ABSTRACT

IDEOLOGY, SOCIAL STRUCTURE AND INDIAN
ECONOMIC DEVELOPMENT

By

Marietta Morrissey Gamso

Indian underdevelopment has been widely attributed to social
values which are considered by some to be inhibitory to economic develop-
ment. Having its origin in the study of Indian religion done by Max
Weber, this perspective has evolved in a number of directions. However,
the tradition generally overlooks structural constraints to Indian
development. The class structure and related financial ties between
the center and hinterland have, since Mogul rule, militated against
economic growth. While values and attitudes serve to legitimate the
existing distribution of power and wealth, and sometimes create resis-
tence to change among the members of particular classes, the literature
on the relationship between the Indian value system and social change
does not adequately address the question of class interests or the

structure they reflect.

IDEOLOGY, SOCIAL STRUCTURE AND INDIAN
ECONOMIC DEVELOPMENT

By

Marietta Morrissey Gamso

A THESIS

Submitted to
Michigan State University
in partial fulfillment of the requirements
for the degree of

MASTER OF ARTS
Department of Sociology

l973

w
T<Xl
if }) ACKNOWLEDGEMENTS

b
I wish to thank the members of my committee, Herbert Karp,
Richard Hill, and Kay Snyder for their encouragement and guidance.
Much thanksis.due also to Bill Barclay and Tom Nowak, both of whom read
sections of this thesis and offered many helpful criticisms.
I am eSpecially appreciative of the aid and support of my

husband, Jeff.

ii

TABLE OF CONTENTS

Page
LIST OF TABLES ........................... iv
INTRODUCTION ............................ l
PART I . .............................. 3
PART II .............................. l5
PART III ............................... l9
PART IV .............................. 27
PART V ............................... 3l
PART VI .............................. 49
PART VII . . ............................ 65
FOOTNOTES ....................... . ..... 72
BIBLIOGRAPHY ........................... 77
APPENDICES ............................ 8l

LIST OF TABLES

TABLE Page
l. Public Sector Sources of Financing the Five Year Plans in
India ............................ 25
2. Land Revenue as a Proportion of Total Tax Revenue in India:
l793—1966 .......................... 37
3. Degree of Control by Foreign Capital ............. 47
4. Structure of Long—Term Foreign Investment ........... 48
5. Agricultural Production .................... 53
6. Food Grain Production and Imports .............. 54
7. Landholdings by Size and Number, 1960-l . . . . . . ...... 59

8. Burden of Direct Taxes on Agricultural & Non-Agricultural
Sectors in India, l950-5l to 1969-70 . .'. . . . ...... 62

iv

INTRODUCTION

The development of the Indian economy has been slow, uneven,
and accompanied by much misery and deprivation for the Indian people.
There is agreement among many students of India that the prospects of
increased agricultural production and rapid full scale industrializa-
tion remain bleak. However, the reasons cited for the seemingly insur-
mountable economic problems of this country have been widely disputed.

Among those who have studied economic development, and India,
in particular, disagreement has focused on the relationship of particular
social and cultural factors to social change. The cultural, or social
psychological perspective has held that economic growth and development
is attributable to the prevailing values, attitudes, or ideology of a
society, or of a dominant social group. Those who advocate a social
structural interpretation have argued that such factors are significant
for explaining economic develOpment and underdevelopment, but must be
subordinated to other variablesé-land distribution, class and status
group cleavages, systems of taxation, foreign domination, etc.

In the case of India, these divergent views have been expressed
in discussion of the importance of Hinduism, the dominant force in the
formation of Indian cultural values and norms, to the underdevelopment
of the Indian economy. In the tradition of Max Weber, many observers
have contended that Hinduism has been the determining factor in the
failure of India to achieve sustained economic growth. This perspective

1

has passed through various stages, and has been utilized in analyses of
different levels of organization. There has been much research, in

the manner of Weber, on the relationship of the Hindu ethic, as it
appears in religious texts, to the formation of individual attitudes,
and the initiation of capitalist activity. More recent studies have
employed ethnographic and survey methods to determine group and
individual values and attitudes, and some have drawn conclusions
consonant with and others in opposition to Weber's theory. All these
analyses, however, share the assumption that cultural values are the
pivotal factors in the achievement of social change.

The response of structuralists to this view of Indian develOpment
has been to deny the validity of the cultural approach and its appli-
cation to Indian society on both substantive and methodological grounds.
This discussion will be limited to substantive criticisms of studies in
the cultural tradition. It is my contention that the social structural
obstacles to development are staggering, and militate against economic
development whatever the prevailing set of cultural values. The Indian
state and bourgeoisie have historically been unable to accumulate
capital for industrialization because foreign interests and a largely
pre-capitalist class of landlords, moneylenders and merchants in the
countryside have appropriated the agricultural surplus and used it to
support various activities that have not contributed to Indian economic
development. Religious institutions and ideology have been used by
these groups to legitimate their positions in the social structure,
but the Hindu value system cannot be considered the primary cause of

Indian underdevelopment.

PART I

The literature which relates Indian social and economic
change to Hinduism is in the tradition of Weber's study of Indian religion.
Weber based his hypotheses about the negative effects of Hinduism on
Indian economic growth on his understanding of the important influence of
Protestantism on the advancement of Western European capitalism. In
The Protestant Ethic and the Spirit of Capitalism, Weber concluded
that there was a relationship, an "elective affinity," between the
Protestant ethic, particularly that of certain sects, and the "spirit
of capitalism." In positing this relationship, Weber contended that
religious institutions foster the development of values that may be
considered the critical variables in the alteration or maintenance
of an economic system.

In the case of Western Europe, the "this worldly ascetism" of
Protestantism encouraged devotion to worldly affairs, and work as an
activity inherently rewarding. Secular roles were legitimated, but
they were valued as they contributed to the pursuit, rather than the
accumulation of wealth. The promise of spiritual reward for diligent
work, and the religious approval of commerce and industry provided
motivation for initiation of capitalist enterprises, and assumption of

roles at all levels of such organizations.

3

In seeking further evidence of a relationship between religious
values and economic activity, Weber examined India,1 operating on the
debatable assumption that India had a social structure conducive to
the development of capitalism. He concluded that Hinduism fostered a
complex of values and attitudes that have inhibited the rationalization
of economic activity and the growth of industrial capitalism. The
doctrinal sources of such values were two, the Hindu proscriptions of
salvation and gharma,

According to Hindu sacred texts, the sole means of attaining
salvation is through prayer and meditation; by devoting one's life to
contemplation, the individual can achieve "ascetic flight from the world."
Weber regarded such activity, with accompanying emphasis on mysticism
and magic, to be indicative of a pervasive Hindu concern with the "other
worldly." Certainly, the scriptural ideal and occasional Brahmanical
practice of physical and psychic withdrawal from worldly matters contrasted
sharply with the Calvinist belief that the pursuit of economic activity
was a calling which indicated salvation. Weber contended that the
"other worldly" salvation ethic of Hinduism deprives the Indian of a
motive for the initiation of capitalist enterprise, and perpetrates a
disdain for the secular roles and tasks of industrialization.

While all Hindus are not chosen to reach salvation through
asceticism and prayer, the rigidly stratified social system provides
hope for improved status in the next incarnation by adherence to pre-
scribed caste duties, or ghagma, If the Hindu follows the sacred
obligations and prohibitions associated with his caste, he will be born
again into a higher ranking caste. While not promising salvation--one

can escape the eternal cycle of rebirth and redeath only through

ascetic flight--the gharma doctrine suggests reward for conformity to
the rules of one's calling, not unlike the Calvinist ethic. Yet, Weber
regarded those committed to their gharmg_as unsuited for entrepreneurial
roles; they would fare better in the next life by following the occupa-
tional and status strictures of caste, and therefore had no self A
interest in engaging in new modes of production.

Furthermore, Weber saw in the social organization of caste, an
institutional constraint against participation in business activity.
Because he perceived caste as a system with limited "elasticity",

Weber thought it impossible for individuals or caste groups to break

out of the hierarchical relations that tied them to kin and village
groups, or to adapt to urban industrial conditions that demanded changes
in ritual practices. He concluded that caste was "traditionalistic

and antirational in its effects;" the "spirit of the whole system"

was inhibitory to the establishment of a modern capitalist system.2

Weber's analysis of the relationship of religion to economic
development initiated much further study of religious values in under-
developed nations of the world. This scholarship has evolved into a
number of theories that have focused on religious ideology, values and
attitudes deriving from other cultural institutions, and, more recently,
on value systems that may be traced to a state of traditionalism, or a
"sub-culture" of poverty and underdevelOpment, and are independent of
national culture.

The writings of William and Lore Kapp exemplify analyses most
consistent with that of Weber. Following Weber, the Kapps have drawn

a distinction between the value systems of industrial and pre-industrial

societies, based on the assumption that in pre-industrial

6

societies, the value system has failed to provide an impetus for the
accumulation of capital and investment in manufacturing. While in
Europe, the Reformation brought the "emergence of a new personality
structure which was well suited for the production of wealth," pre-
industrial cultures (in particular Hinduism) have not produced social-
psychological or structural changes.3

Based on their observations and readings of Hindu dogma, the
Kapps have concluded that India cannot achieve economic development
under current conditions. While structural changes must be made before
India can increase production, prevalent values and attitudes serve
as the primary obstruction to all development efforts of the enlightened
elite. Unless the value system is altered, attempts to overcome
structural obstacles made by the state or bourgeoisie are futile.

The Kapps consider the Hindu doctrine most antithetical to
economic development to be that of cosmic causation. They argue that
because time, duration, and life itself are conceived as cyclical, cosmic
phenomena,causation is held to be outside the realm of human determination.
Thus, Hindus do not perceive themselves as capable of changing their
reality; they are accepting of the existing social and economic
conditions.4

The Kapps generally concur with Weber in their analysis of
ghggma_and the Hindu salvation doctrine as inimicable to industriali-
zation, and suggests that while Hinduism does provide some positive
sanctions for the acquisition of wealth, particularly among certain
castes, the value system grants priority to those actions most likely
to bring salvation. "While the pursuit of wealth is sanctioned and

justified, it also partakes of the illusory character of all worldly

pursuits. Certainly as compared with renunciation and contemplation,

they are inferior as a source of liberation and release."5
Kapp also stresses the importance of the group in Hindu social

life, asserting that the Hindu does not value individual performance,

but rather activity and benefits shared by members of the joint family,

caste or village. Group ties foster a sense of dependent among individuals,

and a feeling of "moral aloofness" from members of other groups.6 As

Weber noted, there is no ideal of human equality in the Hindu value

system nor a feeling of "moral affinity" among all men, that loyalty

to a broader authority than the village.7 Hindu dogma legitimates

caste and inequality by attributing the current pattern of stratification

to the behavior of individuals in another lifetime.

In commenting on Hindu Culture, Economic Development and Economic

 

Planning, Milton Singer criticizes this and other work of Kapp on both
methodological and substantive grouds. Singer charges that Kapp has
"selected those features of Indian culture he believes are most relevant
to economic development, has taken them to define "Hindu Culture" and
has then tried to relate them causally to an equally selectively

8 Like Weber,

defined "ffirHRJSocial System" and a "Hindu Personality."
the Kapps have relied heavily on textual materials not widely read or
understood by Hindus, and have assumed the absolute adherence of most
Hindus to doctrinal prescriptions, reaching conclusions about values

and their effect on the development process that Singer has found invalid
in his own empirical research.

Singer has differed widely from Weber and the Kapps in his

theoretical analysis of the role of Hinduism in Indian economic

8

development. His work is representative of what he has termed the
"second stage of analysis" in the Weberian tradition, in which "students
of specific Asian religions found counterparts to a Protestant ethic,
rationality, profit-seeking motivation, hard work, and thrift, entre-
preneurial groups, bureaucratic organization, in these religions and

societies."9

He contends that the value system of Hinduism has provided
the motivation for the initiation of capitalism and has permitted the
participation of Hindus at all levels of production.

Singer's approach, like that of some other adherents of the
cultural perspective, has been an attempt to show how value systems
can change as they interact with structural variables and cultural contact
from extra-societal sources. While Hinduism did not "create adaptive
strategies" amenable to Indian economic development at the time that
Western nations were beginning to industrialize, the late nineteenth
century marked the introduction of modern economic institutions and
the transformation of Hinduism into a value system capable of facilitating
what Singer regards as the beginnings of successful industrialization.

While Singer is vague about the mechanisms that brought about
structural and ideological changes in the nineteenth century, the impli-
cation is that the influences of the British colonizers and a small
indigenous elite was powerful enough to involve increasing numbers of
Indians in the industrial sector and bring about a more liberal inter-
pretation of Hindu religious doctrines.

Singer bases his conclusions about Hinduism on a study of
industrialists in Madras City. He found that despite the industrializa-

tion and urbanization of sectors of India, the traditional value

9

system (Sanskritic Hinduism) remains predominant. However;the Hindu
ethic is now manifested in forms that are consistent withaimore modern
system of production. Hindus continue to be devout, and retain certain
traditional institutions (e.g., the joint family), but these have been
modified where possible to accomodate the demands of industrial society.
Singer attributes the endurance of the "spirit" of Hinduism to the
flexibility of the Indian cultural system, which is much greater than
Weber and his followers suggested. Influenced by the complementary
processes of Westernization and Sanskritization, Hindu culture has
permitted upward mobility, and demonstrated adaptability in response to
the entrepreneurial and occupational needs of industry.

Singer contends further that Hinduism has always sanctioned
economic activity and has facilitated and legitimated the recent par-
ticipation of Hindus in industrial.capitalism. He argues that Hindu
businessmen are not unlike their Western counterparts; they are motivated
by "an interest in wealth, power, status, industrial production and
workmanship, as well as by moral duty and prospects of salvation.”0
However, Singer found a high degree of motivation related to collective
identities and goals, leading him to conclude that Hindu values
may, in fact, be more conducive to the establishment of a socialist
system of production.

Eisenstadt has also focused on the "transformative tendencies"
of religious ideology. "Under certain conditions, a given religion
may foster new types of activity which go beyond its original WIETSCHAFTSETHIN
(economic ethic). That is, there may take place a transformation of the
original religious impulses which may in its turn lead to the trans-

"ll

formation of social reality. These changes in ideology result from

TO

the interaction of cultural with structural and institutional factors.
The basis for social change, however, must rest with the potential of
the prevailing value system for change into the particular set of values
and attitudes appropriate to the rise of industrial capitalism. In the
case of India, this potential was limited, and Eisenstadt follows Weber
in regarding religious ideology as the critical factor in the failure
of Indian capitalism.

