Tom Tomlinson
[Please note that this is a rough draft and not intended for quotation or citation
without permission of the author, Tom Tomlinson]

The Indian Agricultural Problem, 1900-1950
Land, Labour and Capital

Tom Tomlinson

University of Strathclyde
E-mail: b.r.tomlinson@strath.ac.uk
Peasant Symposium: May 1997


Inadequate agricultural production lay at the heart of India's development problems In the late nineteenth and early twentieth centuries. The rural sector, comprising agriculture, and ancillary activities such as animal husbandry, forestry and fishing, was the foundation of the colonial economy. It employed about three-quarters of the workforce and produced well over half of national income between the 1860s and the 1940s. However, there were also severe productivity constraints, linked to problems of labour utilization, as well as an endemic scarcity of capital and a lack of investment in irrigation and other capital inputs, creating in turn a shortage of productive land.

Although several regions experienced some growth im agricultural output during the last quarter of the nineteenth century, a steady rate of population increase from the 1920s onwards resulted in an emerging subsistence crisis by the middle of the twentieth century, caused by both poor availability of food and skewed entitlements. In addition, low wages and other returns to labour m the rural economy limited demand for basic wage goods such as food and textiles, which in turn weakened the launching pad for take-off to wide-reaching economic growth based on mass consumption in the domestic market. One recent general estimate suggests that while the proportion of the workforce employed in agriculture increased very slightly between 1911 and 1951, the percentage of national income derived from the agricultural sector fell by 9 per cent over the same period, suggesting an equivalent fan in the relative product per worker in agriculture. (1)

The classic work on Indian agricultural output and productivity in the colonial period remains that of George Blyn, first published in full in 1966. (2) Using the acreage and yield estimates collected by the colonial revenue administration, Blyn argued that there was a small expansion in per capita agricultural output during the 1890s (a decade of minimal population growth), but a clear decline thereafter, so that although overall yields per acre rose very slightly over the first half of the twentieth century, food-grain availability fell by about one per cent per year between 1911 and 1947. Static overall yield figures do not mean that output everywhere was stagnant, but rather that progressive forces were always cancelled out by regressive ones, and that periods of dynamism were interspersed with periods of enervation. Market demand did stimulate significant increases in crop production and productivity, so that commercial crops with favourable market opportunities, such as cotton and sugar, achieved considerable yield increases, and had consistently higher average productivity per acre than did food-grains. However, even export crops with favourable overseas demand performed less well in the difficult international trading conditions of 1926-41 that they had before 1914.

Blyn's account of Indian agriculture is pessimistic, showing that food-grain availability held up only at times of minimal population growth, and that cash-crop output was dependent on the unstable stimulus of international demand. His estimates have been subjected to minute scrutiny, and the fragilety of their empirical base expounded at length. Estimates of agricultural output based on direct measurements derived from rigorous and wide-ranging crop-cutting experiments were not widely available until the 1940s. It is undeniable that much of the raw data for crop output and yields before that was gathered very casually as part of the fiscal system, and the linkage between land tax and output estimates may have encouraged under-reporting, especially as the British bureaucracy progressively gave up day-to-day supervision of rural administration after the political reforms of 1919. However, despite these distortions, the available data all suggest that, m the aggregate, agricultural yields were largely static in colonial India, especially for the subsistence crops that provided the basic needs of the rural population. Thus, while foodgrain and non-foodgrain output may both have risen faster than population from 1860 to 1920, even optimists accept that foodgrain output lagged behind population growth between 1920 and 1947. (3)

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All this does not mean that the rural economy lacked pockets of dynamism. For the Punjab, one of the most prominent areas of agricultural advance during the first half of the twentieth century, recent recalculations have suggested that new investment, technology and enterprise led to considerable increases in the yields of wheat, cotton and sugarcane, mostly as the result of the expansion of the irrigated acreage, but also thanks to the introduction of new varieties of crop and changes in the cropping pattern. However, while yields of sugarcane, cotton and wheat increased, those of other food-grains declined, especially that of gram (a staple inferior' food-grain used by poorer consumers) which was hit by fungal disease and adverse weather conditions in the 1930s and 1940s. Overall, the annual growth rate of total food-grain output was no more than one per cent between 1907 and 1947, which was less than the growth in provincial population during the period. (4)

The Punjab was not the only area where some agricultural growth, underpinned by technological change and capital investment, occurred during the late nineteenth and early twentieth centuries. Parts of the western United Provinces experienced a Punjab-style canal-based output boom between 1880 and 1920, and new cash crops for export such as cotton and groundnuts brought considerable advance in dry regions of Maharashtra and Madras in the decade after 1900. In the same period expanding acreage in both Gujerat and parts of Bengal led to output growth, while the arrival of the wheat frontier' in the Narmada valley in central India after 1880 caused extensive changes in economic activity and social relations. However, these patches of growth were rarely sustained, nor did they usually transform the locality through a process of long-term social or economic change; rather they ended, in Christopher Baker's graphic description, with the usual range of rural predators - the rentier, the usurer, the carpet-bagger and the State - fastening on like leeches to any red-bloodied example of growth'. (5) The crucial issue for historians of Indian agricultural performance is not to explain the absence of growth, but to discover why such growth as did take place remained isolated, spasmodic and short-lived.

