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Rapid economic growth has put India at the centre of current debates about the future of the global economy. In this fully revised and updated text, B. R. Tomlinson provides a comprehensive and wide-ranging account of the Indian economy over the last 150 years. He sets arguments about growth, development and underdevelopment, and the impact of imperialism, against a detailed history of agriculture, trade and manufacture, and the relations between business, the economy and the state. The new edition extends the coverage right up to the present day, and explains how one of the largest countries in the world has sought to achieve economic progress and lasting development, despite institutional weaknesses, rigid structures of political and social hierarchy, and the legacy of colonialism.

In 1868, when the Meiji emperor had his powers ‘restored’ by the political revolution that destroyed the old feudal system of the Tokugawa shoguns, Japan was a predominantly agricultural economy. By the time of the emperor's death in 1912 Japan had achieved significant industrialisation and in 1920, after a further boom during the First World War, she was well advanced along the road to a distinctive type of industrial development based on textile goods for export, heavy industry for domestic civilian and military capital investment, and considerable state intervention in economic and social organisation. In the mid 1880s, about 70% of the gainfully-employed population were engaged in agriculture, producing well over 40% of the gross national product. Farmers derived about three-quarters of their total income from agricultural activities, although agriculture probably absorbed only about 60% of total work hours for the labour force as a whole, with another 2% each for fishing and construction, and a further 16% or so for traditional mining and manufacturing. By 1920, the GDP of the Japanese economy had grown almost three-fold, but the share supplied by agriculture was under 30%, while just over 50% of workers were employed there.1.

Campsie : Presbytery of Glasgow, Synod of Glasgow and Ayr, County of Stirling. The Parish of Campsie measures eight English miles in length, and seven in breadth . . . . It is bounded on the North by the parish of Fintry; on the West by Strathblane and Baldernock; on the South by Calder and Kirkintilloch; and on the East by Kilsyth; forming a distinct commissariat along with Hamilton, stiled the commissariat of Hamilton and Campsie. Kedgeree : A village and police station on the low lands near the mouth of the Hoogly, on the west bank and 68 miles below Calcutta. It was formerly well known as a usual anchorage of the larger Indiamen. This article deals with the activities of one Scottish family—the Lennox family of Campsie in Stirlingshire—in Asian trade during the closing decades of the eighteenth century. The growth of private trade by Europeans in Asia in this period, and of the Agency Houses that managed much of their activity, is well-known. However, the classic studies of this subject have relied largely on official records and have used these to address issues in the history of imperial expansion. Thus standard accounts have tended to concentrate on the political relations between private traders and the East India Company, and to see private trade in the eighteenth century mainly as the by-product of the corruption of Company power. Viewed from inside the private business networks that made this possible, the perspective is rather different.

The independent India that came into existence on 15 August 1947 was a large, diverse and poor country that inherited many economic problems from its colonial past. The most decisive break with the past that was achieved in economic matters by independent India was in the role of government policy and state agencies in the running and directing of the economy. The most important set of controls that were devised in the late 1940s concerned the development of industry through the rationing of capital issues and planning of future economic development. Since the level of savings and capital investment in agriculture was so low during the 1950s it is not surprising that the growth in agricultural output which took place was largely the result of enhanced labour utilisation on an expanding area of unirrigated land. Between 1939 and 1971 a particular type of economy emerged in India in which official planning and government economic management played a crucial part.

Assumptions about the nature and course of Indian economic history lie at the heart of many analyses of South Asia's recent past. The descriptions and explanations of the apparent lack of growth and development in the Indian economy produced during the colonial period itself were dominated by the nationalist critique of British rule and the imperial response to it. Modern studies of the transition to colonialism in India provide a rather different contrast between the economies of the eighteenth and nineteenth centuries. The analysis of dependent underdevelopment contends, like the nationalist critique of the colonial economy before it, that the British conquest was the chief reason for India's development problems over the last 200 years. The underlying characteristics of economic growth and development in colonial and post-colonial India were determined by the nature of the markets that decided how any surplus over subsistence was generated, and then divided it between capital, labour, and the state.

The rural sector, comprising agriculture, and ancillary activities such as animal husbandry, forestry and fishing, was the foundation of the colonial economy. In most parts of the country, the peasant mode of production never fully resolved itself into a class structure based on labour and capital. Rich peasants rarely became rentiers; poor peasants did not often suffer full proletarianisation by losing access to land entirely. The creation of a land market in India in the first half of the nineteenth century was identified by nationalist historians as one of the most drastic effects of colonial rule that acted, especially in north India and Bengal, as a mechanism for transferring control of land out of traditional proprietors into the hands of merchants and moneylenders. For the rural poor the disruption of the rural labour market was probably the most severe direct consequence of the depression in agriculture.

Taking a fresh look at the institutions of economic management in colonial India explains much about the history of the last decades of the raj. The concept of political economy—the interaction of economic forces and political choices—provides a useful approach to the study of government economic policy and practice that can give a new perspective on the history of the late British Empire as a whole.

The history of economic growth and industrial development in Meiji Japan has long attracted the attention of economic historians of India, especially those who are concerned with the question of industrial development. There is as yet no consensus as to the message of any comparison between Japan and India, and the battlefield between different analyses of the Meiji economy has proved a useful source of pillage to dress up conflicting interpretations of the Indian economy in this and later periods.

The spectacular decline of the expatriate business houses of eastern India in this century is one of the many underdeveloped areas of Indian economic history. The extent of the decline itself seems hard to exaggerate. In 1900 almost all the commanding heights of the colonial economy appeared to the dominated by expatriate and foreign firms, most of them British. Not only was the foreign trade of Bengal almost exclusively in their hands, but so was the industrial and banking structure. In addition, most historians of the period have stressed that the expatriate sector was able to dominate internal trade, operating in amonopsony position in regard to cash crop production and marketing and also, thanks to its contacts with government, the railways and the port trusts, to enjoy hegemonic powers that impeded the development of indigenous rivals. Thus, as A. K. Bagchi has stressed, 'social discrimination was complemented and supported by political, economic, administrative and financial arrangements which afforded European businessmen a substantial and systematic advantage over their Indian rivals in India.' The fate of the expatriate groups since 1950 has beenvery different. Many suffered considerable depredations during and after the second world war, losing important sectors of their business to Indian rivals, and even being bought out entirely by native enter-prise. Such expatriate interests as survived after Independence have generally failed to perform well. Their recent history has been agloomy one of a steady erosion of profitability and viability, so that most of those that still remain are now taken seriously only by a new generation of indigenous speculators and asset strippers.