Eisenstadt explains the aborted transformation of Indian values
as follows. Hinduism has historically retained a locus (the village)
of cultural symbols and values that is detached from a weak and'
ineffective center. This facilitated modernization to the extent
that the political center was freed from traditional symbols, as well
as certain pressures that regional authorities have been able to absorb.
A reformist group, the Congress Party, did emerge, which attempted to
utilize the non-political aspects and emphases of traditional values to
establish loyalties to the center. There were boundaries to the flexi-
bility of religious doctrine and institutions, however, evidenced in the
assumption by various caste groups of "some limited new economic, political
or ritual tasks, more or less within the range of traditional culture.”2
Hinduism failed to inspire "motivational orientations and commitments

"‘3 Thus, the

to the undertaking and performance of new secular roles.
center was unable to establish a new division of labor; village and
regional elites resisted the imposition of capitalist institutions.

A. K. Singh's work repesents the contemporary thrust away from
emphasis on religious values in seeking explanations for underdevelopment,

to a consideration of "traditional“ attitudes, which may be submitted

to testing. In the article "Hindu Culture and Economic Development in

ll

India," Singh raises objections to studies in the tradition of Weber,
including those of Singer and the Kapps, which have been based on
analyses of Hindu religious writings and observations of Indian
behavior. Singh insists that until Indian attitudes and personality
traits have been tested, theories of development based on the pre-
dominance of particular social values can be of little use in explaining
underdevelopment, or devising appropriate means of implementing
development strategies .

Furthermore, Singh criticizes the attribution of Indian under-
development to attitudes deriving from Hinduism. While "socio-cultural
barriers to development" do exist, they may not "stem inherently from
the basic core of Hinduism and derive their strength of resistance
from their religious sanctity." He suggests the alternative thesis
that these socio-cultural barriers may be "non-religious factors, such
as scarcity, ignorance, governmental inefficiency, low morale, a long
period of foreign rule, etc.," typical of factors which characterize
underdevelopment throughout the world.14

The foundation of this view results from testing of attitudes
of Hindus as they have become educated and spend time in the urban
factory setting. Attitudes of farmers, factory workers, other urban
industrial workers, and students toward a number of issues considered
relevant to economic development were tested in this research, directed
by Alex Inkeles. The attitudes measured included fatalism, feelings
about personal competence, attitudes toward science and rationality,
religion altruism, openness to new experience, etc. The conclusions
of the researchers was that education and factory experience modernize

attitudes.

12

The degree of religiosity of subjects was also determined, and
it appears that education and factory experience may be more powerful
mechanisms in changing "traditional" attitudes than is Hinduism in
reinforcing them. As Hindus participate in formal education and
factory work, they will abandon and modify religious practices, and
change attitudes that derive from, or are at least strengthened by
religious ideology.

Singh, and others doing research in this vein, go a step
beyond other proponents of the social psychological perspective whose
work has been examined here. They have suggested that the application
of their findings in order to precipitate social change is possible and
desirable. This approach was never adopted by earlier cultural theorists,
for in attributing underdevelopment to values and attitudes derived
from religious and other cultural institutions, they could only have
proposed altering these institutions as a means of eradicating
ideologies antithetical to development. The strong tradition of
cultural relativism in the social sciences is shared by Weber and
his followers, and seriously militates against proposals suggesting
the implementation of schemes to produce cultural change. Thus, the
cultural or social psychological theories, have been, up to this
point, primarily explanatory.

The writings of Singh, Inkeles and Rogers15 represent a
significant departure from this school towards the study of development
strategies aimed at changing individual consciousness. This has been
possible because they have drawn a distinction between values and

attitudes deriving from cultural institutions, and those created by

l3

social structural conditions. The ideology which inhibits Indian
development is, for Singh, not directly related to Hinduism, but to

living conditions peculiar to underdevelopment. Whether linked to

agrarianism,16

17

a less advanced stage in the evolution of human
societies, or underdevelopment, the concept of a value system separate
in origin from culturally inspired values allows the researcher to
formulate means of changing ideology without threatening indigenous
cultural institutions. By implementing programs of education, mass
media exposure, industrial employment of rural people, first values
systems inhibitory to development will yield, and then the
structure which created them will do so.

Having examined the Indian social structure in some detail,
this theoretical perspective presented by Singh and others appears
to me to be both a theoretically and practically ineffective way of
approaching the question of social change in India. Strategies such
as mass education could not be implemented given the shortage of funds
for the most fundamental needs of living, as well as the constraints
imposed by the class structure. To expect or actively encourage change
in India by creating plans designed to act on values which are thought
to inhibit participation in capitalist activities, is to underestimate
the power of certain classes which benefit from the existing structure.
Furthermore, I am skeptical about both the comparative measurement of
attitudes through survey techniques, and the differentiation of
cultural from "traditional" values. Nevertheless, the influence of
these works, and the thrust to applied strategies of development through

attitude change is significantly reflected in the proliferation of

l4

research on attitudes related to the adoption of innovation, family

planning, education, etc., carried on throughout the Third World.

PART II

While these theories about Indian culture and personality
have received much attention and have prompted a considerable body
of research on values and attitudes, they are quite inadequate for
explaining underdevelopment. Many criticisms can be directed at the
methodologies utilized in these studies; Weber and the Kapps have
used observation and textual examination and have reached conclu-
sions at odds with those of Singer and Singh, both of whom employed
survey techniques as a means of measuring attitudes. Certainly the
question of how values and attitudes of a group are measured is an
interesting and valuable one, but beyond the scope of this discussion.
Nor do I wish to define my criticisms of this perspective in the
terms of the cultural or social-psychological argument by presenting a
variation of Singer's position that Indians do have "achievement
motivation" but it has been stifled or expressed in other forms
because new economic roles have not been available.

I wish, instead, to question the whole thrust of the cultural
or social psychological view of social change. The principal problem
with this tradition is the failure to deal with structural constraints
against individual action that is directed to economic development.
Returning to the case of India, it is unclear in the presentations
reviewed above how the individual relates to the development process.

l5

16

It is contended that attitudes and values determine the individual's
participation in capitalist enterprises, yet how can such motivation
be expressed, if the individual has no access to capital resources for
investment?
This issue is further obscured by the vacillation expressed
in these writings on the question of structure. The theorists
discussed have all acknowledged the critical nature of social structure,
yet the concept is never adequately or precisely incorporated into the
theories presented by them. Singer has followed Weber in his conten-
tion that Indian society is structurally conducive to the development
of capitalism, and has actually gone so far as to suggest that the
Indian economy is successfully progressing in that direction.
Eisenstadt, Singh and the Kapps note structural constraints to develop-
ment, claiming that while the structure does not now permit extensive
industrialization, only a modification of the value system can
introduce the structural changes necessary for development. In both
cases, social change is attributed to ideology and ultimately reduced to
a function of individual willingness to assume new occupational roles.
There can be no question that individual consciousness, ideology
and institutions are crucial variables in the consideration of
strategies and theoretical analyses of social change. However, the
equally important variable of social structure is not regarded as an
immediate or relevant concern in these studies; implicit in the
assertion that the pivotal factor in creating change is attitudinal
is the assumption that the present system allows the individual to
manifest "modern" values. In fact, many obstacles to such activity

do exist and should be correctly defined.

17

Furthermore, the recent attempts to apply such theories by
devising educational programs to change the value system of individuals,
persuade them to adopt particular methods of cultivation, improved
health procedures, etc. (Indian Community Development exemplifies
this movement) are futile if once in possession of new knowledge or
attitudes, the individual is still incapable of changing his living
conditions because of the strength of other forces determined the
preserve the existing social order.

It is to the identification of those social constraints on
economic development that the discussion now turns. These obstacles
operate at several different levels, yet the source of much of the
difficulty is the inability of the state or bourgeoisie to mobilize
resources produced in the agricultural areas. The more current of
the cultural theorie places the burden of responsibility for changing
this situation on the traditional agrarian sector, suggesting that the
peasantry is not motivated to increase production or to assume the
entrepreneurial and occupational roles of capitalist agriculture and
industry. In fact, the peasantry probably produces as much as is
possible given the small areas of cultivation, primitive technology,
low access to credit, etc., that is common in most parts of rural
India, as well as the class structure, which signifies their exploi-
tation by the same groups-~moneylenders, landlords, and rich peasant
farmers--who absorb the surplus and prevent capital accumulation in the
center. For centuries, this rural elite has controlled the country-
side and limited the potential for industrialization. These forces
have been strengthened by periods of foreign rule and now hold great

economic and political power.

l8

In recent years, a considerable body of literature on structural
causes of Indian underdevelopment has emerged. Much of this research
has considered class divisions in the countryside and how the dominance
of a largely pre-capitalist class has prevented the accumulation of
capital by the center. I will attempt to elaborate on some of the
issues raised in these analyses of Indian economic problems, stressing
the role that the rural elite has played in continuing the process of

underdevelopment.

PART III

India has not achieved economic development because of social
structural factors which have prevented the center from mobilizing
existing agricultural surplus or from generating a sustained increase in
agricultural production. The agricultural sector has increased food
grain production very slowly, hindered by a high rate of population
growth, and despite the implementation of development strategies by the
center to increase yeilds. The government has failed to utilize the
surplus that has been produced to feed the population or to further
economic development because of its reluctance to change the political
and economic structure which has permitted a hierarchy of local and
state elites to appropriate an excessively large portion of the surplus.
The consequences of the government's failure to tap the existing surplus
or to increase it have included food shortages, increased reliance on
food grain imports, a low rate of domestic savings and investment, and
dependence on other sources of capital for industrialization.

The problem of low agricultural yield may well be attributed
in part to the use of relatively primitive technology, limited areas
of irrigated land, and the pressures of population on land under

cultivation.18

However, there exist many landlords, moneylenders,
and rich peasants who live quite well from the surplus generated by
wage labor, tenants and sharecroppers. Furthermore, benefits from

l9

20

recent increases in yield per acre in some regions with the use of
"high yield varieties" of seeds have accrued primarily to the already
wealthy sectors of the peasantry, further polarizing the rural social
classes by increasing the gap between landlords and rich farmers,

and those tenants, sharecrOppers and landless laborers barely sub-
sisting.19

The social determinants of the central government's failure
to accumulate the existing agricultural surplus are also related to
the gaps that exist between wealthy rural groups and those with little
land or income. For centuries, Indian caste and village hierarchies
have stratified the rural population, and caused resistance to the
imposition of central authority. While land was once in surplus and
production supported the village and its officials, land is now scarce.
Since the reign of the Moguls, control of land has been distributed
among a hierarchy of officials of both regional and imperial bureaucracies
who have gained wealth and political power through their authority to
tax agricultural producers. Although the Moguls and British did require
the payment of tribute to the center, they made limited efforts to
consolidate the various principalities or to undermine the power of
chieftans, moneylenders and landlords to exploit the peasantry.

The system of caste has contributed to the priority of village
and regional power and affiliation, through its legitimation of the
economic and political dominance of particular groups. The landlords,
tax collectors and chieftans who have dissipated the economic surplus
have traditionally been of the higher castes; peasants have thus been
tied to them not only by economic dependence, but through the caste

bonds which justify existing labor and status divisions. Caste has

21

been "maintained by the top layer of the village elite for their own

benefit."20

It has fostered the authority of the local elite, leading
to the disregard of the policies of the center; "caste spells indiffer-
ence to national politics."

Indian underdevelopment has been widely attributed to the

relative weakness of the political center.21

The strategy of
surplus extraction from the countryside by the forces of urbanization
and industrialization is antithetical to Indian social structure and
institutions. While urban manufacturing centers have emerged, their
growth has been severely curtailed by their limited access to capital
generated in the countryside.

Nathan Keyfitz addresses the issue of surplus accumulation in
urban centers in his essay, "The Political-Economic Aspects of Urbani-
zation in South and Southeast Asia." He contends that in pre-industrial
societies, the political and economic interests of the city must
achieve domination over the countryside in order to secure the resources
for economic growth. While ideally, the balance of exchange will
change in later stages of development, initially the center must exert
power over the hinterland by the extraction of surplus through trade,
and the imposition of land tax. The center, through the bourgeoisie
or the state uses this surplus to establish manufacturing and support
the urban population.

The center achieves hegemony over the countryside by seeking
legitimation of its dominance or by coercion. In either case, the 7

center is able to create and, to a degree, enlarge surplus production.

22

Given a desire to industrialize among the bourgeoise or state authori-
ties, there is generally the financial base to do so, provided that the
center is willing to force a surplus from the hinterland.

There are, however, several obstacles to the application of
such a model in policy. Keyfitz stresses that the unwillingness of
many democratic and humanistic governments in the underdeveloped
world to accept the exploitative nature of surplus extraction from
the countryside has been a major inhibiting factor to development.
This thesis ignores a basic issue, the complex of political and
economic interests of various groups and classes in the Third World
that can weaken or strengthen the center. The elite or state engaged
in manufacturing can succeed only to the degree that their economic
dominance over the countryside includes power over all rural social
groups. That is, the peasantry may produce as much as possible given
current social conditions; the gap between agricultural production and
surplus accumulation in the center rests on the capacity of rural
elites--capitalist farmers, landlords, moneylenders and merchants--to
take a portion of the surplus produced by the peasantry.

Unfortunately, it is true that in many developing nations,
the center is unable to overcome traditional patterns of social
organization, or to undermine long existing economic and political
hierarchies. In the case of India, the center has for centuries
extracted some surplus from the hinterland. In British and Mogul
times, the ruling elite was very successful in accumulating surplus
from taxation of producers. They willingly used force to do so,

however, and failed to establish their legitimacy as political authorities

23

or to weaken indigenous elites. During these periods of foreign rule
the village continued to be the basic unit of social organization
and remained largely in isolation from the influences of the political
center or urban market. In the years immediately following Indepen-
dence, the Congress Party attempted to legitimate itself as a
democratic, socialist government; it was not successful because of its
dependence on coalition of rural landed interests and industrialists
for political support. The urban groups, both intellectuals who were
very instrumental in founding the Congress Party and the bourgeoisie,
have found it impossible to break down the strength of the rural pre-
capitalist groups with whom they have been forced to share the surplus.
The control of agricultural surplus by the center has tradi-
tionally been restricted by a powerful pre-capitalist class which has
been comprised of moneylenders, merchants, and rentier landlords.
Since Independence, there has been a gradual shift in the relations of
production, as increasing number of peasant farmers have turned to
capitalist agriculture. This trend has been particularly evident in
the fertile wheat growing states of the north and east (Punjab, West
Bengal, Kerla, Maharashtra) and other states where industrial and
export crops are cultivated (these include notably Bombay and Gujarat).
In these areas, there has occurred in recent years much polarization
between rich peasants and landless labor. Elsewhere, particularly in
central and parts of southern India, the inroads of capitalism have
been slower and tenancy continues to prevail, with landlords (often

at several levelscflitenancy) and moneylenders appropriating the surplus.

