Colonial Rule and Its Effects on India's Rural Economy

Read this article, which takes a much longer-term historical view of India's contributions to the global economy. In particular, it covers how British colonial rule may have "broken" the economy in ways that have yet to be repaired.

Impact on Agriculture

The impact of the land revenue systems (Ryotwari/ Mahalwari, etc.) led to the agrarian controlled structure with property rights leading to under-utilization of land and of manpower and led to inefficient use of land and low agriculture productivity.

This led to different forms of land ownership as under:

  • Exproprietory tenants – earlier owners of land who had lost their status
  • Occupancy tenants – those who acquired tenancy right as per the 1935 Act
  • Non- Occupancy tenants- these were tenants at will and paid cash rents that were not regulated by administrators
  • Share-croppers – who paid rent in kind at 50 percent of gross produce and unprotected
The various Tenancy Acts in force were:

  • Bengal Tenancy Act 1885-12 year's continuous occupancy conferred rights to tenants.
  • Agra Tenancy Act 1901-7 years continuous occupancy conferred lights to tenants.
  • Agra Tenancy Act 1926 – life tenancy rights.
  • UP Tenancy Act 1939 – tenants for life and inheritable.

The leasing out and leasing in of land led to feudal relationships and a stagnant setup (between 1870 and 1920, agriculture grew @ 0.04%) and was not on commercial lines due to the existing economic, soil, irrigation, and cultural set-ups. Agriculture suffered as there was mass exploitation of the tenant cultivators, extraction of the marketable surplus produce in the form of arbitrary rents, and no investment in enhancing land productivity. Summing up, the colonial legacy led to the continuation of outdated cultivation methods, low agricultural yields, and abnormally high rents paid by farmers to the zamindars. 

Family labour had to necessarily work in the fields and no organized marketing system except the weekly/bi-weekly 'haats' or 'shandies'. This led to subsistence-level agriculture and eviction of farmers at the will of the zamindars and added to the plight of the smallholder farmer and laid the foundation for the growing numbers of landless laborers in India. The agrarian society then became a hindrance to encouraging productive forces in the rural economy and the productive capacity of farmers reached a state of stagnation.