Textile markets

The textile market and the agrarian rural and urban economy of India

The oldest reference in the Ithihaasa of natural red cotton gardens is seen in the

Ramayana .In 17th, 18th centuries the greatest cotton supplier of the world was

India. Europeans were interested in cheap mass consumable clothes while

Persians, Babylonians were interested in fine silk and both were specialties in

India. Among designed garments the cheap printed and the costly woven designs

Existed. Because of preference for cheap variety in market, the specialization occurred in

large villages of Gujrat, Coromandel and Bengal. English and Dutch dominated the trade.

The production organization in villages was clustered around trading centers. Co-

ordinated with merchants who traded in the town, the village traditional guilds

prospered. The pattern of location and ethnic composition of buyers and producers had an

important role for Indian merchants and intermediaries. Naturally the hereditary weavers

were prosperous. Then in 1820 trade dwindled and they suffered. The cotton famine of

1860 in India due to Manchester cotton markets is well known. The system of basaks in

Bengal was to make contract with weavers and give advances of money and raw

material. This can be used as a tool for bargaining and involve coercion. The fulfillment of

contract was a sort of debt. For Indian goods Europe gave gold and silver (bullion inflow

to market) .This existed in India even before, and what they did was getting the monopoly

of the gold which served as currency in sathavahan and vijayanagara periods. Gold was

more than currency, a saving in India.

The rural area contributed subsistent food crops, raw materials, export quality goods, and

the urban centers had marketing centers and did capital generation and gave raw material

for exportqulity goods to rural area. The export markets bring gold and silver for savings

and as raw material for workers to make export quality ornaments. The export markets in

Bengal and Cholamandalam and Malabar were famous in pre-colonial India. British made

first centers in Bengal, Madras and Malabar due to this very reason.

1790 saw 50 million yards of cloth exported which only 1-2 % production is of

India. (M.J.Twomey .Employment in 19th century Indian textiles .Exploration of

economic history of India 20. (1.) 1983.Table 1) The internal trade in pre-colonial North

India: There were small exchanges in rural areas for rural produce with or without local

markets. Periodic markets in large villages on specific dyes where commodities of all types

traded. The will be mainly the necessities for day to day life of people.

The second level limited regional trade in small towns and permanent markets .Higher

value goods like sugar, oil, ghee, butter, fine clothes available here. (Kessinger .Regional

economy pp 247), and the area and range expanded when water transport was available.

The 3rd level was the entirely urban long distance trade in luxuries.Mohenjo

daro, Harappa, Dwaraka etc were land and sea port centers which catered to such

activities. Caravan pack bullocks from entire country reached such places through a nexus

of roots protected by special guards of tribesmen living in the hills and forests.

When British expanded this trade they first captured the monopoly of the long distance

major trade centers and routes. Abolished the old guards and even the forests from where

they did guerilla warfare.

The function of the kanakkar /sreshty/accountant class were four-fold.

1.converting the weights and measures

2.bill discounting

3.remittances

4.leading to the local elite

These people who kept accounts of long distance trade and urban economy were called

shroffs and they got political power through helping the British .For example Jagath seth

house in Bengal. In Malabar and Kerala were the Nayar guilds and they did trouble the

foreigners and hence were curbed along with their chieftains who were engaged in land

and sea routes. The Indians saw EIC as a new trade house or a renter only and they never

expected that they will destroy the entire system of their economy .Therefore the rights to

revenue over large states was given .In 1790 the income from export trade declined and

by then EIC was ruler of Bengal. How this happened?

1.They defended trade from political interference of native rulers

2.They interfered with the natural conflicts over possession of wealth among local rulers

and made it their benefit.

When export income declined the company concentrated on land income and started

direct rule. Then started territory expansion. They slowly made impact in order starting

from trade, agrarian relations, industry and infrastructure of the country’s economic

backbone. Bengal surrendered, and in 1856 Ayodhya too. Then only the people and the

rulers realized the impact of what was happening. By 100 years they have lost all rights

whatsoever on their motherland. And the result was 1857 Mutiny .

Year wise -most important exports from India

1811 Cloths
Opium
Indigo
Raw silk
Raw cotton
Sugar 33%
23.8%
18.5%
8.3%
4.9%
1.5%
1850 Opium
Cloths
Indigo
Sugar
Foodgrains 30.1%
19.1%
10.9%
10%
4.1%
After 1850 Indigo and opium replaced by cotton and jute from Surat,Bengal and Sahyadri
Tea and leather export increased .Estates ,and increase in cow slaughter

In 1850 60 % textiles and metal imported
In 1870 import was of machinery and intermediate goods.




Scale of foreign trade (excluding treasures) 1813-1913

Import export % share of trade in
National income
Bengal 1813
1839 16 46
57 120 -
-
British India 1835
1857(mutiny yr)
1913 48 111
153 275
1913 2490 1.1-2.4
3.6-4.8
>20
National profit increased only after queen Victoria took over.



Average annual growth rate %
Bengal year Import Export
1813-27 6.5 2.4
1828-39 1.1 1.9
India 1835-57 6.3 4.9
1858-1913 5.0 4.5
1858-1913(excluding 1866 as outlier) 5. 5.3
The average annual growth rate of India did not increase, but it did decrease.1800-1850

was the indigo-opium era. Indigo cultivation flourished. The natural indigo was then
substituted by synthetic one and sudden decline in markets affected the indigo farmers of

Bengal. Opium in Bengal was cultivated under Government monopoly of British. In late 18th

century it was only a small item of export to China.EIC made it the payment for Chinese

tea,silk,porcelain which were exported to Europe. China tried to stop the opium trade and

British fought two wars with China for this. Only in 20th century China and India could

stop this trade by a common agreement. Sugar and raw cotton ,indigo and opium

sustained the commerce of Eastern Gangetic economy in 1st half of 19th century .

The agrarian change

This was pursued with great determination for maximization of land revenue .Fixing

revenue in cash and not as proportion of the output was the first drastic measure and

assessment was done uniformly all over India without considering the productivity of

different regions. Especially severe in Ryotwari settlement areas between 1820-50.The

prices fell, burden increased, even the tax-free tenures subjected to tax, tax collection made

more” efficient” and cash crops(sugar,cotton,indigo,opium,nuts,tea,rubber

increased)given preference over subsistence foodgrains for getting cash payments. Even

single jackfruits were taxable .Sale and auction of land increased with revenue defaults

and propriety rights defined differently. The grain traders who were strong could purchase

the transferred land and continue cultivation to some extant. Cash economy depended on

financiers. Poor peasants suffered. The part time peasants who were artisans were

particularly affected by the double change that came. People who live on animal

husbandry ,the shifting cultivators all suffered alike by the changes. In 1858,the high

revenue demand was slightly relaxed and the areas of cash crops were given revenue

ease with expansion of irrigation ,cultivation of arable waste ,rising prices and profits.