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All the available evidence suggests that the first half of the twentieth century saw little increase in the cultivated area or in the yields of subsistence crops over large areas of the Indian subcontinent. Both output and acreage for food-grains lagged well behind rates of population growth from early in the century, with food-grain acreage only expanding significantly during the war as a result of the Grow More Food' campaigns. Between 1900 and 1939, for example, population increased by 36 per cent, while the expansion of the gross cropped area by 13.7 per cent (from 214 million to 244 million acres) was almost entirely as a result of new irrigation. The area under irrigation expanded from 29.1 million acres (13.6 per cent of the total cultivated area) to 53.7 million acres (22 per cent) in the same period. (6) Rural savings and investment were also at a low ebb. Between 1914 and 1946 total net capital formation in agriculture had amounted to Rs 19.58 billion, less than a quarter of this (Rs 4.3 billion) invested in machinery and equipment. (7) The total sum amounted to about 1.7 per cent of agricultural income. Thus, while agriculture provided slightly more than one-half of the national income in the inter-war period, and employed more than two-thirds of the labour force, private capital formation was only about one-fifth of the national total. (8) In 1951 the total of net rural private investment was the equivalent of Rs 17 per rural household; the total stock of agricultural equipment (excluding livestock) used on Indian farms was worth Rs 5.44 billion (at 1960-1 prices) - Rs 3.86 billion of it in the form of carts, and only Rs 0.49 billion in irrigation equipment, almost all animal-powered. (9)

While such statistical evidence is not always as reliable as it appears to be, it does suggest that agricultural yields were not keeping up with the historically unprecedented rate of population growth after 1920. The population of British India, which stood at about 280 million in 1891, had reached over 380 million by 1941. The total population rose only slowly before the 1913, with absolute declines in some regions in most decades from 1891 to 1911, and virtually stagnated between 1911 and 1921 as a result of the plague and influenza epidemics during and after the First World War. From 1921 onwards there was a steady rate of growth, however, averaging over one per cent per year until 1951. This increase was well below the 2.1-2.25 per cent average annual population growth rates of the 1950s, 1960s and 1970s, but nonetheless it represented the first [Tomlinson - Land ++Page 3] sustained period of consistent expansion of population m the modern period. (10) As Table 2.4 indicates, these rates of population growth became roughly similar in all the main demographic zones of the country after 1921.

This population increase of the middle decades of the twentieth century did not signify any significant overall improvements in nutrition, or in public health or welfare systems, except perhaps m malarial areas. It was the result of a striking fall in death rates, which occurred because the main agents of mortality - famine and epidemic disease - were less prevalent than they had been in previous decades as a result of favourable climatic conditions, the development of natural immunities in the population, improvements in the emergency transportation of food-grains, and the diversification of employment prospects. Even so, the rate of population increase in India remained low in comparison to some South-East Asian countries; Java, for example, sustained an average annual population growth rate of more than one per cent throughout the nineteenth and early twentieth centuries. (11) While the population of India increased by 30 per cent between 1880 and 1930, that of Java doubled. Low food availability and the paucity of investment in public health measures such as insect eradication kept death rates in India relatively high throughout the colonial period.

The problems of agricultural production in the interwar years were having a marked effect on the availability of foodgrains by the 1940s. Estimates of food supply for the first half of the twentieth century, based on fairly optimistic assumptions, suggest that per capita daily availability of foodgrains was between 502 and 613 grams in 1921, between 474 and 557 grams in 1931, and between 390 and 446 grams in 1946. (12) In 1951 per capita foodgrain availability was 395 grams, rising to 480 grams in 1965.(13) Regional production figures suggest that the potential threat caused by fading food-grain production and rising rates of population increase was most marked in some parts of eastern India, but a fall in the aggregate supply of grain, coupled to the sharp rise in food prices in the late 1930s and throughout the 1940s, was likely to hit those on low incomes severely everywhere. By the early 1950s enforced hunger was certainly affecting some agricultural labourers and others in the lowest income categories. According to the data collected by the Rural Credit Survey, households living on Rs 100 a year or less in 1952 consumed only 11oz (312.5 grams) of foodgrains per day, equivalent to a daily diet of 1100 calories and below the lowest ration level set during the post-war food crisis. (14)

