• One of the major areas of economic impact of the British Raj was the breakdown of the system of traditional, autonomous, self-sufficient village economy in India. The isolation of the village came to be gradually broken because of developments in the field of transport and communication i.e., roads and railways.
  • After the conquest of India in 1818, British authorities in India established high centralized administration. This new system of administration by taking charge of village administration an of functions previously performed by the village panchayats weakened the autonomy of village administration. Functions and duties of village officials came to be supervised by the taluq and district headquarters to which now the village officials became responsible. The Indian villages began to be gradually brought into contact with outside world. Also, the more enterprising among the village folk, when compelled by circumstances, moved away from their villages, seeking employment in newly developing factories, mines, plantations or railways Construction.
  • The agrarian structure of the rural society in India has witnessed enormous changes in India during the colonial rule. When the British started ruling India they, in the rural areas they ruled through local zamindars, who were the landlord and had certain amount of political power in their hands. Under the British rule the zamindars were given even more powers and they were also granted property rights.
  • The British government made various new land revenue systems in the form of the Permanent Settlement, Ryotwari Settlement, Mahalwari Settlement. Thus by the middle of the nineteenth century the Company’s administration had devised three systems of land revenue administration, creating private property in land and conferring that proprietary right on three different groups- the Permanent Settlement was made with the zimindars, the Ryotwari Settlement with the ryots or peasant proprietors and the Mahalwari Settlement with the village community. As a result of these new system of revenue administration the landlords did not pay any attention to the development of agriculture. Rather they focused on extracting revenue as much as possible.
  • Due to this attitude the condition of agriculture worsened. The condition of the peasants became even more worst as the oppression on them increased since they failed to pay the revenue amounts. To save themselves from the oppression the peasants fled from their lands. In some places the peasants started revolting and what more worsened the situation was the occurrence of famines. These changes and grievances generating from these new systems of revenue administration were amply reflected in the series of agrarian disturbances that marked the first century of British rule in India.
  • The British conquerors were entirely different from the Mughal ruling authorities, who ruled India till former came to India for trade and later started interfering with the politics and administration of the country. The British Government totally disrupted the traditional socio-economic structure of the Indian villages. The self-sufficient village economy broke down as the British Government centralized the system of revenue administration and also commercialized the agrarian products to enhance trading activities.
  • The British rule which was exploitative in both nature and functioning, played an important role in the emergence of the money lender class who in due time became very much influential and by the end of the 19th century they were nothing but curse for the poor rural people and also a major cause of the growing rural indebtedness. All these caused great resentment and the peasant class and also the people belonging to the rural society started to revolt against the existing system and this money lending class of people became quite a target of attack. As a result of these turmoil and disturbances the village communities gradually witnessed disintegration and decay.
  • The impact of British rule led to the development of new structure of agrarian relation totally different from the previous system and as far as the social classes in the rural society is concerned the saw 19th century saw the rise of landlords, intermediaries and money lender class of people who exercised much power in the newly developed agrarian structure. Agricultural labourers and share-croppers belonging to lower ranks in order of social class were the most oppressed and deprived and sunken in poverty. The new agrarian system was neither entirely feudal nor did it had any elements of the Mughal era. It was combination of feudal and colonial elements.
  • The impact of the British Government on the Indian people was enormous and long-lasting but it was extensively somewhat much more on the rural people and rural society. In the pre-colonial times the Indian village communities enjoyed a proper system of agriculture, small scale village based industry and local trade all of which together contributed to economic stability and self sufficiency of the Indian villages. But with the coming of the British the existing systems changed which proved detrimental for both the agriculture based structure of the Indian villages and also the condition of the peasantry. The Indian Rural society had to deal with long lasting poverty, famines and stagnant situation of agriculture as a result of all the changes.

