Land revenue, inequality and development in colonial India (1880–1910)

This dissertation was completed and conferred in 2023 at the University of Barcelona under the supervision of Alfonso Herranz-Loncán (University of Barcelona) and Gabriele Cappelli (University of Siena). It was financially supported by the Spanish Ministry of Science, Innovation and Universities under an FPU scholarship. See the dissertation for full references and acknowledgements.

The dissertation can be accessed at https://hdl.handle.net/2445/206123.

Different institutional settings lead to different developmental outcomes (Acemoglu et al., 2005). However, the effect of institutions on the distribution of the benefits of development remains relatively unexplored—particularly for colonial times. Similarly, research on the impact of institutions on the provision of public goods promoting human capital—other than education—has also remained understudied. With these broad research gaps in mind, in this dissertation I explore the impact of land revenue systems on the distribution of agricultural income and on the funding of hospitals and dispensaries in colonial India.

Land revenue systems was an institution introduced by the British granting landownership—together with land tax liability—to different types of individuals. During their initial expansion, the British introduced a landlord system—where landownership was granted to an intermediary. As more regions came under British control, non-landlord systems were also introduced. In these systems, landownership was granted directly to the cultivator. Interestingly, Banerjee and Iyer (2005) find that these systems influenced post-colonial development, although their impact during the colonial period remains mostly unknown. Importantly, this dissertation presents the first comparative estimates of agricultural income inequality below the national level for colonial India. I also provide one of the first datasets with data for colonial India below the district-level. In particular, I construct a new georeferenced dataset with revenue and expenditure data for over 1600 hospitals and dispensaries.

After a brief introduction, I explore the link between land revenue systems and the evolution of agricultural income inequality from 1880 to 1910. To do so, I use provincial wage/land price (W/LP) ratios to estimate agricultural income inequality. When correlating these new estimates with the presence of different land revenue systems, I find that in provinces with more landlord systems, agricultural income inequality increased less and, in some cases even decreased. I argue that this was due to the introduction of Tenancy Acts. These acts were mostly introduced in landlord provinces and limited rent rises as well as tenant eviction, reducing the landlords' capacity to increase their share of agricultural surplus over time. The correlation between some economic factors—like factor endowments—and the W/LP ratios does not always hold at the national and provincial levels. This suggests that national level results should not be generalised for all provinces of colonial India.

In chapter 3, I use district-level wage/income ratios to estimate agricultural income inequality and an instrumental variable to explore the causal effect of land revenue systems on the levels of agricultural income inequality across districts. I find that despite the previously observed shift towards more egalitarian distributions of income in landlord provinces between 1880 and 1910, non-landlord districts had more egalitarian distributions of income by 1916. I argue that land concentration, differences in bargaining power and law protection of landowners and cultivators could explain this effect of land revenue systems on the levels of agricultural income inequality.

Finally, I analyse the potential impact of land revenue systems on the resources available to hospitals and dispensaries. Using an instrumental variable, I explore the causal effect of land revenue systems on the total revenue and different revenue sources of hospitals and dispensaries, including the funds these healthcare facilities received from local governments and private individuals. I find that hospitals and dispensaries in non-landlord districts received more funds, particularly from local governments, than healthcare facilities in landlord districts. However, it was in the latter where these facilities received more funds from private subscriptions and donations from Indians. I argue that these effects were driven by the capacity of local elites to influence land revenue as well as their ability to use subscriptions and donations to show allegiance to the British, particularly in landlord districts.

The take-away message of this dissertation is that institutions matter to explain differences in the resources available to healthcare facilities and how the benefits of development are distributed. This message speaks not only to institutional literature, but also to political economy as well as distributional literatures. To previous political economy research, this dissertation shows how the ability of local agents to influence fiscal capacity and use private donations can mediate the effect of colonial institutions on the provision of public goods. To previous distributional literature, this dissertation presents the first disaggregated estimates of agricultural income inequality for colonial India and points at the influence of institutions on the distribution of income while highlighting the relevance of comparative regional analysis below the national level.