CHAPTER-II THEORETICAL ANALYSIS OF THE BRITISH INDUSTRIAL POLICY IN INDIA

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Colin Green
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1 CHAPTER-II THEORETICAL ANALYSIS OF THE BRITISH INDUSTRIAL POLICY IN INDIA The present study has tried to analyze the nationalist and Marxists approach of colonial exploitation and link it a way the coal mining industry. The nationalists writers like Dadabhai Naoroji and Justice M.G. Ranade, G.V.Joshi, G. Subramaniya Iyer, R.C. Dutt and others had articulated that the British industrial policy in India was detrimental to the growth of Indian industries. According to them the industrial Revolution in England had negative impact on Indian economy. The Marxist authors like Tapan Roy Chaudhury, Amiya Kumar Bagchi, Bipan Chandra pointed out that the contradiction between the need for economic and industrial development Making India a reproductive colony and the objective of consequences of colonialism which produced the opposite results. They have shown how the foreign capital controled the entire mining industries. Coal mining in Assam was no exception. The study seeks to apply these theories on coal mining industries in Tinsukia District. The Industrial revolution has helped the English merchants accumulate a lot of capital from the countries of Asia and Africa. They now wanted to invest this wealth in setting up industries. The mass production of goods through machines was pioneered through the Industrial Revolution which occurred first in England during the late 18th and the early 19th century. This led to a massive increase in the output of finished products. The East India Company helped in

2 29 financing and expanding their industrial base. During this time there was a class of manufacturers in England who were benefited more from manufacturing than trading. They were interested in having more raw materials from India as well as sending their finished goods back. During the nineteenth century, these British manufacturers launched a campaign against the company, its trade monopoly and the privileges it enjoyed. With this India became an economic colony of Industrial England. The nationalist writers like Dadabhai Naoroji, Romesh Chandra Dutt Mahadev Govind Ranade and G.V.Joshi considered India an advanced civilization but a backward economy. Drawing on contemporary theories of political economy and collating supportive statistics, their writings sought to affirm that British colonialism had impoverished the Indian economy. Interest in political economy led these writers to focus on issues of production and distribution of wealth. 1 Dadabhai Naoroji s celebrated work Poverty and Un- British Rule in India (published in 1901), Ramesh Chandra Dutt s The Economic History of India, vol-i & vol-ii, ( ), Govind Ranade s Essays on Indian Economics, (1898), G. Subramaniya Iyer s Some Economic Aspects of British Rule in India (1903) and G.V. Joshi s Essays on Indian Economic Situation largely influenced the nationalist economic thought. The Marxists writers were of the view that colonial economic policy as shaped by imperial preferences and the dominant structure of 1 K.T.Rammohan, Pathways to India s Economic Past in D.Narayana and Raman Mahadevan, ed. Shapping India; Economic Change in Historical Perspective, Routledge, New Delhi, p.325

3 30 finance with imperial banks at the helm had seriously hindered the growth of Indian capitalists. The Marxists believed that capitalists in colonial India were under developed and fragmented, differentiated regionally in terms of size and growth, lacking an all India character and locked in a dependent relationship with British capital and the colonial state. The nationalist paradigm was somewhat shy of economic theorizing. In fact it was left to the Marxist economic historians to draw upon the nationalists observations and provide them a certain theoretical rigour. The central argument of the Marxists was that British colonialism had turned India into a site of underdeveloped capitalism, marked by external dependency and sustained economic backwardness. Colonial economic interests destroyed the local economy of independent handicraft workers and self sufficient peasants. They directed domestic economic activity into exportoriented agriculture and factory, industry both having low potential for employment. The few dynamic features of colonially induced capitalism-like the development of railways were functional to the needs of the British economy. In taking this stance, the Marxist economic historians of India departed boldly from Marx s assumption of the normalcy of the destructive effects of capitalism in India and his optimistic faith in the virtuous effects of capitalism in the long run. 2 The imperialist perspective denied any substantive effect or emphasized the positive effects of British rule. It was a mix of two views of imperial benefaction and imperial innocence. It viewed 2 Ibid p 327

4 31 British rule as conducive to India s economic growth; if backwardness still persisted, it was due to factors internal to India. These were seen to include, besides population size and physical geographic conditions, the shyness of capital, the nature of family organization, the community ethos and social values. 3 One of the most important Marxist texts on colonial Indian economy is Rajani Palm Dutt s India Today. 4 According to Dutt, colonialism and capitalism were equally responsible for the poverty of India. The process of plundering the resources of the country started quite early and was responsible for funding the capitalist development in Britain and other countries of Europe. Dutt has divided the period of imperialist rule in India into three phases. The first phase belonged to the merchant capital represented by the East India Company, and extending the general character of its system to the end of the eighteenth century. Then came the domination by industrial capitalism which established a new basis of exploitation of India in the nineteenth century. The third phase is that financial capitalism which started in the last years of the nineteenth century and flourished in the twentieth century. The phase of merchant capitalism was characterized by the monopolistic hold of the East India Company over the Indian trade. This was facilitated by its increasing territorial control from the second half of eighteenth century. Apart from this monopolistic control, Indian 3 Ibid p K.T.Rammohan, op.cit p.326

5 32 wealth was also plundered directly by the colonial state and privately by the servants of the company. 5 The massive wealth transferred through this plunder in England. This started the search for a free maker for the products of English industries. Thus, India had to be transformed from an exporter of cotton goods to the whole world into an importer of cotton goods. The monopoly of the East India Company had to be abolished now and this was achieved in phases and after 1858, the rule of India was transferred to the British Crown. This started the process of turning India into an uninhibited market for the British goods. After the First World War ( ), a new stage of imperialism was inaugurated in India. Although the older forms of getting tribute and seeking India as market British goods still continued, there was now an emphasis or capital investment in India. According to Dutt, it was clear that by 1914 the interest and profits on invested capital and direct tribute considerably exceeded the total of trading, manufacturing and shipping profits out of India. 6 The Marxist economic historians drew on successive radical theories of economic condition on colonies, beginning from Marx. The Cambridge paradigm which contrasted sharply with both these drew upon two analytical streams: from economics, neoclassical economic theory, and from history, the Cambridge school. 5 R.P.Dutt, India Today, Calcutta, 1986 p.45 6 ibid

6 33 Neoclassical economics centralizes issues of supply and demand in understanding an economy. Its interest lies not in issues of the origin of surplus and its distribution among different social groups and the associated relations of power, as is the wont of political economy. The Cambridge economic historiography chose to situate economic change in British India in the interstices resources, market and risk behaviour. It affirmed that India s slow economic growth was due to internal factors-a combined outcome of low savings and capital formation, inadequate development of the market, the poor quality of labour, demographic pressure, static technology and scant market intelligence. As the preconditions for economic development were missing, economic backwardness was the inevitable outcome. More recent writings of the Cambridge school not only absolve Britain of the responsibility of causing economic backwardness but also propose that the colonial Indian economy was actually on a growth-path. The present study has found that the Marxist approach and partially the nationalist thought can be applied in the case of coal mining in Upper Assam. The study being a micro study, these approaches have been tried to be applied on the coal mining areas of Tinsukia district of Upper Assam.

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