Economic History of a Princely State

The volume starts with the era preceding 1875 when the Asaf Jahi rule was consolidated, especially under the Prime Ministership of Mir Turab Ali Khan popularly known as Salar Jung (1829-1883). Salar Jung initiated several measures of social organization such as the agrarian revenue system, trade and manufacture, development of public works and infrastructure and overhaul of the fiscal system which laid the foundation, as it were to the efforts at industrialization that followed. Changes in the agrarian revenue system resulted in shifting the revenue base from the village to the individual and the link with the productivity of the land. This, with the abolition of hereditary collectors of revenue and abolition of private duties on trade increased land and customs revenues. This in turn led to attempts at increase in social overhead capital like the creation of a railway system, public works in irrigation, opening of coal fields, textile mills etc.

The author places the evolution of industrialization from 1875 to 1948 as being in three phases. In the first phase upto 1919 a firm base for infrastructure was laid which helped the industrialization, trade etc. In the second phase upto 1939 (the watershed of the two World Wars), the state took the initiative in providing institutional assistance to industry like financial and technological aid to develop local industry, both small and large. In the third phase upto the merger with the Indian Union in 1948, the state tried to induce a structural change in the type of industrialization from one which was agro-based to non agro-based industries such as metal and engineering, chemical and forest-based units of manufacture. In the last phase efforts were made to place the industrialization within the ambit of planned economic development . The author cautions us rightly before a description of these phases that they were not watertight compartments. Also, except for a period after the 1930s evolution of state policy was non-linear where the policy emerged long after the measures inherent in it had been put on ground.

In the analysis that follows the author describes the nature of changes that occurred. Thus, in the first phase, a large number of agro-based industries came up and there was a sharp increase in the labour employed here and in the infrastructure sector like the Railways. In the second phase institutional support of the state to industry became marked with the setting up of a separate Commerce and Industries Department in the Government. An Industrial Trust Fund with a large measure of autonomy was set up. The department ran some pioneering industries in glass, soap and power alcohol. In cottage industries, emphasis was on handlooms with initiatives like setting up of a demonstration weaving factory and industrial cooperatives. Encouragement to carpet-weaving was also notable. All these measures to help artisans were also backed with financial support, which was extended in equal measure to the corporate sector too by giving tax concessions and the like. In the field of technology, an industrial laboratory was started. As mentioned earlier, in the third phase there was a structural change from agro-based industry to others and an integrated plan for economic development emerged. The first Five Year Plan of the Hyderabad Government envisaged 108 projects and contemplated fiscal levies to fund them. It did not take off as intended because the regime faced a social and political crisis in the form of the peasant uprising, the Razakar movement etc.

According to the author, the distinctiveness of the process of industrialization in a princely state compared to the process in British administered provinces. The Hyderabad process was rooted in the autonomous initiatives taken in social reorganization and establishment of infrastructure–all within a fairly cogent framework which was lacking in British Indian provinces. State support to industry was more unlike the situation outside the princely states where private capital and industry dominated.

Having described the distinctiveness and achievements in industrialization, the author turns in somewhat Marxian dialectics, to the limitations imposed on the process of industrialization by a feudal social order and an autocratic polity. In the case of capital investments and control, it is not clear if agricultural surplus really entered industry with the agrarian rich playing a role. However, investments came from the feudal orders like jagirdars and from urban centred merchants. But it is concluded that a class of capitalists did not come up. Working conditions of labour were oppressive even after the Factories Act of 1930. There were struggles over wages. A working class emerged ‘not only itself, but for itself’.

In the last two chapters on Appraisal and Social Framework, the thrust is on the limitation posed on industrialization by the feudal social structure and the nature of agrarian society which was mostly at subsistence level not generating the markets for industrial production. An interesting sidelight is the role of non-price factors in conditioning the price response of producers. The author is convinced this was mainly because of the feudal social structure which even fed on the fruits of commercialization. This social power is said to be the foundation of the state in Hyderabad and even the efforts to industrialize only strengthened this order thus giving rise to the communist movement in the state.

Whatever be the merits of the conclusions in the book on the interplay of economic and social forces, the book itself is a clear labour of intensity and commitment and would fill voids in the current knowledge of the economic history of princely states like Hyderabad. One feels sad that such a scholarly soul left us at a very young age. Kudos to those that took pains to publish this posthumously.

1994. Rajamani is a retired officer who served both the Andhra Pradesh and Central Governments in different capacities until 1994.