From where did the intellectual roots of the British come from to induce such property

rights in India which is still followed by us ?

Erik Stokes traces it to the Ricardian idea that rent is the only income that can be taxed

without discouraging production. Others think that it was a stimulus for enterprise. Was it

just a theory or a local condition that they had to practically tackle to make benefit for

themselves that stimulated the British ?Did they change the local condition? If so in which

way ?Sometimes suppressing and sometimes collaborating with the local reginal ruling

class ,as well as the common people of India did get their way.Colllaboration was a

massive example for asymmetric information between ruler and the ruled for them. They

pictured themselves as the supreme landlord ,and thought they had rights to do what they

thought justice and did not know that they were doing damage to a well established

system of ecology and economy based on agrarian ecosystems. They did really change the

system but out of ignorance of its impact in the future. By 1840 traditional community

was lost not only in Bengal but everywhere in India. The community had become a

business resource .And naturally it ceased to exist or was fast disappearing after

surviving millions of years.

The ancient system of canals for irrigation were in a state of disrepair decades before the

company rule began. The returns to such investments were expected to come in two

forms.

1.Indirectly as increased revenue charged on irrigated land and prevention of famines

2.Directly as water rates. These were remunerative investments.Upto 1870 such public

works were under a military board in North India since the investment was of a strategic

value. In 1830 British started to replace the old wooden ships of India by iron ships

powered by steam. The Indian shipbuilding industry which had more than 6000 years

history dwindled .1835-1855 for postal, telegraph and railways forest clearing happened

and fields destroyed. By 1857 the basic structure of land revenue was established and it

was very high and joint stock banks and exchange banks came up in India which

completed the macroeconomic transformation.

Agrarian change from 1858-1947

After 1900 agriculture cannot generate rapid economic growth in India due to these

factors. Only in 1970-1980 it could revive following the green revolution of wheat (only

in Punjab).Why this stagnation?

The past alone can explain the present Indian agriculture.

Growth rate of net domestic product(NDP)Total and agricultural 1868-9 to 1946-47:-
Year Agriculture NDP Population growth rate Per capita NDP
1868-98 1.01 0.99 0.40 0.59
1882-98 1.08 1.28 0.51 0.78
1900-1946 0.31 0.86 -0.01

Before 1890 the universal phenomenon in India was expansion in net sown area and land

under food grain cultivation in all major areas of cultivation. This was so till the second

half of the 19th century. By 19th century the cash crops were increased .The areas of

increasing cultivation was by the united effort of the village and the irrigation facilities

provided by the leaders/rulers/rich merchant class etc who also belonged to the

village. Between 1890 -1947 all details collected ,checked and analyzed by British Indian

Officials and their method of estimating production for survey purposes was “Total

agricultural output in one year for a crop calculated as follows(Taught to them by the old

village Patwaris ,chowkidars etc)

Production= Area cultivated in that year X std yield per acre X condition factor for that

year.

Std yield=the average or normal yield in a normal season. Estimated by crop cutting

experts in sample plots in a normal season. Periodically revised by similar experts.

Condition factor= Actual yield as a ratio of the normal yield”

For every village ,for every field there is a normal and the yield is calculated according to

that. Condition factor is the district as a whole based on sum of the village level

observations. The drought year condition factor should be less than one. Exemplary good

year more than one. The rain, the weather prediction, and harvest is predicted in the first

day of year and with that the planning for the year is done as early as possible. This is the

collective co-operative action of the village as a whole.

Actual measurement of rain and proof of prediction std yield etc are estimated

independently and did not show variation annually.

The condition factor:-the given work(the probability theory of management)+the actual

measurement .The acerage estimated but varied slowly. Condition factor was the function

of the seasons, which can fluctuate. In practice the condition factor was always reported as

less than one. Reasons being:-

1.Standard yield was set too high

2.Official interpret the std yield to the mean the best possible output rather than the

normal or average output.

3.Officials suffered from a universal and persistent pessimism about agricultural

condition.

4.Deliberate reduction to press for revenue remission was suspected by British.

The village officials could predict whether it would be good or bad harvest with great

accuracy of judgment .They knew strong correlations between rainfalls, the most

important factor behind seasonal fluctuations and the other condition factors. Condition

factor was a measure of the fluctuations. The long term trend in condition factor which

every one knew was the monsoons. Between 1890-1940 the condition factor of Bombay

presidency showed a downward trend. The pathwari/Chowkedar was giving the

information but Clive Dewey thought that the data were wrong and purposely given to

evade revenue of that permanent settlement. But the overestimation of the std yield was

to compensate for any underestimation of the condition factor so that the compensation

for each other in aggregate would give correct value.

Agricultural trends in India was studied between 1891-1947 by Monumental work of

George Blyn.He suggests seven basic things.

1 From 1891 to 1946 the average growth rate of crop output was small at 0.37 %.

2.Foodgrain output was stagnant and nonfood grain output growing quiet rapidly

3.The output growth rate was small due to the small acreage growth, because there was

no cultivable waste land after 1891.Another reason was the yield per acre grew slowly

and declined in food crops.

4.Until world war 1 the yield per acre of both food grain and nonfood crops grew. In

interwar period food crops had precipitous decline

5.Among food crops rice suffered worst stagnation and wheat was growing

6.Regional experience varied. Bengal experienced decline than any other place in

India. Both types of crops were below average growth rate and yield per capita.Rice per

acre yield fell sharply in Bengal and in Madras it raised.

7.Until world war 1 food output grew more rapidly than population, with availability of
food to all. Interwar period the population growth rate increased food output rate

decreased and decline in food availability per head happened. This was most acute in

Bengal.

These show that the commercial food crops more than the subsistence food was grown

and commercialization of agriculture productivity can be correlated. The regional

differences was very important .The tables of Blyn are quoted here for better

understanding of facts and figures.

