Railways: A Lasting Memorial of the

British Rule in India

Abstract: The construction of railways had a revolutionary impact on the life, culture and
economy of the Indian people. The impact of railways was felt in all sectors of the Indian
economy. Railways were responsible for expanding India's overseas trade and changing its
orientation, they also promoted internal trade. In so doing, they were instrumental in
transforming the structure of prices in India and widened the markets. The agricultural sector of
the economy was deeply affected by the widening of markets. Indian agriculture became linked
to world trade cycles. Thus, leading to commercialization of agriculture.
In this paper, I have tried to link these processes and show how one process consequently led to
the other, ultimately causing commercialization of agriculture. I have also touched upon the
consequent adverse effects of the process of commercialization of agriculture by railways.

The nineteenth century saw a rich debate on the impact of colonialism on the colony. Two
journalistic pieces written by Karl Marx in 1853 for the New York Daily Tribune on British rule
in India raised some key issues concerned with this debate which are of relevance even today.
Marx in these articles wrote about the destructive and the regenerative role of colonialism.
He saw in the very process of destruction by colonialism of the pre-colonial Indian society, the
regenerative role of colonialism, as it opened up the possibility of growth of capitalism and
industrialization in the colony. This was because Marx, on the basis of information then available
to him, erroneously characterized Indian society as a changeless Asiatic society which needed
to be destroyed, even though the process was painful, before any social progress could occur.
Further, along with the destruction of the old 'Asiatic' order he expected that new elements
introduced by British rule, such as electric telegraph, railways, steam navigation, private property
in land, western education, free press, political unification, etc., would create the conditions for
the evolution of a modern western type of society. As he put it: England has to fulfill a double
mission in India: one destructive, the other regenerating - the annihilation of old Asiatic society,

and the laying of the material foundations of Western society in India.1 The hope was that
colonialism would lead to the 'mirror image' of capitalism being produced in the colony.
Keeping this agendum in mind, not long after railway construction began in Western countries,
the Government of India together with the British government decided to encourage the building
of an extensive railway system in India. The reasons for this decision have not yet been fully
investigated, but they appear to have been primarily commercial and political.2 Railways, it was
believed, would assist the economic development of India and provide both a market for British
goods and a source of raw materials. They would also aid in the rule and protection of India by
facilitating the defense of the frontier and by transporting troops within the sub-continent.
Until the mid-nineteenth century, the common system of long-distance transportation of cargo
was pack of animals and small sailing vessels on navigable rivers. The nomadic Banjaras drove
long trains of pack animals on roads that connected western India with eastern and northern
areas. For short-distance trade and travel, the common means were palanquins, small river crafts
and bullock carts. The older system of long distance trade required a lot of labor and time. The
railways destroyed them without much resistance. By contrast with the railways, the government
paid less attention to short-distance travel, so in that sphere, boats, carts and palanquins survived
until well after 1947.
In the 1840s, there was a vigorous campaigning for railways by the City of London, which was
the principal financier of railways in Britain, and by business communities in London, Liverpool,
Calcutta, Bombay and Madras. In 1849, the Cabinet, the Company and the promoters agreed to
establish two experimental lines, one connecting Bombay with the Deccan cotton zones, and the
other connecting Calcutta with Burdwan coalfields. From the beginning, two principles were
accepted. First, the railways would be constructed by private enterprise on a 99-year lease, with
the Government of India having the option to purchase the lines after 25 years. And second, the
government, from its own budget, would guarantee 5 per cent return on capital where a company
failed to earn a minimum of 5 per cent return. In exchange the government exercised supervisory
1

Mukherjee, Aditya ,The Return of the Colonial in Indian Economic History: The Last Phase of Colonialism in India,
Social Scientist, Vol. 36, No. 3/4 (Mar. - Apr., 2008), pp. 3-4

