A History of India, Third Edition

THE PERIOD OF COLONIAL RULE

rest consisting of customs and excise, etc. The salt tax was a very reliable
one, as it was based on a government monopoly of the manufacture and
collection of salt. At the end of the century only 25 per cent of the revenue
income consisted of land revenue, opium was no longer of much
significance and the salt tax had been reduced; now, customs duties and
excise were of much greater importance. This is why the increased military
expenditure could be met.
In addition, much money was spent on the railways, whose ownership
had passed into government hands. The capital for these railways was
raised on the London capital market but the interest had to be paid by the
Indian taxpayer. The expansion of the railway network was to a great
extent geared to military requirements for troop movements.

The design of the railway network

The railway network was the only item of massive British investment in
India. The British public was used to this kind of investment in railways all
over the world and therefore there was no problem about raising capital for
this purpose on the British capital market. Interest rates were low and the
British Indian government guaranteed that the debt service was reliable.
The railway network was neither designed from the point of view of
improving communications in the interior of the country nor in terms of
economy and profitability. It was pushed ahead in order to connect the
main centres of agricultural export production with the great ports and for
strategic reasons. This meant an emphasis on the northern plains and the
northwestern frontier and a neglect of the south and of the interior of India
in general. Throughout the nineteenth century the expansion of the
network was not matched by a similar increase in the amount of freight.
Indian critics therefore pointed out that British investment in irrigation
would have been far more productive than this kind of railway expansion.
By the turn of the century India had a railway network of about 25,000
miles; 46m tonnes of freight and about 200m passengers were transported
per year; and the railways employed around 400,000 men. Total revenue
from the railways amounted to 315m rupees. This was not yet very much
and the critics were eager to stress this fact. But within a fairly short time
this changed radically. In 1914 the railway network was not much larger
than it had been at the start of the century, but the annual transport of
freight had increased to 87m tonnes, and the number of passengers to 458m.
The most important fact, however, was that revenue had increased to 542m
rupees—which silenced the critics. The railways were the largest employer in
India—by 1928 the number of employees had risen to 800,000—but the
better-paid positions were all occupied by British workers, and by Anglo-
Indians (sons of British fathers and Indian mothers) who had become
something of a ‘railway caste’ and eagerly defended this status.