Trend growth rate of crop output .Average and yield 1891-1946 with growth, stagnation

in the yield(per acre %PA):

Growth in output Growth in average Growth in yield per acre Growth &stagnation
1891-1916
%PA Growth stagnation
1816-21
%PA From1921-1946
%PA
All crops 6.37 0.40 0.01 0.47 -0.36 -0.02
Food
grain 0.11 0.31 -0.18 0.29 -0.63 -0.44
Nonfood
grains 1.31 0.42 0.67 0.81 0.34 1.16

Trend growth rate output of major crops 1891-1946 % PA
food grain Growth rate Nonfood grain Growth rate
Rice -0.09 Cotton 1.30
Wheat 0.84 Sugar cane 1.30
Mower 0.05 Tobacco 0.03
Baja 0.72 Groundnut 6.26
Maize 0.02 Jute 0.27
Rage -0.37 Tea 2.74
Indigo -6.19





Precipitate output and growth rates of output in major provinces (1891-1946)Trend growth

rates in %PA.
Growth rate(out of all crops) Percapita food grain output in tons
1891 Per capita foodgrain
Output in tons
1941
Greater Bengal -0.45 212 147
Rest of British India 0.82 160 168
United provinces 0.42 123 130
Central provinces 0.48 207 149
Bombay and Sind 0.66 195 152
Madras 0.98 146 163
Greater Punjab 1.57 140 201

Relationship between agricultural output and population growth rate(1891-1946 )%PA

1891-1916 1921-1946
All crops 0.84 0.34
Food grains 0.61 0.13
Nonfood grains 1.66 1.08
Population 0.44 1.12

The investment in agriculture was small or negligible. Investment in irrigation was done

by Government investment The increase in acerage of cropped area from 12 to 22 %

between 1885-1938 was due to canals made by Governments & private sources. Canal

and wells constituted in only three areas-Punjab, Madras &western UP. The growth in

these areas was due to this. Canals encouraged a change in cropping pattern and raised

value of land which stimulated private investment in wells.

Area irrigated 1885-1938 in million acres ,excluding Burma:-

Area irrigated by 1885-86 1938-39
Government canals 6.90 24.41
Private canals 0.94 3.53
Tanks 4.38 5.87
Wells 8.74 13.21
Total irrigated 23.09 53.73
Total cultivated 185.09 243.58
Irrigated/cultivated area % 12.4 22.1





Irrigated area as proportion of cultivated area in major provinces British India 1885-1938(% excluding Burma):-

Area 1885-86 1938-39 % increase in irrigated area due to Govt Canals % increase due to wells
Punjab 29.3 57.4 95.5 9.3
Madras 24.1 23.5 49.6 18.6
UP 19.3 26.6 57.0 37.2
Rest of British India 6 12.5 31.3 10.7

Commercialization: A process where peasants produce for sales in distant markets ,than

to the needs of food in the region or for selling in local markets. The commercial markets

existed in a very well organized form in pre-colonial India. Their character was changed by

the new rulers to suit their own needs.

1.The weights and measures.

Were perfected from prehistoric times in India. Each region had developed them

independently and depending upon the availability of raw materials. Therefore conversion

was needed just as we do conversion now for world trade from Rupee, dollar and pound

etc.This was done only with the mathematical expertise and by local scholars. Due to

well developed mathematics in India every peasant knew this. But this was unknown to

the British. So they adopted only one of the systems and made it universal for entire India.

2.The transport system

Was through dangerous territories with strong security which the British could not access

or control. Therefore they needed their own transport system and abolish the transport

system of natives as well as the security systems.

3 Barter

This was a serious constraint over the British. So they changed all the three .Later on this
tend to integration of global regional and local markets and global economy ,though it

broke the Indian economy.

4.Export

Was a major source of demand. In post-1858 period it lead to integration of entire world

trade into pre-colonial Indian world trade. This lead to the development of the present

developed countries ,though India became from its developed status to underdeveloped

and developing country status.

5.Accelerated development

Of financial markets ,and development of land and labor related to it.

The earlier commercialization based on indigo and opium of Eastern India became less

lucrative after 1850-90.Indigo cultivation shifted to Bihar and eastern UP districts from

Bengal and thereafter declined. The reason for shift was Bengal revolt of 1860.Farmers

protested against the forced and extortionate cultivation of this crop by British planters

.In UP it had a voluntary character and had canal irrigation. It persisted there till

1870.Then a mineral dye discovered and indigo cultivation declined. Cane sugar and

silk(Bengal exports)also declined. Cane sugar was from Bihar. In 1850 beet sugar in world

market replaced it. But local markets grew. Therefore sugarcane cultivation did not

disappear totally. In early 19th century British firms withdrew investments from Bengal

silk and its trade .After 1850 cotton and wheat export expanded and trade augmented by

oilseeds ,tobacco,groundnut,sugarcane .Rice production increased only in a small

way.The demand and supply factors behind commercialization increased with industrial

revolution for raw materials and food. Steam shipping was quicker and cheap .In 1869

Suez canal opened and shipping cost between Europe and India declined .People were

specializing in nonfood grains or cash crops and the fact that unless they make the

foodgrains for their own sustenance the economy will collapse was forgotten
.
Average cropped British India 1891-1946(annual average):-

CROPS Millions acres
1891-95 % of crops Millions acres
1941-46 % of crops
Rice 66.0 37.3 74.1 36.0
Wheat 21.9 12.4 26.4 12.8
Jowar 20.9 11.8 22.1 10.7
Gram 11.1 6.3 15.1 7.3
Bajra 11.7 6.6 15.1 7.3
Barley 5.2 2.9 6.7 3.3
Maize 5.1 2.9 6.3 3.2
Ragi 4.4 2.5 3.4 1.7
Total foodgrain 146.0 82.5 169.0 82.0
Cotton 9.6 5.6 11.6 5.6
Sugarcane 2.9 1.6 3.6 1.7
Jute 2.0 1.1 2.5 1.2
Groundnut 0.4 0.0 5.6 2.7
Oilseeds (rapeseed,mustard,
Linseed,sesamum) 12.5 7.0 11.1 5.4
Indigo 1.4 0.8 0.05 0.0
Total nonfood grain 30.4 17.2 36.5 17.7
All crops including others 177 100.0 206.0 100.0

Cotton, wheat and sugarcane were in demand in Europe and became the major cash crops

and their acreages increased. In India the major cotton producing areas were

Khandesh,South Gujrat,southern Bombay ,Deccan,Madras ,and Punjab. Wheat export was

from Punjab,UP,Bombay and Deccan .In Punchab where it had been the staple diet of

the people suffered hunger. In Bombay Deccan the staple diet was millets and wheat was

grown merely for export market so that people did not suffer. In India a range of drought

resistant millets dry land foodgrain millets existed and were consumed locally even

in drought conditions.