Impoverishment of Peasantry

  • Before the British came to India, most of the people of India was dependent on agriculture. Even though the methods applied in agriculture was not advanced technology wise but was self-supporting and autonomous. The villagers either acquired or devoured the crude materials and articles directly. Hence, scenario like that of starvation or famines were uncommon. Obviously, farming practices stayed crude, yet the villages worked autonomously and were independent. The majority of this got changed when the British set feet on the Indian subcontinent.
  • Under British rule, the peasantry became increasingly impoverished. Despite the fact that he was no longer embroiled in internal conflicts, his material situation deteriorated, and he gradually fell into poverty.
  • Clive and Warren Hastings’ policy of extracting the maximum possible land revenue had caused such devastation in Bengal at the start of British rule that even Cornwallis complained that one-third of Bengal had been transformed into “a jungle inhabited only by wild beasts.”
  • Improvement didn’t happen later, either. The peasants’ lot remained unenviable in both the Permanently Settled and Temporarily Settled Zamindari areas.
  • They were left to the mercy of the zamindars, who raised rents to unaffordable levels, forced them to pay illegal dues, forced them to work as beggars, and oppressed them in a variety of other ways.
  • Cultivators in the Ryotwari and Mahalwari areas were in no better shape. The government stepped in to replace the zamindars and imposed an excessive land revenue tax, which was initially set at one-third to one-half of the produce. Heavy land valuation was a major contributor to the rise of poverty and deterioration of agriculture in the nineteenth century. This fact was noted by many contemporary writers and officials. 
    • Bishop Heber, for example, wrote in 1826: Neither Native nor European agriculturist, I think, can thrive at the present rate of taxation. Half of the gross produce of the soil is demanded by government. … In Hindustan [Northern India] I found a general feeling among the King’s officers… that the peasantry in the Company’s Provinces are on the whole worse off, poorer and more dispirited than the subjects of the Native Provinces; and here in Madras, where the soil is, generally speaking, poor, the difference is said to be still more marked. The fact is, no Native Prince demands the rent which we do. 
  • Despite the fact that the demand for land revenue grew year after year—the proportion of total produce taken as land revenue tended to decline, particularly in the twentieth century as prices rose and production increased. As the disastrous consequences of demanding extortionate revenue became clear, no proportional increase in land revenue was made. However, by this time, the population pressure on agriculture had grown to the point where the lower revenue demands of later years weighed just as heavily on the peasants as the higher revenue demands of the Company’s early years.
  • Furthermore, by the twentieth century, the agrarian economy had collapsed, and landlords, moneylenders, and merchants had established strongholds in the village
  • The evil of high revenue demand was exacerbated by the fact that the peasant received little monetary compensation for his labour. Agriculture was given very little attention by the government.
  • It spent almost all of its earnings on meeting the needs of the British-Indian administration, paying direct and indirect tribute to England, and promoting British trade and industry. Even the enforcement of the law tended to benefit merchants and moneylenders rather than peasants. 
  • The negative consequences of an excessive land revenue demand were exacerbated by the strict manner in which it was collected. Even if the harvest was below average or failed entirely, land revenue had to be paid on time and on schedule. However, even if he had been able to meet the revenue demand in good years, the peasant found it difficult to do so in bad years.
  • When a peasant failed to pay his land tax, the government sold his land to recover the money owed to him. However, in the majority of cases, the peasant took the initiative and sold a portion of his land to meet the government’s demand. 
  • In either case, peasant was evicted from his property. The inability to pay revenue drove the peasant to borrow money from a moneylender at high interest rates. He would rather go into debt by mortgaging his land to a moneylender or a wealthy peasant neighbour than lose it outright. He was also compelled to go to a moneylender whenever he couldn’t make both ends meet. He, on the other hand, found it difficult to get out of debt once he was in it. 
  • The moneylender charged high interest rates and used cunning and deceptive tactics to get the peasant deeper and deeper into debt, including false accounting, forged signatures, and forcing the debtor to sign for larger amounts than he had borrowed, until he had to give up his land.
  • The new legal system, as well as the new revenue policy, greatly aided the moneylender. The moneylender was subordinate to the village community in pre-British times. He couldn’t behave in a way that the rest of the village despised. He couldn’t, for example, charge usurious interest rates. In reality, interest rates were set by usage and public opinion.
  • Furthermore, he could not seize the debtor’s land; he could only take possession of the debtor’s personal belongings, such as jewellery, or a portion of his standing crop. The British revenue system made it possible for a moneylender or a wealthy peasant to take possession of land by introducing land transferability.
  • Even the benefits of peace and security established by the British legal system and police were primarily reaped by the moneylender, in whose hands the law placed enormous power; he also used the power of the purse to turn the expensive litigation process in his favour and to make the police serve his purposes.
  • Furthermore, the literate and astute moneylender could take advantage of the peasant’s ignorance and illiteracy to manipulate the complicated legal processes in order to obtain favourable judicial decisions.
  • Moneylenders, merchants, rich peasants, and other moneyed classes gradually sank deeper and deeper into debt, and more and more land passed into the hands of moneylenders, merchants, rich peasants, and other moneyed classes in the Ryotwari and Mahalwari areas. The process was repeated in the zamindari areas, where tenants lost their tenancy rights and were either ejected from the land or became moneylender’s subtenants.
  • During times of scarcity and famine, the process of transferring land from cultivators was accelerated. The Indian peasant had few savings for emergencies, and when crops failed, he turned to the moneylender not only to pay his land taxes, but also to feed himself and his family.
  • The moneylender had become a major curse of the countryside by the end of the nineteenth century, and an important cause of rural people’s growing poverty. The total rural debt was estimated to be Rs 300 crore in 1911. It had grown to Rs 1800 crore by 1937. 
  • The whole thing spiralled out of control. Taxation and rising poverty pushed cultivators into debt, which exacerbated their poverty. In fact, the cultivators frequently failed to recognise that the moneylender was an unavoidable cog in the imperialist exploitation machine, and they turned their rage on him because he appeared to be the visible cause of their poverty.
  • During the Peasant Revolt of 1857, for example, the moneylender and his account books were frequently the first targets of attack for the peasantry. Such peasant behaviour quickly became the norm. The moneylender-turned-merchant was aided in exploiting the cultivator by the growing commercialization of agriculture. Because he had to meet the demands of the government, the landlord, and the moneylender in a timely manner, the poor peasant was forced to sell his produce shortly after harvest and at whatever price he could get.
  • This left him at the mercy of the grain merchant, who was able to dictate terms and buy his produce for a fraction of the market price. As a result, the merchant, who was frequently also the village moneylender, reaped a large share of the benefits of the growing agricultural trade.
  • Landless peasants and ruined artisans and handicraftsmen were forced to become either tenants of moneylenders and zamindars by paying rack-rent or agricultural labourers at starvation wages as a result of de-industrialisation and lack of modern industry.
  • As a result, the peasantry was crushed by the government, the zamindar (landlord), and the moneylender. After these three had taken their share, the cultivator and his family were left with very little. 
  • According to estimates, land rent and moneylenders’ interest totaled Rs 1400 crore in 1950-51, or roughly one-third of total agricultural output for the year. As a result, the peasantry’s impoverishment continued, along with an increase in the number of famines. Whenever droughts or floods caused crop failure and scarcity, millions of people died.