It is not possible to summarize the pattern of land control or changes in the size of operated land holdings for the last decades of colonial rule using contemporary data, although the distribution of land-ownership probably remained fairly static across size categories. (15)15 The first extensive attempts to collect such data by direct surveys were made in the early 1950s, as part of the Indian government's attempts to survey the problems of rural credit and agricultural labour, and the techniques used even then, especially in the All-India Rural Credit Survey (1955), have often been criticised as too narrow. The best figures based on widespread sampling are for 1954-5, published in the eighth round of the National Sample Survey in 1956. From these sources it is possible to put together a picture of the agricultural situation in the decade after independence, which can be taken as representative of the whole period after 1930. This suggests that the distribution of land was very uneven, and that the size of the average operated holding in most parts of the country was inadequate for subsistence. (16) The Indian Famine Commission (1946) calculated that 74 per cent of holdings in Madras and 50 per cent of those in Bengal and Bombay produced less than one ton of foodgrains, while half the farms in the United Provinces produced less than 1.5 tons of foodgrains. (17) One ton of foodgrains would supply a subsistence ration of 12oz per day for 9 people, or a starvation ration of 8oz per day for 12 people. The Government of India's Agricultural Labour Enquiry (1955) estimated that in 1951 17 per cent of land holdings were less than one acre in area, and 59 per cent were less than 5 acres, which was below the minimum required for a viable independent farm in most parts of the country. For 15 per cent of rural families with land the major activity was supplying labour to others, while about half of the agricultural labour force consisted of poor peasants with some land of their own, who might themselves employ labour at peak seasons. (18)

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According to the National Sample Survey data, 23 per cent of rural households owned no land at all in 1954-5, and 75 per cent owned less than five acres. The rental market gave most rural households some access to land, but even so distribution was very uneven. Overall, only 11 per cent of rural households did not cultivate any land at all, but the vast majority could still farm only petty amounts - 31 per cent of operational holdings were one acre or less, and 61 per cent five acres or less. The amount of land available for rent may have been somewhat limited by the land reform programmer, but even so about one quarter of the cultivated land was leased-in at the end of the 1950s, with farmers in north-western India leasing 37 per cent of the land they used on aggregate. Furthermore, the line of demarcation between share-croppers who were tenants at will and agricultural workers employed on a crop share basis was rather thin, especially in Central and North-Western India. (19)

Despite the small size of the units of production, the agricultural system in 1950 was heavily market-oriented. A large volume of agricultural produce was sold, and many cultivators depended on cash sales to maintain themselves. A detailed study of the marketed surplus for 1950-51 indicated that cultivators with small holdings marketed a disproportionately large share of their output, about one third on aggregate. As a result, more than one quarter of the total marketed surplus of Indian agricultural production came from cultivators with operated holdings of five acres or less, and a further 20 per cent from those with holdings of 5-10 acres. (20) Even for smallholders, cash markets were of crucial importance to service debts, pay rent and land revenue, and buy in necessities such as cloth, kerosene and salt. In addition there was an extensive non-cash market operating in food-grains used for barter or as payments for labour. Various estimates from the 1950s suggest that around 40 per cent of the total man-days worked by adult casual agricultural labour was paid for in grain, while up to 20 per cent of rice production was used to pay wages in kind.(21)

Markets were as important for rural consumers as for rural producers. Data collected in the mid 1950s demonstrated that the consumption of grain among the rural poor rose as market prices fell and declined as market prices increased - clear evidence that many poor consumers were dependent on an integrated, cash-based market (often in superior' food-grains such as rice and wheat) for their nutritional requirements. Access to this market depended on cash income, and hence on the employment possibilities for rural labour. The poorest rural consumers obtained a higher than average proportion of their consumption of fruits, vegetables and fuel in kind, but a lower than average proportion of their consumption of cereals, for which consumption in kind rose with income.(22) The poorest members of rural society - those with the most inadequate control over land - were the most dependent on cash earnings and cash markets for food-grains; this group included some smallholders as well as those who relied entirely on agricultural wages for their income. As the Government of India's Committee on Distribution of Income and Levels of Living (Mahanalobis Committee) reported in 1964, reviewing the evidence of income inequality in the 1950s,

to a large extent the phenomenon of economic concentration in the Indian economy is the result ... of unemployment and under-employment and consequent low productivity per unit of labour, that is to say, of inadequate economic development rather than merely structural inequalities of a distributional character....(23)

The problems of rural production and consumption were bound up with the functioning of coherent labour and capital markets, markets that depended on institutions which were focused at a very local level. Where productivity increased it was often the result of new inputs of agricultural capital - a precise, but variable, mixture of manure, draft animals and water delivered in the right mix and order. In particular, manure was useless without water, and even draft animals were comparatively ineffective without water. So far as consumption was concerned, given man-land ratios, debt-bondage and the highly imperfect nature of market arrangements, most agricultural producers and their families had to secure at least part of their food-supplies by selling their labour, rather than simply by growing crops for their own consumption. By the early 1950s between two- thirds and four-fifths of rural households farmed too little land to achieve self-sufficiency, even [Tomlinson - Land ++Page 5] assuming they were able to consume all that they produced. As a result the market for rural labour became the key determinant to the welfare and income of the vast mass of the agrarian population.

