Did careless governance and a bad work ethic cause India’s economic descent?

This book, according to the authors, arose out of probing questions from students about the causes of India’s current poverty and what can be done about it, especially since India is rich in resources and knowledge. The first pages of the book argue that India has always been rich. It certainly was. For what other reason, indeed, would so many others invade India? But even after all these invasions, when the East India Company arrived, India was well off. The data presented shows some indicators of the quality of life of “ordinary” people in certain regions of the country. A set of observations, for example, of the diet of a peasant family of six in Bengal in the early 18th century, and of the life of a Marwari family in the late 17th century, show that the average person had a reasonable quality of life by today’s standards. This was the period just before or around the arrival of the East India Company on Indian shores, and several visiting chroniclers noted that the common people in India were at least as well off as people almost everywhere else, if not better. Its merchants were wealthy and knowledgeable, its rulers efficient and powerful, and the artisans skilled and productive.

How, then, did the East India Company establish itself as a power in the country? The lesson of history is this: poor legal, fiscal and financial management. Essentially, the state and traders did not share information, responsibilities and duties clearly or equally. This hampered the ability to take risks, caused uneven infrastructure, and created opportunities for officials to pluck their nests. For example, the soldiers of Indian kings were paid irregularly and, therefore, did not undertake to protect the subjects, with consequent risks for navigation. The Company had a unified leadership, able to share and use information to its best advantage, while much of the Mughal administration and even merchants operated more or less on their own.

Indeed, commerce in India depended on trust and honor instead of enforceable laws based on written contracts. Missing, incomplete, or inconsistent financial records meant that business processes couldn’t run smoothly or profitably, and couldn’t grow as quickly. Indian rulers were negligent in collecting taxes and duties, and the East India Company managed to evade duties as disputes over these evaded duties led to the Battle of Plassey, after which the Company entrenched themselves and exploited the natives on a larger scale than before. Tax collection was patchy at best, as can be seen from the available records showing Mughal jama, the taxes that could be collected, versus haasil, or actual collections.

The Company’s victory over the Bengal Nawab at the Battle of Plassey marked the beginning of the end of India’s wealth. The company used its information base and systems to exploit the population – who witnessed the terrible famines in Bengal at the time – while the rulers stood on their feet. What is a shame is that people knew that having government and businesses working together and sharing information was a definite advantage. There is a long anecdote – an entire chapter – about the banking house of Jagat Seth, which flourished through the relationship between a Manickchand and Nawab Murshid Quli Khan of Bengal. They did not institutionalize the relationship so that it could continue beyond their lives. While this smacks of crony capitalism (why not all Bengal bankers?), The lessons are clear: Businesses can only function long term if they work with government.

The book also notes, among other things, the evolution of the population of India from the time of the Mughals until the year of independence: the country’s population is said to have doubled during the period to reach around 350. millions. In Mughal times, the zamindars treated their workers well, simply because there were fewer people available for work. Population growth has changed all of that. What the book does not fully recognize is the effect of the depredations of the British Empire. Estimates of the value of what the British took away run into the trillions of dollars: Shashi Tharoor, in a speech in the British Parliament, speaks of $ 15 trillion.

Instead, he talks about the skill and knowledge of Indian artisans. Again, there’s a whole chapter about a type of steel called Wootz, which eventually got too expensive to make. Some ways of making different types of steel are described in the 6th century Brihat Samhita. You could craft a sword that wouldn’t shatter against rock, for example, or dull against iron instruments. There was even the use of what turned out to be a kind of nanotechnology in the making of metals, although the ancients did not use such ways of thinking. There is no mention, however, of the Asoka pillar, which is far older than the Brihat Samhita.

There is more to construction and sophisticated geometry, for example, temples. Craftsmen of the time had simple tools, but could use them to create remarkably complex and strong structures, mostly made of stone, and these can be seen all over the country. There is even a mention of surgery in the 18th century – particularly a procedure now called rhinoplasty, reshaping, or reconstruction of the nose – being performed long before it was possible in the West.

And so in modern India, where the last decade of the twentieth century saw the economy open up. The link between information and productivity remains weak despite growing evidence that information systems need to be strengthened and that information is the backbone of all aspects of modern life, industry, agriculture , trade and services, etc. Here’s what it takes: a functioning legal system that delivers justice fairly quickly; information systems geared towards increasing productivity rather than controlling or regulating lives; a good understanding of how information helps governance and business; and, most importantly, creating systems that allow learning to learn for the future.

But the solutions presented fail to solve the problems which are now built into the system.

First, how to overcome vested interests – corruption and petty personal interests – which affect our systems of governance just as they affected the Mughals?

Second, how to deal with the active destruction of Indian thought systems by the British, especially Lord Macaulay, and subsequently the tendency of successive Indian governments to ignore these systems?

Third, and perhaps most importantly, there is no formal evidence that the information infrastructure that the authors propose is likely to work. There are anecdotes, like the story of Manickchand or descriptions of steel making, but there is no hard evidence to support the thesis. And many anecdotes available point to the contrary: note, for example, the development of Kerala, which is among the best social indicators and per capita income among the states of the country, but also among the states less favorable to business.

Regardless of its weaknesses, however, it presents interesting facets of life in India before, during and after the British. Its assumption on transparency, cooperation, and information infrastructure is intuitively appealing, and technologies such as blockchain facilitate its implementation. The anecdotes, while far from exhaustive, offer insight and would be useful reading material for students of business, public administration, and political science.

Making India Even More Beautiful: Learning from our History
By Meeta and Rajivlochan
pp. 299, Rs. 1495

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