Proposal preview

Organizing People: Political and Cultural Institutions in Colonial India

Our proposed panel examines the impact of institutions—the formal and informal “rules of the game”—in shaping economic developments in colonial India. The papers in the panel analyze the impact of a wide range of institutional arrangements and actors, from land restrictions to political enfranchisement to community norms.

The setting of colonial India setting is an important one to examine these questions, for several reasons. First, relying on the wealth of statistics collected by the colonial administration, most of the papers of the session use novel data and quantitative methods, which shed new light on the economic history of India.

Second, given that many institutional choices in the colonial period were chosen by the colonial powers rather than the people themselves, the analysis suffers less from the issues of endogenous institutional change than present-day institutions.

Finally, the lessons from these papers are useful for areas beyond India and for India beyond the colonial period.

Organizer(s)

  • Guilhem Cassan Université de Namur guilhem.cassan@unamur.be
  • Lakshmi Iyer Notre Dame University liyer@nd.edu

Session members

  • Latika Chaudhary, Naval Postgraduate School
  • Anand Swamy, Williams College
  • Gupta Bishnupriya, University of Warwick
  • Saumitra Jha, Stanford University
  • Lakshmi Iyer, Notre Dame University
  • Guilhem Cassan, Université de Namur
  • Rinchan Mirza, Université de Namur
  • Dan Keniston, Yale University
  • T.K. Suramya , IIT Madras

Discussant(s)

Papers

Panel abstract

Our proposed panel examines the impact of institutions—the formal and informal “rules of the game”—in shaping economic developments in colonial India. The papers in the panel analyze the impact of a wide range of institutional arrangements and actors, from land restrictions to political enfranchisement to community norms. The setting of colonial India setting is an important one to examine these questions, for several reasons. First, relying on the wealth of statistics collected by the colonial administration, most of the papers of the session use novel data and quantitative methods, which shed new light on the economic history of India. Second, given that many institutional choices in the colonial period were chosen by the colonial powers rather than the people themselves, the analysis suffers less from the issues of endogenous institutional change than present-day institutions. Finally, the lessons from these papers are useful for areas beyond India and for India beyond the colonial period.

1st half

Community Origins of Industrial Entrepreneurship: Evidence from 19th Century India

Bishnupriya Gupta, Dilip Mookherjee, Kaivan Munshi, Mario Saclemente

We examine the role played by community networks in the transition from trade to industry in nineteenth century India. The American civil war marked a turning point in the activities of trading communities engaged in cotton trade as they moved into cotton textiles production in Western India. Using a novel dataset of entry into industry at the level of the entrepreneur, we document the role of community networks in industrial entrepreneurship. Individual entrants were more likely to join a firm where the majority of the directors belonged to the same community. Controlling for community characteristics, we still find that the presence of members of a community in the industry mattered for further entry. We make comparisons with the entry of Marwari jute traders into the jute industry after the First World War in Eastern India. This was an industry dominated by British firms and the entry of Indian traders also...

We examine the role played by community networks in the transition from trade to industry in nineteenth century India. The American civil war marked a turning point in the activities of trading communities engaged in cotton trade as they moved into cotton textiles production in Western India. Using a novel dataset of entry into industry at the level of the entrepreneur, we document the role of community networks in industrial entrepreneurship. Individual entrants were more likely to join a firm where the majority of the directors belonged to the same community. Controlling for community characteristics, we still find that the presence of members of a community in the industry mattered for further entry. We make comparisons with the entry of Marwari jute traders into the jute industry after the First World War in Eastern India. This was an industry dominated by British firms and the entry of Indian traders also show the importance of a community network.

Dharma in General Equilibrium: Caste and Occupationnal Choice in India

Guilhem Cassan, Dan Keniston, Tatjana Kleineberg

The Indian caste system establishes a social hierarchy and assigns traditional occupations to each caste. In 2011, 20 percent of the Indian working population is employed in their caste’s traditional occupation, suggesting a strong attachment to these occupations. We develop a general equilibrium occupational choice model which we estimate with detailed survey and historical data. With the estimated model, we ambition to quantify the importance of caste affiliation in driving occupational choices and the resource allocation across sectors. Attachment to traditional occupations makes workers willing to work for lower wages in these occupations. Compared to the frictionless case, this leads to overproduction in these occupations, while other more productive occupations are underserved. With the estimated model, we can quantify the extent to which this friction leads to inefficiencies in the allocation of resources and in private sector development and propose policies to reduce the distortion.

The Indian caste system establishes a social hierarchy and assigns traditional occupations to each caste. In 2011, 20 percent of the Indian working population is employed in their caste’s traditional occupation, suggesting a strong attachment to these occupations. We develop a general equilibrium occupational choice model which we estimate with detailed survey and historical data. With the estimated model, we ambition to quantify the importance of caste affiliation in driving occupational choices and the resource allocation across sectors. Attachment to traditional occupations makes workers willing to work for lower wages in these occupations. Compared to the frictionless case, this leads to overproduction in these occupations, while other more productive occupations are underserved. With the estimated model, we can quantify the extent to which this friction leads to inefficiencies in the allocation of resources and in private sector development and propose policies to reduce the distortion.