24

The interests of those controlling capital in rural India
differ regionally and in terms of the mode of production. Where
large landowners and middle peasants profit from hiring wage labor,
part of the surplus is used in the increase and rationalization of
production. However, even in the plantation areas, the utilization of
surplus is, to some extent, determined by traditional relationships and
institutions. The customary use of resources on displays of wealth,
articles of religious and ritual value, dowries, as well as the
maintenance of dependents tied to the wealthy through caste and kinship,
has historically been a crucial variable for explaining the failure of
much of the rural population to mobilize the surplus necessary to
greatly increase agricultural production.

As the population grows and the pressure on the land increases,
the amount of surplus available for non-productive purposes decreases
and is effectively limited to large landholding capitalists, rich
landlords and moneylenders. Nevertheless, it is possible to consider
these sectors of the rural elite as a virtually untapped source of
capital for the center. There is considerable wealth in the hands of
these groups which does not reach industrial interests in the center
becauseiyfpolicies of taxation and trade which favor the upper strate
of the rural population. The goals of these forces within the land-
owning and moneylending classes are not always or everywhere compatible,
but there exists uniform support for legislation which preserves the
current financial relations between the center and the states.

That the Indian industrial sector has continued to grow, albeit
very slowly, is indicative of the willingness of the government and '

powerful industrialists to depend on deficit financing, foreign aid

25

and capital. Table l shows the pattern of capital formation in the

center for the first three Five Year Plans. The anticipated level

of domestic savings for Plan Four years is exceptionally high, without
warrant; the earlier plans showed some increase in domestic savings,
but did not meet the expectations of the planners. The constraints
against sustained growth under such conditions are numerous. The
national debt is very large, and the growing balance of payments
deficit has been quite problematic to the current government adminis-
tration. For indicators of these trends, see Appendices A and B.
The internal dimension suggests a number of difficulties, including the
prevailing pattern of private investment in consumer industries, and
growing urban unemployment because of population increases and capital
intensivity in both industry and agriculture.

TABLE 1.--Pub1ic Sector Sources of Financing The Five Year Plans in
India (Rs. Million and Percentages)

 

 

S.No. Source I Plan II Plan III Plan . IV Plan
(1951-56) (1956-61) (1961-66) (1969-74)
1. Domestic Savings (a+b+c) 115230 163170 23’620 84:672
a. Balance from current 3,240 110 -4,730 25,920
revenue (16.5) (0.5) (-5.2) (18.0)
b. Profits of Public 1,150 1,670 6,960 19,008
enterprises (6.5) (3.6) (8.1) (13.2)
c. Capital Receipts 6,480 14,390 21,390 339,744
(small savings, pro- (34.9) (30.8) (24.8) (27.6)
vident fund, bonds,
etc.)
2. External Assistance 1,890 10,490 24,550 24,912
(12.1) (22.5) (28.5) (17.3)
3. Deficit Financing 3,330 9,540 11,510 7,344
(17.0) (21.3) (13.2) (5.1)

26

TABLE l.--Continued

S.No. Source I Plan II Plan III Plan Iv Plan
(1951-56) (1956-61) (1961-66) (1969-74)

 

4. Additional Taxation 2,550 10,520 26,600 27,072
(13.0) (22.3) (30.6) (18.8)

5. Total Resources (1 to 4) 19,600 46,720 86,280 144,000
(100) (100) (100) (100)

 

Note: Figures in parentheses show percentages

Sources: (i) Govt. of India: Fourth Plan Material 8 Financial
Balances, Planning Commission, New Delhi, 1966

(ii) Report on Currency & Finance, 1967-68 (Bombay: Reserve
Bank of India, 1968).

(iii) Reserve Bank of India Bulletin, Bombay (June 1969)

PART IV

These political and economic obstacles to development have
their historical antecedents in the periods of Mogul and British
occupation. The current pattern of stratification in the rural sectors
varies little from that found and reinforced by the Moguls in the
fifteenth century. Under the Moguls, India was "an agrarian bureaucracy
on top of a heterogeneous collection of native chieftans differing

"22 The maintenance of the bureaucracy

widely in resources and power.
depended on revenues paid by the peasantry, mostly in kind, and collected
by local assignés, or zamindars. These tax collectors included auton-
omous chieftans who were obliged to render tribute and military service
to the imperial authority, intermediary zamindars who were the actual
go—betweens; and primary zamindars who generally held proprietary rights
over land. These groups formed "a kind of pyramidical structure in
agrarian relations wherein rights of various kinds were superimposed

"23 These rights were increasingly l" dispute, leading

upon each other.
to rebellions of zamindars and peasants against the Moguls, and inter-
regional warfare. The costs of such unrest, in both military and
economic terms, were great, and eventually the tension that existed
between central and local power led to the demise of Mogul rule. "The
Mogul Empire achieved its great power largely because it could secure

the collaboration of this class (the zamindars and chieftans); but

27

28

the inherent contradictions between a centralized empire and the
zamindars were too deep to be resolved. These contradictions contributed
to its downfall even before the Western powers were established in the
country."24

‘The zamindars, and the emperor each took a considerable portion
of the peasant's surplus. Hasan reports that the Mogul rulers tried to
limit the total share taken from the producer to 50% of the gross
yield. However, there was often extreme pressure on the peasant from
the excessive demands of zamindars, chieftans, as well as military and
bureaucratic officials who received jagj§§_and mansabs, or land revenue
in lieu of payments. "We cannot state in precise figures the total sums
paid by the peasants, but we can be fairly certain that they were
substantially in excess of the revenue calculated on the prescribed
rates, and it is not impossible that they may have occasionally approxi-
mated to the proportion of "nearly three-quarters" of the produce . . . "25
The number of peasants contributing taxes to the government slowly
decreased as peasants rebelled or moved to other land areas to excape the
pressure of taxation. While most of the peasantry was oppressed, the
greater part remained in their villages and endured adverse conditions
according to Moore, because of caste and patriarchal loyalties.

During the reign of the Moguls, there was no significant
investment in productive enterprises, although trade and commerce were
common if not widespread undertakings. Moore claims that the extent
of commerce was quite limited, and that manufacturing enterprises

could never be established because of the squandering of surplus at

every level on displays of wealth. Moore has overstated his case on

29

this issue. It is true that the growth of manufacturing was limited,
slow, and very sporatic. However, the high level of consumption of
luxury goods was very much related to the extensive commerce carried
out by Indian and foreign merchants within the major cities of the
empire. Furthermore, the development of landlordism and "multiple
layering of tenancy" that Moore finds in areas near markets, suggests
the inroads of commerce and a money economy into some regions.

Hasan argues persuasively that commerce was significant for as
long and peace and unity prevailed, and led to the "development of
industries, and brought about conditions favorable to the growth of a
money economy. This led to the expansion of cash crops and the extension

"27 However, the administrative and

of the cultivated area . . .
political difficulties of the Mogul empire became obstacles to economic
growth, and commerce and incipient manufacturing enterprises declined
as the bureaucracy collapsed.

However, he fails to differentiate between foreign and
indigenous mercantile classes, a distinction which is most important in
light of the differences in official policy enacted toward each group.
Gupta reports that up to 70% of the urban merchants who carried on
commerce in the Mogul empire during the 16th through 18th centuries
were of foreign origin, mostly from Persia, Afghanastan, Turkey, and

Iran.28

They were favored by the emperor and were subject to fewer
taxes and other restrictions than were Indian merchants.

The indigenous trading class, a minority among foreign interests,
was unable to build an autonomous base. Few accumulated great fortunes,
given the high risks of trade during this period; the emperor laid

claim to the wealth of his subjects upon their deaths. Indian merchants

30

were subject to a series of often excessive taxes and transit dues on
trade, which varied in amount with local and imperial officials.
Furthermore, merchants never instituted guilds of the Western European
type, or other cohesive organizations that could enable them to achieve
the status of a class independent from the enperor. Instead,
both foreign and indigenous trading interests competed for the favor of
royal and local officials, causing factionalism and weakness within their
ranks.29
The potential for the development of an autonomous bourgeosie
among the artisans was severely curtailed by the same set of constraints
affecting merchant organization. They were subject to government
taxation as well as the exploitation of merchants, both of which made
the accumulation of capital quite difficult. Artisans and petty
manufacturers were commonly located in towns and villages along transport
routes. This regional separation and the cultural diversity and
isolation of towns and villages (e.g., the merchant castes held

different statuses in various villages and regions), precluded the

organization of large or powerful guilds.

PART V

The British, French and Dutch explored India and established
trading centers during the fifteenth, sixteenth and seventeenth cen-
turies. In the early 1800's, the British, through the East India
Company, secured hegemony over both European competitors and the by
then, weak and fragmented Mogul court. The East India Company and the
British crown came to dominate the disparate regions through a series
of wars and revolts. By 1857 all of India recognized British sovereignty,
although about one-third of the country was still ruled by native princes.

The effect of British imperialism on India has been widely
discussed and observers have disagreed sharply about the impact of the
British presence on the agricultural, industrial and commercial
sectors. It is my contention that British intervention in each of these
areas involved complex and sometimes seemingly contradictory motives,
but had the cumulative effect of hindering indigenous economic develop-
ment. In the agrarian regions the British made some attempts to
change the social structure by introducing capitalist agriculture, but,
failing at this, took full advantage of the existing class structure
to facilitate their policy of taxation. In the commercial and manu-
facturing sectors, urban trade and industry were systematically dis-
mantled, and the indigenous mercantile and artisan classes were
displaced by a comprador bourgeoisie joined to British economic
interests. The policies implemented by the British Raj and their

31

32

ramifications indicate some degree of official vacillation about
fostering the growth of Indian capitalism but no hesitation about the
establishment of full British control over such activities. Never-
theless, British colonization of India has been the subject of
controversy in the historical literature about India, and therefore

the consequences of British rule warrant a somewhat detailed discussion.

In regard to the population engaged in agricultural production,
the British presence accounts for few changes in the mode or relations
of production. The colonizers, in effect, imposed a bureaucracy larger
and more sophisticated than that of the Moguls, but one that stood in
the same relation to the agrarian sector as did that Of their prede-
cessors. While early in their rule, the British made more strident
efforts than the Moguls had to commercialize agriculture, they were
largely unsuccessful, and ultimately turned to the exploitation of
the pre-capitalist agrarian structure to support the colonial govern-
ment and British national development. They cruelly oppressed the
peasantry and drained the agrarian and manufacturing sectors of surplus,
yet their most enduring impact was the further entrenchment of social
forces that have long blighted the Indian countryside.

Throughout parts of the north, the British organized tax
collection as the Moguls had done. They employed the services of
zamindars, but legitimized their excesses by making them landowners.
The colonial administration thought that this would assure efficient
delivery of the surplus and that a landlord class like that of

29

fifteenth century England could be established. The zamindars

generally preferred to remain rentier landlords; many were absentee

33

owners, others were of families and castes that had long served as
tax collectors for the state and had acquired wealth, power, and
status in the village.
Elsewhere, the British Permanent Settlement provided for the
granting of private property rights directly to the cultivators of
land. This was the rytowari settlement. This system too,quickly
degenerated into rentier landlordism, as land exchanges and concentra-
tion increased as a result of the rigid tax levied imposed by the British.31
Alice and Daniel Thorner maintain that this introduction of
private property into the Indian countryside undermined village
comnunalism. They do not acknowledge the existence of landlordism
during the period of Mogul rule, and contend that the British Permanent
Settlement created multiple layers of tenancy, and the extension of
the money economy into the countryside. Barrington Moore had countered
that the influence of the British Raj on the rural stratification
system did not result in a widespread shift in the relations of production.
The British merely legalized and further stablized the relationships

32 The British

that had prevailed in the countryside for centuries.
strengthened the zamindars and those who controlled the revenues from
cultivation by allocating to them private property and its attendant
rights and privileges; however, the zamindars were in the same position
vis 3 vis the rest of the village population as during Mogul rule,
collecting agricultural surplus as rent and taxes, and returning some
traditional féudal obligations. I .

Hasan agrees that a system parallel to parasitic landlordism

existed in the Indian countryside before the entrance of the British.

34

Zamindars and village chiefs, as well as bureaucratic officials,
controlled land revenues, although they did not generally have formal
ownership of land. (Apparently in agricultural regions surrounding
urban markets, the principle of private ownership was much more explicit
than in other parts of the countryside.)33 The surplus produced by

the village was shared by a hierarchy of such officials in Mogul days,
much as it was during the long period of British rule.

As to the question of the introduction of a money economy into
the countryside, it is true that Indian cities and some rural towns
carried on exchange through money during the nineteenth century.
However, much of the countryside continued to base exchange on semi-feudal,
or patron-client ties between landowners and tenants, and caste and

kinship bonds, well into the twentieth century.34

Regional differences
are important in this regard, for where capitalist agriculture was
most important (in the wheat, cotton, tea and jute growing areas),
traditional systems of exchange gave way to cash payments for land,
labor and commodities during the nineteenth century.

The British tried to initiate and encourage capitalist farming
primarily by conferring the rights of private property on the
zamindars, and individual owners in ryotwari areas. Yet conditions in
the countryside (including the rigorous appropriation of surplus by
the British, and the broad sharing of the remainder of the surplus
among layers of landlords and tenants) inhibited the accumulation of
capital and conversion to the capitalist mode of production. That -
big holdings in India generally do not exceed fifty acres suggests

that unlike wealthy farmers in other parts of the Third World,

35

Indian landlords either did not have the capital or the incentive to
acquire large concentrations of land.

British entrepreneurs did buy large plots of land for the
production of industrial and export crops. The British interests
retained control over most of the jute, sugar, tea and cotton production
which until recently was the extremely profitable domain of foreign
capital. These four were important industrial crops within India, and
processing industries for these crops had the highest net value of

Indian industries until after Independence.35

While many of the cotton
processing mills were technically owned by Indian industrialists,
British managing companies controlled the cotton industry and owned

36 Furthermore, the volume

processing mills for other industrial crops.
and value of cotton and jute exports increased steadily throughout the
nineteenth and twentieth centuries. Between 1813 and 1844, raw cotton
exports increased from 9 million lbs. to 88 million lbs.; sheep wool
exports increased from 317 thousand lbs. in 1833 to 2.7 million lbs. in
1844. Between 1849 and 1914, exports of raw cotton rose from e 1.7
million in value to £22 million. In weight, raw cotton exports
increased from 32 million lbs. in 1833 to 963 million in 1914, or
thirty times over. The value of jute exports increased 26 times from
1849 to 1914.37

Other evidence of the limited but valuable capitalization of
Indian agriculture by the British is the expansion of cultivated
areas for industrial and export crops during British colonization.

From 1892-93 to 1919-20, the areas of cultivation of non-food crops

rose 43% while that of food crops increased by only 7%; the rise in

36

non-food crop areas from the average for 1910-11 to 1914-15, to 1934-45

38 From 1890-1945

was 54%, while that of food crops was only 12.4%.
food grain production increased by 1%, while production of commerical
crops rose by 90%.

