Book in Focus
Railways' Economic Impact on Uttar Pradesh and Colonial North India (1860-1914)"/>

01st November 2022

Book in Focus
Railways' Economic Impact on Uttar Pradesh and Colonial North India (1860-1914)

The Iron Raj

By Ian D. Derbyshire

  1. Railways’ Contribution to Economic Development in Colonial India

Railways were the principal infrastructural investment in India during the colonial era, absorbing 6-9% of British portfolio foreign investment between 1850 and 1914. The imperial nexus reassured overseas investors and gave security and strategic motivation to building railways to act as iron rods to buttress the Raj. Railways were introduced early, in 1853, and spread rapidly, with over 33,000 route miles open in India by 1914, of which 4,800 miles were in Uttar Pradesh (UP). In contrast, China’s first railway opened in 1876 and by 1911 it had only 6,000 route miles.

There has long been a lively debate between Indian nationalist and Imperialist meliorist historians over railways’ economic and social impact. Nationalists saw railways eroding the self-sufficiency of village communities and promoting commercialisation of agriculture, with increased cash cropping, grain exports and imports of Lancashire piecegoods contributing to Malthusian famines. Meliorists accepted that railways accelerated the destruction of village self-sufficiency, but believed they brought beneficial modernisation, with expanded commerce, improved living standards and development of modern industries. 

  1. How Does this Book Compare with Others?

Ian J. Kerr and Christian Wolmar have written overview books on India’s railways in the colonial and post-colonial eras [1]. This book dives deeper, however, and is the first detailed examination of railways’ impact on a major Indian state: UP in northern India [2]. It is based on research at provincial and divisional archives in India, including examination of village records, and the India Office Library and Records in London.

This book combines a holistic and bottom-up approach. It views UP’s rural economy as a peasant economy subject to family-farming opportunities and constraints, with its social structure shaped by unequal access to land, labour and credit, and economic possibilities influenced by opportunities and constraints of the colonial nexus. It sets out the differing responses of UP’s agro-economic sub-regions, some landlocked and some river-served, to the opportunities and challenges provided by railways.

  1. What Does the Book Cover?

The book is organised into five parts:

Part 1. Before railways. This examines the volume and characteristics of pre-rail trade in UP, modes of transport and the constraints they imposed.

Part 2: The introduction and operation of railways. This explores the motivations for introducing railways to India; how the railways were financed; construction challenges faced and overcome; rail operation and management in UP; how improvements in efficiency were achieved; and competition from alternative modes of transport.

Part 3: The rural economy. This examines railways’ impact on market integration and the price movements for different crops, goods and sub-regions; the peasant economy structure of UP’s rural economy and associated constraints; cropping trends for individual cash crops and different grains; the grain trade, grain stores and famine; and sub-regional and social differences in impact.

Part 4: The urban economy. This examines railways’ impact on the volume of local, medium- and long-distance trade, trading routes, trading structures and trading methods; the impact on urban centres; the development of processing, consumption and rail services industries; and the development of Kanpur as an inland industrial centre.

Part 5: Railways’ macro impact. This compares railways’ impact on India with that of other developing and developed countries using the measure of social savings.

  1. Some of the Book’s Findings

Pre-rail trade: UP’s medium- and long-distance trade was growing before the introduction of railways, but the constraints of slow speed, unreliability and high freight costs limited trade volumes, especially on the westward land route.

Financing railway development: There were five phases before 1914, including a period during the 1870s when state financing, construction and management predominated for new lines.

Between three-fifths and three-quarters of the cumulated capital invested in India’s rail network to 1913 came from British-based investors and the rest from India. The rates at which India obtained the capital for its railways fell, from an initial 5% to a low of 3-3.5% by the 1900s. Indeed, British investors’ returns from Indian railway securities were below those from North American, Latin American and Asian railways. This led to the growing unpopularity of Indian railway securities, which hampered much-needed investment in renewals, improvements and rolling stock between 1900 and 1914.

Operating North India’s railways: State railway managers were more innovative than those of guaranteed private railway companies. They pioneered reductions in freight and passenger tariffs to grow traffic and achieved operating cost economies through statistical analysis and Indianisation of intermediate operative grades.

Improvements in operational efficiency enabled Indian railway freight rates to be reduced between 1885 and 1914 by 63% in real terms and passenger mile rates by 46%. However, while the state owned over 70% of UP’s rail network in 1914, it managed only two railways comprising one-third of UP’s track mileage. This was because it wished to distance itself from direct responsibility for potentially controversial operational decisions.

Building North India’s railways: By the later 1860s, a syncretic, ‘British Indian approach’ to railway construction had emerged, blending British engineering practices with more traditional Indian approaches as a response to Indian physical conditions.

Railways’ impact on price integration and cropping patterns: Railways stimulated a step-by-step rise in, and convergence of, grain prices as an inter-provincial crop failure grain trade and regular urban-centred grain trade developed.

