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British rule in India formally lasted between 1858 and 1947. How large, of what nature and how lasting was the impact? These questions have long guided the study of the economic history of India. The imperialist, or "orientalist," belief was that the empire heralded modernity in India. For example, Karl Marx shared that belief with many of his contemporaries, although he also observed that modernity came with a cost. In contrast, twentieth-century writers on imperialism and development believed in an enduring link between colonialism and underdevelopment.
The view that impediments to development were inherited from the damages of colonial rule, and not homegrown, became a key premise of Indian nationalist thought articulated by, among others, Jawaharlal Nehru himself. In 1947, this diagnosis of Indian poverty held that it was a product of "laissez-faire," exploitation by foreign capital and the noninterventionist stance of the Indian government under the British raj. In turn, these ideas supported the two key planks of India's development strategy: strong sentiment against foreign trade and investment and statism. Indian big business at 1947, the principal backers of the Indian National Congress, eagerly embraced the former and, somewhat uneasily, the latter.
These policy stances now have few takers in the nations of south Asia. Since 1990, if not earlier, the worldview that habitually warns against globalization has been in decline. Faith in statism has diminished, too. The study of India's economic history has been affected by this shift. Scholarship continues along the imperialism-- underdevelopment axis, albeit on a smaller scale than in earlier years. But this stance looks increasingly dated and disoriented, especially at a time when economic liberalization in India is drawing upon the tenets of classical political economy on which British policy in India was founded. Another reaction is simply to sidestep India's economic history and to focus instead on recent decades. Indeed, the study of the economy history of India is at risk of losing wider relevance, audience and funding.
This paper argues that to restore the link between economic history and modern India, a different narrative of Indian economic history is needed. An exclusive focus on colonialism as the driver of India's economic history misses those continuities that arise from economic structure or local conditions. In fact, marketoriented British...