Sugarcane was used to make Gur (gula/Undasarkkara in Malayalam) and the Khanda

(sarkkara achu in Malayalam).These were made in small rural units. The high impurity of

molasses was there and it was cheap. It was an off-season rural industry. The competition

with modern factories which make refined white sugar (initially called khandasaari mills

)was heavy for the rural industry. Crushing of cane with wooden mortar and pestle

changed to two-roller mill in 1874.Cultivation was more in UP, Punjab ,Bihar, Bengal .90

% gull and all the khandasarkkara came from these four provinces. To increase the cash

crops ,Punjab wastelands for pasturalism was converted to irrigated cultivable lands in

1867-1892.From 1890-1920 agricultural production in Punjab increased .In Punjab

uncultivable waste converted to arable land by irrigation and rest of India cultivable

wastes brought under the plough. The doab became famous for wheat and cotton while the

SW Punjab (Haryana)specialized in livestock ,dairy and fodder crops.

In west India Konkan coast was rich in paddy.Gujrat with cotton from ancient times and

both were in direct contact with Bombay the city of export. Bombay was also connected

to dry interior region of cotton growth. The poor communication and absence of railway

left out the rice-based Konkan out of the new commercial networks.1843-1873 saw 67%

increase in cultivation in Bombay Deccan and cotton lead the increase.

Bengal was paddy based and no change in its crop pattern happened. Marginal shifts to

indigo, jute and sugarcane happened. Bengal rice had an old long distance trade. That now

expended but changed direction. The land and river routes changed and by railway the

industry of Ranigunj ,supplied serampur, Calcutta and North Bengal and Assam

plantations. Also it went to other British colonies. Jute and rice trade persisted as it was

voluntary while indigo trade was opposed by local farmers and stopped.

1847-1852 ,prior mutiny period the coastal irrigated delta of Godavery Krishna had a

long distance trade in paddy.This as well as oilseeds,sugarcane ,turmeric,tobacco

,chilli,and plantains were grown .Economically prosperous towns of

vijayawada,Elluru,Rajamunthry,Visakhapattinam existed.Tobacco was speciality of

Guntur.In contrast to north Andhra of Godavery Krishna delta, the southern Andhra or

Madras Deccan has scanty rainfall and low fertility soil. Famines occurred, resources were

poor and high risks of cultivation existed. Shift in cropping pattern and direction of trade

by railways the people had to depend upon millet called thina

alone.Millets,cotton,oilseeds and fodder crops were grown by people.1860-80 railway

connected Bombay to Berar (Bedapura).Expansion concentrated in two areas .

1Narmada valley with Youdhpur(Jabalpur)and sagarapura(saagar).Cotton industry had

centers in Berar and Naagpura(Nagpur).The largest migration farm laborers from

Chattisgarh to Berar happened and the entire population of bedda(Veda),naaga and other

adivaasins became laborer class .Tamil Nadu has several agro ecological regions. The

wet districts are Thanjavur,Chingalpet in Kavery delta and grow paddy and do not

depend on rain for its growth. Cropping pattern is same as coastal Andhra and Bengal. The

dry interior(Coimbatore,Selam,Thrissinappally) the most important crops were coarse

millets and black cotton. In Coimbatore,Madhura,Thirunelveli and Ramnadu these

increased. Cotton processing and packing became livelihood of small towns in these

areas. Madras and Coimbator became centers of textile industry. Second important cash

crop was groundnut in south and north Arcot.Madurai and Coimbatore had well irrigation

systems which played a keynote in post-independent green revolution of Tamil nadu.

The temple lands were always leased to tenants and the crops were shared as a common

pool for all.It had no tax due to this reason.It was protected land of the people and its

tenancy meant permanent security even in times of natural calamity/famine.But this

changed in new law.Tenancy came to be associated with poverty according to British

view and this view spread rapidly. Agricultural labourers did not exist as a class in

pre-colonial India. Every one was tenant in the common land of God. In 19th century India

the laborer class increased. There was a laborer market for the European industries .

The reasons were :

1.Precolonial comparatively egalitarian village community produced its own subsistence

food and exchanged it ,other articles and services. Forced commercialization broke up the

system and created a class of poor agricultural labors and tenants and rich zamindars.

2.The artisans lost their traditional jobs in which they were experts.This happened with

industrialization. The blacksmiths and woodworkers and other artisans were given a piece

of land and asked to do agriculture which they didn’t know. Without expertise they could

not get good produce. These people became helpless and became labourers in different

industries out of sheer necessity. Instead of bringing equality, the individual property

rights actually brought about a class of rich landlord and poor tenant and landless people .

3.Wages and tax became cash and not barter or service. And cash was European currency

and not old traditional currency of the land. Both the rich and the poor did not have the

cash .In South India the standard of living,food,dress,everything was the same for rich

and poor in villages. This changed. The relation of people changed from co-operation to

one of enmity, envy and suspicion when individual property rights established.

4.Just like lands ,the land labourers also could be traded and in that laborer market

several poor people became workers of estates and plantations and in industrial

construction areas. This happened especially in old hilly and forest areas where people

became mere serfs to the estate owners. The propaganda spread hatred to the British rulers

as well as to the rich estate owners(native)alike who sided with the British laws and

regulations and succumbed to it .They were accepting the dress code, code of conduct

,other social dictates of the British as occupational choice under the British masters and

the security offered by them.

5.Migration within and outside agriculture increased. Migration to cities from rural area

increased. The agricultural lands were abandoned. People entered

plantations,mines,urbanservices,public works, government utility services as white collar

jobs .

6.Religious conversions of tribals in South India was to get food, shelter ,jobs and to get

rich,(out of poverty)and not out of any preference for the new religion.

7.Food security during natural calamities and famines was gone and peasants started to

loot the treasury (Deccan riots).This was a vicious circle. Money wages lead to rice in

price, and to more wages, and more price rice. If no food is grown and no purchasing

power also, in difficult conditions extreme starvation ,famines etc revolts, crimes and thefts

increase .This we are still witnessing.

Did the changes improve the standards of living as promised ?Does the system of credit

cause the backwardness of the country?

Was commercialization forced by revenue or rent demand? Did it exist before? Where

loans taken for payment of revenue or rent in pre-colonial period? Or for some other

purpose? Was there a moneylender class in rural India before? Was there large sale

dispossessions? Did the moneylender ownership of the land cause agricultural stagnation

before ?The answers to such questions will provide an exact picture .