Railways carried bulky, low-value items, such as grains, oilseeds and raw sugar, at rates one-fifth to one-tenth the charges of pre-rail cart transport. This shattered the traditional distinction between subsistence grains, oilseeds and cash crops and narrowed the returns from cultivating grains, oilseeds and traditional cash crops narrowed. This stimulated a key cropping development: the spread of grain double-cropping.

The beneficiaries of agricultural change: Substantial ‘independent cultivators’ profited from the post-1860 agricultural price rise and expansion of produce markets. They tilled better quality soils, possessed superior capital equipment and inputs and were able to plough and irrigate at the most opportune times. Improvements in living standards were cyclical for ‘floating cultivators’ and ‘dependent cultivat­ors’, labourers and artisans.

The differential impact on UP’s sub-regions: The previously ‘advanced’ East UP came under severe competition from better-located and endowed regions. Its sugarcane, poppy and indigo acreages declined. It found a solution through the seasonal migration of its young men by rail to Calcutta’s factories. By the 1900s, half a million East UP migrants remitted Rs 150 lakh per annum. This helped many smallholding families meet their rental and revenue obligations.

In contrast, the Upper Doab in West UP enjoyed significant growth. It became an important wheat exporter and granary for the expanding crop failure grain trade and, with canal irrigation, a key zone for sugarcane cultivation. Its per capita income levels became the highest in the province.

Railways’ demographic impact: After growing 14% between 1872 and 1901, UP’s population fell by 5% to 1921. The causes of this were epidemics of plague, cholera and influenza (in 1918-19). Increased rail travel played a key role, importing plague epidemics and influenza from the ports and disseminating cholera and dysentery in the wake of pilgrimage visits.

The impact on trade: Between 1880-84 and 1910-14, UP’s rail-borne exports (shipments to outside the province) increased ten-fold for other grains, by 184% for oilseeds, 155% for sugar and 145% for wheat, while imports rose by 113% for piece goods, 81% for metals and 72% for salt.

Railways stimulated new forms of trading and opened new markets, especially overland westwards to Central India and Bombay and Karachi ports. Before 1880, scarcely any UP produce found its way overland to Bombay or Karachi, but, by 1920, a quarter of UP’s rail-borne trade was with Bombay port and 3% was with Karachi.

Aggarwal and Marwaris based at the rail centres and involved in the lower-value grain, sugar and salt trades became UP’s key traders.

The impact on towns: UP towns increasingly became redistributive centres for their rural hinterlands, while cotton ginning and pressing mills and sugar refineries were set up at rail marts.

Backward linkages: Railway capital expenditure represented a sixth of India’s gross fixed investment between 1860 and 1900, but a third was spent in Britain. Overwhelmingly, India’s railways imported iron and steel and locomotives from Britain. If India had received tariff protection, the annual level of rail demand in the 1900s would have supported an iron and steel industry with 60,000 workers and a locomotive-building industry with 8,000 workers.

Kanpur’s emergence as an inland industrial centre: From a riverside village with a population of 5,565 in the 1770s, Kanpur developed into India’s fifth most important industrial centre in 1921, with a population of 214,436. By the 1870s, it was UP’s main rail trading centre and developed leather, woollen and cotton textile industries. Its industrialisation was a partnership effort in which British entrepreneurs dominated before 1914, but Indian banker-traders, led by the Singhanias, also played a significant role.

Social savings: Social savings measure the potential cost to a country or region in a specific year of being unable to use railways and having to transport goods by the cheapest alternative means. I have calculated freight social savings of 12-14% of provincial income for the UP in 1920. This compares with existing differing calculations for India of 9% of its GDP in 1900 and 26% in 1912.

[1] Kerr, Ian J. 2007. Engines of Change: The Railroads that Made India. Westport, CT: Praeger; and Wolmar, Christian. 2017. Railways & the Raj: How the Age of Steam Transformed India, London: Atlantic Books.

[2] Situated in the wide fertile Upper Ganges Plain, UP had a population of 48 million in 1901, which was greater at the time than that of the United Kingdom (38 million) or Japan (44 million). Its interior location meant that a smaller proportion of longer distance trade went to the ports than in the cases of the Bengal, Bombay and Madras presidencies, although eastern UP had long enjoyed cheap river transport by the Ganges to the Bay of Bengal.

During the 1980s, Ian D. Derbyshire carried out extensive fieldwork and archival research in north India and the UK on railways’ impact on the economy and society of Uttar Pradesh (UP) between 1860 and 1914. He also taught international economic history at Cambridge University and York University and carried out postdoctoral research with the support of the British Academy. In the 1990s and more recent decades, his research has explored the financing of India’s railways, rail construction methods and challenges in North India, and the impact of rail communications on UP migration, pilgrimages and dissemination of disease, among other subjects. In addition to writing on North Indian economic history, he has also published extensively on international politics and produced research reports for the UK Parliament.

Railways' Economic Impact on Uttar Pradesh and Colonial North India (1860-1914) is available now in Hardback at a 25% discount. Enter code PROMO25 at checkout to redeem.

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