Agricultural Trade and Markets in British India

Abstract

The study draws upon both unpublished as well as published sources to describe the structure of, and changes in, agricultural trade and markets at the regional and local level in the British India districts of Shahabad and Gaya, spanning parts of the current state of Bihar, in northern India during 1800–1920. Agricultural trade and markets during the period under study were largely shaped by the logic of subsistence agriculture, available infrastructure, the land rent payment system and patterns of demand. There were six striking developments. First, the construction of all-weather roads and the railway, part of the modern public infrastructure put in place soon after the administration of the two districts came directly under the British Crown in 1858, gave a great fillip to trading activity. Old trade routes lost their pre-eminence, as new channels took root. The modern infrastructure also tended to integrate the markets in the two districts on the one hand, while increasing the pulls of external markets on the other. This was reflected in greater price equalisation between markets. Second, notwithstanding greater market integration and increased stability in annual farm yields on account of the construction of modern irrigation canals that reduced the reliance on monsoonal precipitation, sharp seasonal fluctuations in the market price of food grains continued. Third, there was a sustained secular upswing in agricultural prices practically throughout the period, with the terms of trade moving in favour of agriculture, as the entry of mass produced wage goods into local markets had a deflationary impact on industrial goods. This, along with the growing depth of trade and markets, and changes in the land rent payment system, facilitated the rise of a new social group that became a new source of demand and was to subsequently play a major role in the emerging political economy. Fourth, there were three inter-dependent tiers of trading activity—long-distance trade conducted by arhatiyas, trade between major trade centres conducted by ladu beparis and trade within the village dominated by the grihasta bepari, the chief source of agricultural credit and frequently an agriculturist himself. Modern infrastructure transformed the conduct of long-distance trade, even as the pattern of short-distance trade and credit remained remarkably resilient. The fifth feature was the sharp and sudden expansion of the range of products traded in the market, as the latter was drawn into the emerging global system with the first industrial nation at the epicentre. While locally produced handicraft products like indigenous cotton cloth and paper lost their former importance, trade in agricultural commodities and imported industrial goods grew. Sixth, and last, was the increase in the monetisation of the rural economy at the cutting edge as the traditional system of paying rent in kind was commuted to cash.