-cessation of imports due to war operations, Indian industries somehow
came to take pleasure in having a quasi- monopoly situation in the home market.
As a result, not only industrial output of large scale industries expanded significantly,
but also a more widening of the industrial diversification became possible during the
war-time years. During 1938-39 and 1945-46, the general index of output of all large
scale manufacturing activity (at 1938-39 prices) rose from 100 to 161.6 and that of
factory employment increased from 100 to 159.
Despite this headway, India’s manufacturing before independence displayed many
frailties. Firstly, India did not possess capital goods industries worth the name. This,
therefore, hampered her potentiality to reproduce its existing productive capacity.
Secondly, import dependence of the Indian manufacturing sector was enormous.

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Thirdly, possession of technical skill and institutes offering technical education were
virtually negligible. Industrial development is largely conditioned by the stock of ‘human
capital’—the stock of scientific and technical cadre. India was still a country denied to
grow by the apathetic foreign government.

However, the prospect for industrial development in India after independence must not
be undermined as she had already constructed enough possibilities for industrial
development.

DEINDUSTRIALISATION

Sanjay Sharma postulates that a colonised India witnessed a decline of traditional artisanal
industries which was not replaced by newer or more advanced forms of industrial production.
Thus India’s traditional industries declined in the face of the influx of British manufactured
goods that were sold under colonial conditions that benefited foreign manufactures.
Consequently Indian manufacturers were pushed into agriculture and other low-paying
occupations. This process is referred to as the ‘de-industrialization of India’. He states giving
examples, that even till the 18th century, neither the Europeans nor the European markets
were the most dominant. The intra-Asian networks continued to be important. Using their
dominant political, administrative and military position, the East India Company and its
servants in their private capacity acquired last quantities of textiles in Bengal at low prices
and reaped high profits from sale in the European markets. On the surface it appeared that
the exports and production in Bengal had gone up. But in reality the artisans were forced to
produce and deliver goods at prices that made it difficult for them to survive. They were able
to do it for some time since artisanal production was based on family labour where living
standards could be pushed below subsistence level up to a point. However the lowering of
their incomes ruled out the possibility of investing in technology and other resources to
improve production. He then goes on to mention the effects of Industrial Revolution in
England in the 18th and 19th centuries and how it dwindled the demand for Indian textile
both in England as well as at home in lieu of many factors giving an edge to the mass-
produced British goods and working against the small-scale home goods which payed
enormous dues in international markets as imposed by the British. Sharma describes a
‘double blow’ to the country yet again in 1813 when the Charter was implemented when
foreign goods flooded the Indian markets. All such circumstances, Sharma writes, led to a
reverse of industrialisation.
The earliest nationalist views were presented by historians such as R.C. Dutt, Dadabhai
Naoroji and R.P. Dutt, who relied on accounts of colonial traders and administrators to
conclude that deindustrialization of India set in the first half of the 19th century, as a result of
influx of cheap British machine made goods, and the conversion of India into a supplier of

