British Raj - Economic Impact

Economic Impact

"A significant fact which stands out is that those parts of India which have been longest under British rule are the poorest today. Indeed some kind of chart might be drawn up to indicate the close connection between length of British rule and progressive growth of poverty."

— Jawaharlal Nehru, on the economic effects of the British rule, in his book The Discovery of India

In 1780 the conservative British politician Edmund Burke raised the issue of India's position: he vehemently attacked the East India Company, claiming that Warren Hastings and other top officials had ruined the Indian economy and society. Indian historian Rajat Kanta Ray (1998) continues this line of attack, saying the new economy brought by the British in the 18th century was a form of "plunder" and a catastrophe for the traditional economy of Mughal India. Ray accuses the British of depleting the food and money stocks and of imposing high taxes that helped cause the terrible famine of 1770, which killed a third of the people of Bengal.

P. J. Marshall shows that recent scholarship has reinterpreted the view that the prosperity of the formerly benign Mughal rule gave way to poverty and anarchy. Marshall argues the British takeover did not make any sharp break with the past. The British largely delegated control to regional Mughal rulers and sustained a generally prosperous economy for the rest of the 18th century. Marshall notes the British went into partnership with Indian bankers and raised revenue through local tax administrators and kept the old Mughal rates of taxation. Instead of the Indian nationalist account of the British as alien aggressors, seizing power by brute force and impoverishing all of India, Marshall presents the interpretation (supported by many scholars in India and the West) that the British were not in full control but instead were players in what was primarily an Indian play and in which their rise to power depended upon excellent cooperation with Indian elites. Marshall admits that much of his interpretation is still rejected by many historians.