While the use of land for thecultivation of commercial crops
was quite important for British planters and mill owners, the predominant
form of exploitation of the rural population by the British state
continued to be the taxation of land used mainly for the production of
food grains, for the support of the colonial bureaucracy and British
international trade and investment.

It is virtually impossible to assess the total amount of
capital the British took from India in the form of land revenue, but
it is known that the British received a sizeable portion of the
surplus. According to Dutt, the total land revenue raised by the East
India Co. in 1800-1 was $4.2 million; this sum increased (by increases in
acreage and assessments) to £15.3 million in 1857-58 when the Crown
assumed control, to 217.5 million by 1900-1, t0 £23.9 million 1936-7.39
Sanderson reports that the British consistently took from 50 to 70%
of the peasants' production in taxes. During the early stages of coloni-
zation, the tax levies were very high, estimated at about 80 to 90% 0f
the rental in Madras and Bengal, where the pressure of taxation forced

many peasants to flee or suffer famine.4o

. At various times during the
nineteenth century, the colonial administration tried to enact limits on
taxes in response to the dire conditions of the poorer peasants

but could not control fees and extra charges imposed by the various
levels of tax collectors. The proportion of the surplus appropriated

through land taxation by the British significantly declined in 1919

37

when the principalities became responsible for tax assessment and

collection, as indicated in Table 2.

This, of course, does not suggest

that the peasantry as a whole benefitted from the easing of tax levies

on land by the central authorities; the regional governments and the

rural elite now had access to more of the peasants' resources.

TABLE 2.--Land Revenue as a Proportion of Total Tax Revenue in India:

1793 to 1966

 

 

Year Percent
1793-94 69.0
1808-09 61.1
1818-19 73.1
1839-40 70.6
1850-51 66.5
1871-72 42.8
1881-82 35.5
1891-92 36.5
1901-02 33.9
1911-12 31.3
1938-39 16.1
1953-54 8.6
1961-62 6.5
1965-66 4.1

 

Source:

entrenching moneylenders in the countryside.

James Cutt, Taxation & Economic Development
F. A. Praeger Publishers, 1969), pp. 32-39.

in India (New York:

The British system of taxation was highly effective in further

They had gained power

during Mogul rule because of their ability to provide peasants with the

resources f0r meeting the demands of the imperial bureaucracy and its

38

agents. They performed the same role during British colonization,
serving as a source of ready cash to meet British tax requirements. In
addition to seeking cash, produce and human labor (debt bondage) in
repayment, the moneylenders of British India often assumed control of
the debtor's land if the peasant was unable to repay the loan and
high rates of interest. In 1879 the British tried to curtail this
practice by the enactment of the Daccan Relief Act, which forbid the
transfer of land to non-cultivating castes. However, this legislation
was not everywhere enforced rigorously, and in areas where the British
and local officials were more scrupulous in their efforts to eradicate
moneylenders, the rich peasants assumed the role of creditor to the
masses of the peasantry. In fact, the nineteenth century was the "golden
age" of the moneylender; it has been estimated that at the end of
British rule "about 1/3 of the farmers--in some regions as much as 90%--
are heavily in debt."41

With the passing of surplus to the moneylenders and pre-
capitalist groups, it has been quite difficult for the peasant to
accumulate capital or to purchase the technology necessary to increase
production. The high interest rates imposed have made borrowing to make
technical improvements or to expand the area cultivated into high risk
undertakings. In capitalist regions, where the moneylender is also a
village merchant or competing farmer, he is likely to have an interest
in keeping his neighbor's yield comparatively low.

While the concentration of agricultural holdings by capitalist

farmers was fairly limited, British colonization was accompanied by an

39

increase in the number of Indian landless and semi-landless (defined as
those with not enough land for subsistence production). Population
pressure, the high price of land, frequent sales and subdivisions in
response to British tax levies left much of the population landless
and unable to find employment. Malenbaum estimates that in the early
1950's, shortly after Independence, 22% 0f the rural population had

42

no land, and 25% controlled less than one acre. Rural unemployment

and underemployment increased; "male workers could find only an average

of 190 days work a year, and the women 120 a year."43

There were, and
continue to be, numerous sharecrOppers and peasants who seek supple-
mental earnings by working on other farms that are not included in

rural unemployment figures. Bettleheim has presented a classification
system and data that describe the concentration of land ownership and
the relationships of the agricultural population to the means of produc-
tion for the early post-Independence period. Mazdoors are those land-
less laborers estimated by Bettleheim to have been about 38% of the
rural population; the §i§3g_are those who own some land which they work
themselves, are tenants, or sharecroppers. and constituted about 45% of
the rural population controlling 43% of the land; Maljks, or landlords,
receive revenue in payment or kind and do not personally farm the land
and were about 17% of the rural population and owned 50% of the land.44
These figures correspond with Moore's interpretation of National
Sample Survey data for l950-51 which suggest the existence of a "huge
rural proletariat, about half the rural population; a small class of

prosperous peasants, not much more than 1/8 of the population, and a

tiny elite."45

40

Much of this rural proletariat survives by selling its labor
to more prosperous farmers. The Agriculture Labour Enquiry for 1950
showed that 64.2% of the landless (38% of the rural population) earned

their living from paid agricultural work.46

However, land units are
typically small; for 1961-62 over 95% Of all rural households owned
holdings of less than 20 acres, accounting for 64% of the total cul-
tivated area, and less than 5% owned 20 acres or more, controlling over

35% of the land.47

Only in the northern wheat growing regions and on
plantations where commercial crops are grown, are large numbers of
laborers hired and paid in cash. The remainder of the agricultural
workers are distributed among peasant farmers who are able to hire a
small number of employees, often on a part-time or seasonal basis.
Most of these farmers are producing food grains for sale on local
markets.

While almost 1/3 of the rural population is a sizeable propor-
tion to be engaged in hired labor, it is important to distinguish
between this situation and that of countries here large number of
rural workers are engaged in the production of cashcrops. Unlike the
plantations of Latin America, and other parts of Asia (including the
few areas of cash crop production in India), much of the labor force of
Indian agriculture and the profit margin is very low. Thus, hiring
labor in this case is not indicative of prosperity. Secondly, in many
instances, labor was rendered landless because of population growth
and the seizure of land by rentier landlords, not capitalist farmers.
Laborers have been hired under conditions which recall the semi-feudal

relationships of traditional Indian agriculture, involving part-time

41

employment, payment in kind, and certain social bonds not as likely to
be found in production relationships of the highly rationalized systems
of large farms or plantations.

The effect of British imperialism on Indian manufacturing and
commerce has been more difficult to determine. Marxist writers have
held that the British hindered Indian manufacturing, first, by depriving
an indigenous economic or political elite of the surplus necessary to
establish manufacturing enterprises, and secondly, that the British
destroyed the fairly extensive handicraft industry of rural India by
enacting restrictions against manufacturing and introducing competition
from British made goods.48

The first of the propositions has been stated by Paul Baran
in explaining how British colonization of India is representative of
Western colonial penetration of now underdeveloped countries. Baran
contends that the accumulation of surplus from the agricultural sector
must be the base for the development of manufacturing. The British, and
the Moguls before them, appropriated this surplus, but did not, of
course, contribute it to Indian controlled manufacturing. The
British vigorously accumulated surplus through taxation, which became
part of the English national savings derived from international imperialism,
and was used to finance the development of British capitalism. More
surplus was drained from India in the latter half of the nineteenth and
throughout the twentieth centuries, as British businessmen invested in .
both agriculture, finance and industry. While the native bourgeoisie
have increasingly participated in investment with foreign interests, in

the management of foreign owned business and in indigenous controlled

42

consumer industries, they have been denied the role assumed by the
bourgeoisie in developed nations.

The extent of British inroads into the Indian handicrafts
industry has been obscured by the failure of many writers on the
subject to differentiate among the several issues involved in this
argument or to relate these specific factors to the development process.
The charge has been made that England's incursion into the Indian economy
introduced competition from cheaper, British made goods and thus 1) the
British won the local markets for Indian handicrafts and manufactured
goods, 2) British goods undercut Indian finished products in inter-
national trade, 3) this competition on both fronts forced a large
number of Indians formerly engaged in trade and manufacturing back to
agriculture. The assumption underlying this argument is, of course,
that India had extensive commerical contacts, and that Indian trade
and manufacturing were sufficiently pervasive and sophisticated in
organization to form the basis of industrialization. It was British
colonization, specifically economic competition and restrictions,
which prevented this industrial growth and returned Indian to a stage
of agrarianism she has never escaped.

While there is general agreement that British competition and
trade restrictions did disrupt the Indian economy in the three ways
described above, the critical point is the assertion that pre-British
India had developed a sytem of production and a national bourgeoisie
of the character necessary to precipitate industrialization.49

The evidence suggests that while commerce was extensive,
seventeenth and eighteenth century manufacturing had not widely

progressed beyond primitive production techniques (e.g., handweaving

43

of textiles), nor was the production process characterized by a complex
division of labor. Moreland's descriptions of seventeenth century
India point to the relative simplicity of the organization of production;
capital was probably not separated from labor, and a differentiation
of tasks was found only a few workshops in the capital city (where
wages remained in kind) and at the site of special projects in the
construction of the infrastructure. The production of finished goods
was carried on primarily by independent artisans who rarely earned
enough to move beyond a subsistence level.50

This information is, in fact, not very instructive in determining
the long range effects of British colonization on the Indian economy.
While the description is one of techniques and organization of nascent
manufacturing, the Indian system of production was probably not very
much different from that of Europe during the same period. As for the
question of the indigenous bourgeoisie, it is true that Mogul policies
discouraged the consolidation of wealth and growth of merchant and
manufacturing classes. By the end of Mogul rule, however, the evidence
suggests that the cotton industry was extremely productive, created
great fortunes, and was the basis of extensive export trade, implying a
greater degree of mercantile organization than had existed during the
height of the Mogul empire. The manufacturers were predominately
independent artisans and certainly did not build the kind of guild
structure that existed in England during the early period of indus-
trailization. It was the traders who were most autonomous, but still
incapable of withstanding the imposition of British authority.

Another indicator of the importance of manufacturing, however,

was its contribution to the growth of trade in both domestic and

44

international markets. All production for export, most of which was
comprised of cotton weaving, contributed probably 1% of the national
income during the seventeenth and eighteenth centuries. The internal
market was much larger, and involved the trade of many more kinds of
manufactured production; production for domestic consumption contributed
about 5% to the national income.51

The principal export industry was textile processing, par-
ticularly of cotton goods. Wool and silk production was slight in the
seventeenth century, and much of the demand of Akbar's court for these
goods was satisfied through imports. Cotton weaving was done primarily
for export, and while the means of production were quite rudimentary,
the industry produced a sizeable volume of cotton, and was the basis
of trade to Africa, Europe (with the coming of the Portugese) and other
parts of Asia. Populous towns such as Madras, Bengal, Dacca and Surat
owed their existence to the cotton trade, while the manufacturing
process itself was carried out by artisans in nearby villages.

The scope of goods produced for internal consumption was
much wider. The imperial court was a most significant sector of this
market, purchasing three-quarters of domestically consumed goods.
Products included weaponry, processed agricultural goods, indigo, sugar,
opium, oil spices, and handicrafts such as jewelry and leather goods.
Village demand was satisfied by local artisans, most of whom carried on
agriculture on a part-time basis.

It is impossible to determine if India would have progressed
to an advanced stage of industrialization had the British not intruded.

However, it appears that India was, at the very least, moving in the

45

direction of increased concentration of labor and resources in manufacturing.
While production techniques were primitive, and the organization of the
bourgeoisie relatively weak, industrial production of textiles was
making significant contributions to commercial expansion, national
income and urbanization. There is no question that industry was in a
nascent stage, but it was probably not too dissimilar from much of the
manufacturing carried on by independent artisans until the sixteenth
century in Europe.52

The British began to export manufactured goods, in particular
textiles, to India around 1800. The effect on Indian exportation of
cotton goods was devastating. Between 1812 and 1932 Britian exported
to India what eventually constituted 1/4 of all its cotton goods,
causing a 92% decline in Indian cotton goods exports; from 1896-1913,
the British supplied 60% of Indian cloth consumption. Indian made
cotton goods exports to foreign areas particularly to Britian were
replaced by the export of raw cotton grown on plantations owned by
British concerns.

‘The urban center of commerce, especially those tied to the
cotton goods trade, lost much of their significance with the displace-
ment of indigenous traders by representatives of the British. The
population of Dacca decreased from about 200,000 in the last 18th

century to 30,000 by 1840.53

Bettleheim estimates that while 25% of
the population was engaged in manufacturing, artisanry and trade in
the early 1800's, the percentage dropped by 1881 to between 16% and
18% with the introduction of cheaply made British goods into both rural

and urban India.

46

The internal market suffered both from the decline of the
Mogul administration and the competition offered not only from British
made textiles, but also from other cheaply manufactured goods. I am
skeptical, however, about claims of British inroads into rural markets.
While manufacturing and handicrafts in cities and rural towns were
undoubtedly affected by the competition of British made goods, a money
economy had not penetrated most of rural India until the mid-twentieth

century.54

Villages continued to be self-sufficient economic units
where artisans of particular castes produced handicrafts to fulfill
their function in the local caste hierarchy.

Most importantly, the intervention of the British into Indian
trade and manufacturing had a tremendous effect on the direction
that Indian capitalism could and did subsequently take. British
imports of manufactured goods reversed a probable long term trend,
however incipient, away from manufacturing to the production of agri-
cultural goods for export. As noted earlier, the British converted
fallow land into areas for the cultivation of export crops. Eventually
they established processing enterprises, and diverted Indian capital
in the same direction. Furthermore, British control of surplus capital,
and licensing of industry made it impossible for Indians to build an
industrial base of capital goods manufacturing; Indian capital was
.concentrated in processing and consumer goods industries, a pattern of
investment which still prevails.

The influence of British and other Western interests on the
Indian economy continued after Independence. (Table 3 indicates the

heavy concentration of foreign capital in commercial agriculture and

47

finance at the time of Independence. During recent years, foreign

investors have shifted some capital investment to consumer industries,
formerly the limited, but exclusive realm of the Indian bourgeoisie.55
The British have lost some of its hold on the Indian economy to the
United States, which has increasingly contributed a higher proportion

of capital investment to India (see Table 4). However, British capital

remainSEHIactive force in agriculture, manufacturing and banking.