Hurd, John .M, Railways,The Cambridge Economic History of India Volume 2 c. 1757-1970, Cambridge University Press, 1983,
p.738

and advisory powers on railways development and administration.3 Once the contract was agreed
upon, railway development began in earnest, with capital raised in Britain. Between 1853 and
1870, more than 4,000 miles of lines were opened, between 1870 and 1883 6,000 more were
added, between 1883 and 1925, 15,000 miles of railway tracks were laid.4
As Lord Elgin had said, The development of the country by the construction of railways is
the method by which we can materially improve the condition of the vast population dependent
upon agriculture most surely and most steadily.5 The construction of railways had a
revolutionary impact on the life, culture and economy of the Indian people. Bipan Chandra
points out, not till their establishment could the British truly penetrate Indian life, link India with
the growing world market, and set it on the path of capitalist development. As a matter of fact,
railways began, in course of time, to be looked upon by the alien rulers of the country as a
panacea of all its economic ills, and their development was pressed on with rigorous vigor and
vehemence, getting priority over everything else.6
Recent years have brought forth a number of path breaking studies on the multifaceted impact of
railway communications. In the debate on British policy in India, one school of thought would
associate the impoverishment of Indias rural economy with the introduction of railways.
According to this view, the proliferation of railway links was instrumental in modifying the
traditional cropping pattern as well as production relations in the countryside to the detriment of
the peasants and the artisans.7
Michelle B. McAlpins studies have shown that some of the welfare implications inherent in the
debate can be subjected to more rigorous analysis and may not always stand vindicated by
statistical evidence. John M. Hurd has shown that at last one aspect of economic change related
to the growth of railways has been in conformity with the predictions of economic theory. J.
Metzer, in his analysis of railway expansion in the Russian economy, also comes to this
conclusion. Both Hurd and Metzer observe that the range of price dispersion in the annual grain
3

Ray, Tirthankar, The Economic History of India, 1857-1947, Third Edition, Oxford University Press, 2011, chap. 9, pp. 238-239
Ibid, p. 239
5 Chandra, Bipan, The Rise and Growth of Economic Nationalism in India: Economic Policies of Indian National Leadership, 18901905, Har-Anand Publication Private Limited, 2010, chap. 5, p, 160
6
Ibid, p.160
7
Mukherjee, Mukul, Railways and their Impact On Bengals Economy, 1870-1920, Indian Economic and Social History Review,
Volume 17, No.2, April, 1980, p. 191
4

prices prevailing in various parts of the economy is inversely related to the extent of railway
constructions.8 While Bipan Chandra pointed out that railways brought about commercial
revolution of agriculture, i.e., the expansion of commercial crops and local specialization in
particular crops. He observed that the economic significance of the phenomenon of equalization
of prices was seen all over the country (though such equalization was seldom recorded) as well.9
The impact of railways was felt in all sectors of the Indian economy. Both people and goods
began to make extensive use of the railways. Contrary to earlier predictions that they would not
travel on railways in large numbers, there was a total of 19 million passengers in 1871; in
1901,183 million; in 1929-30, 630 million; and by 1945-46 passengers buying tickets exceeded 1
billion annually. Passenger kilometers also soared, from 4.6 billion in 1882, when statistics were
first collected, to 35.9 billion in 1929-30 and 67.7 billion in 1946-47. Passenger kilometers per
capita stood at 18 in 1882, 108 in 1929-30, and had reached 164 by 1946-47.10
The total volume of ton kilometers of freight moving within the subcontinent also rose
dramatically in the railway era. In 1871 the net metric tonnage of freight carried by the railways
was 3.6 million; by 1901 it had risen to 42.6 million, by 1929-30 to 116 million, and by 1945-46
to 143.6 million. Net ton kilometers increased from 4 billion in 1882 to 44 billion in 194647,
while net ton kilometers per capita went from 15 in 1882 to a high for pre-Partition India of 118
in 1941-42. Much of this increased volume was composed of goods destined for foreign markets
or goods being imported into India. The reduction of shipping costs, therefore, must be counted
as a major factor in changing India's position in international trade. Railways helped Indian
agricultural commodities to become competitive internationally and made possible an enormous
expansion in the export of products such as wheat, rice, jute, leather, oilseeds, and cotton. Before
railways only a very small proportion of agricultural output normally was exported, but after
railways, substantial amounts of both food and non-food crops began to be shipped overseas-as
much as 13 per cent of the wheat produced and an even greater percentage of non-food crops.
The growth of exports occurred extremely rapidly. India's exports of wheat exemplify this
growth. Before railways the sub-continent exported no wheat at all, but by 1886 India was
supplying 23 per cent of Britain's imports of wheat. In real terms, the value of exports increased
8