All these existed before but was different from the new system of revenue,rent,individual

ownership or cutthroat competition and exploitation of all resources. The system had a

different dharma. The loans were for improving agriculture and trade and for benefit of

all. The moneylenders were lending with a vanijyadharma or kulasanghadharma .They

were called the Mutharaya or Arhat classes(The Araya/Arya)as sreni or samgha/gana

worked in unison with the people and the king for both land and sea trade advancing loan

for the prosperity of the agriculture and crafts of the land .There never was large scale

dispossessions. Ownership of land with moneylender can cause agricultural stagnation if

he is not one among the agricultural class but came from a purely commercial

background with selfish motives.Krishi,Goraksha and vanijya were vaisikadharma with

integrated co-operative basis and well spread branches all over the land .If these are

separated the problems happen in each sphere. Erik Stocks statement that in Narmada

valley no distinction occurred between agricultural and nonagricultural class is

noteworthy(Peasants ,moneylenders and colonial rule .An excursion into central India

Sugatha Bose ed .OUP Delhi 1994).The situation described by William Logan in Malabar

is an excellent source for understanding wet land and coconut garden farming of Kerala

and is discussed as a separate chapter.

Rainfall and cultivation.

There was positive correlation between average rainfall and rice cultivation and positive

correlation between low rainfall and millet cultivation. When data on land-man ratio is

added one can deduct that, a combination of rice production, and assured rain fall normally

meant mitigated impact of famines and rice cultivation being labor sensitive

,rice, rainfall associated with high population density and low land-man ratio. The only

exceptions were Burma and Assam but between 1901-1931 Assam became destruction

of land hungry Bengali peasants.

Agricultural ecology 1901 census of India vol 1 part1 calcutta pp190:-

ZONE MEAN ANNUAL RAINFALL IN INCHES POPULATION/SQ MILE % SHARE OF CROPPED AREA
Punjab 20 200 Wheat 47
Western Indo-gangetic plain(west UP) 31 409 Wheat 24
Millet 35
Eastern Indogangetic plain(East UP,Bihar,W.B) 48 490 Rice 59
Bengal delta(now Bangladesh) 71 552 Rice 80
Brahmaputhra valley 92 84 Rice 73
Deccan(south of Narmada ,East of Ghats,Mysore plateu,parts of Hyderabad) 30 151 Millets 57
Pulses 17
Gujarat 27 182 Millets 52
West coast(Konkan ,Malayaam/Malabar) 104 334 Rice 75
South India interior Tamil naadu 33 259 Millets 50
East coast (south India)Coastal Tamil nadu and Nellore 48 359 Rice 50
East coast north (Krishna Godavery delta) 52 229 Rice 65

.
Annual rainfall over 100 inches happened only in three areas 1.West coast from

Narmada valley to Cochin (Which is traditionally the area where King Mahabali ruled in

prehistoric times)2.West Bengal.3.Assam.

Venad got 40-100 and in areas with this rainfall rice was cultivated with rain

+irrigation. In 20-40 inch rainfall areas (Interior Tamil nad,Gujrat,Deccan,South of

Narmada,east of Ghats,Mysore plateu,Hyderabad etc)millets were chief crop and in

western UP also millets was staple diet.(In sangha and Vedic literature

millets/thina/barley cultivation is spoken of).

Land use 1885-1938(in million acres)
1885 1921 1938
Cultivated area(including current fallow) 186 254 258
Uncultivated area 98 90 94
Uncultivated –not available for cultivation 59 66 68
Forests 49 101 101
Total area (net states +Burma) 391 511 521

In pre-British India the entire land of the subcontinent being that of God, peasant

population could migrate to anywhere and use uncultivated fallow land with a verbal

deed from the local village panchayath and chief. British prohibited this by law. All people

had to become sedentary permanent settlers .Sedentarization and peasanterization of

those people who depended on common land, of the idaya and girijana,vanavaasi people

happened(1855 Santhal rebellion in west Bengal was due to this, just two years prior to

the 1857 mutiny).

Small scale industry

Large scale Small scale modern Small scale traditional
Organization Factory .several 100 workers+supervisory staff Less than 100 workers Household small factories
Technology Steam,electricity,modern machines Limited use of machines Hand tools
Regulations Factories Act, Acts governing employment, and management Some regulated, some are not Usually not regulated .According to Kula dharma which is a type of regulation inherent in them
Vintage Colonial Colonial Pre-colonial
Examples Cotton mills, jute mills,steel,sugar and paper Foundry, rice &flour mill, oil mill, weaving with power looms Handloom weaving, making baskets, wooden tools etc pottery

Total employment and industrial employment (1911-1991)
Year Industrial employment(in million) Total employment(million) %share of industry in total employment
1911 17.5 148.9 11.8
1921 15.7 146.4 10.7
1931 15.6 153.9 10.2
1961 20.0 188.7 10.6
1971 17.1 180.7 9.5
1981 25.1 242.0 10.4
1991 28.7 306.0 9.4

Annual rate of growth in %(with decline of industrial employment)
1911-1931 -0.6%
1961-91 1.2%
1981-91 1.3%

% share of industry was 11.8 %in 1911 and is only 9.4 in 1991.India is more

industrialized now than a hundred years before, and despite the stagnation in employment

share ,the share of industry has grown up in national income. In 1961 -1991 a shift from

household industry to informal factories (from firms that use less productive, less

speculative labor to more productive tools and labor)took place and this shift reduced

total employment but increased productivity of labor .

Women’s employment in industry(From 1911-1991)

1911 1921 1931 1961 1971 1981 1991
% share of women in industrial employment 34.3 % 32.1% 29.7% 27.3% 12.9% 14.8% 16.5%

From 1911 to 1947 there was total and per worker income growth of 1.5 to 2% per year

and productivity of certain industries like textiles(Thanthuvaaya),tanning(chaamar/paraya

)metal works(blacksmith, goldsmith class of aasari,moosaari,karuvan,thattan)increased

.When they became unemployed .unemployment and underemployment happened. The

women who were participants of all industries and in agricultural work of the family also

lost the share of employment .In pre-colonial India charmer bartered his goods for grains

with village, rural and temple people ,with performing artists etc.The scavenging of each

village was done by one official family of chaamar I always wonder ,why were they

always kept outside the village premises? What I believe is that it was for two reasons, one

being the disposal of the dead animals, tanning etc has an uncanny sight within the

city/village and the second is for the reason of avoiding bad smells ,environmental

pollution etc by the animal carcasses with which they worked. The aesthetic and the

medical reasons must have given them a poachers(outside family poition)while the

other workers were akachery(inside families/Akam )The position gave them certain other

important jobs like spy work and letting the insiders know whether an enemy is

coming. The multiple works for which a chaamar was paid by the village included:

1.Looking after the entire village from the strategic outpost where he dwells

2.The messenger job in emergency and in day to day life

3.tanning

4.scavenger jobs

5.participate in agrarian work in seasons

6.traditional role in religious and festival rites.mela

7.Sometimes magical cures /healing. musical instruments playing etc

In large villages one or more families with men ,women and children lived in a cherikkal

or cheri which is a jointly owned traditional factory by them for production of their

articles. And family apprenticeship gave them opportunities to become expert in a

profession. The family itself was the firm or production unit whether in agriculture or

industries. The master and the apprentices(shishya)went together. Usually there will be

sons and nephews as apprentices to all skilled people. And others from neighbouring

villages join, if the fame of ones art and skill is famous. In all skilled crafts among artisans

this existed just as in Gurukulas of ancient learning. The system was same. The craft

learned and expertise obtained was different. Successive experts. masters and

apprentices(guru/shishya)were generated by this system .These sangha of families were

called the kulasangha (kul/kol/koul )and were the ancient guilds of India which existed

from Kashmere to Kanyakumari on the same basis. If this is not administrative unity and

efficiency what else can be this? In contrast to the formal organized guilds of later

Europe which existed on cutthroat competition and destruction of each other, these guilds

functioned on basis of co-operation and protected each other in need. In north India during

the Moghul period the Guru was called the chief or Usthad and in South India the term

persisted as Guru or Aasaan .The chief of a tharavaad as Kaaranavar was the ruler of the

entire land belonging to one system of kulasangha (as Kakkatt kaaranavar in thalappally

dynasty of South Malabar ,of which Punnayurkulam is a part).This system weakened

with industrialization and individual property rights and by 1947 it had disappeared.

Entrepreneurship in pre-colonial India

In pre-colonial prehistoric India trade and commerce of the common land produce earned

profits and these were spent for

1.Assets as gold jewellery to the temple nidhi

2.Building temples,ships giving opportunities for artisans to earn as well as exhibit

maximum Talents

3.constrction of ghats ,irrigation facilities for improving production

4.charity relief for famines, and natural calamities

5.daily expenditure of the village community through temple/village organizations as a

common pool

6.Maintaining educational services through the teachers of community

We have ample evidences for this from sathavahana .chola,pallava,vijayanagara periods

.Not only the emperors but also chieftains, their family members, chiefs of the tribal

kingdoms did the same and the system was uniform. As I write this today’s Hindu

daily(10th August 2009)reports having found cave inscriptions from Naamakkal .It shows

vijayanagara,chola period inscriptions of temple grants.ThiruAaraikkal is the name of

naamakkal in inscriptions. One maanilam of wetland at vettanpadi as

thirumadaipallipuram to vedanayakaperumal at the hill by Urali pillaiar alias Irunkolan

of keezhkarainaadu,two and a half maanilam to the 2 deities Ranganatha and

Narsimhaperumal by local feudatories valamkai Alapirandan Narasingadeva and brother

Desi Alapirandan Mummudicholackakravarthy for maintainanance of the temple

kitchen,gift of half maanilam at pavithramanikkam to pirathiyar of vedanayagaperumal as

offering of valankai alappirandan narasingadevan ,gift of senthamangalam land by koyan

Irunkolan kariyaperumal alias valankai Mikamaan ,a hunter of urali malai for

maintaining the temple kitchen. These belong to 12th century AD and is precolonial.The

cave temple belongs to athiyaman dynasty.13th century inscription of Achutharaya of

vijayanagara mentions his officer Savuthan Lakkaiyan renovated the temple.

During the Islamic regime we find the same repeated without much disturbance to the

total scheme though with little modifications .The informal management by family

sangha,village sangha and the joint family system for co-operative management of daily

business and industry with strong relations and alliances were not disturbed. Trust is

essential for all kinds of business. The personal connections and networks through family

and village relations were based on honesty and never betrayed. Support facilities as

supply of credit, travel facility with protection of produce, profit sharing and

apprenticeship which ensured job opportunity were part of this scheme. The immigrants

were helped by local people for physical survival and in building up a career. That is how

the marwaris from Rajasthan found a footing in Calcutta in 19th century. More earlier

records exist in Kerala where jews,arabs,Christians were given opportunities of survival

and equal rights in trade ,commerce etc.The guilds had to keep trade and travel route

secrets to “behave as a guild” and honesty ,co-operation and community feeling were key

stones of trade and commerse as the Aihole inscription proclaims.

In the formal management system of the British there is no trust and it was just a contract

between two parties and each suspects the other might cheat and is cautious always and

wants to outwit the other and there is no scope for co-operation in such management.

Textile industry was present in Hyderabad,Mysore and Travancore-Cochin.But each had

its specific resource and intensive enterprise in British India. In Hyderabad it was coal

mines for the railways and tobacco manufacture. In Musore the Kolar gold mines ,steel

,sandalwood oil and soaps. And in Travancore –Cochin tea

plantations,rubber,coffee,agricultural processing industries as coir and cashew.

The specific local communinities in these princely states had their own commerce

finances ,industries, agro-plantations under their politico-religious heads ,especially in

Kerala where the grant of land deeds to the Christian missionaries are well preserved

showing the evidence. So were the landed groups called Kanbis in Baroda. For Hyderabad

and Mysore the foreign capital was not needed.Mysore had its gold fields and the foreign

bullion was not needed .It was Travancore-Cochin among the southern city states which

took the foreign capital. The plantation and agro processing shifted from the local

chieftains to that of people who received significant foreign capital.

Travancore-Cochin, Malabar economy was significantly export-oriented than other parts

of India from ancient times .The factors which helped such an economy were

1.The long maritime experience and connections and a wide seafront and knowledge of

the monsoons

2.Presence of contact with foreign world for millennia and communication during the

pre-Christian and Christian era with Jews and Christians .The Christian converts

established connections with the company associates and mobilized foreign exchange .