Tom Tomlinson Rural labour came from two chief sources of supply. One was the traditional landless groups, or menial' (often untouchable or tribal) castes, who were usually bound to dominant cultivators by custom, sometimes on an hereditary basis and often reinforced by debt-bondage. This group of farm servants' were clearly defined in many regions before the British conquest, and they probably remained the only major rural group without any access to land at all throughout the colonial period. The terms on which such labour was employed varied over time, as different systems of agricultural production evolved. Periods of growth provided employment opportunities that gave traditional labourers fresh bargaining power, although as cultivation became more profitable and prices rose landlords also had an interest in substituting casual cash employment for fixed obligations to provide grain.

The second source of rural labour came from the large numbers of deficit cultivators, families that did not have enough land to provide employment or subsistence for all their members. This was supplied both directly, through casual employment at harvest and other times of high seasonal demand, and also indirectly, through debt-bondage, share-cropping arrangements and hypothecation. A 2.5 acre plot in a dry' region absorbed perhaps 125 labour days a year, most of which could be supplied by women and children, leaving male family members free to seek seasonal employment elsewhere. In one village typical of the arid regions of peninsular India that was studied by H.H. Mann in 1920, 82 per cent of total income came from labour, and only 7 per cent of households (with 19 per cent of the land) could reach a minimum subsistence level without working away from their own holdings.(24) Indebtedness and hypothecation produced a further supplementary source of rural labour, as small-holders struggled to retain their nominal independence while working under the instruction of their creditors. Land symbolized sovereignty to the peasant, but the economic opportunities of many tenants and small-holders were almost indistinguishable from the landless. In Tamilnad a report on tenancy in 1947 noted:

In this province, the prevailing notion of rent among the land-owning classes is that the tenant is merely a wage-earner and is not entitled to any appreciable margin of profit over and above what an ordinary agricultural labourer will get for cultivating the land.

Under the waram system of crop-sharing tenancies in Tamilnad the cultivator might get as little as 20 per cent of the output, where the land was especially fertile and the owner supplied the capital for cultivation.(25) This system was widespread, and induced increased effort with diminishing rewards. As a recent study of peasant proletarians' in the Punjab has concluded:

The indebted peasant resisted the process of complete dispossession, striving continuously to produce more and consume less. The property which belonged to him was, in a way, sham property'. It had in effect been taken over by the rich peasant or the bania. But to the peasant' his hold over the land did not appear to be a sham. He considered it his property, the basis or the potential basis of his independence. (26)

Despite some moves towards more flexible hiring arrangements and cash wages over the late nineteenth and early twentieth centuries, the rural labour market was always strongly differentiated, especially for those workers who were paid in kind, either directly or through share- cropping or crop-hypothecation agreements. While the market for cash labour or cash credit did become more competitive at times, this was less marked in the market for labour paid in kind and bound by customary relations. Share-croppers without capital assets of their own and consumption debtors usually had less opportunity than independent peasants to switch between landlords or creditors. This could result in a classic monopoly relationship in which dependent cultivators acted as price-takers, buying' grain and selling' labour as differentiated products in a market with high entry and exit barriers. Despite these structural barriers, however, the rural labour market was unified in certain important respects, even where consumption needs were largely met by non- monetary transactions. Subsistence wage levels were not simply fixed by custom, but responded to [Tomlinson - Land ++Page 6] the cash market price of grain and commercial crops, and the relationship between them. Jajmani payments for services in kind survived into the 1950s im the less commercialized areas of the countryside, yet even traditional relationships of this sort were often linked to market conditions. in one relatively uncommercialized village in the Kannada region of northern Tamilnad in the 1950s, for example, where jajmani payments made were still being made to artisans, labourers, and other dependents, these were clearly calculated to equalize the distribution of resources in bad seasons. but to enable the village leaders to skim off the surplus in good years. (27)

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Many historians of rural South Asia have pointed out that Indian agriculture was consistently undercapitalized throughout the modern period. In the nineteenth century the most important item of capital equipment was the animal power supplied by bullocks, which were needed to pull carts and ploughs, draw water from wells and down irrigation channels, and to supply rich and cheap manure. in much of peninsular India, away from the wet-crop zones of the east and south-east, as many as six bullocks were needed to pull the heavy ploughs, and double that number for carts. Yet early surveys of the Deccan revealed that m the 1840s and 1850s the vast majority of cultivators did not own, or even have access to, enough of this basic capital equipment to farm their lands properly. As a result, land remained unmanured, and was sometimes ploughed only once every three or four years. (28)

