May 01, 2002

The Economic History of India

Tirthankar Roy, _The Economic History of India 1857-1947_. Delhi: Oxford University Press, 2000. xiv + 318pp. Rs. 595 or $24.95 (cloth), ISBN: 0-19-565154-5.

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

Teachers of Indian economic history will welcome Tirthankar Roy's _Economic History of India 1857-1957_. Roy provides a chronological survey of the colonial economy by economic sector -- agriculture, small-scale industry, large-scale industry, plantations, mines, banking, and the public sector. The book also provides separate chapters on "the macroeconomy" and "population and labour force." In a heterodox field in which historical economists often find themselves defensive about their methods and struggling with a paucity of records, Roy offers a serious attempt to place the tools of economic analysis in the service of Indian history. The goal of his _Economic History of India_ is to convey to budding historians and economists how this might be done.

Despite the fact that the survey covers the colonial period, Roy does not view the government of British India as the prime mover of the economy. This is most evident in his lucid discussion of the de-industrialization debate. He writes, "De-industrialization means a decline in traditional small scale industry that (a) derived from technological obsolescence against British goods, (b) was sustained by colonial policies, and (c) remained uncompensated by new enterprise. The term makes explicit contrast between Britain which experienced industrialization, and her major colony India, which experienced de-industrialization, at the same time and due to the same set of causes, namely trade and technological change" (p. 124). The debate surrounding de-industrialization is as central to Indian economic history as that of slavery is to American economic history. Enormous intellectual effort was put to the issue in the 1960s and 1970s and to a lesser extent in the 1980s. After two major monographs on traditional industry during the colonial period, Roy is well placed to provide an alternative perspective, which he calls "commercialization." Roy maintains that "products of British mechanized industry replacing Indian hand-made goods [in India] was more exceptional than the rule" (p. 128). Machine-made cloth was a poor substitute for handloom cloth in important market segments of the textile industry. Market segmentation implied that large and small-scale industry did not directly compete leaving open the possibility of survival and expansion of the latter. His commercialization thesis also provides evidence of mechanization and organizational innovation in traditional industries. Thus if Roy does not see the British government as the prime mover, it's because he knows better. Roy's own contribution to the research literature has led him to fresh insights on what happened in the bazaar.

Pedagogically Roy's handling of de-industrialization offers a brilliant illustration of the delights of Indian economic history. It offers students an intellectual feast with all the elements for exciting classroom exchange: the performance of the economy and nationalist discourse, Marxist vs. neo-classical principles, complex social norms in a commercializing economy, implicit theorizing, institutional change, alternative hypotheses and tests of evidence, disputes over evidentiary standards. De-industrialization is certainly one of the livelier segments in my course and I am grateful for a teaching tool that organizes many strands of the debate.

Roy's book is not without its drawbacks however. Money and banking are barely touched upon. The banking sector illustrates well what Rajat Ray called the imperial "division of economic space" and thus lends itself well to a full discussion of how colonialism interacted with commercialization. Instead banking is anachronistically placed in the same chapter with plantations and mines, while monetary policy (i.e. exchange rate stabilization) is tucked inside the chapter on macroeconomy. The index does not even contain entries for either shroffs (moneychangers) or hundis (bills of exchange). What institutions operated in the informal banking sector and how did they operate? How did monetary policy affect the opportunities available to or choices made by indigenous entrepreneurs? The book does not provide clear answers.

One might find other points worth taking issue with. Roy at times skims too lightly over opposing views. For example, in chapter one he describes the "world systems school" as the most famous school to have expounded views of underdevelopment. Yet Roy does not cite Wallerstein's work explicitly and within a sentence or two, world systems theory becomes indistinguishable from Marxist theory. For good reason Roy does not share many of the specific views of what he calls the "left-nationalist paradigm." His terse treatment of such positions is however more than compensated by the focused and systematic treatment his provides overall.

Indeed Roy's clear and organized handling of complex issues (such as the economics of common property rights in agriculture) surpasses the treatment found in other textbooks. Dietmar Rothermund's _Economic History of India from Pre-colonial Times to 1991_ (Routledge, 1993) provides a drive-thru version of Indian history. It is a competent chronological overview that does not enter into any substantive historiographic or economic issues. However I would discourage exposing the young to such gems of economic analysis as "Compelled always to have an export surplus, India could not import too much" (Rothermund, p. 37). A more refined alternative is B.R. Tomlinson's _Economy of Modern India, 1860-1970_ (Cambridge University Press, 1996). The three core chapters of this work are masterpieces of synthesis but not easy to disaggregate into a sequence of coherent class lectures and exercises. Roy's work by contrast is neither too diluted nor too condensed. He keeps the narrative flowing and at the same time ably describes the economic issues at stake, the possible counterfactuals, and the evidence supporting competing positions. It should be noted that none of the available surveys of Indian economic history contain the photo essays or graphical expositions typical in textbooks on American economic history.

While the inner flap bills this as a textbook, the work will interest a wider audience. Roy's up-to-date overview of the historical research makes the field accessible to anyone interested in the development of the global economy and its national parts. It's a pity it ends at 1947.

Santhi Hejeebu researches the East India Company in the eighteenth century. She is currently writing an article called "Mechanism Design in the English East India Company" (joint with Pablo Casas-Arce). She is also interested in the organization of Indian merchant groups in the early modern period and is working on an article called "South Asian Firms: Competing Theories in an Emerging Field" (joint with Scott Levi). She teaches several courses in Asian economic and business history.

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