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raw materials to British industries. This view was elaborated upon by later nationalists like
Bipan Chandra and Amiya Kumar Bagchi, who used employment data to prove their
hypothesis agreeing that deindustrialization occurred in the first half of the 19th century.
Imperialist scholars like Morris D. Morris, Daniel Thorner, M.J. Twomey, P.Parthsarthy and
Tirthankar Roy argued the contrary saying that, that deindustrialization occurred in the
second half of the 19th century if at all and secondly income statistics were the best indicator
of deindustrialization and not employment data used by Nationalists.
Morris argued that the 19th century in India witnessed unprecedented economic growth and
a rise in per capita income. He held that British rule brought political stability to the
tumultuous 18th century by setting up a liberal nation state, introducing higher public order,
standardised administration, transport links and eliminating tax and commerce barriers. This
along with a slow 0.4% population growth rate between 1872-1921 stimulated economic
growth in 19th century India. Morris says this growth was noted as (a) Firstly average
agricultural output per acre and per man probably increased. This was due to higher political
stability, new irrigational projects by the British, increase in total area under cultivation,
improvement in transport and public order and the growth of foreign and domestic markets
and a shift to cultivation of high value crops in many areas. (b)Secondly growth was seen in
the handicrafts sector especially- handloom sector. Morris argues contrary to the Nationalist
view that Manchester’s cheaper machine made textiles wiped out Indian textile manufacture,
by saying that British machine made yarn in fact seemed to have ‘strengthened the
competitive position of the indigenous handloom sector’. He also noted that rise in
population led to a rise in demand and consumption of cotton domestically. Thus Morris says
at worst British exports to India, “skimmed off the expanding demand” and Indian
handloom weavers were no poorer by end 19th century. With regard to the nationalist view
that shift to metal products led to decline in pottery and that railroads displaced traditional
carriers, Morris says that these new sectors generated income and employment to compensate
for decline in other occupations. (c) Thirdly Morris says late 19th century India witnessed the
growth of modern factories (especially jute and cotton mills). The cotton textile industry by
1900 was one of the largest in the world. Morris says this proves that British policy didn’t
deliberately inhibit Indian economic expansion. (d) Lastly he argued that 19th century saw a
rise in domestic and foreign commercial activity, due to greater urbanization in India, a
growing international market and a shift to new products like tea. Thus Morris concluded
that the 19thcentury, due to the introduction of “a stable modern polity” and “largely laissez
faire government policies” witnessed an increase in real economic output, far from
deindustrialization.

Nationalist historian Bipin Chandra provided a detailed critique of Morris’s arguments. He

began by critiquing the title of Morris’s work, by saying the he only reiterated the imperialist
view and didn’t ‘reinterpret’ it. Secondly, Morris doesn’t grasp the nationalist argument,

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which focused on whether British rule facilitated industrialization of India and not on
whether it destroyed the traditional sector as Morris asserts. He says Indian Nationalists were
in favour of positive economic changes brought about by the British. Thirdly with Morris’s
portrayal of the 19th century as one of growth- due to favourable factors like, stable polity,
surplus land, rising per capita income etc. Chandra asks why didn’t India industrialize? While
many other countries without many of these factors, such as Japan, Russia, Italy, France did
industrialise.
Then Chandra then critiques the two reasons cited of economic growth and areas of growth
highlighted by Morris. Firstly he says high or low population growth can affect an economy
favourably or even unfavourably. He also shows population growth was not as low as 0.4% as
Morris claims but 1% according to G. Blyn. Secondly he critiques Morris’s point on political
stability, as he says law and administrative order doesn’t automatically end in economic
growth but can be used for exploitation by the state. He also says taxation and commercial
regularisation didn’t help the economy; in fact it caused agrarian hardship and internal
customs duties hampered internal trade and industry. Finally rail development by British in
India, was used to exploit India too by flooding Indian markets with British goods. Thirdly
regarding Morris’s point on increase in agrarian output, Chandra says, there is no evidence
of introduction of new agricultural technology in 19th century and commercial crops, only
occupied 16.5% of agrarian land in 1891, the benefits of which accrued to moneylenders,
landlords European plantation owners who used it as an instrument of drain, forcing peasants
to produce such crops.
Fourthly regarding growth of handicraft and increase in competitive position of Indian
handlooms, Chandra shows that export of cotton goods from India fell much faster than
import of cotton yarn, thus increasing the price of such yarn, also import of foreign cloth
increased 12.5 times between 1894-1889 while that of yarn only 4 times, thus showing a
reduction in production of Indian cotton cloth. Only in few areas did Indian cloth maintain
its position due to inaccessible markets but overall the position of Indian weavers
deteriorated. Thus he says many artisans left to bid for land, work as share croppers or
agrarian labour, while those who stuck to their craft died in periods of famine. He also cites
evidence for decline in number of textile centres like Murshidabad and decline in crafts in
Delhi. He points to the increasing subdivision of landholdings, fall in wages and migration of
artisans, none of which support Morris’s view of employment in industry increasing, increase
in land under cultivation and greater monetisation. Finally Chandra’s most important critique
of Morris is that he didn’t produce a shred of qualitative or quantitative evidence in support
of his theory, while eagerly criticising nationalists who provide such detailed data. Thus
Chandra concludes that the Indian economy of the 19th century witnessed ‘aborted
modernisation’ typical of a modern colonial economy.