The supply of capital goods for the rural economy may have eased somewhat durimg the second half of the nineteenth century, although the staple items of agricultural equipment remained bullocks, wooden ploughs and unsprung carts right up to the 1950s. By 1860 the rural economy in most of colonial India had recovered from the shocks that accompanied the British conquest and the first phase of punitive revenue extraction. Cultivated acreage grew substantially, and windfall gains in overseas demand, as well as consistent improvements in road and rail transportation networks, all increased the profits to be made from the rural economy. However, such benefits were often skewed, and also fluctuated wildly in time and space. Indian agriculture remained a gamble in rain; when the monsoons failed badly m the nineteenth century famine could still be devastating, especially in the late 1870s and the late 1890s. It is probable that the increased mortality of these years, which was exacerbated in the 1890s by a large-scale outbreak of plague in western India, fell more heavily on those who relied on returns from the labour market to meet their subsistence needs. Famine years also damaged capital equipment, for bullocks starved when the rains failed. In many parts of the Bombay Presidency, for example, cattle numbers fell sharply in the famines of the mid 1890s, and had not recovered their former numbers by the late 1920s. (29) Here, and on the plains of Tamilnad as well, the population increase and intensification of land-use for arable crops in the 1920s and 1930s were leading to pronounced shortages of cattle and fodder and increased pressure on the forest areas and waste land that remained. (30)

By the twentieth century the key to agricultural improvement through capital investment lay in irrigation, but expanding the irrigated acreage was again a difficult matter. Increasing the provision of water for cultivation was a technological problem in part, but one that existed in a distinct socio-economic context. Mechanised irrigation-pumps were not available until after 1945; before then the delivery of water from canal schemes and large-scale irrigation systems, or from local dams (bunds) and reservoirs (tanks) through gravity-fed channels or simple machines of the persian-wheel' type, or even from wells, relied on gravity or animal-power. Bullocks required feed and careful breeding; reservoirs, dams and channels needed hard labour for maintenance and repair. Using government irrigation facilities required paying a water-rate, and preparing land for irrigation involved considerable work and some prior capital expenditure.

At the micro-distributional level, the sharmg of water between rival claimants was in large part a social issue, with water rights and privileges being determined by local power and the ability to exploit common effort for private gain. The link between water, agricultural growth and local power could have the effect of limiting investment in irrigation in some circumstances. In north India in the mid nineteenth century, for example, tenant investment in wells gave a customary claim to occupancy rights; zamindars tended to discourage such improvements because they would [Tomlinson - Land ++Page 7] disturb the local balance of power. More generally, however, the emergence of local elites of substantial cultivators in the nineteenth century led to increased investment in rural capital goods such as wells, and also other economic and social activities, as an expression and underpinning of their increased power and wealthy.(31)

In the colonial period the most spectacular advances in irrigation were those made bv large scale public works in northern, north-westerll and south-eastern India. By contrast the small-scale irrigation systems of dams and reservoirs traditionally constructed and maintained by local rulers, patrons and magnates often suffered neglect front a colonial administration incapable or unwilling to co-ordinate the supply of public goods at the village level. In 1900, when the Indian Irrigation Commission was set up to consider the future of large-scale public works, about one-fifth of the total cultivated area (44 million acres) of British India was served by some form of irrigation works. Private sources, chiefly wells and tanks, supplied 60 per cent of this area; only one quarter of it was watered by any of the major public works schemes built m the second half of the nineteenth century. Furthermore, such works were concentrated in a relatively few areas of the subcontinent, with almost half the irrigated area supplied by them being in the Punjab by the end of the colonial period. Nineteenth-century canals had been built with nineteenth-century objectives in mind, mainly the defeat of famine through insurance for dry-land gram cultivation. As ecological, climatic and economic circumstances changed and offered new opportunities for growing different crops, the old system was not always able to adapt very well to the demands made of it.

The persistence of both under-investment and under-consumpt~on in the rural economy was part and parcel of the institutional structures that emerged under colonial rule. In setting up Company rule over the sub-continent, British administrators brought with them a package of policy initiatives that, by the second half of the nineteenth century, had helped to create and sustain a wide band of privileged groups who benefitted from state action over land revenue, tenancy and agricultural investment. Favouritism by the state brought some direct economic advantages, the most usual being the provision of privileged land tenures that gave tax-free or tax-favoured status to the inam or sir land that formed the personal holdings of village officials, local zamindars and proprietary ryots. More important, however, was the control of production that came from manipulation of the scarce resource of land, and the local markets for employment, rural capital and sales of output. Such control was most often derived from social power, reinforced by the privileges of a position in local organs of the state such as the land revenue hierarchy and village administration.

The direct economic returns from such activities were often remarkably small. In the first half of the twentieth century income obtained directly by rural moneylending possibly contributed no more than 10 per cent of total agricultural income. (32) Buymg land for rent was not usually a profitable investment in itself, although land had other important advantages as an asset, such as absolute security. Real returns from rent in the 1920s and 1930s have been estimated at 3-4 per cent of the purchase price of the land in western India, and about the same level for the best valley land in Tamilnad, while they were probably below that m zamindari areas. The annual rental paid for land in the Unwed Provinces during the 1930s amounted to less than one per cent of total net farm income.(33) By far the biggest share of rural income was derived from the returns from agricultural production and trade, but this remained a risky and uncertain business in the difficult conditions of the inter-war years. Thus Arm profits were often used to spread and avoid the risks that resulted from practicing undercapitalized agriculture at times of ecological adversity and unstable market conditions. Given the limited and unstable nature of the market opportunities that faced the agricultural sector, maximizing security was often more important than maximising output. Consequently, some dominant groups invested the surplus derived from their economic strength in reinforcing their social power, and the dominance of local state agencies, on which their command of scarce resources ultimately depended.