TABLE 3.--Degree of Control by Foreign Capital

 

Percent of control
by foreign capital

 

(in 1951)
l. Industries in which more than 50 percent of
capital is under foreign control

Petroleum 97
Rubber factories 93
Light railways 90
Matches 90
Jute _ 89
Tea 86
Coal 62
Other mines 73
Plantations and distribution of rubber 54

2. Industries in which less than 50 percent and more
than 25 percent of capital is under foreign control

Banks and financial institutions 46
Electrical industries 43
Engineering industries 33
Coffee Plantations 37
Food industry 32
Paper and cardboard 28

3. Industries in which less than 25 percent of capital
is under foreign control

Sugar 24
Cotton 21
Cement ' 5

 

Source: Charles Bettleheim, India Independent, Monthly Review Press,
1968, p. 60.

 

48

TABLE 4.--Structure of Long-Term Foreign Investmenta

--—.—- ---q-

1948 1955 1966

 

Total Value of Oustanding Investment

($ million) 539 930 2248
%DISTRIBUTION BY COUNTRY

OF ORIGIN
United Kingdom 80.4 82.8 51.4
United States 4.3 9.1 23.1
Others 15.2 8.1 25.5
%DISTRIBUTION BY SECTOR
OF DESTINATION
Plantations 20.3 19.7 10.5
Mining 4.7 2.0 0.9
Petroleum 8.6 23.5 16.0
Manufacturing 27.7 29.2 50.6
Services 38.7 25.6 22.0

 

aIncludes foreign investment in the Indian private sector only.

Source: Thomas E. Weisskopf, "Dependence and Imperialism in India,"
p. 91.

PART VI

Sectors of the Indian population reacted to British rule
with hostility from the nineteenth century until Independence. The
Western secular influence of the British was perceived as a threat to
Hindu culture by Indians of all classes, and their response took such
forms as the Mutiny of 1857. The significance of the national movement
led by Gandhi in the twentieth century was its reactionary overtones.
Gandhi built up resistence to British oppression by proposing a return
to the idealized self-supporting pre-British village, and by opposing
the secularism and industry brought by the British. The Congress
movement promoted the continuance of the village as the locus of political,
economic and social activity; this advocacy of local affiliation was at
once evidence of the fragmentation of Indian society and a check to
greater unification with Independence. The colonizers encouraged the
formation of the movement by favoring the rural elite, thus alienating
the bourgeoisie and driving them to the coalition with the peasantry
that came to constitute the base of Gandhi's movement. While Gandhi
and his followers presented a program that on a practical and symbolic
level recalled an earlier historical period, particularly among the
rural population, preoccupation with these "traditional" aspects of his
proposals has allowed his critics to obscure the Congress movement's
apparent support of the social and economic demands of the peasantry,
56

which included a more equitable distribution of income and resources.

49

50

With Independence, the base of the Congress Party shifted.
Unable to maintain the support of the peasantry through the power of
its principal constituency--urban intellectuals, the party was forced
to go to rural elite and urban upper middle and upper classes for
votes. The intellectuals and urban bourgeois reformers lost ground to
industrialists and wealthy agriculturalists. Rosen reports that while
"lawyers, press, and other professionals" held 55% of the seats in the
Lok Shaba (lower house of federal government) in 1947, that proportion
decreased to 35% in 1962; rural representation rose from 15% to 40%

over the same period.57

As long as the Congress Party has been the
dominant political party, and has acclaimed the goal of a democratic
and peaceful road to socialism, its leadership has been forced to yield
to the participation of disparate interests. Thus, the Congress Party
has survived by balancing the socialist rhetoric of its urban intellectual
founders, who remain a vocal minority, with legislative and financial
service to more powerful rural and urban groups.

The coalition of landed rural forces and urban industrialists
rests on an anti-socialist ideology. In fact, their interests are
quite divergent; the rural Capitalists, rentier landlords, and money-
lenders have inhibited industrial development by their control of surplus
and refusal to contribute to national savings. These groups have been
able to exercise their preferences, however, because 0f their influence
on political decision making at the state level, where land reform and
taxation are implemented. In this way, the rural elite has captured

the center, limiting and controlling the power of both public and

private industry.

51

The conflicts between various interests have caused much
fragmentation within the Congress Party. Currently, a serious
division exists between Mrs. Gandhi, a center-leftist who is dedicated
in principle to socialism, and her more conservative rivals. There has
been considerable growth in the past few years in rightist parties,
particularly the Swantantra Party, and the Communist parties, which
despite several schisms have been strengthened by the influx of students
and intellectuals disaffected with the Congress.

As the party of elements which are in inherent conflict, the
Congress is locked into a position of stagnation. To satisfy one group
is to lose support from another, a threat much intensified by the
growth of the Swantantra Party. To appease the rural population, and
both public and private industrial interests requires compromise, but
within a range restricted by the intransigence of the rural elite on
the question of state control of taxation and the need of the urban
forces for rural support. The industrial bourgeoisie has responded
to this deadlock by increased reliance on foreign capital and loans
from the state. The public sector, the growth of which was to be a
major thrust in the achievement of Indian socialism, has suffered from
the demands of both rural and private capitalist groups, and has not
acquired the position of power expected by the early Congress socialists.

It is, then, structurally impossible for the center to carry out
economic development given the nature of the alliances on which the
Congress Party is based.‘ Nevertheless, with a great deal of rhetoric
and bureaucratic design, the Indian government has half-heartedly

instituted reform measures promised by Nehru and its other early leaders.

52

Since Independence, considerable attention has been paid to
the problem of increasing agricultural production. The various plans
designed to increase the yield of food grains have focused on community
development, the improvement and utilization of agricultural technology,
and the construction of a rural infrastructure. As a result of these
efforts output has improved, but very slowly, generally falling short
of the planners' five year targets. The aggregate average annual
rise in production of food grains increased at a rate of less than 3%
a year from 1949-50 to 1965-66, while the population increased at the rate

of 2.4 to 2.5% per year for that period.58

The per capital production
of food remained constant from 1964 to 1969 as indicated in Table 5.
The government still must import large quantities of food, although
imports constitute a decreasing percentage of available foodgrains
(see Table 6).

The response of Indian planners to this dismal record has been
the introduction of "high yield varieties" of wheat, rice, jowar,
maize and other cereal crops. While wheat production increased by
51.8% in 1968-69 over the peak year of 1964-65, (partly due to an
increased area of cultivation of 18.6%), the rise in production of
rice and jowar has been negligible. Sugarcane, cotton and groundnut,
and other cash crops, have decreased in rate of production as peasant
farmers have changed over to the production of food grains to escape

59 Furthermore, there has

the exploitation of merchants and processors.
been some evidence of a levelling off of wheat production in "high

yield variety" areas since 1968-69.

53

 

._Kap eeseP=8eem< eee eooa to eeeom see .o.<.a meocpez emote:

 

.onmp xoonceo> corpuavoca .o.<.u meowpwz woven: "mogzom

 

 

 

e02 N02 _o~ Km mm mm eoF eoeeuseoea eooe eueaeu sea
mo_ Fo_ oo_ mm mm mm eop _ eoeeoseoea Peese_=uweme eowaeo tea
om_ me_ mm, om_ _NP NN_ mm_ cowooseoea nose Peach
me_ Nee am, _m_ _~P NNF mu. espouseoea Peesppsomeme Peach
.A.ew_aeav cum. mem_ weep Nem_ mom. mem_ eemp
“co. u .mse em-~mva eo_ou=eoea Pee=p_=u_em<--.m u4m<h

 

RN. Nom.m o.NN CNN.mmm Nm¢.Nm onN
NN. — NmN. N —.mp om¢.mom owo.Nm mmmp
No. N NNN. N N.mp oN¢.mmm mom.mm mom—
Nm. N NNO. N m.m~ omp.¢mm Nm¢.om Nom—
NN. F oNN.N N.NN oom.ome mom. mm mmmp
NN. _ NmN.N o.mp omm.mm¢ MNN. mm _ mem—
NF.N wee. m _.mN opm.mmm com. on wom—
Nw. NNN. m o.ep omN.mme mmm.mm mom—
Nm.N one. a _.NN omw.mmm Nmo.om Nom—

mmuNmmN
maim¢m_
mama

M.

NNN mom.mm N.NN omm.OON oNo.mN onN
Nap mam. om N.NN ONm.mmN www.mp ammp
NNN Nmo. we o.—N oo¢.moN mam.¢p momp
Rom mom. em m.m omm.mpp NNN.N_ Nomp
Nma mmm.mN N.N oeN.¢oN omo.N— comp
Nmm mNm.mm N.m oom.NNN 00¢.mp mmmp
Nam omm.mm m.N omm.mm mme.mN comp
NNN Nmo.oe m.N omN.NoN omm.mp momN_
NNN mmm.Nm m.m ONN.0NP on.mN Nmmp

NmN Nom.0N o.o on.oo oaN.m mmuNmm—
naeNNemN
N<sz
mcweemuoou «Naepwe>< Amcou owepms N.mmxv «canoe: Amcop creams copy Ammgmuuo; coo.pv gmo>Nuu=uogm

N we mugoasu oopv mucoaeu emu coppusuoga covuusuoga Nance mms<

 

wagons” ucm comuuzvosm :Pmsc voomiu.o m4m<h

 

 

 

.EF xoofmm> mum-C. “DROP xoofmw} cotpuustLa mhwm_ xooanm> gum-NF “Romp xoofmw> cowuuatosm

 

mmug xoongmm> munch .o.<.m “mmmp xoongmm> :owuuauoga .o.<.m cw vmucmmmga cunt sage vmumpzupwu "mugsom
m¢.m NNN.mm omm.F¢p.F mem.oop QNm—
mN.m www.mm oum.~mo.P NNw.oop mmmp
mm.m mom.mm om¢.¢~o.p www.wm momp
8N.m Nom.om omm.emm Noo.mm Nom—
wm._N 9pm.~op CON.~om Nom.mm comp
mN.m vom.mN OON.mmN mvm.—m momp
m¢.m www.mo omm._mm www.mm vamp
wm Nom.mv OMN.mom me.mm moop
we Nem.om 0mm.~Nm www.mm Nomp

mfi.m om¢.N~ oam.omm mmm.mN mmummmp
umeuwwmp
m4<mmmu 4<h0k

5

,5 1- -1 N.NN omN.¢N amm. ONm—
we. mNm N.m oaN.om Nom.m mmmp
we. wN_ 0.0— opo.Nm opN.m wom—
w mom N.~F omo.mo mmm.m Noop
m . NNN m.m OFm.m¢ poo.m momp
mo.m omN.— o.oN coo.N¢ mmN. mmmp
mm.N owN.N F.0— owm.m¢ wpo.e vamp
w¢._ opm o.op opm.m¢ Nom.¢ mmmp
m me m.m ONo.m¢ meo.¢ Nom—

mo omm.~ m.m omo.pm mwm.m mmummmp
umeuw¢mp
uNH<z

 

mcweemuoom apnepwe>< chou owgpms N.mmxv menace: Amcou avenue copy Ammsmpoo; coo.pv gmm>Nuuzuogm
N we mpeogsH ooNV mueoasm Lag cowuuacoga cowpusuoga peach emg<

 

easeweeou--.e wsm<e

56

The regional and class inequities related to the adoption of
high yield varieties have been widely discussed.60 Several states
including the Punjab, Haryana, Tamilnadu, and to a lesser extent
Maharashtra and Gujarat have successfully used the new seeds. However,
high yield varieties have been planted on only 20% of the cultivated

61

land. The large landowners have benefitted disporportionately from

the use of "miracle" grains; small farmers do not have the access to
credit necessary for the purchase of machinery to secure optimum yields.62
Mahana and Paharla report that small owners, who make up 75% of the
rural households, account for only 36% of the long-term loans taken

63

from development banks. The problem of rural unemployment has been

aggravated as large farm owners have evicted tenants and replaced
them with hired labor or machinery.64
The beneficiaries of the Green Revolution, then, have been
capitalist farmers in a few areas of India, who have been able to
increase profits and widen the gaps between themselves and the rest of
the peasantry. Cleaver presents data from an A.I.D. study which indicate
an increase of 258% in returns for rice cultivation. Government price
supports have aided large scale farming enterprises; the retail price
of wheat increased 12% in 1971-72 to compensate for the high procurement
prices the government paid to wheat farmers. While only one-third of
the food grains produced are marketed, 60% of the farm households
depend on the purchase of food grains to supplement their own production,
thus the 90% increase in food grain retail prices from 1962-1963 to
1969-70 has dispr0portionately benefitted large landowners and

merchants.65

57

Land reform has been another area where ameliorative measures
have been largely ineffective in equalizing the distribution of
income. The states have had the authority to implement their own
reform programs, and they have not been aggressive in the passage of
land reform legislation or in its enforcement.

Since Independence, the central government has recommended
that land be turned over to cultivators, and that tenants be provided
with greater legal rights. The policy of returning land to the culti-
vators was directed to the zamindari regions, where the British conferred
property rights on former tax farmers. While some absentee landlords
were affected by the enactment of such statutes, granting the opportunity.
for land ownership to rich peasants and petty landlords, stipulations
for the amount of land held, and the definition of "cultivation" were
easily evaded, so that those rentier landlords determined to retain
control of land have found loopholes. In other areas of India, where
the rytowari system prevailed during British rule, the states attempted
to secure legislation to ensure the rights of tenancy. The two principal
objectives were to prevent evictions by granting tenants of long standing
permanent rights to the lands they had been cultivating, and, secondly,
to reduce rents. Thorner reports that landlords frequently moved
tenants from one land unit to another at time intervals short enought
to prevent their acquisition of permanent tenancy rights, and, as in
the zamindari regions, "connived at wholesale falsification of village

”66 While rent limits were set--40% of net production in

records.
West Bengal, one-third of gross production in the Punjab, for example--

Bettleheim contends that rent on irrigated lands continue to be at the

58

pre-Independence rates of 50 to 60%.67 Ceilings on land holdings have

been enacted by all states, but owners of large amounts of land have
skirted these laws by dividing up land (for the government records)
among relatives and tenants. In Thorner's words, "The sum total of
land reform laws enacted in India in the decade after 1947 constitutes
the largest body of agrarian legislation passed in so brief a span of
years in any country. But the legislation has proved to be full of

loopholes, and the implementation half-hearted."68

While figures are
not available for the last decade, it is estimated that the concentration
of land remains at roughly the same as for 1960-61 {cited on page 35).
For data on number and size of holding see Table 7.

India's efforts at agrarian reform have also included the
establishment of Community Development blocks throughout the countryside.
Village level units, parallel in structure to traditional panchayats
(village and caste councils) have been established to satisfy the
collective needs of villagers. Village Level Workers, predominately
from urban backgrounds, have tried to teach the villagers more produc-
tive cultivation techniques and modern styles of living, although these
outsiders have reportedly met with much resistance from the village
inhabitants.