Credit and "Community": Restrictions on Land Transfer in Punjab, 1900-1970

Latika Chaudhary, Anand Swamy

The Punjab Land Alienation Act of 1901 was one of the British Raj’s most notorious legislations in colonial India. The Act sought to prevent transfer of land from “agricultural tribes” to “non-agricultural tribes.” Ostensibly meant to protect the peasantry from unscrupulous moneylenders, it also came to be viewed as a legislation that favored the Muslim peasantry at the expense of their Hindu creditors. This paper explores, for the first time, the impact of the Act on mortgages, agricultural acreage, and investment in Punjab districts with varying religious composition. We also consider the impact of later debt and mortgage-related legislation in the 1930’s, which affected religious groups differentially.

The Punjab Land Alienation Act of 1901 was one of the British Raj’s most notorious legislations in colonial India. The Act sought to prevent transfer of land from “agricultural tribes” to “non-agricultural tribes.” Ostensibly meant to protect the peasantry from unscrupulous moneylenders, it also came to be viewed as a legislation that favored the Muslim peasantry at the expense of their Hindu creditors. This paper explores, for the first time, the impact of the Act on mortgages, agricultural acreage, and investment in Punjab districts with varying religious composition. We also consider the impact of later debt and mortgage-related legislation in the 1930’s, which affected religious groups differentially.

Regulation and Informalisation of Labour: A Case Study of Beedi Rolling Industry in the 20th Century Malabar

T K Suryama

The Beedi (an Indian variety of indigenous cigar) industry in the erstwhile Malabar district of the Madras Presidency witnessed a major change in the organisation of production during the 1930s. This was a result of the incorporation of beedi establishments in the Presidency under the Indian Factories Act in 1937 (G.O. No. 1337, Development Department). In order to escape this legal binding, beedi factories suddenly started splitting up their workforce and shifting their production to small branches comprising of 19 workers or less. The legal intervention of the state in production relations resulted not only in the decentralisation of production but also the further informalisation of employment. This paper attempts to explore the interconnections between the process of informalisation and state regulation experienced by the beedi rolling industry of colonial Malabar in the 1930s and 40s. The strategies employed by capital to escape the regulations and the resistance offered by...

The Beedi (an Indian variety of indigenous cigar) industry in the erstwhile Malabar district of the Madras Presidency witnessed a major change in the organisation of production during the 1930s. This was a result of the incorporation of beedi establishments in the Presidency under the Indian Factories Act in 1937 (G.O. No. 1337, Development Department). In order to escape this legal binding, beedi factories suddenly started splitting up their workforce and shifting their production to small branches comprising of 19 workers or less. The legal intervention of the state in production relations resulted not only in the decentralisation of production but also the further informalisation of employment. This paper attempts to explore the interconnections between the process of informalisation and state regulation experienced by the beedi rolling industry of colonial Malabar in the 1930s and 40s. The strategies employed by capital to escape the regulations and the resistance offered by labour will form a major part of this discussion. The theoretical interest of this paper is to understand how the colonial legal interventions created an administrative formal-informal dichotomy in the Indian industrial sector.

2nd half

Enfranchisement and Political Competition: Evidence from India

Guilhem Cassan, Lakshmi Iyer, Rinchan Mirza

We build a dataset of electoral results in India between 1919 and 1957, constructing district level turnout, enfranchisement rate as well as tracking individual legislators over time. We analyse the consequences on incumbency advantage of large scale enfranchisement reforms in colonial India and from colonial to Independent India. This allows us to understand if the political personnel changed when the enfranchised population was multiplied by 3 (with the 1935 Constitutional reforms) and again by 10 (with Independence) or if the same individuals remained in power.

We build a dataset of electoral results in India between 1919 and 1957, constructing district level turnout, enfranchisement rate as well as tracking individual legislators over time. We analyse the consequences on incumbency advantage of large scale enfranchisement reforms in colonial India and from colonial to Independent India. This allows us to understand if the political personnel changed when the enfranchised population was multiplied by 3 (with the 1935 Constitutional reforms) and again by 10 (with Independence) or if the same individuals remained in power.

