One of the elaborate essays that Amiya Kumar Bagchi includes in Colonialism and Indian Economy( www.oup.com) is on ‘land tax, property rights, and peasant insecurity in colonial India.' Analysing the case of the Bombay Deccan districts in the 19th Century, the author rues that the problem of a vulnerable ecology and uncertain peasant production can be compounded by state policies regarding property rights and taxation.
While the British rulers in India are credited with the introduction of the concept of generalised private property into the Indian legal system, there was a conflict because land taxes also financed colonial conquest and rule in India, feels Bagchi.
The result, as he explains, was that whereas in Britain the nature of property rights held by a person in land often determined the extent to which, and the form in which, he was subject to taxation, in India it was the form of the land tax that determined the nature of property rights in land. “It also determined the kind and the degree of security a person with such tax-determined property rights enjoyed in his property.”
Zamindari and raiyatwari
The two main systems of land taxation then, as you may know, were zamindari and raiyatwari. The former was the so-called Permanent Settlement or the Cornwallis system, enforced in Bengal, Bihar, and Orissa, the first really large territory the British conquered in India, the author informs.
Under this system, the government authorised a small group of large revenue payers to collect the land tax from the occupiers or cultivators of land and then pay most of it into the government coffers, after retaining a portion (initially authorised to be 10 per cent of the revenue) as the reward for their trouble, he adds.
The system is better known as ‘ zamindari' because ‘it was only in the case of these large revenue-payers (who were usually called zamindarsin British documents) that the quantum of tax on a given piece of land was fixed permanently.'
In the second system, the raiyats or the occupiers (not necessarily the cultivators) of land were to pay the land tax directly to the government. “The quantum of tax could vary from period to period: initially it varied from year to year but over time, the procedure was adopted of conducting periodic surveys of the tax-paying capacity of a particular region, and revising the taxes (‘land revenues') accordingly.”
Raiyatwari was born in the Baramahal region of the Madras Presidency under the administration of Alexander Read and Thomas Munro, but it was given a canonical formulation in the Fifth Report of the House of Commons on the Affairs of the East India Company of 1812-13, the book notes.
Concern for ‘peasant welfare'
To British policymakers, the second system appealed more than the first, because of the reluctance to hand over ‘a substantial fraction of the potential tax revenue to a group of idle landlords.' Concern for peasant welfare also seemed to argue against the zamindari settlement, the essay mentions. “An enlightened British administration would take better care of the mass of the peasantry than a group of greedy tax farmers.”
In many regions, however, the raiyatswere a privileged group such as the mirasdars, patidars, or the big sharers in bhaiyachara tenures, the essay informs. “The British tried in some regions to settle with the so-called village communities which were dominated by such big men of the countryside. Almost inevitably, they ultimately had to deal with the individual sharers in these village communities, even though particular dignitaries were supposed to be responsible for the payment of the tax.”
The author points out that an overlooked aspect of the British approach towards land tax has been the ‘contingent nature' of property rights in colonial India. He explains that private property in land in Britain assumed the form of freeholds where the proprietor held the land absolutely without making any regular payment to any higher authority, or the form of copyholds or long leaseholds, under which the proprietor made a fixed payment (often a nominal one) to a superior right-holder.
“The proprietors under freehold or copyhold tenure did not hold the land under the condition that they had to make regular annual payments to the Crown or to some superior landlord and would have to forfeit their property if they failed to make the payment punctually. In the eighteenth century, they paid a land tax. But they paid the tax because they were proprietors, and were not considered proprietors because they paid the tax.”
Public revenues vs property rights
By contrast, in British India, under both the zamindari and the raiyatwari tenures, it was the prompt payment of a tax to the government every year that allowed the so-called proprietors to hold the property in land, continues Bagchi. The security of property was thus made subject to ‘the superior requirement of security of public revenues from the land, which after all constituted the sinews of British colonial expansion, and almost the principal raison d'être for maintenance of the colonial state.'
He observes that in an era in which revenue needs grew both for making remittances to Britain (as ‘ dividends' on East India Company's stock, and as expenses of the British Indian establishment in Britain) and for defraying the costs of further conquest in Asia (and even in Africa), the requirement of the security of private property in land was to be subordinated to that of the security and size of the public revenue.
Added agricultural risks
Woefully, the British made sure the taxes got paid, as long as there was an administrative and coercive machinery at their disposal to make the threat of snatching off land rights credible. “By linking the revenue to be paid to the estimated average produce of the land with only minor adjustments for variation in harvests, and pitching the tax demands sufficiently high, they made it certain that a number of the designated revenue-payers would lose their titles every year.”
For an agrarian system that depended mainly on rainfall, there was already the risk of varying productivity in a subtropical climate. Adding to this ‘ natural' risk was what the British policies brought in.
The impact of the additional risk, as the book analyses, was manifold. “First, by making all the land, including pastures and forests, subject to taxation or to monopolisation by the State, the tax policies introduced ecological disturbances.
The peasants could not keep cattle or other livestock as sources of manure or depend on forests as sources of timber or fuel and had to ‘ mine' the land on which they had engaged to pay taxes.”The second impact, as Bagchi outlines, was that by depriving the zamindars and other superior right-holders or village biradaris (that is, the group of landowning families) of their local judicial or police powers and at the same time releasing them from their obligation to maintain roads, dams, or markets, the British system tended to depress the productive or profit-yielding capacity of the land, until new institutions evolved to repair the damage. Economic impactAnd thirdly, the compelling of peasants and zamindars to pay their dues in money of a designated character had a telling economic impact: it glutted local markets with produce and depressed agricultural prices. "In many parts of India, peasants and zamindars had been accustomed to pay their taxes or their tribute in kind (in grain, sugar, elephants, and so on) and even when money was used, it might be money of a low denomination such as cowries. The British demonetised vast stocks of such small denomination currencies; then went on effectively to demonetise gold coins for the purpose of payment of public dues."Instructive study that takes you on a travel back in time and unravels in the process the roots of many of today's problems.
D. MURALI(SMS your comments about Taxation page to 94449 07996)