Ibid, p.191
Chandra, op cit. p.175
10
Hurd, op. cit. pp. 743-745
9

230 per cent from 1862 - the first year for which estimates for trade excluding Burma are
available-to 1928-29.11
The growth of exports was paralleled by a rise in imports. These were composed primarily of
manufactured items, such as cotton textiles, yarn, and capital goods. From 1862 to 1928-9 the
value of imports rose by 350 per cent in real terms. By the 1880s Britain had become both India's
largest customer and the source of fully three-quarters of the subcontinent's imports. Railways,
therefore, not only reshaped the pattern of India's foreign trade but helped tie India to the British
economy.12
Just as railways were responsible for expanding India's overseas trade and changing its
orientation, they also promoted internal trade. In so doing, they were instrumental in
transforming the structure of prices in India. Before railways, inter-regional price differences
were pronounced, and the local prices of grain, cotton, and other agricultural commodities
fluctuated with the changes in local supply conditions, particularly rainfall. As the railway
network expanded, and with it trade in commodities, price differences between regions narrowed
dramatically. A similar convergence occurred in the prices for major food crops that were not
exported, such as jowar, and also in those for non-food crops, such as cotton. The behavior of
prices indicates that because of the falling costs of transport, markets were not only widening but
were becoming national markets.13
The agricultural sector of the economy was deeply affected by the widening of markets. For the
first time, prices in India were susceptible to any significant shift in world prices. Indian
agriculture became linked to world trade cycles. As part of this linkage, farmers' decisions about
which crops to plant were affected by prices set in international markets; i.e., agriculture began
to become commercialized. Instead of producing solely for a local market in which prices
fluctuated with local conditions of supply, agriculturalists found that they could sell their
surpluses outside the local region at a relatively stable market price. As a result, a trend toward

11

Ibid, p.745
Ibid, p.745
13
Ibid, pp.745-746
12

regional specialization occurred. Acreage in many crops, such as jute, cotton, oilseeds, and
groundnuts, was intensified in regions suited to their cultivation.14
Commercialization15 brought far-reaching changes to rural areas. Greater specialization and the
opportunity to export agricultural commodities raised the value of farm output in districts with
access to railways. This led to a greater demand for land which in turn stimulated sales of land
and brought about higher land prices, rents, and taxes. The growth of exports also led to an
increased flow of income into rural areas. Which classes gained from this flow of income
depended on local conditions. Where credit was in short supply, moneylenders profited and
enhanced their economic power by lending to cultivators who needed loans to finance the
cultivation of crops for export and to pay their ever-rising taxes. Large landowners reaped
advantages both from the sale of their surpluses and from their capacity to make loans, and those
small landowners whose holdings were large enough to provide surplus acreage also benefited.
Still another group which realized gains was that of the landless laborers in regions of low
population density, such as the Central Provinces and Bihar, where real wages rose as farmers
expanded acreage in labor-intensive crops.16
Much of the new flow of income to rural areas was spent on consumer goods, but some of it was
saved, a fact affirmed by the large amounts of gold that began to be imported into rural regions.
On the other hand, some was used to finance the expansion of acreage under the plough. This
affected employment. While we cannot form firm conclusions about the impact of railways on
total agricultural employment until we know more about the specific labor requirements of the
new commercial cropping patterns, it is likely that the expansion of acreage generated by
railways led to a net increase in jobs in the agricultural sector.17
Agriculture, on the other hand, was relatively favored by railway rates. In contrast to modern
industry which had to bring in energy and raw materials, agriculture's inputs were produced
locally. Nor was scale a factor. Whereas, in the absence of protective tariffs, many industries had
14

