The previous post on Indian Economy during the British period revealed one of the reasons for widespread penury in the country at the time of independence. This post is second in the series on Indian Economic History. A major reason for the presence of very wide inequalities of income and wealth concomitant to abject poverty was due to the Land Tax levied by the British Government.
On Land Tax
After the deterioration of the Indian manufacturing sector owing to policies framed by Britain, Agriculture was the sole source of national wealth.
The Land Tax levied was not only excessive by outrageous. In England the Land Tax rates were between 5% and 20% whereas in India, they levied exorbitant rates which were over 90% of the produce. This crippled the Indian Agriculture. This ensured that the cultivators got zilch from cultivation.
The main characteristics were
1) It was heavy as in the rates were too high.
2) The rates were uncertain. The tax rates were changed very now and then. There was absolutely no transparency in the proceedings.
Moreover, this Land Tax differed from the principle of taxation which prevailed in all well administered countries.
In addition to all this, the revenue from Land Tax was never used for the betterment of the Indian populace. This left the cultivators permanently poor.
The movie portrays the large chunks of monies which were taken as tax from the Indian peasants. Life during the colonial rule was certainly hard for them. This was not caused by mismanagement but in fact it was maneuvered cleverly by the British.
The effects of the Land Tax were wide spread. They not only robbed the cultivators of their harvest but also discouraged them to cultivate. This had serious negative impact on production and productivity. Thus we know that, Colonial rule played a very important role in destroying agriculture and industry in India. This resulted in India being shunned from international trade as the products were no longer ‘price’ competitive.
1) The Economic History of India By R.C. Dutt