INTERNAL ADMINISTRATION AND GENERAL CONDITION, 1906-1938

The Co-operative Movement

Frederick Nicholson, a Madras civilian, first suggested in his Report (1892) to the Madras Government the introduction of co-operative credit societies in India. In 1901 the Government of India appointed a Committee to consider the question of the establishment of agricultural banks in India, and after the Committee submitted its report, the Co-operative Credit Societies Act was passed by the Imperial Legislative Council in 1904.  

It provided for the starting of rural as well as urban credit societies. Thus the Co-operative Movement was inaugurated in India on 24th March, 1904. The movement showed remarkable progress in every Province within a few years. It received a fresh impetus by the Amending Act of 1912, which granted recognition to non-credit societies, central financing societies, and unions. The Maclagan Committee (1914-1915) made some valuable recommendations for the organisation of co-operative finance. After the reforms of 1919, co-operation became a Provincial subject and the local governments were left free to adapt the Act of 1912 to their own requirements. There are three parts in the financial structure of the Co-operative -Movement: (I) The Agricultural Credit Society, (ii) Central Financing Agencies, and (iii) Provincial Co-operative Banks. The question of the relief of old debts of agriculturists, through long-term credit, led to the establishment of a special type of bank, known as the Land Mortgage Bank, in some Provinces. But the Co-operative Movement passed through a very critical stage during recent years, owing partly to the fall of agricultural prices and general economic decline and partly to some defects in its working. In spite of all that has been done, the poverty and indebtedness of the Indian masses are still appalling problems in Indian economic life, like the problem of unemployment among the middle classes (into which investigations were carried on by specially appointed committees, the most important being the Sapru Committee which submitted its report in 1935) Provinces like Bengal, Madras, Bombay, the Punjab, U.P. and Bihar, and in some of the Indian States. The solution of these problems is vitally necessary, though the stupendous and perplexing character of the task cannot be denied.

Due to the planned efforts, there has been considerable expansion in the works of the cooperative societies in different spheres including agricultural credit, supply of farm inputs, marketing, processing, and consumer trade.

Famine Relief

As noted above, important recommendations about the principles of famine relief in India were made by the Famine Commission of 1880, which had as its Chairman Sir Richard Strachey. Reference has also been made to the subsequent famines, in 1896-1897 and again in 1899-1900, and the Commissions appointed on both these occasions. The last Commission, with Sir Antony MacDonnell as its President, which reported in 1901, stressed the need for “moral strategy “or “putting heart into the people”, that is, helping the people with loans and other means, as soon as there is any sign of danger, by timely and liberal grants of takkavi loans, by the suspension of land revenue, by being watchful about the signs of approaching calamity, by organising private charity and by enlisting non-official support. The present famine relief policy is shaped in the light of its recommendation. Side by side with the growth of the machinery for famine relief has developed the policy of famine prevention through railway and irrigation works and improvement of agriculture and industries. Under the financial decentralization rules of the Government of India Act, 1919, each Provincial Government (except Burma, which is now separated from India, and Assam) was required to contribute every year, out of its resources, a definite sum for expenditure on famine. These annual assignments from the revenues of the Provinces were to be spent on relief of famine only, the term “Famine” covering famines caused by drought or other natural calamities; but the sum not required for this purpose was devoted to building up a Famine Relief Fund. Under the 1935 Constitution, famine relief expenditure became entirely a Provincial charge, though the annual contributions of the Provinces to the Famine Relief Fund continued as before. 

Trade, Industry, Fiscal Changes, and Labour

Trade

We have already observed how after 1869, when the Suez Canal was thrown open for navigation, India’s foreign trade began to expand rapidly with the growth of peace and order, improvements in means of communication, the adoption of the policy of free trade, and disappearance of internal customs barriers and transit duties in India. Great Britain for a long time held the predominant position in the Indian market. But after the end of the nineteenth century, other countries, like Germany, the United States of America and Japan, appeared as her competitors in Indian trade, and the volume of it, as a whole, consequently increased. The War of 1914-1918 first caused a temporary reduction in the volume of this trade, particularly the import trade. But owing to some favourable factors on the termination of the war, there was a trade boom in India as in other countries, which again was followed by a trade depression. After a temporary recovery, trade received a severe setback due to general economic depression throughout the world. In 1932-1933 the export trade declined in value to Rs. 136 crores, and the import trade reached the lowest level, that is, Rs. 117 crores, in 1933-1934. Soon there was a partial recovery. During 1934-1935 the value of the export trade rose to Rs. 155 crores and of the import trade to Rs. 135 crores. The report of the Economic Adviser to the Government of India for 1939 stated that India “witnessed the culmination of a period of recovery in world trade, world production and international price level in 1937-1938 “. But “the turnover of India’s overseas trade in merchandise for the year 1938-1939 suffered a substantial reduction as compared with 1937-1938 “.

Important changes have taken place in recent times in the distribution of lndia’s trade. Before the War of 1914-1918, there was a distinct tendency on the part of India’s foreign trade to divert itself from the United Kingdom to the other European countries. During the war the United Kingdom recovered to a large extent her share in the export trade, though it afterwards decreased so far as the import trade was concerned, owing to the active competition of the United States of America, Japan and the Central European countries. The United Kingdom’s share in the import trade was 40.6 per cent in 1934-1935 as compared with 64 per cent in 1913-1914. Subsequently there was some recovery in her share, and the Ottawa preferences to imports from the United Kingdom were meant to benefit her. Besides India’s external trade, her internal trade includes the coasting trade and inland trade. The coasting trade with Burma is of special importance.

The matter of commercial intelligence began to attract increasing attention. Besides the Department of Commercial Intelligence and Statistics (functioning since 1922), there were Indian Trade Commissioners in London and Hamburg. Nonofficial bodies like the European and Indian Chambers of Commerce also took much interest in the development of trade.