A.K. Bagchi a Marxist scholar presented evidence in support of the nationalist view. He
argued that three factors were are essential for capitalist industrialization-(i) increase in

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national income generated by secondary sector,(ii) increase in population engaged in
secondary sector and (iii) Increase in degree of industrial mechanization . Bagchi argued that
19th century India, witnessed a reversal of the first two factors and thus deindustrialization.
He supports this argument for decline in proportion of the population dependent on
secondary industry by his case study of Gangetic Bihar, by comparing employment data in
the start and end of the 19th century-comparing Francis Buchanan Hamilton’s Bengal Survey
of 1809-13 and the 1901 Census. Bagchi calculated the total population dependent on
secondary industry and concluded that in 1809-13 18.6% of the population of Gangetic
Bihar was depended on secondary industry while in 1901 only 8.5% remained dependent on
it i.e. a drop of over 50%. He says this decline was most in the largest sector-the textile sector
– as in 1809-13, 62.3% of industrial population depended on cotton spinning and weaving in
Gangetic Bihar but in 1901 only 15.1% were. The principle reason for such a decline he said
was import of cheap British textiles into Gangetic Bihar- he cites Hunter who says import of
English cotton cloth increased till 1914 when India imported 3014 million yards, and these
goods spread due to new rail networks which resulted in a fall in internal demand for Indian
cotton textiles.
Bagchi also cites qualitative data like Statistical Accounts of Bengal District (1870s) and
District Gazetteers, which recorded a shift to manufacturing coarse cloth and decline in
condition of weavers forcing them into agriculture or to migrate to industries along the Hugli.
Bagchi here refutes the Imperialist point that displaced artisans/weavers as in European
economies were absorbed into new sectors like railways/commercial agriculture. He says in
Bihar, there was only one rail workshop at Jamalpur, which was inadequate for absorbing the
huge displacement. In other parts of India in 1900, modern industry, mines and plantations
together employed only one million people, barely being able to absorb this displacement.
Thus he says most displaced artisans became agrarian labour. Bagchi also says Gazetteers
noted a complete extinction of other industries like handmade paper and bidri ware (in
Purnea) by the 20th century. Finally he also argues that other areas witnessed similar decline-
e.g. Bengal according to him witnessed a fall in employment in traditional industry was 16
time that of Gangetic Bihar.
Marika Vicziany provided a detailed critique of the quantitative data cited by Bagchi. She
firstly critiqued Bagchi’s uncritical use of Buchanan’s Records as she points out many flaws in
Buchanan’s method of Data collection- (a) she says we don’t know if the statistics were
collected in a tabulated form or tabulation was done later. Buchanan’s method of estimates of
total population relied on calculating number of people involved in agriculture and by
eliciting the opinions of “most intelligent men” in each district. Vicziany says the opinions of
these “intelligent men” were not dependable as Buchanan himself admits to local zamindars
being reluctant to volunteer information and misguiding him for personal reasons. Also
Buchanan’s survey route of the seven districts of Bihar was not pre planned leading to pockets
being left out and the data collected was largely qualitative on- geography, people, natural
production, arts etc. Finally Bagchi doesn’t even use original statistics from Buchanan’s