Measures of economic growth from 1891-1938:-

1891 1921 Base 1938
Real national income Total
Percapita
Agriculture
Industry 70
78
67
- 100
100
100
100 126
82
100
175
Infrastructure Acreage irrigated
Railway mileage/percapita
Postal articles handed/percapita
Real value of telegraph sent per capita. 52

51
27


55 100

100
100


100 123

110
57


83
Employment Factory
Total 25
80-85 100
100 137
105-110
Foreign trade Real export value
Real import value 76
72 100
100 96
95
Financial development Real value of bank deposits 29 100 100
Resources Cultivated land millions acres

Production of coal million tons 56



11 100



100 156



153
population 89 100 153


In older system simplest low cost anicuts on riverbeds was used to irrigate large areas

and there were also suranghams for irrigation in north Malabar and wells and tanks and

freshwater lakes .The canals were also used for navigation upland for trade and

commerse and served a double purpose. The economic effects of the canal irrigation were

1.Famine relief by more production and supply of foodgrains by sharing through the

water transport system of boats

2.Increased prosperity and security to local farmers even if rain does not come in time

3.Easy water transport for people and commodities

The high cost of canal projects due to persistent engineering defects and need for annual

maintenance was a problem for the British administration in India whereas it was taken

up as a mandatory duty by the people’s administration of ancient traditional rulers .The

swadharma became a commercial endeavour only .The canals the British built (for

example the canoly canal)later became the cause for leak of saline from sea water to

fresh water and whole areas of land became uncultivated (which we will see in other

chapters).

Population and labour force

Death and birth rates 1881-1951.
Year Death rate per 1000 person Birthrate per 1000 person
1881-1891 40-2 47-9
1891-1901 38-50 46-51
1901-1911 41-4 44-8
1911-1921 42-50 45-9
1921-1931 33-8 42-8
1931-1941 30-2 43-5
1941-1951 25 40-2

Change in acerage (net sown area)per capita
Year Acreage per capita
1885 British India excluding Burma ,including current fallow 0.69
1938 Same as above 0.67
1951 Indian union 0.81
1996 Indian union 0.38

Labour force and occupational structure 1881-1951
1881 1901 1911 1921 1931 1951
Population million 213.2 238.1 251.9 251.2 278.7 356.6
Work force million 100.8 115.7 121.0 117.7 119.4 139.5
Participation% rate 47 49 48 47 43 39
Participation% male 63 63 62 60 58 54
Participation% female 31 33 34 33 27 23
OCCUPATIONAL STRUCTURE % WORKFORCE
Primary sector 74 75 76 77 76 76
Sec & tertiary sectors 26 25 24 22 22 24
Industry & trade 20 16 16 15 15 -
industry - - 10 9 9 10
Trade & transportation - - 7 7 7 7
Other services - - 7 6 6 7

Primary sector is agriculture, animal husbandry,forestry,hunting ,fishing, general labour.

Industry includes mining and construction works. The quality of the labour in each sector

does not depend on the mere numbers alone but on the quality of work done by each

participant including his/her expertise,skill,experience and knowledge as well as the

intellectual,mental and physical health status to carry out it properly and the co-operative

mentality. The long term stability of women as the backbone of this dharmic structure of

workforce and its retreat from the general workforce reflects the devaluation and quality

to a great extent .

We have to address the unexplored aspects of rural agrarian economy and its history to

find solutions for the current problems. The facts and figures are just to prove certain

points. The risk of uncertainty of monsoons was not a new feature for Indian agriculturists

.The relation of agrarian economy and trade and commerce with monsoon is age-old in

tropics. Still the harvest had been sufficient for sustenance and a prosperous trade and

people well managed their affairs even in pre-mechanized ,ancient times. No great

famines reported except very few .The risks are not climatic but manmade is the first

thing we should understand. The world market fluctuations and the greed to capture world

markets were more responsible than the variable monsoons. What was the traditional

system of insurance each village had and how did it change?

Was the rural credit system of the ancient tribals an expression of power and dominance

by a few Brahmins and one or two classes ?A field here creditworthiness of behavior

,social power, harvest risks ,portfolio choices of lenders, demand for working capital

,market structure ,interacted to give rise to various terms like dharma,samgachathwam

samvadathwam,panchaayathana etc (all based on collective co-operation of all and on

common land property for God )was the reason for the self-reliance and self-sufficiency of

village economy and its values of life. It did not depend upon any foreign capital before

19th century but derived wealth from world trade and remained self sufficient. It had

shares in world economy without depending upon foreign shares for it. This is what the

modern economists define a welfare state to be. And women in village agricultural and

small scale industries had been a important part and had 100 % participation in all

activities related to the economy of the village and the division of labour did not exclude

her from any of the activities. From 1811-1971 we find this participation gradually on the

decline and from 1971-1991 again gradually on the increase, but not in agriculture but all

other activities.

Here it is worthwhile to quote Schultz argument (Transpiring traditional agriculture

1964) that traditional agriculture was economically rational (Ref B.R.Tomlinson .The

economy of modern India 1860-1970 Cambridge uty press 1998) on the following

grounds:-

1.The peasant farmers responded to market incentives

2.Optimised the use of resources when the circumstances allowed

3.They were held back only by the market imperfections and diminishing returns to

traditional inputs so that,

4.In the labour market ,each laborer who wishes and who is capable of doing useful

work was always employed(no problem of unemployment or underemployment)

5.This openly challenges the notion of underemployed surplus or unlimited labour in

peasant agriculture.

How the village community made profits and how they used it/This is the crucial issue in

the history of a country’s agricultural development. It is defined in the terms of increase

in labour productivity and an increase in labourers share of the product. In Indian rural

economy the land ,labour and profit all belonged to God and therefore is common

property. Everyone is doing kainkarya or labour for service of God ,for service of entire

village and is the dharma for next janma also. Without securing the preyas the acquisition

of sreyas was not possible so the entire village did dharma for common good of

all. Individual property rights were not there.

The next question is there surplus over substinence?The answer is yes. Without

surplus the ancient world trade would not have been undertaken and the ancient world

gives so many exotic descriptions of prosperity of India which has been proven by

archeology.

It was in the wet well watered rice growing low-lying areas of the agricultural heartlands

the sustained hub of traditional civilizations were well preserved .Not in the millet

producing dry areas.Structured,hierarchical,urban and cultural centers these areas

depended on the capital and labour intensive rural cultivation. They had high population

densities .The entire farmlands were under co-operative farming and no more land

reclamation was possible except at high lands.