Ibid. pp.746-747
The term commercialization of agriculture is used to describe the extension of trade and money relation in Indias
countryside that followed the construction of the railways (Habib, Irfan, A Peoples History of India 28 Indian Economy, 18581914, Tulika Publication, 2006, p.59)
16
McAlphine, Michelle.B, The Effects of Markets on Rural Income Distribution in Nineteenth Century India, Explorations in
Economic History, Volume 12, No. 3, July 1975, pp. 289-302
17
Hurd, op. cit. p. 747
15

to achieve a size large enough to compete with foreign producers who had the advantage of low
costs of transport in their own countries and low sea-rates to India, in farming this problem did
not exist. The relative abundance of good land and cheap labor kept production costs low, and
the relatively inexpensive charges for sea freight allowed agriculture to compete in overseas
markets as long as the railway rates to ports remained advantageous. That agriculture made use
of these rates is indicated by the composition of railway freight revenues. In 1901, a
representative year, 60 per cent of these revenues derived from the shipment of Indian
agricultural products. As coal, salt, and imported piece goods, and imported twist and yarn
accounted for another 20 per cent, it is clear that Indian manufactures made up only a small
portion of freight shipments.18
Despite the favored position in which railways put agriculture, it did not prove to be a growth
sector. Nor did agriculture stimulate significant growth in other sectors of the economy. Yet, it is
an open question whether the structure of agriculture itself was the cause or whether the period
of low railway rates was too short to enable agriculture to establish itself as a lead sector.19
Agriculture did have linkages with other sectors of the economy. It purchased consumer goods
and supplied raw materials to industry and food to urban centers; and it earned a considerable
amount of foreign exchange. But it did not have a large demand for inputs from other sectors.
Agricultural production remained labor-intensive. Capital equipment, such as ploughs and hoes,
tended to be produced locally by village artisans. When crops required processing, most of the
machines used were imported. Thus, it could be argued that insufficient linkages were at the root
of agriculture's failure to encourage the growth of industries that could service it. It could also be
argued that agriculture's institutions were too inflexible to allow it to continue to expand output.
The increases in output that were realized came largely from the extension of acreage, not from
increases in productivity. Changes in productivity would have necessitated structural changes,
and these were not forthcoming. For political reasons, the government refused to tamper with
existing rural institutions. While it did make some attempts to expand rural credit facilities, foster
cooperatives, undertake agricultural research, and regulate rural markets, these were tried only

18
19

Ibid, pp. 758-759

Ibid, p.759

on a limited scale. There were few land reforms, and large-scale absentee landlordism continued
until Independence.20
Agriculture's limited linkages to other sectors and its institutional framework may, therefore,
have been responsible in part for the lack of significant economic growth in India. But
railway rates may also have been a contributing cause. The general decline in transport costs
brought about by railways had initiated regional specialization, but through most of the
nineteenth century, railway rates were too high to allow specialization to become widespread. A
large portion of the grain and other agricultural commodities that were exported overseas was
surplus, i.e., it was what remained after local needs were met. Price changes in international
markets and lower transport rates did induce some farmers to alter their cropping patterns.
Farmers were slow to respond, however. High railway rates may help to explain their reluctance
to specialize. Whereas rates might be low enough to make it profitable to ship surplus goods to
the ports, they tended to be too high when it came to inter-regional shipments of other essential
agricultural commodities for farmers to risk specialization in one commercial crop. A farmer
might have soil and rainfall excellent for growing cotton, for example, and when the relative
price of cotton rose, he might grow cotton for export, but he would reserve some acreage for
growing food grains because the price of grain shipped in from another region by rail was likely
to be too high.21
When railway rates dropped, farmers were quick to react. Between 1903 and 1919-20, when
railway rates fell steeply, farmers took advantage of the cheaper rates and exported more of their
output, while purchasing the additional commodities they needed from other regions. The
movement toward regional specialization accelerated. This is reflected in the large jump in the
ton kilometers shipped per track kilometer. Between 1902 and 1912, ton kilometers per track
kilometer rose 67 per cent, and between 1912 and 1918-19 they went up another 28 per cent.
Greater regional specialization is also evidenced by the increase in tonnage of grain shipped.
While statistics for railway ton kilometers of grain are not available, the numbers of tons of grain
shipped per track kilometer afford a rough measure of the volume of grain being moved relative
to the size of the railway system. Between 1883 and 1902 tons of grain per track kilometer fell,