Access to state-granted privilege or the exercise of social power alone did not always ensure a permanent dominance of the rural economy, however. While the colonial state favoured certam groups in the revenue settlements of the nineteenth century, it did not consistently reinforce them thereafter, and those who found their position usurped had little redress. Subsidised entry to land, [Tomlinson - Land ++Page 8] capital and commodity markets gave certain advantages, but could not resist all challenges. New crops, markets and institutions gave others the opportunity to challenge and overcome the control networks of old elves. Economic growth from below was possible in some circumstances, and such growth was able to tickle down, or bypass, the social hierarchy to a significant extent. The history of wheat in the Punjab, of cotton and tobacco in Gujerat, of jute in Bengal, and of garden crops everywhere, suggests that where markets mechanisms and demand stimuli were the strongest, the influence of social networks on the allocation of factors of production and economic choices was weakest.

Market opportunities that could rearrange access to economic reward fundamentally in rural India occurred most often at times of rising demand, either inside or outside the country. Between 1860 and 1930 dependent cultivators had a number of opportunities to produce commercial crops directly on their own account, and thus move partially out of the subsistence and into the cash economy. The peasants of the cotton-growing areas of the Khandesh in western India, for example, were able to control production and marketing of their crop from the 1870s onwards, and got good terms for output and credit from a competitive service economy. (34) In Bengal the jute boom of 1900s temporarily freed peasants in districts such as Faridpur and Dacca from debt, and enabled them for a time to market their crop independently, without resort to dadan (the taking of loans against a standing crop hypothecated at half the market price of the previous season).(35) The opening-up of groundnut cultivation on the plains of Tamilnad offered a similar opportunity. In South Arcot in the 1920s the Exceptionally low' cost of production meant that:

It is possible for one man with a pair of oxen and a single plough to do all the work necessary - cultivation, manuring, sowing, weeding, reaping etc., for from five to eight acres of groundnuts and other grains, with the exception of some assistance at weeding and harvest. This is not uncommon m this locality.(36)

The benefits of rising demand could help weaken the ties of the social hierarchy in other ways. In boom times the price of land rose faster than interest rates, so that peasants could hope to recover some of their land-holding by selling or mortgaging another part at a higher value. Where agricultural profitability increased, demand for labour also rose, returns to labour increased accordingly and freer wage-labour markets grew up to replace older custom-based systems.

It is important to realise that these market opportunities, where they existed, were mediated through a complex mix of particular local economic, social, political and ecological circumstances, and so did not lead inevitably to a pure' form of agrarian capitalism. There was often no clear link between investment and profitability in Indian agriculture, nor were there universal returns to scale or to scope wading to be captured. Equally, commercialization did not lead to proletarianization or to any major changes in the distribution of land-holdings by size. Possession of even a tiny holding of land retained considerably psychic and cultural advantages for Indian villagers, as well as assuring them of a more favourable relationship with the local labour market. Large farms secured no significant advantages over small ones, provided that smallholders could super-exploit their own labour and obtain off-farm employment. Thus economic growth did not necessarily lead to changes in social structure or in the factor-mix used to produce the staple crops.

Opportunities for market-based growth in agriculture were always limited, and probably only existed in ecologically-balanced areas growing crops for which there was a substantial export demand. For export crops this stimulus virtually came to an end with the onset of the Great Depression that hit the Indian rural economy in the late 1920s. The collapse of international demand for primary products after 1929 weakened the Indian rural economy considerably and disrupted the capital and labour markets based around export-led production that had grown up since 1900. The most corrosive and lasting effects came from the liquidity crisis that undermined the market for rural labour both in cash and in kind. Dominant cultivators did not retreat from cash-crop production, but they looked for ways of minimising costs - especially those of labour. This was done by switching to less labour-intensive crops, or to less labour-intensive methods of cultivation, and by employing family rather than hired labour on the farm. The Bombay Government estimated that rural wage rates fell by over 20 per cent between 1929 and 1931; family labour was always paid less [Tomlinson - Land ++Page 9] than even the market rate.(37) Erstwhile labourers were, in turn, thrown back onto their own, inadequate, family plots, or had to migrate to the cities in search of work.

For the rural poor the disruption of the rural labour market was probably the most severe direct consequence of the depression in agriculture, and this also had two serious subsidiary effects. Firstly, sharecropping increased in some areas, most notably in Bengal, and was probably accompanied by a further decrease in agricultural efficiency through a loss of incentives for the cultivator. Secondly, the collapse of cash credit networks from outside the village lead to an increase in the prevalence of consumption credit provided in kind by surplus food producers, leading to fragmentation in the rural credit market and its control by village-level surplus cultivators rather than district-level bankers and traders. Decentralised sharecropping gave dominant farmers an alternative method of grain redistribution via the product market once the credit market had slumped.

