Great Depression in India

Topic: Colonial Economy: Land Revenue, Drain, Deindustrialisation · NCERT: Class 10, Ch 2 "Nationalism in India"; Class 10, Ch 3 "The Making of a Global World"

Meaning

The Great Depression in India was the effect on India of the world economic slump (1929 to the mid-1930s). Between 1928 and 1934, India's exports and imports nearly halved and wheat prices fell by 50 per cent. Raw jute prices crashed. Peasants fell deep into debt and sold their gold, but the colonial government did not lower the land revenue.

It matters because this farm crisis brought rural India into the Civil Disobedience Movement. It also finally broke the old zamindars of Bengal, and the jotedars (rich village landholders) took their place.

Explanation

Background: from a world crash to an Indian crisis

• The world slump began in 1929.
• The world was already growing more farm produce than it could sell, so crop prices were falling.
• In 1929 the US share market crashed. American banks stopped lending abroad and called back their loans.

• Demand fell everywhere. Prices and trade collapsed.

• India was hit because of how the colonial economy was built.

• India mainly sold farm goods and raw materials (wheat, jute, cotton) and bought finished goods.
• So when world crop prices fell, Indian farmers felt it at once.

Main features: how the slump showed up in India

• Trade nearly halved. India's exports and imports nearly halved between 1928 and 1934.
• Farm prices fell sharply.
• Wheat prices fell by 50 per cent between 1928 and 1934.

• In Bengal, raw jute prices crashed by more than 60 per cent. Jute growers had borrowed to grow a cash crop, and now they could not repay.

• Revenue stayed the same.

• Crop prices fell, but the colonial government refused to reduce the land revenue.

• Peasants had to pay the same cash tax from a much smaller income.

• Debt and the sale of gold.

• Peasants used up their savings and mortgaged their land.
• They sold their gold and silver ornaments. India became an exporter of precious metals, notably gold.

• The economist John Maynard Keynes thought that Indian gold exports helped the world economy recover. For the Indian peasant, it meant losing the family's savings.

• Towns felt it less. People with fixed incomes (salaried workers, landowners living in towns on fixed rents) were often better off, because prices fell. Industry also gained from the government's tariff protection (taxes on imported goods that shielded Indian industry).

How it fed the national movement

• Rural unrest reached its peak. Gandhi began the Civil Disobedience Movement in 1930 with the Dandi March. The rural crisis was at its worst in the early 1930s.
• Rich peasants joined actively. Examples are the Patidars of Gujarat and the Jats of Uttar Pradesh, who grew commercial crops (crops grown for sale).
• For them, lower revenue was the main demand.

• They were deeply disappointed when the movement was called off in 1931 without any cut in revenue rates.

• Poor peasants were mostly tenants (people who farmed land rented from landlords). They wanted the unpaid rent to the landlord cancelled. The Congress, which did not want to upset rich peasants and landlords, was unwilling to back "no rent" campaigns.

Results: the end of the old landlord order in Bengal

• After the Permanent Settlement (a land tax fixed "for ever" with the zamindar), introduced by Bengal Regulation I of 1793, the big zamindars survived early auctions of their estates (land put up for public sale when the zamindar failed to pay revenue). They did this through tricks like benami purchase (buying in a false name). [2]
• They became a landlord class loyal to British rule but cut off from the actual cultivators. [3]
• The Depression of the 1930s finally broke them.
• Crop prices crashed, so rents could not be collected.
• The zamindars collapsed.

• The jotedars, who controlled land, loans and trade in the village, took over the countryside.

• Zamindari itself was abolished only after independence, by laws such as the West Bengal Estates Acquisition Act, 1953. [5]

Time, place and evidence

• Period: 1929 to the mid-1930s. The key price and trade figures cover 1928–1934.
• Regions hit hardest:
• Bengal: the jute crash, and the collapse of the zamindars.
• Punjab and western Uttar Pradesh: wheat-growing areas.

• Gujarat and Uttar Pradesh: the peasant base of Civil Disobedience (Patidars and Jats).

• Key people: Mahatma Gandhi, who led Civil Disobedience, and John Maynard Keynes, who commented on India's gold exports.

• How we know: from price and trade figures (wheat, jute, exports and imports) as presented in NCERT Class 10, Ch 3 "The Making of a Global World" and Ch 2 "Nationalism in India". The end of the zamindars and the rise of the jotedars is described in NCERT Class 12 Part 3, Ch 1 "Colonialism and the Countryside".

Don't confuse with

• The price depression of the 1790s. This came soon after the Permanent Settlement (1793) and ruined many zamindars, causing estate auctions such as Burdwan, 1797. It had ended by the early 19th century. The 1930s Great Depression is the one that finally broke the zamindars. [4]
• The Drain of Wealth. This was the steady, long-term transfer of India's wealth to Britain throughout colonial rule. The export of gold in the 1930s was a short-term crisis caused by distress, not the Drain theory itself.
• The Non-Cooperation Movement (1920–22). It came before the Depression. The movement fuelled by the Depression was the Civil Disobedience Movement (1930–34).
• The Bengal Famine (1943). This was a wartime food disaster, not part of the 1929–34 price slump.

Prelims Hooks

• Between 1928 and 1934, India's exports and imports nearly halved and wheat prices fell by 50 per cent.
• In Bengal, raw jute prices crashed by more than 60 per cent.
• India became an exporter of gold during the Depression. Keynes thought this helped global recovery.
• Trap: the colonial government did not cut land revenue, even though prices had halved.
• Rich peasants who joined Civil Disobedience: Patidars (Gujarat) and Jats (Uttar Pradesh).
• The Depression of the 1930s ended zamindari power in Bengal, and the jotedars rose.

Mains Points

• How a colonial economy amplified the slump. India sold farm goods and paid a fixed cash revenue. So a world price fall turned straight into peasant debt, sale of land, and loss of gold. A good example for a GS-I answer on the impact of colonial economic policy on Indian agriculture.
• From economic distress to mass politics. The Depression gave Civil Disobedience its rural base. But rich and poor peasants wanted different things (a cut in revenue versus cancelling rent). This shows the limits of Congress's peasant mobilisation and why many rich peasants felt let down after 1931.
• Continuity and change in rural Bengal. The big zamindars survived the auctions that followed 1793 and stayed loyal to British rule. But the 1930s slump destroyed them, and the jotedars rose from below. The real break in the old rural order came from a world economic crisis, not from colonial land law. [3]

Related concepts

• Burdwan auction of 1797
• Raja of Burdwan
• Fictitious sale
• Benami transaction
• Lathyal
• Proja

Read more

• Auctions, fictitious sales and zamindari survival