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manuscripts but condensed statistics published by M. Martin in 1838, leading to skewed data.
Thus his population estimates are dubious. Secondly Vicziany critiqued two assumptions
made by Bagchi regarding cotton spinner-(a) that the average spinner supported one person
beside himself or (b) every spinner supported himself/herself at least. Vicziany shows this was
but the case in many places- e.g. In Shahabad the annual subsistence requirement of a person
was 12 rupees a year, but a spinner only made 1.5 rupees a year. Similarly from Bhagalpur
and Patna Gaya she cites such evidence. Thus Bagchi doesn’t ever assume that the spinner/
weaver couldn’t support himself and probably had another occupation. Thirdly Vicziany
critiques Bagchi’ inclusion a number of artisanal groups in the “industrial sector”- as she says
D.Thorner pointed out that how Bihar could have an industrial sector as production was still
carried out by the household economy not individually and differentiated? Also she says salt
makers were not artisans in S h a h a b a d , but agrarian labour for large part of the year.
Fourthly she critiques Bagchi’s comparison of two very different sources-Buchanan’s Survey
and the 1901 Census, because the method of data collection in both was very different and
Bagchi didn’t reconcile these differences before his analysis. Finally she also says the Bagchi
makes too much of the decline in the Bidri ware and paper sectors, as she says very few
artisans worked in these sectors-e.g. 1 bidri worker, 64 paper makers, 22lead makers etc, as
compared to other sectors with many more workers -like 2900 potters, 2293 goldsmiths, 5132
oil makers etc.
Bagchi was critiqued by imperialist historian J. Krishnamurti, who argued that Gangetic
Bihar was an exceptional case as the railway extensively penetrated this areas causing de-
industrialization due to faster spread of British textiles. However he says deindustrialization in
the larger sense is not witnessed across the board in 19th century as railways penetrated
limited parts of the subcontinent. He also felt the shift of people out of industries was due to
changes in industry itself -such as shift from labour intensive to capitalist industrial methods
of production which required lesser labour. Bagchi replied to Krishnamurti’s view by citing
examples of railway penetration into interior districts of Bellary (Karnataka), Cuddapah,
Kurnool and Anantapur (Andhra Pradesh) as well as the city of Hyderabad, which caused
deindustrialization in these areas.
Tirthankar Roy too argued in favour of the imperialist position. He said that one cannot deny
that de industrialization occurred in some areas. Yet in terms of income loss, which is a more
important parameter of deindustrialization rather than employment loss as nationalists assert,
one notes a very small decrease in real income. He says even though 4-5 million jobs were lost
by artisans over 60-70 years, this was accounted for loss of 30% of jobs in the industrial
sector, yet in terms of income loss it was only 1-2% of industrial income. This was because
artisans that lost jobs found employment in other sectors like agriculture due to increasing
commercialization. Thus he argues it is incorrect to present a case to total deindustrialization
across the 19th century.

REVISIONIST HISTORIANS

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After Bagchi’s study of Gangetic Bihar a number of revisionist historians’ post 1983
conducted regional studies on deindustrialization. Most argued there was decrease in hand
spinning and weaving industries but this was largely in the second half of the 19th century
and was mild and thus it is hard to argue for large scale deindustrialization, but probably for a
limited decline.
M.J. Twomey and P. Parthasarthy, countered the nationalist view that a decline in export of
Indian textiles in the 19th century adversely affected the Indian textile industry. They argued
that even if volume of such exports dwindled it didn’t have an adverse effect as Twomey says,
statistics show that in end 18th century cloth exports were 50 million yards while total
production of cloth was 2 billion yards, thus export earning was a minor part of the textile
industry. Similarly P. Parthsarthy said in late 18th century in South India, 1,800 tons of cloth
exported while 50,000 tons were produced, exports thus being a minor part of the Indian
handloom sector. They also argued that Lancashire exports into India only took place in the
second half of the 19th century.