As a result of all these changes deficit food producers could no longer earn enough to meet their subsistence, rent, revenue and capital costs by growing commercial crops for market on their own account. In east Bengal, for example, peasant smallholders had switched to jute, a high-value, labour-intensive cash crop, after 1900 as a way of solving the subsistence crisis caused by diminishing land-holdings and rapid population growth. When the international market for jute collapsed in the 1930s, this was no longer practicable. Durmg the 1940s urban demand for consumption goods rose sharply, fuelled by the wartime inflation, and the real cost of rent and capital probably fell. Deficit producers did not benefit, however, because these changes pushed up the price of food still further, and meant that entry into various forms of tied labour became a crucial mechanism for securing subsistence goods. The vicious circle of under-consumption of basic wage goods tightened still further once the rural poor had to compete directly with urban demand in the domestic food-grain market (a food-market severely distorted by procurement, transportation and allocation difficulties throughout the 1940s), and could no longer benefit from windfall gains in international prices for exportable crops. In these two decades it became significantly more difficult for those with inadequate unencumbered holdings of land, or with insufficient access credit and employment, to obtain surplus produce. Deficit producers who were unable to command consumption from non-market sources suffered considerably, but they were not the only group whose economic opportunities were diminished; labour enforcement problems and the shock to the land market of the 1930s severely damaged the position of non-cultivating landlords, rentiers and urban moneylenders as well.

By 1950 the failings of the Indian rural economy were obvious, but their causes were complex and remain somewhat obscure. Our account has stressed that the institutional networks of the rural economy were an important variable determining performance, since the social mechanisms for allocating capital and credit, and for providing access to land and employment, acted as replacements or substitutes for missing markets. But there was nothing inevitable about the dominance of social structure over economic opportunity in Indian agriculture, nor did the apparent shortage of productive resources and the increase in man:land ratios constitute by themselves an insurmountable barrier to sustained development. It is true that at the end of the colonial period there were severe problems of food-supply, and that institutional control had once again become more important than responsiveness to market opportunity in ensuring economic survival and success. However, these phenomena were not the inevitable consequence of either the social formations of colonial capitalism, or an implacable Malthusian crisis - rather they were largely the result of the specific institutional inadequacies and market failures of the last twenty years of British rule. Social mechanisms were strong only because market stimuli were often weak, and state agencies were virtually non-existent.

With more favourable and stable market networks, linked to sustained, positive stimuli from the export trades, and coupled to a more diffused and efficient system for allocating capital and labour, it is possible that the developmental thrust of Indian agriculture could have been stronger, more universal and more consistent.

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Tom Tomlinson Notes:

1. While the percentage of the labour force employed in agriculture rose from 74.8% in 1911 to 75.7% in 1951, the percentage of national income supplied by agriculture fell from 66.6% in 1900-1/1904-5 to 57.6% in 1942-3/1946-7. See J.Krisnamurty, 'The Occupational Structure', in D.Kumar, with Meghnad Desai, (ed.), Cambridge Economic History of India: Volume II, Cambridge, 1984, Table 6.3.[BACK]

2. George Blyn, Agricultural Trends in India, 1891-1947: Output, Availability and Productivity, Philadelphia, 1966.[BACK]

3. Heston, 'National Income', CEHI, 2, p.387. See also Michelle B.McAlpin, 'Famines, Epidemics and Population Growth: the Case of India', Journal of Interdisciplinary History, XIV, 2, 1983, p.360 ff, which shows that the expansion of foodgrain acreage lagged well behind the rate of increase in population between 1916 and 1941. [BACK]

4. Carl E.Pray, 'Accuracy of official agricultural growth statistics and the sources of growth in the Punjab, 1907-1947', Indian Economic and Social History Review, 21, 3, 1984. [BACK]

5. Christopher J.Baker, 'Frogs and Farmers: the Green Revolution in India, and its murky past', in Tim P.Bayliss-Smith and Sudhir Wanmali (eds.), Understanding Green Revolutions: Agrarian Change and development planning in South Asia. Essays in honour of B.H.Farmer, Cambridge, 1984, p.41.[BACK]

6. A.K.Bagchi, Private Investment in India, 1900-1939, Cambridge, 1972, p.104. [BACK]

7. One billion = one thousand million (1,000,000,000). [BACK]

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8. Raymond W.Goldsmith, The Financial Development of India, 1860-1977, New Haven, 1983, pp. 124-5.[BACK]

9. Raj Krishna & G.S.Raychaudhuri, 'Trends in Rural Savings and Capital Formation in India, 1950-1951 to 1973-1974', Economic Development and Cultural Change, 30, 2, 1982, p. 293. [BACK]