Decline of Productivity of Agriculture

  • Because of congestion in agribusiness, exorbitant taxation system, development of landlordism, expanding obligation and the developing impoverishment of cultivators, Indian agriculture started to stagnate and even fall apart bringing about amazingly low yields per section of land. In general farming generation fell by 14 percent somewhere in the range of 1901 and 1939.
  • The congestion in farming and increment in subinfeudation prompted subdivision and discontinuity of land into little property a large portion of which couldn’t keep up their cultivators. The outrageous destitution of the dominant part of laborers left them with no assets with which to improve agribusiness by utilizing better means, more excrement and composts, and improved systems of creation. Nor did the cultivator have any motivating force to do as such.
  • In England and other European nations, the rich proprietors regularly put capital in their property to build its efficiency with the end goal of partaking in the expanded pay. Yet, in India the truant proprietors, both old and new, played out no helpful capacity. They were negligible lease beneficiaries who had regularly no roots in the land and who took no close to home enthusiasm for it past gathering rent. They thought that it was conceivable and in this way wanted to build their salary by further pressing their inhabitants as opposed to by making gainful interests in their properties.
  • The administration could have helped in improving and modernizing agribusiness. In any case, the administration would not perceive any such duty. A normal for the money related arrangement of British India was that, while the fundamental weight of tax collection fell on the shoulders of the worker, the administration spent just an exceptionally little piece of it on him.
  • In the year of 1905, British rule spent excess of Rs.360 crores just on the railroads. This expenditure was done because it served the purpose of the British Empire. But during the same time frame not even Rs.50 crores was spent on agriculture which was the most revenue generator at that time. All things considered, water system was the main field in which the administration stepped forward. When farming everywhere throughout the world was being modernized and upset, agriculture in India was lacking in innovations. The equipment that were in use were getting for last 100 years.

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