The government's underlying assumption in creating the Community
Development program has been that peasants will respond favorably to
their contact with outside agents of "modernization," and will adopt

new agricultural methods that will increase production and, ultimately,

improve the rural standard of living. Those decisions effecting the

 

.aap .a .ONNN .Nez .mowwmo mcwpcwea ucmscco>oo .mwvca LON xooavcmz mmg< ”mucsom

 

59

 

mom.¢Nm Nmm.m¢ 4<Nop
Nom.mm NNm m>one new o.om
NON.Ne NmF._ . mm.me o» o.om
eNm.NN mmo mm.mN op o.mN
mo¢.mN mmo.N mm.¢N 0» o.ON
Nom.om mmN._ V mm.m_ 0» o.m_
ooN.mN Nmm._ mm.¢N op m.NN
Npm.mN mNm.N a¢.NN ca o.o_
Noe.mN ¢N¢.m . mm.m op m.N
mmm.mm emN.m m¢.N op o.m
oqm.mm me.o_ mm.¢ op m.N
omm.NN No¢.op m¢.N ow o.N
eNo.m NmN.¢ mm.o op mo.
NmN.N mmm.m me on a:
Aooo.Fv Nooo.~v Ameeue e_v mmewepoe
mmcwupo; Necowumemao mNCNuNo: chowumgwao Nocowumgmao No mmm—u oNNm
omen umueswumm Longs: emueewpmu

 

F-oem_ .288532 nee eapm an mme_epoeeees--.N msm<e

60

collectivity, (i.e., questions pertaining to areas such as education,
health, and irrigation, will be democratically decided at the village
level, where change can most successfully be implemented. This policy
reveals the total misunderstanding of the relationships of social

forces in the countryside held by the national planners; individual
peasants simply cannot become modern capitalist farmers if they have
virtually no security of land tenure, nor have access to improved
technology because sources of credit are controlled by the same rich
landowners and officials who control all decision making in the community.
Village level councils have certainly not altered these patterns of control
and influence, they have only further legitimated them.

Thus, despite all of the ambitious rhetoric of the Congress Party,
the countryside retains the structure it has had for centuries. The
landlords, moneylenders, merchants, and the relatively small number of
capitalist farmers, take what surplus is produced and squander it; the
country has still not achieved self-sufficiency in food production, and
the urban sector is locked in a position of dependence upon foreign and
private capital and the willingness of the government to use deficit'
financing. It is true that agricultural production must increase, yet
it has been estimated that 25% of the national income is in the hands of
moneylenders, landlords and other unproductive groups who appropriate the
agricultural surplus.69

The center-state financial relations further exacerbate the
conditions leading to low capital formation in the center. The states
have the constitutional authority to tax the rural sector, and have

everywhere been subject to the political pressures exerted by the rural

61

elite. The rate of taxation of the agricultural sector has remained
constant since World War II, and both state and central governments

have depended on taxes levied on the non-agricultural sector]0

The
ratio of direct taxes to the national income of the farm sector has
declined from 1.14 in 1950-51 to .70 in 1969-70; the ratio of direct
taxes to national income in the non-agricultural sector has increased
from 3.64 to 5.01 during that period, Table 8.

There have been two forms of taxation of the agricultural sector
operative since the period of British colonization. The imperial
government granted authority to the provincial governments in 1935 to
impose an agricultural income tax on all peasants. Prior to this, tax
was levied only on the incomes of the owners of tea, coffee and rubber
plantations. Karp and Barla contend that this form of revenue gathering
has been opposed by the large scale capitalist farm owners, as well as
other powerful rural groups, and consequently the state governments have

been reluctant to collect income tax.71

There has been great regional
diversity in the assessment of income tax; only nine of eighteen states
levy this tax. Three-fourths of the total income tax revenue is taken
from Assam, Kerala, and Madras, while the governments of Punjab and
Gujarat (where productivity and incomes are comparatively high) impase
no income tax. Furthermore, the rate of taxation has not increased to a
level consistent with increases in income and productivity. While the
net annual income of landowners with more than 50 acres increased from Rs.
7176 per household in 1950-51, to 22,738 in 1967-68, agricultural income
tax receipts increased only from Rs. 60 million to Rs. 120 million during

that period.72

62

TABLE 8.--Burden of Direct Taxes on Agricultural & Non-Agricultural

Sectors in India, 1950-51 to 1969-70. (Rs. Million)

 

Agricultural Sector

Non-Agricultural Sector

 

 

 

 

Year Total National Ratio of Total National ’TRatio of
direct Income of direct direct income direct
taxes the sector taxes to taxes of the taxes to

national sector national
1ncome 1ncome
1 a a 9 .5. 9. .7.
1950-51 546 47800 1.14 1732 47500 3.64
1955-56 857 43900 1.90 1683 54900 3.06
1960-61 1067 67070 1.59 2884 68180 4.22
1961-62 1046 70100 1.49 3320 74030 4.48
1962-63 1296 71960 1.80 4187 80910 5.17
1963-64 1327 84730 1.56 5446 29060 5.91
1964-65 1305 101550 1.28 5939 104170 5.70
1965-66 1218 98010 1.24 5914 114270 5.17
1966-67 1001 115950 0.86 6500 125500 5.16
1967-68 1080 130000 0.83 6479 127500 5.10
1968-69 1140 15000 0.75 6728 131000 5.14
1969-70 1160 158000 0.70 7020 141000 5.01
Sources: Appendix C for columns 2 and 5. For other columns, see (i)

Eastern Economicst, New Delhi, Annual Number, 1970, and (ii)
Report on Currency & Finance, 1967-68, Bombay, Reserve Bank
of India, 1968.

63

The history of land revenue has been equally problematic.

Since the nineteenth century the proportion of land revenue to total
tax revenue has steadily declined. From 1953-54 to 1965-66, there has
been a decrease from 8.6 to 4.1% of total tax revenue accounted f0r by
land tax, supplying no more than 8.6% of state revenue, and 4% of total
tax revenue of the central government. Obviously, the state govern-
ments have been forced by political pressure to derive direct and
indirect levies on personal incomes of members of the non-agricultural
sector, corporate taxes, wealth and sales tax.

As a result of this trend, more capital is being pumped back into
the agricultural sector in community development appropriations than is
being taken out through taxation. Table 9 presents data which indicate
that for the early plan years, 1951-56, direct taxes collected from the
agricultural sector constituted only 58% of the total expenditure on
agricultural development. By 1968-69, that proportion had decreased
to 19%.

The social structure then, has restricted the means by which
reform measures can be implemented. The traditional rural class structure
has remained essentially intact for centuries, although an increased
number of f0rmer tenants have become landless laborers or peasant farmers
since Independence. In some highly productive areas, particularly in the
north and northwest of India, rentier landlordism has given way to
capitalist agriculture, often on a large scale, but the interests of
these farmers are consistent with that of pre-capitalist classes elsewhere
in regard to land expropriation and ceilings and the payment of land tax.

While much of the surplus accumulated by the center has gone back into the

64

TABLE 9.--Tota1 Expenditure on Agricultural Development and Direct
Agricultural Taxes in India (1951 to 1969)

 

 

j—

Expenditure Direct taxes Taxes in pro-
on agricul- raised from portion to
tural Dev. the farmers total expendi-

Period (Rs. million) (Rs. million) ture (percent)
1 2. .3. 3.
I Plan (1951-56) 6040 3513 58
II Plan (1956-61) 9780 4975 51
III Plan (1961-66) 17630 6192 35
1966-67 4720 1001 21
1967-68 5020 1080 20
1968-69 5820 1140 19

Total since 1951 449010 17901 36.5

 

Sources: (i) Eastern Economist, New Delhi, Annual Number, 1969 for
Column 2

(ii) Bhargava (l) for column 3

countryside for community development, land reform and technological
improvement, these measures have had little effect on the distribution

of power and wealth in Indian villages. The poor are by no means less
poor because of the programs of the Congress, in fact, in some areas
their conditions have worsened; nor are the middle peasants wealthier or
more secure. The historically powerful groups (including landlords,
moneylender, merchants, and increasingly, capitalist farmers with

growing concentrations of land) continue to dominate the countryside

and frustrate the efforts of the various political factions in the center

to extract agricultural surplus to be used in industrialization.

PART VII

Conclusion
It is, then, the question of control of the agricultural surplus
which is a critical factor for explaining Indian underdevelopment.
The class structure reflects the control of this surplus by the rural
elite, and serves as a major obstacle to ecnomic development. With
current taxation, terms of trade and agrarian reform legislation in
effect favoring the rural upper classes, it is naive to expect changes
in the social structure precipitated by parliamentary action. Nor can
these social constraints against economic development be obscured by
attributing current economic conditions in India to social psychological
variables. Nevertheless, much of the study of Indian economic development
has long focused on the effects of Hinduism on the formation of Indian
personality and attitudes. Even some of those who have stressed structural
obstacles to development have made reference to the complications for
development presented by the Hindu value system.73
Since Weber there have been some superficial modifications
of theories proposing the causal link between underdevelopment and
Hinduism that suggest a recognition of the theoretical inadequacies
of such a proposition. Both Eisenstadt and Singer have attempted variations
on Weber's argument by making more complex the relationship between
ideology and social change. They contend that because ideology changes
as it interacts with social structure, a set of values and attitudes

65

66

not conducive to economic change in its original form may be transformed
into a system of values appropriate to industrialization. While indica-
ting an awareness of the failure of others to address the question of
structure, Eisenstadt and Singer have not, themselves, made a departure
from the tradition initiated by Weber. While "transformative potential"
suggests the possibility of change within the value system, it does not
imply a shift away from the assunption that it is. ideology, and not
structure, that is the motive force behind social change. The key variable
for both Eisenstadt and Singer is motivation, or attitudes favorable to
development, which, in the Indian case, have been linked to Hinduism.
While they reach differing conclusions, they share underlying assumptions
about social change which do not vary greatly from those of Weber.

A. K. Singh questions the entire tradition of the cultural or
social psychological perspective in explaining Indian underdevelopment,
and presents a theory relating social psychological variables deriving
from "traditionalism," or a state of underdevelopment, to India's failure
to achieve balanced economic growth. Such an interpretation of the
influence of attitudes and values permits him to address the question of
how these attitudes may best be changed, an issue antithetical to the cultural
relativism of Weber and others who have previously studied the relation-
ship of ideology to social change. Whatever the conceptual difficulties
with differentiating among the sources of values, this type of research
is most important as an impetus to the application of what may be termed
development strategies, and the use of great amounts of valuable resources
for activities which will ultimately fail to aid the Indian economy.
Again, however, it is values that are considered the determining factors

in economic development.

67

A consistent source of difficulty with these social-psychological
theories is their failure to take into account the exigencies of the class
structure. Weber, and his followers, have implied a modal system of values
and attitudes; in the Indian case, the critical complex of values and
attitudes include a disinterest in industrial capitalism and unwaivering
acceptance of traditional institutions and ideology, except perhaps among
the Western educated bourgeoisie. In contending that there is such a
uniformity of values, the vital significance of forces with varying
interests and goals is obscured. The concept of national consciousness
or personality has meaning only in so far as it acknowledges that each
class experiences differential gains and losses as a result of social
change.

I would argue from a Marxist perspective that class membership
or position in the social structure produces a particular ideology or
consciousness. Class implies a hierarchy of control of wealth and power,
and accordingly, variation in attitudes towards change. Certainly those
with the most to lose from changes in Indian structure, i.e., the pre-
capitalist elite, are quite resistent to the imposition of a capitalist
or socialist mode of production. The peasantry, on the other hand,
lives on the edge of survival throughout the underdeveloped world. Their
only security comes from the cohesion of kin (and caste) based systems
of social relations, which traditionally have been among the factors which
define the relationships of production as well. These ties have dis-
integrated with the introduction of capitalism into the countryside; as
this occurs, change is perceived not as a risk, but as the only viable
response to chaos imposed from above. This reaction to the undermining

of the social basis of the peasantry may take the form of participation

68

in the new mode of production; where this possibility is blocked the
peasantry may resort to violent action.74
In India, the traditional division of labor and system of exchange
have been based on obligations among members of caste and kin groups, and
between patrons and clients. In other underdeveloped countries, capitalism
has caused a shift in these feudal or semi-feudal relationships of
production. Groups and individuals once controlled the means of pro-
duction, as peasant farmers or tenants, and exchanged agricultural goods
in return for services from non-farming or part-time cultivators; share-
cropping and hired labor have increased with the separation of capital
from labor, and exchange has developed on a cash nexus. Where capitalism
did not emerge as a powerful indigenous force, imperialist expansion often
led to the capitalization of agriculture and the introduction of a
cash economy into the countryside. India has been somewhat unique in
this regard; the British established only a few "semi-plantations"
where export crops were grown, relying on taxation as the primary source
of state income. The British did not threaten the landed elite, historically
a conservative force, but sought their cooperation in the appropriation
of surplus; it was not to their advantage to tear through the social bonds
of the village centered countryside with capitalist agriculture. The
traditional system of social exchange continued to operate in much of
rural India, with land in control of landlords and moneylenders of the'
higher castes, who exacted surplus from the peasantry in exchange for land,
food, and protection.
However, the British, through their shifting encouragement and
harassement, created an Indian national bourgeoisie that tried to initiate

the process of industrialization. While they constituted a small number

69

and established a narrow industrial base, the national bourgeoisie and
intelligentsia had a tremendous political impact on British India,
and eventually became strong allies in the movement to oust the British.
With Independence, the mechanism for beginning in earnest the process
of large scale industrialization--the surplus--did not pass into the
hands of the bourgeoisie. The basic weakness of the center in relation
to the state governments representing the rural elite militated against
the use of tax revenues as the basis for Indian economic development.

The cause of the powerlessness of the center has, in part,
been the limitation of its Gandhian-inspired constituency. With its
basis in nationalism, the alliance between the bourgeoisie, intelligentsia,
and segments of the peasantry could not endure when the battle of Inde-
pendence was resolved. The long range interests of these classes were
simply not compatible. The intelligentsia favored the adoption of
socialism and very much influenced the official ideology, if not the
policies of the Congress Party in the early post-Independence period. The
bourgeoisie was more successful in achieving its aims, a mixed economy with
adequate room for individual profit making. The peasantry would bear the
burden of industrialization, whatever the mode of production, and was
unlikely to be granted the individual control of land it wanted, and was
inherent in the Gandhian promise of the return to village self-sufficiency.
Furthermore, Gandhi's support rested on the tacit approval of much of the
rural elite, particularly the rich peasants, who responded favorably to
the termination of British control. With the rise to power of Nehru,
the strength of both the urban bourgeoisie and intelligentsia in the

Congress began to erode; their plans for development called for the

70

dismantling of the rural social structure, and thus they could depend

no longer on the rural elite for the deliverance of much needed rural
votes. The core of the Congress Party began to shift in the early 1960's
to representatives of rural landlords and rich peasants, indicating the
effectiveness of the rural elite in using coercion and patron-client ties
to consolidate political power.