20

21

Ibid, p.759
Ibid, pp. 759-760

but in the decade after 1902, in the period of sharply declining railway rates, they increased 57
per cent. After the First World War, rail shipments leveled off, and the trend toward regional
specialization slackened. Agriculture's response to changes in the cost of transport suggests that
existing institutional and other bottlenecks did not present insurmountable barriers to expansion,
and that railway rates were an important if not crucial factor.22
The railways helped to relieve temporary food shortages in particular areas, but, in respect of
large-scale crop-failures, the railways tended to spread the rise in prices over a larger territory
and so to extend the area of a famine while lowering its intensity observes Professor Irfan Habib.
This was especially seen in the famines of 1896-97 and 1899-1900.The total mortality in these
famines was estimated at 1.25 million. In spite of favorable seasons, starvation deaths continued
because by bringing supplies to the core area of the famine (namely, the North-western
Provinces, Central Provinces, and other regions that were hit by the famine in that span of time),
railways did help to restrict the rise of price there, but they correspondingly raised prices in areas
they had drawn their supplies from: and so the effects of scarcity became more and more widely
felt. 23
Moreover, the railways seriously reduced food supply available within the country in times of
famine by moving large amounts of food grains to the ports for export as Habib points out as
well. By giving access to larger markets for non-food-crops, the railways helped generate a shift
from food to non-food crops. The area under non-food crops increased from 13.42 per cent to 15
per cent of the total cropped area (excluding area under tea and coffee) between 1875 and 1895.
The result was that despite considerable extensions of cultivation, the output of food crops per
head stagnated. Also, by connecting the inland regions with the ports, they greatly facilitated the
exports of food grains, notably rice and wheat, on an ascending scale. In 1875, British Indian
ports exported 1.22 million tons of food grains and in 1895, about 2.49 million tons, respectively
representing 2.3 per cent of British Indias food grain production in 1875 and 3.9 per cent in

22

23

Ibid, p.760
Habib, Irfan, A Peoples History of India 28 Indian Economy, 1858-1914, Tulika Publication, 2006, p.41, pp. 82-83

1895. This in turn led to the two of the worst famines experienced by India between 1896 and
1900.24
The above observations as made by Irfan Habib and the corresponding statistics corroborate the
nationalist critique (by scholars like R.C Dutt, G.C Iyer and others), that claims that railways
facilitated the export of food grains, thus producing in sufficiency of food supply in normal
times, depleting the country of its normal surplus, and making it an easy prey to recurring
famines.25
Therefore, we can infer that the introduction of railways in India was the first step towards
modernization. It replaced the labor-intensive and time-consuming system of long-distance
transportation. It connected the inland regions with the ports and facilitated trade. It equalized
price distribution across the country. These factors urged the farmers to shift from food-crops to
non-food crops. As the international markets opened for Indian agrarian goods, the farmers
began to specialize in one particular crop (like cotton in the Deccan as demand for Deccan cotton
increased in the international markets). Despite being favored by railway, agriculture did not
prove to be a growth sector nor did it provide any significant stimulus for growth of other
economic sectors.
However, when railways imposed positive impacts on the agricultural sector it also brought in
some adverse consequences in its wake. It caused massive shortages of food grains and leading
to famines that caused millions of death due to starvation.
Jayjayanti Banerjee

====================

24
25

Ibid, p. 84
Chandra, op. cit. p.172

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