The looting of India

Sidharth Moirangthem *

"The sun never sets on the British Empire because even God couldn't trust the English on the dark"

India's share of the world economy was 23 per cent before Britain arrived on the shore of India. But by the time the British left India, it down to below 4 per cent. It was simply because India had been governed for centuries for the benefits of Britain. Britain's rise for 200 years was financed by its depredations in India.

The drain of wealth began with the British East India Company, incorporated by the Royal Charter from Her Majesty Queen Elizabeth I in 1600 to trade in silk, spices and other profitable Indian commodities. Before 1600, the Indian economy was primarily a rural economy, but Indian farmers and artisans produced goods in bulk to meet the demands of Indians and European buyers especially Britain.

There had been a great demand for muslin silk from Bengal and silk from Bengal and Banaras. By this the British East India Company considered India as a cash cow. In the furtherance of its trade, the company established outpost or factories along the coast, mainly in Calcutta, Bombay and Madras. On other hand they also started personnel trade by military means. Later a commercial business quickly became business of conquest.

In 1757, under the command of Robert Clive, the company won a famous victory in Plassey over a ruling Nawab, Siraj-ud-Daula of Bengal. It also marked the beginning of the political dominance of the British in India. Robert was soon able to transfer the princely sum of £ 2.5 million (present day- £ 250 million pound) to the Company's coffer in England as the spoils of conquest.

On his first return to England Clive took home £ 234,000 from his Indian exploits (present day- 23 million pound). He also became one of the richest persons in Europe. Clive and his followers bought their 'rotten boroughs 'in England with the proceeds of their loot in India while taking the Hindi word "loot" into their dictionary as well as their habits.

The Company conquered a number of independent or autonomous states and imposed executive authority. Governors-General were appointed from London to regulate the country's trade and collection of taxes. Governor General like Lord Dalhousie annexed a quarter of a million square miles of territory from Indian rulers, by means of the Doctrine of Lapse and other policy of annexation.

The company reshaped all the systems like social, economic, political, education, means of transport and communication etc. The railways and roads were built to serve the British interests but not for the local people.

The revolt of 1857 led to the takeover of British domains by the Crown in the following years. Britain's Industrial Revolution was built on the destruction of India's profitable manufacturing industries. The British systematically set about destroying India's textile manufacturing and exports, substituting Indian textiles by British ones manufactured in England.

Ironically, the British used Indian raw materials to teed their mills at Manchester, Lancashire etc. and exported the finished products back to India. Prior to the arrival of the British to the Indian textile industry was more creative, innovative and productive; exports boomed, but when the British traders took power, everything changed.

The British stopped paying for textiles and silk in pounds brought from Britain preferring to pay from revenues extracted from Bengal. As a means to destroy India's textile industry, they imposed tariffs, taxes and duties on the handloom and handicraft products. Later weavers of India became beggars and India was transformed from being a world famous exporter of finished cloths to an importer of British textiles.

India could hardly impose retaliatory tariffs on British goods, since the British controlled the ports and the trade, and decided the terms of trade to their own advantage. India had enjoyed a 25 per cent share of the global trade in textile in the early eighteenth century, but it was destroyed by the British rule. India still grew cotton, but mainly to send to Britain in a lower rate.

This led to the loss of the farmers. India's share of world manufacturing exports fell from 27 per cent to 2 per cent under the British rule. Under the British, the share of industry in India's GDP was only 3.8 per cent in 1913 and at its peaked reach 7.5 per cent when the British left in 1947.

Taxation became a favourite form of exactions for the British. In my opinion it was not a real system of taxation but it was "a form of looting" labelled as taxation. By the end of nineteenth century India was already Britain's cash cow; the revenues that flowed into London's treasury were described bv the Earl of Chatham as "a kind of gift from heaven".

The British extracted from India approximately £ 18,000,000 each year between 1765 and 1815. To have a large extraction they practiced many unkind and unjust activities. Unpaid taxes meant being tortured to pay up. The British extracted payments from Indians beyond what they could afford, and the rest had to be obtained by bribery, robbery and even murder.

The fundamental principle of the English had been to make the whole Indian nation subservient, in every possible way, to the interests and benefits of themselves. They took money from the native rulers to give them protection from their enemies. All the taxes and the surplus revenues were sent to the Home government in London.

Since India consistently exported more than she imported in the second half of the nineteenth century. and early twentieth century, Britain used India's trade surplus to finance her own trade deficit with the rest of the world, to pay her exports to India, and for capital repayment in London. This represented a massive drain of India's wealth. The 'permanent settlement' proved repressive for the Indian economy and all but destroyed Indian agriculture.

The Ryotwari settlement and Mahalwari settlement of taxation had the additional feature of abolishing all private property. And many other acts were imposed which led to the abolishment of the century old tradition and ties.

Not only textile industries but they also destroyed the shipping and the shipbuilding industries of India. Before the British East India Company arrived, Bengal, Masulipatnam, Surat and the Malabar ports had a thriving shipbuilding industry. The British were unalterably opposed to India developing its own steel industry. Jamsedji Tata tried to set up India's first modern steel mill in the face of implacable British hostility, but he was successful to set up the modern steel mill.

By the end of the nineteenth century, India was Britain's biggest source of revenue. At the same time the British had a standing army of 325,000 men, two third of which was paid by Indian taxes. There were also disparities between the European and Indian soldiers in terms of ranks and promotions.

During the Great Depression, the Indian agriculture collapsed and there were no buyers, but the Indian agriculturists were not provided with remission of taxes. Cruelly, the British decided to restrict India's money supply, fearing that the devaluation of Indian currency would cause losses to the British from a corresponding decline on sterling of their assets in India.

So the Britain insisted that the Indian rupee stay fixed at 1 shilling six pence, and obliged the Indian government to take notes and coins out of circulation to keep the exchange rate high. The total amount of cash in circulation in the Indian economy fell from some 5 billion rupees in 1929 to 4 billion rupees in 1930 and as low as 3 billion rupees in 1938. India was starved but their currency stayed high and the values of British assets in India were protected.

When we talk about the British aid to India, it was about 0.4 per cent of India's GDP but the government of India actually spent more on fertilizer subsidies which might be an inappropriate matter of that argument. If India's GDP went down because it 'missed the bus' of industrialization, it was because the British threw Indians under the wheels.

Many of the today's problems in the country including the persistence of poverty, too much dependence on agriculture, racial and ethnical tensions etc. are the gifts of the Raj, the legacy of the British colonial rule in India.