In the last few years, however, the traditional village ties have
begun to break down as a cash economy has spread throughout the countryside.
More land is being purchased by capitalist farmers; the number of land-
less is increasing as tenures are lost, and small peasant holders are
bought out. The relations of production are changing as the peasantry
increasingly turns to labor in the fields of capitalist farmers for money
wages. As cash becomes the basis of exchange, the traditional system of
obligations gives way, as does the brokerage system that has controlled
rural politics for decades. Frankel reports much greater independence in
voting behavior in regions of India where capitalist farming has expanded

75 Elsewhere, the traditional ties still

since the Green Revolution.

obtain, but their importance lessens as tenancy system is replaced by

.wage labor and peasants have less dependence on landlords and village chiefs.
The likelihood of the urban elite profitting from such a change

remains doubtful, however, at least in the short term, because of the greater

constitutional power of the state governments in financial and land

matters. It is more likely that new rural reform groups within the state

hierarchies who advocate land reforms will be elected. Furthermore, as

long as food shortages continue, the capitalist farmers are assured of

a favored position in trade with urban merchants.

71

At the same time, the incidence of rural rebellion has risen
appreciably in recent years, following the pattern of other countries
where insurgency has accompanied the transition of land, labor, and
the means of production into commodities. Where land becomes increasingly
concentrated in the hands of kulaks, turmoil will persist, and the govern-
ment at the state or federal level will be forced to take measures aimed
at appeasing the rural masses, although it is doubtful that they can
effectively curtail the power of the rural elite.

A tension has long been manifested in Indian politics between the
powerful and the powerless. The Calcutta food riots, the increased
activity of Marxists organizations in parliamentary and extra-parliamentary
politics, even the responses of Mrs. Gandhi to conservative trends in the
Congress Party, all represent a pattern of leftest radicalism that has
been a viable force in Indian politics for years. The breakdown of
traditional relationships in the countryside, precipitated by the growth
of capitalist agriculture, would seem to be provoking a rural reaction
much more severe than has been evidence in the past. Yet, if no strong
organization emerges to crystallize and articulate the anger of the peasantry,
the potential for change through social revolution will continue to be
diffused by attempts at appeasement by the Congress and non-directed acts

of protests.

FOOTNOTES

lMax Weber, The Religion of India, ed. and trans., Hans H. Gerth
and Don Martindale (New York: Free Press, 1958). What follows is a
summary of much of this work.

2Weber, p. 112.

3Wm. and Lore Kapps Hindu Culture, Economic Development and Economic
Planning (New York: Asia Publishing House, 1963), p. 6.

4Kapp, pp. 15-18.

5Kapp, p. 18.

6Kapp, pp. 52-54.

7Weber, p. 146.

8Milton Singer, "Religion and Social Change in India: The Max Weber

Thesis, Phase Three," Economic Development and Cultural Change, Vol. XIV
(1966), No. 4 (July, p. 499.

9Singer, "Religion and Social Change," p. 407.

10Milton Singer, When A Great Tradition Modernizes (New York: Praeger
Publishers, 1972), p. 353.

1]S. N. Eisenstadt, "The Protestant Ethic Thesis in an Analytical and
Comparative Framework,“ in The Protestant Ethic and the Spirit of Capitalism
(New York: Basic Books, Inc., 1968), p. 10.

leisenstadt, p. 33.

13Eisenstadt, p. 34.

14A. K. Sin h, "Hindu Culture and Economic Development in India," in

Conspectus, (1967 , No. l, p. 25.

72

73

15For examples of their work see, Alex Inkeles, "The Modernization
of Man," in Myron Weiner (ed.), Modernization (New York: Basic Books, 1966);
Everett C. Rogers, Modernization Among Peasants (New York: Holt, Rinehart
and Winston, 1969.

16Rogers uses the term "subculture of peasantry" or "subculture of
traditionalism“ to describe sector of the population in underdeveloped
nations which share a particular set of "traditional" attitudes.

17Inkeles shares the conceptual framework of Rogers and Singh which
defines modernity as the end point on a continuum of values and attitudes
which begins with traditionalism. However, Inkeles sees modernity as an
ideal social psychological state, related to, but of significance inde-
pendent of the goal of economic development. Modernity is a state of
individual consciousness which encompasses a kind of humanism towards
which all men should strive.

18For a review of these problems see:- Charles Bettleheim, India
Independent (New York: Monthly Review Press, 1968), pp. 8-17; Wilfred
Malenbaum, Modern India's Economy_(Columbus: Charles E. Merrill Co., 1971),
pp. 43-46.

19Harry M. Cleaver, "The Contradictions of the Green Revolution,"

in Monthly_Review, Vol. 24 (1972), No. 2 (June), pp. 8-111; G. S. Pohekar,
Studies in the Green Revolution (New York: United Asia Publications,
1970); Francine Frankel, India's Green Revolution (Princeton: Princeton
University Press, 1971).

20Barrington Moore, Social Origins of Dictatorship and Democracy
(Boston: Beacon Press, 1966), p. 339.

21Nathan Keyfitz, "The Political-Economic Aspects of Organization
in South and Southeast Asia," in Phillip Hauser and Leo Schnore, Studies
in Urbanization (New York: Wiley, 1965).

22

 

Moore, p. 318.

23S. Nuriel Hasan, "The Zamindars Under the Moghuls," in Robert E.

Frykenberg, ed., Land Control and Social Structure in Indian History
(Madison: University of Wisconsianress, 1969), p. 29T'

24Hasan, p. 17-18.

25H. H. Moreland, India At The Death of Akbar (Delhi: Atma Ram
and Son, 1962), p. 125.

26

 

Moore, p. 329.

74

27Hasan, p. 23.

28Ashin Das Gupta, "The Merchants of Surat, c. 1700-50," in Edmund
Leach and S. N. Mukherjee, eds., Elites in South Asia (Cambridge:
University Press, 1970), pp. 201-22.

29

 

Gupta, p. 210; Moreland, pp. 130-233.

30Alice and Daniel Thorner, Land and Labour in India (New York:
Asia Publishing House, 1962), p. 53; Moore, p. 345.

3Moore, p. 346; the Thorners, p. 54.

32Moore, p. 356.

33For a discussion of the introduction of private property into
India see Walter C. Neale, "Land Is To Rule," in Robert E. Frykenberg,
ed., Land Control and Social Structure in Indian History.

34Social relationships in Indian villages have received much
attention from anthropologists. See, for example, ethnographies presented
in McKim Marriot, Villa e India (Chicago: University of Chicago Press,
1955); William and Charlotte Wiser, Behind Mud Walls (Berkely: University
of California Press, 1971).

 

35Bett1eheim, p. 50.

36Ameiya Kumar Bagchi, “European and Indian Entrepreneurship in
India, 1900-1930," in Elites in South Asia. pp. 223-256; A. R. Desai,
Social Background of Indian Nationalism (Bombay: Popular Prakashan,
19481, p. 114.

37R. Palme Dutt, India To-Day(Calcutta: Delip Bose, 1947), p. 124.

 

38butt, p. 205.

39butt, p. 226.

4oGorham D. Sanderson, India and British Imperialism (New York:
Basic Books, 1951), pp. 104-105, 186-87.

41

 

Bettleheim, p. 29.

42Malenbaum, p. 38.

75

43Bettleheim, p. 30.

44Bettleheim, pp. 19-34.

45Moore, p. 368.

468ett1eheim, p. 25.

47Nationa1 Sample Survey, 1961-62, 17th Round, cited in Frankel.

48Baran, pp. 134-151.

49This point in stressed by Barrington Moore, and Angus Maddison,
Class Structure and Economic Growth (London: George Allen and Unwin Ltd.,
1971)! pp. ”‘32.

50Moreland, pp. 172-6; Desai, pp. 7-19.

5lMaddison, p. 55.

52Maurice Dobb, Studies in the Development of Capitalism (New York:
International Publishers, 1947), pp. 137 ff.

53butt, p. 124.

54Moore, p. 395.

558agcni. pp. 223-256.

56Gail Omvedt, "Revolution and the Rural Proletariat in Contemporary
India" (unpublished paper),p p.

 

57George Rosen, Democrac and Economic Change in India (Berkeley:
University of California Press, l957), p. 73.
58

Bettleheim, p. 177.

596. A. Pai, "How Green is the Green Revolution?" in Pohekar, pp. 41-52.

60Cleaver; Ohekar; Frankel.

6'Pai. p. 41.

76

62S. S. Madalgi, "Small Farmers in India and Their Problems," in
Pohekar, pp. 6-12.

63R. M. Mohana and P. Jagannadha Paharlo, "Small Farmers and Long
Term Finance," in Economic and Political Weekly, Vol. 7 (1972), no. 26
(June 24), pp. A, 83-88. ‘

64Wolf Ladejinsky, "The Ironies of India's Green Revolution,“ in
Foreign Affairs, July, 1970, p. 764; V. S. Vyas, "Green Revolution: A
Promise and the Problems" in Pohekar, p. 4.

65"New Trends in Inter-Sectoral Terms of Trade," in Economic and
Political Weekly, June 19, 1971.

66

 

Thorner, p. 63.

676ett1eheim, p. 189.

68Thorner,,p. 63.

69Baran, p. 225.

70Rosen, p. 146.

7lHerbert Karp and Chain Singh Barla, "Agricultural Taxation and
Mobilication of Surplus for Economic Development in India" (unpublished
paper , p. 19.

72Karp and Barla, p. 19.

73$ee, for example, Maddison, p. 21 ff.

74Eric Wolf, Peasant Wars of the Twentieth Centu (New York:
Harper and Row, 1969). in this wBY-k, Profgsor W01 as focused on foreign
and indigenous capitalist penetration of the countryside. I have drawn
heavily on his discussion, in particular the concluding chapter.

75Frankel, p. 196 ff.

BIBLIOGRAPHY

Alavi, Hamza, "Peasants and Revolution," in Socialist Register, 1965, 241-277.

 

Area Handbook for India, Washington, D.C.: Government Printing Office, 1970.

Bagchi, Ameiya Kumar, "European and Indian Entrepreneurship in India,
1900-1930," in Leach and Mukherjee, eds., Elites in South Asia,
Cambridge: University Press, 1970, 223-256.

Baran, Paul A. The Political Economy of Growth, New York: Monthly Review
Press, 1957. "

Bettleheim, Charles, India Independent, New York: Monthly Review Press, 1967.
Chaudhuri, Pramit, "India: Objectives, Achievements and Constraints," in

Aspects of Indian Economic Development, London: George Allen and
Unw n t ., , - .

Cleaver, Harry, "The Contraditions of the Green Revolution," in Monthly
Review, Vol. 24, No. 2 (June, 1972), 80-111.

 

Cohen, Bernard, "The Initial British Impact on India," in Wallerstein, ed.,
Social Change: The Colonial Situation, New York: Wiley, 1966, 303-320.

Desai, A. F., Social Back round of Indian Nationalism, Bombay: Popular
Prakashan, I948.

Dube, S. C., “Cultural Problems in the Economic Development of India," in
Bellah, ed., Religion and Progress in Modern Asia, New York, 1965.

Dobb, Maurice, Studies in the Develo ment of Capitalism, New York:
International PuElisfiers, I947.

Dutt, R. Palme, India To-Day, Calcutta: Delip Bose, 1947.

 

Eisenstadt, S. N., "The Protestant Ethic Thesis in an Analytical and
Comparative Framework," in the Protestant Ethic and Modernization,
New York: Basic Books, Inc., 1968, 3-45.

Frankel, Francine, India's Green Revolution, Princeton: Princeton University
Press, 1971.

Gupta, Ashin Das, “The Merchants of Surat, c. 1700-50," in Leach and
Mukherjee, eds., Elites in South Asia, Cambridge: Cambridge University
Press, 1970, 201-222.

77

78

Hasan, S. Nuriel, "The Zamindars Under the Moghuls," in Frykenberg, ed.,
Land Control and Social Structure in Indian History, Madison:
University of Wisconsin Press, 1969, 17-32.

Inkeles, Alex, "The Modernization of Man,“ in Weiner, ed., Modernization,
New York: Basic Books, 1966, 138-50.

Kapp, William and Lore, Hindu Culture, Economic Development and Economic
Planning, New York: Asia Publishing House, 1963.

Karp, Herbert H. and Chain Singh Barla, "Agricultural Taxation and Mobili-
zatiog of Surplus for Economic Development in India,” (unpublished
paper .

Keyfitz, Nathan, "The Political-Economic Aspects of Urbanization in
South and Southeast Asia," in Hauser and Schnore, ed.s, Studies in
Urbanization, New York: Wiley, 1965.

Ladejinsky, Wolf, “Agrarian Reform in Asia," in Fore_gg Affairs, Vol.
XLII, No.3 (April, 1964), 445-460.

Madalgi, S. 5., ”Small Farmers in India and Their Problems,“ in Pohekar,
ed., Studies in the Green Revolution, New York: United Asia
Publications, 1970, 6:12.

Maddison, Angus, Class Structure and Economic Growth, London: George
Allen and Unw1n Lth2—197l.

Malenbaum, Wilfred, Modern India's Economy, Columbus, Ohio: Charles E.
Merrill Co., 19712

 

Marriot, McKim, ed. Village India, Chicago: University of Chicago Press, 1955.

 

Mohana, R. M. , and P. Jagannadha Paharlo, "Small Farmers and Long Tenn
Financea" in Economic and Political Weekly, Vol. VII, No. 26 (June 24,
1972),A -83-88.

Moore Barrington Social Origins of Dictatorship and Democracy, Boston:
’Beacon Presg, .

Moreland, W. H., India At the Death of Akbor, Delhi: Atma Ram and Sons, 1962.

“New Trends in Inter-Sectoral Terms of Trade," in Economic and Political
Weeily, June 19, 1971.

Omvedt, Gail, “Revolution and the Rural Proletariat in Contemporary India,“
(unpublished paper).

Neale, Walter C., "Land is to Rule," in Frykenberg, ed., Land Control and
Social Structure in Indian History, Madison: University oi Wisconsin
I "SS. 5969’ 3-16. 1

: .illllll‘iillfi‘nllllliiiiiliiiiii

79

Pai, G. A., "How Green In the Green Revolution?" in Pohekar, ed., Studies
in the Green Revolution, New York: United Asia Publications, 1970,
41-52.

 

Robinson, Austin, “Economic Progress in India," in Chaudhuri, ed., As ects
of Indian Economic Development, London: George Allen and Unwin Etd.,

Rogers, Evertt, Modernization Among Peasants, New York: Holt, Rinehart
and Winston, 1969.

 

Rose, Arnold M., "Sociological Factors Affecting Economic Development in
India," in Studies in Comparative International Development, Vol. III,
No. 9, 1967-67,’169-181.

Rosen, George, Democracyjand Economic Change in India, Berkeley,
University of California Press,Tl967.