Konrad Specker in his case study on the Madras handloom industry in the 19th century
argued that while number of looms in the areas increased between 1820-70, yet there was a
contraction in demand for textiles due to short term crisis like famines. He says the Indian
reaction to British Lancashire textiles was qualitative and not quantitative and region specific.
Thus we see a shift to production of coarse varieties of cloth across Rajahmundry,
Vishakhapatnam, Coimbatore, Tanjore, Cuddapah and Nellore which resulted in elimination
of some areas of textile production such as Bellary where number of looms decreased. The
overproduction of coarse cloth also resulted in impoverishment of weavers in some areas. He
says despite the increase in number of looms and the increased production of coarse cloth,
one can’t say as Morris D Morris does that cheaper machine made yarn strengthened the
competitive position of the Indian weavers. He takes a middle path by concluding that textile
sector remained important field of employment but under-employment rose significantly
within it, arguing neither in favour of complete de-industrialization or growth.
Peter Harnetty in his case study on Handloom Weavers in the Central Provinces argued that
the early 19th century saw a flourishing handloom industry catering to a domestic and
international market. Yet he says post 1850 into the mid 20th century, one notes the decline
of the handloom industry firstly in terms of number of weavers employed and number of
looms. Secondly the surviving industry became confined to major urban centres like Nagpur,
Umrer, Pauni and Burhanpur. Thirdly the few high caste specialised weavers like the Koshtis
and Momins survived in the textile industry low caste coarse cloth produced had to find other
occupations. Fourthly weavers produced fewer varieties of cloth. Fifthly weavers lost a lot of
their individual status. Yet Harnetty says that the shift to machine spun British yarn was a
strategy of survival and the introduction of the fly shuttle in the early 20th century helped
check the deindustrialization which crept into the industry, thus also taking a balanced view.

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Sumit Guha who conducted a study on the Handloom industry in Central India between
1825-1950 argued in a similar vain. He says Richard Jenkins pointed to a flourishing textile
industry in the region till 1850. However from 1860s decline set in as due to rise in prices of
raw cotton in Central India.
This was largely due to a breach between the northern and southern states and due to
increase in export if local raw cotton-e.g. 26million lbs were exported out of 35 million
produced in 1863-64, leaving local weavers with virtually no raw material. He argues that
expansion of rail links by 1865-reaching Nagpur, indigenous textile industry was hard hit as
cheaper British goods penetrated the market. Weavers were also reluctant to accept foreign
machine spun yarn, unlike in other areas. All this according to Guha led to a huge exodus of
weavers from towns, to take up agriculture, work in railways etc. Yet he says from 1870s on
weavers begun to accept mill yarn and by 1885-89 one notes a recovery. In conclusion he says
by the end 19th century hand spinning was hard hit, and spinners took up secondary
occupations, but his analysis shows the textile industry wasn’t completely destroyed as weaving
noted an expansion. We will go on to elaborate on each of these views in our presentation
while critically evaluating each of them, counter-arguing each of them while also
acknowledging the intangible aspects of this debate on Deindustrialisation.
Thus it can be inferred, from the above views, that there was definitely shrinkage in
employment in indigenous Indian industries especially the handloom industry, however as
Revisionists point out one can’t argue for complete de-industrialisation across the board in all
industries, in many places the textile industry survived with a shift to coarse cloth production
and artisans sleeked alternative employment. Also one must note that income statistics may
prove better indicators of de industrialisation than employment data which nationalists use.

COMMERCIALISATION

There existed extensive commerce in India before the British conquest based on the supply of
food grains and other agricultural products to the towns and also on exchange of goods
among the towns. But the colonial commercialisation that we refer to here during this period
is the increase in certain agricultural crops for the market so as:- (i) to enable the tribute to
Britain to be paid directly or indirectly; (ii) to pay for British textiles and other manufacturer
that were being imported on large scale. The triangular trade relation between India, China
and Britain, in which, China, in return for the imports from India, supplied Britain with a
major raw material, silk and major wage good, tea.
Since the motivation behind British intrusion and subsequent dominance of India was
commercial and economic, the British impact in the economic sphere had been the most
deleterious and devastating. British used the most sophisticated methods to exploit India’s vast
and rich economic potential. However, under East India Company, Indian agriculture
received the maximum care, only because the main source of state income and land revenue.
Indian industry suffered the maximum at the hands of the British intruder. The Whig

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government of the early 18th century imposed heavy duties on Indian textile imports in
Britain. And later on, allowed British machine made goods to be poured into India duty free
or at nominal duties. This one-way trade policy ruined Indian handicrafts. H.H. Wilson, a
British writer admits that Britain employed the arm of political injustice to keep down and
strangle a competitor like India. 