10. Leela Visaria & Pravin Visaria, 'Population (1757-1947)', CEHI, 2, Table 5.12.[BACK]

11. Anne Booth, Agricultural Development in Indonesia, Australian Association for Asian Studies, Sydney, 1988, pp. 28-30.[BACK]

12. Heston, 'National Income', CEHI, 2, p.410. [BACK]

13. Pramit Chaudhuri, The Indian Economy: Poverty and Development, London, 1978, Table 38. [BACK]

14. Cited in Dharm Narain, Distribution of the Marketed Surplus of Agricultural Produce by Size-level of Holding in India 1950-51, Bombay, 1961, pp. 36-7.[BACK]

15. Dharma Kumar, 'Landownership and inequality in Madras Presidency, 1853-4 to 1946-7', Indian Economic & Social History Review, XII, 3, 1975; Eric Stokes, 'The Structure of Landholding in Uttar Pradesh, 1860-1940', Indian Economic & Social History Review, XII, 2, 1975, reprinted in Eric Stokes, The Peasant and the Raj: studies in agrarian society and peasant rebellion in colonial India, Cambridge, 1978, Ch 9. [BACK]

16. See T. J. Byres, 'Land Reform, Industrialization and the Marketed Surplus in India: An Essay on the Power of Rural Bias', in David Lehmann (ed.), Agricultural Reform and Agricultural Reformism:

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Studies of Peru, Chile, China and India, London, 1974, esp. pp. 229-240.[BACK]

17. Cited in Walter C.Neale, Economic Change in North India: Land Tenure and Reform in the United Provinces, 1800-1955, New Haven, 1962, p.153.[BACK]

18. Government of India, Agricultural Labour Enquiry. Volume: I All India, Delhi, 1955, pp. 3, 5.[BACK]

19. K. N. Raj, Ownership and Distribution of Land', Indian Economic Review, New Series, 5, 1, 1970.[BACK]

20. Narain, Distribution of the Marketed Surplus of Agricultural Produce, p.35. [BACK]

21. Second Enquiry on Agricultural Labour (1956-7) cited in A.G.Chandavarkar, Money and Credit, 1858-1947', CEHI, 2, p.764; First Report of the National Income Committee (April 1951), cited in Thorner, Shaping of Modern India, p.292.[ BACK]

22. Dharma Kumar, Changes in Income Distribution and Poverty in India: a Review of the Literature', World Development, 2, 1, 1974, p.35. [BACK]

23. Government of India, Planning Commission, Report of the Committee on Distribution of Income and Levels of Living: Part I, Delhi, 1964, (Mahanalobis Committee) p.28. [BACK]

24. H. H. Mann, Land and Labour in a Deccan Village. No.II (University of Bombay Economic Series No.III, 1921), cited in Sumit Guha, Some Aspects of Rural Economy in the Deccan 1820-1940' in K.N.Raj et al. (eds.), Essays on the Commercialization of Indian Agriculture, Delhi, 1985, pp. 223, 232.[BACK]

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25. Christopher John Baker, An Indian Rural Economy, 1880-1955. The Tamilnad Countryside, Delhi, 1984, pp. 172-73.[BACK]

26. Neeladri Bhattacharya, 'Agricultural Labour and Production: Central and South-East Punjab, 1870-1940', in Raj (ed.), Commercialization of Indian Agriculture, p.121. [BACK]

27. Baker, Indian Rural Economy, p.570. [BACK]

28. Neil Charlesworth, Peasants and Imperial Rule: Agriculture and Agrarian Society in the Bombay Presidency, 1850-1935, Cambridge, 1985, p.78.[BACK]

29. Ibid., p.212.[BACK]

30. Baker, Indian Rural Economy, pp. 159-61. [BACK]

31. David Ludden, 'Productive Power in Agriculture: A Survey of Work on the Local History of British India', in Meghnad Desai et al. (eds.), Agrarian Power and Agricultural Productivity in South Asia, Berkeley, 1984, pp. 68,71. [BACK]

32. Calculated from figures in Goldsmith, Financial Development of India, p.125.[BACK]

33. Guha, 'Rural Economy in the Deccan', in Raj, Commercialization of Indian Agriculture, p.228; Baker, Indian Rural Economy, p.325; Neale, Economic Change in North India, T14 & 20. Charlesworth in Peasants and Imperial Rule, p.191 gives an alternative estimate for western India of 5-10 per cent in the l900s.[BACK]

34. Guha, 'Rural Economy in the Deccan', in Raj, Commercialization in Indian Agriculture, pp. 216-7.[BACK]

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35. Omkar Goswami, 'Agriculture in Slump: the peasant economy of East and North Bengal in the 1930s', Indian Economic & Social History Review, 21, 3, 1984, pp. 337-8. [BACK]

36. Quoted in Baker, Indian Rural Economy, p.151. [BACK]

37. Charlesworth, Peasants and Imperial Rule, p.230; Guha, 'Rural Economy in the Deccan', in Raj, Commercialization of Indian Agriculture, p.220. [BACK]

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Tom Tomlinson
Panel

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