The Economic History of India 1857-1947

Published by EH.NET (March 2002)

Tirthankar Roy, The Economic History of India 1857-1947. Delhi: Oxford

University Press, 2000. xiv + 318pp. Rs. 595 or $24.95 (cloth), ISBN:

0-19-565154-5.

Reviewed for EH.NET by Santhi Hejeebu, Department of Economics and History,

University of Iowa.

Teachers of Indian economic history will welcome Tirthankar Roy’s Economic

History of India 1857-1957. Roy provides a chronological survey of the

colonial economy by economic sector — agriculture, small-scale industry,

large-scale industry, plantations, mines, banking, and the public sector. The

book also provides separate chapters on “the macroeconomy” and “population and

labour force.” In a heterodox field in which historical economists often find

themselves defensive about their methods and struggling with a paucity of

records, Roy offers a serious attempt to place the tools of economic analysis

in the service of Indian history. The goal of his Economic History of

India is to convey to budding historians and economists how this might be

done.

Despite the fact that the survey covers the colonial period, Roy does not view

the government of British India as the prime mover of the economy. This is most

evident in his lucid discussion of the de-industrialization debate. He writes,

“De-industrialization means a decline in traditional small scale industry that

(a) derived from technological obsolescence against British goods, (b) was

sustained by colonial policies, and (c) remained uncompensated by new

enterprise. The term makes explicit contrast between Britain which experienced

industrialization, and her major colony India, which experienced

de-industrialization, at the same time and due to the same set of causes,

namely trade and technological change” (p. 124). The debate surrounding

de-industrialization is as central to Indian economic history as that of

slavery is to American economic history. Enormous intellectual effort was put

to the issue in the 1960s and 1970s and to a lesser extent in the 1980s. After

two major monographs on traditional industry during the colonial period, Roy is

well placed to provide an alternative perspective, which he calls

“commercialization.” Roy maintains that “products of British mechanized

industry replacing Indian hand-made goods [in India] was more exceptional than

the rule” (p. 128). Machine-made cloth was a poor substitute for handloom cloth

in important market segments of the textile industry. Market segmentation

implied that large and small-scale industry did not directly compete leaving

open the possibility of survival and expansion of the latter. His

commercialization thesis also provides evidence of mechanization and

organizational innovation in traditional industries. Thus if Roy does not see

the British government as the prime mover, it’s because he knows better. Roy’s

own contribution to the research literature has led him to fresh insights on

what happened in the bazaar.

Pedagogically Roy’s handling of de-industrialization offers a brilliant

illustration of the delights of Indian economic history. It offers students an

intellectual feast with all the elements for exciting classroom exchange: the

performance of the economy and nationalist discourse, Marxist vs. neo-classical

principles, complex social norms in a commercializing economy, implicit

theorizing, institutional change, alternative hypotheses and tests of evidence,

disputes over evidentiary standards. De-industrialization is certainly one of

the livelier segments in my course and I am grateful for a teaching tool that

organizes many strands of the debate.

Roy’s book is not without its drawbacks however. Money and banking are barely

touched upon. The banking sector illustrates well what Rajat Ray called the

imperial “division of economic space” and thus lends itself well to a full

discussion of how colonialism interacted with commercialization. Instead

banking is anachronistically placed in the same chapter with plantations and

mines, while monetary policy (i.e. exchange rate stabilization) is tucked

inside the chapter on macroeconomy. The index does not even contain entries for

either shroffs (moneychangers) or hundis (bills of exchange). What institutions

operated in the informal banking sector and how did they operate? How did

monetary policy affect the opportunities available to or choices made by

indigenous entrepreneurs? The book does not provide clear answers.

One might find other points worth taking issue with. Roy at times skims too

lightly over opposing views. For example, in chapter one he describes the

“world systems school” as the most famous school to have expounded views of

underdevelopment. Yet Roy does not cite Wallerstein’s work explicitly and

within a sentence or two, world systems theory becomes indistinguishable from

Marxist theory. For good reason Roy does not share many of the specific views

of what he calls the “left-nationalist paradigm.” His terse treatment of such

positions is however more than compensated by the focused and systematic

treatment his provides overall.

Indeed Roy’s clear and organized handling of complex issues (such as the

economics of common property rights in agriculture) surpasses the treatment

found in other textbooks. Dietmar Rothermund’s Economic History of India

from Pre-colonial Times to 1991 (Routledge, 1993) provides a drive-thru

version of Indian history. It is a competent chronological overview that does

not enter into any substantive historiographic or economic issues. However I

would discourage exposing the young to such gems of economic analysis as

“Compelled always to have an export surplus, India could not import too much”

(Rothermund, p. 37). A more refined alternative is B.R. Tomlinson’s Economy

of Modern India, 1860-1970 (Cambridge University Press, 1996). The three

core chapters of this work are masterpieces of synthesis but not easy to

disaggregate into a sequence of coherent class lectures and exercises. Roy’s

work by contrast is neither too diluted nor too condensed. He keeps the

narrative flowing and at the same time ably describes the economic issues at

stake, the possible counterfactuals, and the evidence supporting competing

positions. It should be noted that none of the available surveys of Indian

economic history contain the photo essays or graphical expositions typical in

textbooks on American economic history.

While the inner flap bills this as a textbook, the work will interest a wider

audience. Roy’s up-to-date overview of the historical research makes the field

accessible to anyone interested in the development of the global economy and

its national parts. It’s a pity it ends at 1947.

Santhi Hejeebu researches the East India Company in the eighteenth century.

She is currently writing an article called “Mechanism Design in the English

East India Company” (joint with Pablo Casas-Arce). She is also interested in

the organization of Indian merchant groups in the early modern period and is

working on an article called “South Asian Firms: Competing Theories in an

Emerging Field” (joint with Scott Levi). She teaches several courses in Asian

economic and business history.