 

Sanderson, Gorham 0., India and British Imperialism, New York: Basic
Books, 1951. ‘

Sethi, J. 0., India's Static Power Structure, New Delhi: Vikas Publishers,
1969.

 

Shah, S. A., Structural Obstacles to Economic Development, Delhi: Pe0p1e's
Publishing House, 1969.

Singer, Milton, "Religion and Social Change in India: The Max Weber Thesis,
Phase Three," in Economic Development and Cultural Change, Vol.
XIV, No. 4 (July, 1966), 497-505.

Singh, Amar Kumar, "Hindu Culture and Economic Development in India," in
Congpectus, No. 1, 1967, 9-33.

Singh, V. 8., Indian Economy Yesterday and Today, Delhi: People's Publishing
House, 1970.

Spear, Percival, "The Mughal "Mansabdari' System," in Leach and Mukherjee,
eds., Elites in South Asia, Cambridge: Cambridge University Press,
1970’ 1"“.

Svrinivas, M. N., and A. M. Shah, "Myth of the Self-Sufficiency of the
Indian Village," in Prasad, Hallen, and Pathak, eds., Conspectus of
Indian Society, Matekatra, Agra, 1971.

 

Thorner, Alice and Daniel, Land and Labour in India, New York: Asia
Publishing House, 1962.

United Nations. Demographic Yearbook 1970, New York, 1970.
United Nations, F.A.0. Production Yearbook 1965, New York, 1965.

80

United Nations, F.A.0. Production Yearbook 1967, New York, 1967.

 

United Nations, F.A.O. Production Yearbook 1970, New York, 1970.

 

United Nations, F.A.O. Trade Yearbook 1965, New York, 1965.
United Nations, F.A.0. Trade Yearbook 1967, New York, 1967.

 

United Nations, F.A.O. Trade Yearbook 1971, New York, 1971.

 

Weber, Max, The Protestant Ethic and the Spirit of Capitalism, trans.
TalcottTParsons, New York: Free PFess, 1958.

 

Weber, Max, The Religion of India, trans. and ed. Hans H. Gerth and Don
Martindale, New York: Free Press, 1958.

Weisskopf, Thomas E., "Dependence and Imperialism in India," in The
Review of Radical Political Economics, Vol. V., No. 1 (Spr1ng, 1973),
53-96.

Wiser, William and Charlotte, Behind Mud Walls, Berkely: University of
California,Press, 1971.

 

Wolf, Eric, Peasant Wars of the Twentieth Century, New York: Harper and
Row, 1969.

APPENDICES

81

82

APPENDIX A*

BALANCE OF PAYMENTS

 

 

 

 

 

 

 

 

 

 

 

dar Yo r2.
1"" 1965 1966P 1967? 1968 1969P
‘0 mammmm ooooooooooooooooooooo '1’1‘73 ’1,lh7 -1,mu .810 -1063
1". W, :OOODO ......OOOOOIOOOOOOO0.0.0.... 1’6w 1,531 1’61‘0 1,799 l’%h
b. M c'i'f' ooooooooooooooo0000000000090 2 7 2 600 2 T?“ 2 bill» 2‘26}:
M.m ooooooooooooooooooooooooooooo ”I’m: ’m "iplfi ’635 “220
b i
2. mm" ‘0“ oooooooooooooooooooooooocoo (31‘) (that (11.3) (n-G; (no..’
3. height and income ....................... 66 60 53 65 69
‘0 Mt MM“ o-oooooooooooooooooooooo '3 " -5 -15 -20
50 “”1 coocoo...0.0000000000000000...oooooooo 9 -ch “16¢ “12‘: 12
6. ”Mt m ooooooooooooooooooooooooooo -260 -2515 -276 -218 -292
1. Other government oo00.0.00...00.000.00.000... g“ 1.50 83 37 19
‘. Other private ....... oooooooooooooooooooooooo - h ‘1 '1 ’ "
I“ ”m o00000000000000.0000...on... "JR 3% 'fig '55 ‘5%
I. WED mans
9. Mn“ 0.00.0.0...........OOOOOOOOOOOOOOOOOO 85 178 139 160 176
m. Goverment ........ ooooooocoon-000.000.00.000 Th 127 u 16 57
c. max. ms (excluding Group D)
110 mu“ M“ 1m. ooooooooooooooooooo - ' .-
12. Other print- long-tor- ..................... ii '1' 8 10 i 17 Ii 39
n. M ”in“ .m oooooooooooooooooozo -3 1 ‘10 h 3
n. m ”mt oooooooooooooooooooooooooooo S 5 3 ' 2
150 00.000000000000000...coco. 1 1 . 78 1 182 6
. .. loans receivede ........................... 13% 75% £399 13% 1,039
United States .......................... 615 265 832 669 51.1
m. .............................. (250) (37) (507) (376) (312)
Other .................................. 611 1177 567 517 I598
1: loans repaide ............................. ~181 -176 -206 ~224 -251
United States .......................... -45 -55 -62 -67 -69
Other .................................. -136 -121 444 4.51 -182
c. Holdings of Indian rupees by international
nonmnetu'y institutions ...... ... ...... 17 -14 39 -13 -13
d. Other liabilities .. ....... .. ............ . 159 229 4&7 31.2 -69
e. nectar... ...... o oooooooooooooo o oooooooooo ’27 8 ‘3 -11
W sectors ‘
. vote institutions . ................ _ ....... 2 - O 2 17 -
a. Liabilities .............................. 7P5 - 3 '5 11'9 ‘8
h. Assets ................... . ............... 17 -57 f f -13
11c centm institution ooooooooo 000000000000000 '1h ‘6 h 31 -16
D. OFFICIAL RESERVE AND RELATED I'I‘DB
18. Liabilities (use of m credit) ............ 133 7t 95 -83 -133
19. Auets (increase -) ......................... -101 -10 :62 :_2_O_ f:
1. Monetary gold ............................ 735 758 - - -
1:. Reserve position in the Fund ............. - - - - -
c. Foreign exchange of Govern-lent ...... ...... ~85 48 17 ‘6 '3“
d. Foreign exchange of Reserve Bank ......... 18 -% -85 -21+ -202
B. m AND OHISSIONS ..... . ....... .. . .. ............ 102 51 -124 -191 441
P - Preliminary.
Note: The item umber: correspond to the item nth-hero used by IMF. 'i'nnnutiom between India uni lop-.1
on! Bhutan are not included.
Source: Interactions]. )bnotcy m, "Balance of Put-onto Yearbook."

*Appendix A, B and C reprinted from A.I;D; Economic Data Book: Near East-
and South Asia. July, 1971.

(33

APPENDIX 3
CENTRAL COVERNIENT FINANCES

 

 

 

 

 

 

 

 

 

 

 

Fiscal Year beginning April 1
1m 1966 I 1967 I 1968 [ 1969 l 1970‘
Billions ofi'rupees
‘0 mm - m 000000000000000000 22.8; & M020 206.“! “2 $
1. Dmestio revenue ............. €81 €379 11%;; 16.02 h .2
.0 hm m.’ 0000000000000 0 ' ‘ 7'20 -%%
1). Sale! mum ........... 10.52 11.71 13.108 15.55 18.’+5
6. Guam eeeeeeeeeeeeeeeeee 5085 5013 1"“? h'ls "“65
d. Profits of fiscal 111011013011 0.03 0.02 0.02 0.02 0.03
e. Other tax revenue ........ 0.31 0.32 0.37 0.142 0.h7
1'. Receipts from gov't
enterprises ............ 2. 57 2.95 3. 35 3.68 3.83
3. Other nontax revenue ..... 7-15 10-30 1h-92 15.07 1h.06
2. hon foreign grants .......... 1.02 0.13 0.81 0.38 . 0.37
B0 m - mm 00000000000000 1.8.08 hg.6h 2!.60 2308! 6102“
10 Mat 0000000000000000000000 m M aheou 3'083 ’00.
‘e DIG-00.0111) eeeeeeeeee 10.50 llafi 12.13 12. 1 13e
b. Grants and shared taxes . 7.80 8.89 10.23 12.1h 13.80
c. Subsidies ...... . ........ . 0.31 1.31 0.311. 0.51} 0.145
(1. Interest ................. 1+. 79 5.07 5. 35 5. 7h 6.03
e. Contrib.to gov't.enterprisaifl 0.02 0.02 0.02 0.02 0.01
2. Other current ............ 15.78 5.35 5.97 6.78 7.32
2. Capital ...................... 12.88 1 .6h 12.56 21.00 20.22
a. Direct ................... 1.73 0.53 0.57 0.65 0.95
b. Grants ................... h.2O 3.71 h.19 3.66 6.03
c. Loans ....... ... .......... , 13.95 13.50 111.80 1 ..7h 13.31
(1. Direct - Enterprises ..... - - - - -
mm M on susmrs (+) -1h.25 -12.72 -910 -12.36 -11.58
D. FINANCING was DEFICIT .. ..... 2.... ' 1h.2§ 12.12 2.ho 12-32 11.58
1. Domestic sources (net) .. ...... 7.2h 5.77 5.33 6.x 6.26
2. Ftreign borrowing (net) ..... .. .01 J 6. 1.91 _6.06 .
l. 0.3. Govemnt eeeeeeeeeee e 2 e 3e27 30511 2e
b. Other ................ ..... 2.19 0.89 0.80 2.55 2.86

 

 

* Converted at 7.5 rupees per 0.8. dollar.
a - Budget basis.

Source :

NOTE:

A. I one 1011! IO'The

Pom A.I.D. 10-715 is a standardized compilation of a country's central goverment finances
covering all the budgetary and extrabudgetsry accounts of the central government sector end
social insurance, with government enterprises included 253. of their operating expenditures,"
“megs ‘

84
APPENDIX

C

tOANS AND GRANTS PM ABROAD
(0.8. Fiscal Yeers . Uilliens of Dollars)

 

 

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTNER PR06RA_I_I§

 

0.5. OVERSEAS 1.0”” 040 . WEN
GRANTS-NET OBLIGATIGIS AND ”1”!) A“, 12':
17.8. PM»! 10m wmomzsnous mun“, ”m
101’". 1946- mo
1 1969 1970 “994760- 1970 1147:3537
4- amas. WWW 167.2 159.0 3,564.7 491.2 3,073.5
‘o'e.e w "E'EC‘sm ‘0000' 3 - 0" eeeeeeeeeeeee
“Seeeeeeee eeeee eeeeeeee eeeeee eeeeeeeeeeee 158.6 ‘3‘.‘ 3.113.9 491.2 2,622.7
amtieeeeeeeeeeeeeeeeeeeeeeeee eeeee eeeeeeee 8.6 27.6 ‘50.8 - P ‘5008 .’
rose roe PEACE - 7674; 269.1) 228.13 43322.1 312.2 41 009.9
111131- 1.1,1,........................ 1. 181.1: 1794. 312.2 4 81. 9
1194va m 0.5. 00114725 - LOANS....... .......... 0.2.4.11.‘ 305... 3.1.0271
Pursue mmmmcwmv-Planned for Country Use 1m. 9 69. 7 3,488.9 309.1 3.179. 8
(Laws) ........ . ....... (87. 9 (b9. 7) i2,697.2) (309.1) 2.388. 1)
(67.083) eoeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeees (21.0 (- ) (791.7) (") (791-7)
7 7111.11- 53.2 44.0 520.0 - 528.0 I
. semen RELIEF, momma. 1. 1101310 mm . 92.1‘ - ‘ 92' .‘l '
vOLmnm RELIEF AGENCIES... ...................... 51.5 44. 0 435.9 - 435.9
WWW ... 5.4 3. 8 283.5 76.2 207.3
FasCEuisPs ...................................... ’5.4“’ 3.8 3678 - 36.8
’. OIHERe eeeeee eeee eeeeeee eeeeeeeeee e eeeeeeeeeeeeeeeee - - 246.7 76.2 170.5
TOTAL OFFICIAL DEVELOP!!!“ ASSISTAICE ........ 441.9 391.4 8 170.3 879.6 7 290.7
Lomseeeeeeeeeeeeeeeeeeeee eeeeeeeeeeeeeeeeee . 6,0 a,332,z 375.1; 5’H§Z.g
Grmuu ..... ........................ 93.2 75.4 1,807.9 - 1,807.9
B. OHER(FEHHAL
E! to ..... ............ - 47.5 508.7 317.2 191.5
M ..... . ........ .. 441.9 438.9 8,679.0 1.11.9.5_;§.7,4.82 2
“museum-nuns"...................... . 363.3 6, 7 . 12196.8—fi, 73.3-—
Grants.......s.....s........ eeeeeeeeeee eeeee 93.2 75.4 ‘,m7,9 - 1, ,,807 9
u11114s1 13:1:74s6t PIOIIAI - cu to 746 Aseros )a! 1.6 1311
sentence ..... ..... ................. 0.6 0-9 Data Classified
Grants ................................... . I.0 0-7
(W1 tional Gran: Iron been Stocks)" (‘) P)
.“t. ..L'1‘" “3'01“0‘ ma00000000000000000000 - C n -
VOT‘L ”it"lfleeeeeeeeeeeeeeeeeeeeeseeeeeeeeeeee 1.6 . 1.6 Data ClaSS'Ified
TOTAL ECONMIC 0'0 "'t"meeeeeeeeeeeeeeeeeeeee “3.5 440.5
Loans... ...... ..... ....... . 349.3 364.4 Data Classified
Grmte...................... ........... ..... 94.2 76,]
A‘1IlIh-IIIIII-l

 

 

1.91M. °

IBRD - World Bank 40.5 40.0 1,087.7
lnt'l Dev. Association 152.5 227.5 1,264.9
Int'l Finance Corp. 15.9 3.0 36.1
UNDP — Special Fund 4.5 4.2 54,0
UNDP - TA (CY) 2.8 0.9 35.2
Other UN (CY) 5.0 4.2 55.]

ASSISTANCE FROM IRYERNATIONAL AOENClE§ - QQEEIVNENT!

FY 1969 FY 1070 FY '946

70

 

0.4.1:. 01mm“ (EXCLWIII 11.3.)
01710141. 011115111 01:93: yrs-011114.51

 

 

DONOR CY mos CY 1969 CY “3130-69
19m. 494.6. 422.6. 2,953.9...
Germany 88.8 71.4 897.5
Un. Kingdom 96.2 81.5 852.2
Canada 79 . 4 82 . 3 520 . 5
Japan 88.3 38.8 418.]

r 4‘7 n” AE‘J‘III‘QfiLJL-III

 

5.3117486! nou_____ mm 111 gm
tons no sum mum)

100' [Calendar Year! .....

Conulltive thru

’ 1')": (Calendar Year! .....

l"’”seeee

32
I .980

 

 

'Less than 850,000. 3,

Annual data represent deiiveries.