"Pre-colonial Religious Institutions and Development: Evidence through a Military Coup"

Adeel Malik, Rinchan Mirza

This paper offers a novel illustration of the political economy of religion and development by empirically examining the impact of religious shrines on development. Compiling a unique database covering the universe of holy Muslim shrines across Pakistani Punjab, we show that historically embedded religious power shapes persistent differences in literacy. Using the 1977 military take-over as a universal shock, our difference-in-differences analysis suggests that areas with a greater concentration of shrines recognized by the British colonial administration experienced a substantially retarded growth in literacy. We argue that this literacy disadvantage in shrine-dominated regions is largely attributable to a growingly prominent role of shrine elites in electoral politics and their direct control over allocation of public goods since the 1977 military coup. Our analysis suggests that shrines in these regions represent the confluence of three forces—religion, land and politics—that together constitute a powerful structural inequality with potentially adverse consequences for development.

This paper offers a novel illustration of the political economy of religion and development by empirically examining the impact of religious shrines on development. Compiling a unique database covering the universe of holy Muslim shrines across Pakistani Punjab, we show that historically embedded religious power shapes persistent differences in literacy. Using the 1977 military take-over as a universal shock, our difference-in-differences analysis suggests that areas with a greater concentration of shrines recognized by the British colonial administration experienced a substantially retarded growth in literacy. We argue that this literacy disadvantage in shrine-dominated regions is largely attributable to a growingly prominent role of shrine elites in electoral politics and their direct control over allocation of public goods since the 1977 military coup. Our analysis suggests that shrines in these regions represent the confluence of three forces—religion, land and politics—that together constitute a powerful structural inequality with potentially adverse consequences for development.

Forging a Non-Violent Mass Movement: Economic Shocks and Organizational Innovations in India's Transition to Democracy

Rikhil Bhavnani , Saumitra Jha

We provide the first systematic empirical evidence on factors that successfully mobilized one of the world's first non-violent mass movements in favor of democratic self-government, using novel data from an unlikely venue for such collective action: poor, ethnically-diverse South Asia. We show that residents of exports-producing districts that were negatively impacted by inter-war trade shocks, including the Depression, were more likely to support the Independence Movement in 1937 and 1946 and more likely to engage in violent insurrection in 1942. Further, we show how the nature of mobilization changed dramatically from non-violent to violent immediately after the Movement's leadership was arrested, particularly in districts endowed with a smaller grassroots organizational presence. We interpret these results as reflecting the role of two factors: trade shocks in forging a mass movement by reconciling agrarian exporters with the Movement's offer of protectionism, land reform and democracy, and an innovative organizational structure, that selected...

We provide the first systematic empirical evidence on factors that successfully mobilized one of the world's first non-violent mass movements in favor of democratic self-government, using novel data from an unlikely venue for such collective action: poor, ethnically-diverse South Asia. We show that residents of exports-producing districts that were negatively impacted by inter-war trade shocks, including the Depression, were more likely to support the Independence Movement in 1937 and 1946 and more likely to engage in violent insurrection in 1942. Further, we show how the nature of mobilization changed dramatically from non-violent to violent immediately after the Movement's leadership was arrested, particularly in districts endowed with a smaller grassroots organizational presence. We interpret these results as reflecting the role of two factors: trade shocks in forging a mass movement by reconciling agrarian exporters with the Movement's offer of protectionism, land reform and democracy, and an innovative organizational structure, that selected its leaders based upon public sacrifice rather than wealth, in keeping the mass protests peaceful.

Cultural Transmission and Colonial Legacy: Evidence from Public Good Games Along a Historical Border

Latika Chaudhary, Sriya Iyer, Jared Rubin , Anand Shrivastava

We conduct a standard public goods game in three small towns in the Indian state of Rajasthan. Until independence in 1947, these towns were assigned to (barely) opposite sides of a colonial border separating British India from the Princely States. One town fell on the British India side of the border on account of historical military conquest, unrelated to any geographic or commercial advantages. In line with the historical literature, we conjecture that past institutional differences related to the presence of outsiders and local governance between the Princely States and British India in Rajasthan engendered cultural differences regarding willingness to free ride on publicly provided goods, especially in the presence of “outsiders.” If this conjecture is correct, our experiment permits a test of whether such cultural differences were passed on inter-generationally; the towns have been under similar governance structures for decades, suggesting the modern institutions cannot account for any observed...

We conduct a standard public goods game in three small towns in the Indian state of Rajasthan. Until independence in 1947, these towns were assigned to (barely) opposite sides of a colonial border separating British India from the Princely States. One town fell on the British India side of the border on account of historical military conquest, unrelated to any geographic or commercial advantages. In line with the historical literature, we conjecture that past institutional differences related to the presence of outsiders and local governance between the Princely States and British India in Rajasthan engendered cultural differences regarding willingness to free ride on publicly provided goods, especially in the presence of “outsiders.” If this conjecture is correct, our experiment permits a test of whether such cultural differences were passed on inter-generationally; the towns have been under similar governance structures for decades, suggesting the modern institutions cannot account for any observed differences. We find that participants of the former Princely State town make lower contributions to mixed groups than do participants from the British India town. Moreover, we find these effects are driven by participants with strong family ties to the town.