India was considered to be the most precious “jewel” in the imperial crown of British
monarch. And so to fulfil the imperial obligations, India was drained out of her wealth. The
drainage was caused due to interest on foreign debt incurred by EIC, military expenditure,
guaranteed interest on foreign investment in railways, irrigation, road transport and some
other infrastructural facilities purchased by the government. Dadabhai Naroji argues that
what was being drained out was “the potential surplus” that could generate more economic
development if it was invested in India.
The colonial investment to develop agricultural production was very less, except in
construction of irrigation canals. Though the irrational facilities and other technological
innovations, only benefitted the privileged peasants. This improvement also helped in the
production of cash crops in certain areas.
This trade led India to raise a dangerous drug, opium. The entire crop was raised in Bengal
Presidency placed under the monopoly of East India Company, and this helped the company
make huge profits out of it by paying low prices to opium growers and selling it to private
merchants at auctions at very high prices. The private merchants then took opium into China
through illicit means.
From 1820, Bengal opium came in competition with the opium grown in the Malwa region
because of its better quality. However did didn’t have monopoly over this variety of opium,
but then after 1831 Company succeeded in making Bombay the main port of opium exports
and levied heavy duty from there.
Next to opium, was cotton, always a commercial crop due to the large scale textile production
in India in pre colonial times. But because of its bulk transport was difficult, its use as raw
material was confined to areas near it cultivation. The woven fabrics or very fine varieties of
cotton became an article of export. Initially the cotton exports was done to china, but then as
British textile manufacturers invaded the Indian markets the affected the demand for raw
cotton. Annual Indian cotton exports to Britain which was now turning into the main
recipient of Indian cotton increased.
The third major item exported was indigo, a product of peasant agriculture. It required
considerable apparatus such as large masonry vats and boilers. Indigo was largely raised by
peasants, for the ‘planters’ themselves found it uneconomical to undertake its cultivation
except on a limited scale. The peasants were compelled to grow indigo.
Silk and tea also developed into important export industries. However after the Charter Act
of 1833 the company closed its silk establishment.
Commercialisation of agriculture favouring differentiation within the peasantry, capital
accumulation and construction of markets is considered a sign of progress, but the case of

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India is different. Here the initiative was from the peasant society and did not benefit them.
The system of producing cash crops especially indigo and all, let to rebellions due to the
anger amidst the peasants such as the Indigo Rebellion in 1859-60. They were “forced” to
cultivate cash crops because of high revenue demand. Jute cultivation was started in eastern
India as peasants failed to meet the subsistence necessities and hoped to earn more by
cultivating the “golden crop”.
The commercialisation of agriculture argued by Tirthankar Roy is that the capitalists
captured most of the increase in value-added. It did not benefit majority of peasantry. The
jute economy saw a downfall in the 1930s which was followed by a deadly famine in 1943.
Some historians argue that the growth of trade and integration of markets through the
development of infrastructure actually increased food security and contained the chances and
severity of famines in colonial India.
Railways are considered to be another contribution of British rule towards the development
of modern economic infrastructure. In 1853 Lord Dalhousie took the decision to construct
railways but gradually the need to integrate the Indian markets to open them to British
imports meaning integrating the port cities to internal markets and sources of raw material
came up. The main purpose of railways construction was to tie up Indian hinterland in the
interest of foreign trade, rather than economic development. The transfer of technology was
confined to certain places.
About the railways the nationalists often complained of constant drainage of wealth through
payment of guaranteed interests. Thus the railways construction did not encourage Indian
economic development as it did in Europe. The railways had encouraged the construction of
feeder roads and other strategic roads. This should be considered as unintended results of
British imperialism.
Hence we can see that commercialisation under British was extensively done but majorly for
their own economic motives. This had a profound impact on the economy of India during
this period and was accompanied by various outbursts amongst the population and
strengthening the idea of freedom against the foreign rule.

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