In 1951 the rice growing state of Kerala had a population(in million)of 13.5 ,(% 3.7)in

a distribution area % of 1.2.Agricultural labour as % of total agricultural population was

39.2%.Foodgrain output average from 1949-50 to 51-52 was only 684 (000 tones)which

is the lowest (% of 1.3)and in 51-52 the literacy rate was 40.5%.(As per British

educational standards. It is interesting to note here that in a census of the early 2000’s my

aunt Balamani Amma ,who is a saraswathy samman awardee and padmabhooshan due to

her literary career was marked as illiterate by a primary school teacher in the census data

!!).
In 39-45 there was enormous stress on Indian economy and 45-52 was the crucial
transition years for our young nation. The purchasing power has definitely increased and

the quantity of goods of the land purchased has decreased. Volume of imported goods has

increased over the years. Money supply continuing and food supply limited or slowed

down .Price of basic commodities are ever increasing and distribution of foodgrains to all

at equal basis has not yet been attained. In 1946 there was a poor harvest of millets and in

1947 a poor harvest of wheat. Hoarding of food grains and increasing prices still

continues .Till 1950 the Indopakistan track was standstill. Nehru was committed to

socialism and secularism of the Fabien model. Patel was more traditional and followed the

ancient Indian model of agriculturte.Both had strong links with Gandhi but were

different in their outlooks. Patel stressed the difficulty of moving a traditional society too

rapidly from the traditional path and making transitions slow and steady after weighing

pros and cons of each step. The followers of Nehru and Patel became the left and right

wings of Congress. When Patel died in 1950 Nehru could take decisive advantage and

reorganized the Government commitment as his wishes. Thus in April 1950 the national

planning commission with 7 members was formed with Nehru as chairman. The economic

progress from 1951-56 was based on the plans of this body. Though a very modest plan

the first five year plan was tremendous success considering the situation of India at that

time. In 1950 half of the national product was supplied by the rural economy.1953,54 and

55 had good monsoons which with modest irrigation increased investments in

production. The inflammatory prices decreased and this stimulated demand for

manufactured goods. In 1954 in the chief ministers meet in national development council

Nehru said:” The social and economic policy should be socially owned and controlled for

benefit of society as a whole but in which there are plenty of room for private enterprise

provided the main aim is kept clear”.

Rate of growth of output 1950-65 1965-1972
Agriculture 5.16 1.70
Industry 7.70 3.82
National product 3.60 2.32

(Ref Walter .C.Neale and John Adams :India: The search for unity ,democracy and

progress .New york 1976 table 13)

In 1950-60 co-operative societies were the most important feature of Indian economy .In

1951 4.4 million members increased to 17 million in 1961.6% share of rural credit in 1951

increased to 20 % and more in 60’s.By 1971 the co-operative societies supplied a ¼

agricultural credit just over ½ as much as that supplied by the rural moneylenders.

The Ford Foundation:-

In 1959 to stimulate food production both foreign and Indian experts were organized by

the Ford foundation. In April the “Report of the Indian food crisis and the steps to meet

it” was published and it declared that the “food production must be made the highest

priority of the Government “The first five years the Ford foundation met 1/3 rd of the

cost of the project and this was called the IADP program (10 point Interim agricultural

district program)and in this, the crucial problem of water management was ignored(pp

203-204 Thomlinson).Ford foundation found that with fertilizer use only marginal

increase in profit was possible and it made a very crucial observation about the Indian

farmers. If convinced about the real use, the Indian farmer is as prompt as any other farmer

in the world to accept motivation ,and they are not conservatives as previously blamed

.And the reason why they objected to the new methods of the British was not their

conservative nature ,but because they knew that they were inferior and did not suit their

climatic and geographic conditions.
In 1961 food import from US following the Bihar famine in mid 1960.In 1962 due to

border dispute with China the funds had to be diverted for defense .In 63-64 7 million

went for defense funds. In January 64 Nehru breathed his last .In 1964 monsoon was good

but there was a tsunami that took away the Dhanushkodi and Rameswaram .And 65,66,67

were continuous draught years. In 1965 from US 7.5 m tones of foodgrains imported.65-

66 saw the worst monsoon of the 20th century and food production fell by 27 %.In 1965

there was a four month war with Pakistan. There was more dependence on outside for

food .The policies become vulnerable when we are dependent on outside sources for our

sustenance. Between 64-65 prices increased. Poor harvest eroded the purchasing power

and lowered tax revenue and savings and pushed up the industrial costs. In 1966

IndiraGandhi as a compromise candidate rose to power. In 1967 general elections she

won. In 65-66 India had taken 10 million tons of grain from US to feed her millions. In

1966 again the crops failed. This time America was less receptive to the request .President

Johnson asked India to implement new economic policies that would favor private

enterprises and foreign investment in agriculture. The policy of Johnson is called the

USAID policy. For 10 years India took an anti-American stand but later on it pushed the

Indian Government to a new path of green revolution which had already ensued in the

1960’s itself .

In October 1964 there was likelihood of famine in Kerala and rigid food control came

with imposition of ration (Bombay was getting ration as early as 1945-46).Throughout

the scarcity period the 70% of food grains came from overseas. In 1966-67 IMF loan was

taken and new American aids to fund program of capital investment in intensive

agricultural techniques was launched. In return Indian Government had to devalue the

rupee ,liberalize import control regimes and allow foreign firms to invest in fertilizers
.
HYV of new foodgrain seeds did not thrive well and the farmers had to shift back to

older variety of traditional seeds. At the beginning of 1970 the green revolution of India

was actually a wheat revolution worked only in Punjab,Haryana and west UP. In 1972

prices rose and in Gujarat and Bihar there were protest movements. In 1975 emergency

was declared.

In 1966 Indira Gandhi had disbanded the planning commission and constituted the

national development council of the state Governments. They were given block loans and

grants so that they can freely develop their own states.(An attempt for decentralization

was done by her).The principle was on the fact that the local problems

,priorities,potentials,and past experiences are known better for the rural sectors and

through them to the state Government. In 1969 the great split in congress happened. In

1971 Indira Gandhi won and in 1972 Bangladesh liberation and a crushing victory were

the initiatives for forcing states to implement distributive land reforms.

From 1970-80 the application of new technologies increased. Investments in agriculture

increased and food grain self sufficiency was the goal. The real price of wheat and rice

came down. Employment in urban construction sites increased and people moved from

rural to urban centers in search of labour.people migrated to informal service sectors and

to the overseas(mainly Gulf )and the rural agricultural labour market tightened. Therefore

self-sufficiency became possible only on an operation holding of around 2.5 acres in

some parts .Increased interurban migration ,increase in local wages ,electrical, mechanical

and chemical foreign collaborative joint venture sectors were features of this period.

Thus what changes the British had started were complete by about 1970’s in India and

especially in rice growing rural areas of Kerala ,predominantly in our study area

,Malabar. This we have to see in a broad national and world basis not as a local

phenomenon alone.