Railroad and Communication Network including Telegraph & Postal Services | History Optional for UPSC (Notes) PDF Download

Economic Impact of British Colonial Rule

• Lord Dalhousie's Reforms (1848-1856): Lord Dalhousie, as Governor-General of India, viewed himself as a modernizer, aiming to bring British advancements to India. He was influenced by Benthamite ideals and John Stuart Mill's vision of progress.

• Authoritarian Approach: Dalhousie ruled with authoritarianism, believing it was necessary for India's material development. His policies, including the doctrine of lapse, caused discontent and contributed to the Great Indian Uprising of 1857.

• Infrastructure Development: He introduced significant reforms such as the development of Railways, Electric Telegraph, and Postal reform, laying the groundwork for India's modernization.

• Quote: Dalhousie expressed his efforts by saying he aimed to connect India's traditional bullock-cart civilization with modern innovations like Railways, Uniform Postage, and Electrical Telegraph.

• Political Evolution: His reforms contributed to the emergence of a modern political sector in India, facilitated by the spread of education and the development of communication systems such as railways and telegraph.

Railway Development

• Railways are seen as a significant contribution of British rule to modern economic infrastructure in India. However, the way they were constructed indicates that their primary purpose was to serve the interests of the British Empire rather than the needs of the Indian economy.
• Dalhousie introduced a new system of internal communication in India and is considered the father of Indian Railways. His Railway Minute of 1853 persuaded the British authorities of the necessity for railways and outlined the main lines for their development.
• Under Dalhousie’s plan, railway construction was managed by British private enterprises under government supervision and control. Dalhousie was interested in railway projects for both military and economic reasons. He believed that railways would enhance the military strength of British forces, attract British capital and enterprise to India, and improve access to ports, facilitating the extraction of raw materials for British manufacturing and creating new markets for British goods.
• In 1853, Lord Dalhousie decided to build railways in India primarily to aid army movements. Over time, there was also a need to integrate the Indian market to facilitate British imports, necessitating connections between port cities and internal markets and sources of raw materials.
• The first railway line, connecting Bombay and Thane, was established in 1853. The following year, a railway line was built from Calcutta to Raniganj coal-fields. Eventually, all major cities and towns were linked by railway lines.
• The railway lines were constructed not from the Indian Exchequer but by private English companies under the “Government Guarantee System”. In this system, private investment from Britain was invited, and the British government guaranteed a 5% interest on that investment.
• The railway projects exemplified private enterprise at public risk because the Government of India provided private enterprises with free grants of land and guaranteed a return of about 5% on the capital outlay, if necessary from Indian revenues. This guaranteed return was significantly higher than the contemporary rates of return in Europe.
• Land and Compensation: Private companies were given free land on a 99-year lease to construct railway lines. After the lease expired, the railway lines would become government property. However, companies could return the lines to the government before the lease expired and claim full compensation for all capital spent. This arrangement allowed companies to earn a guaranteed 5% profit for 99 years and then recover their capital.
• British Economic Benefit: The railway construction boom had a positive impact on the British economy. Machinery, railway lines, and, to some extent, coal were imported from England. However, technology transfer was limited to low-tech areas such as plate laying, bridge-building, and tunneling.
• British Capital Investments: India became a field for British capital investments in railways and agency houses. The Government of India was responsible for ensuring the payment of interests on guaranteed railway stock and debt bonds, as well as meeting its annual home charges. This contributed to an increase in India’s public debt.
• Impact on British Balance of Payments: India’s export trade with other countries helped Britain address its balance of payment deficit with countries like Europe and North America. The constant drainage of Indian wealth through the guarantee system led to excessive expenditure by the companies and imposed a significant financial burden on the government.
• Changes to Stop Wastage: To curb wastage, two changes were implemented:
  (i) Some railways were constructed directly by the government.
  (ii) A new guarantee system was introduced, declaring railways as state property and reducing the interest rate on capital invested by companies to about 3.5%.
• Further Development of Railways in India: The guarantee system was abolished in 1869, and the government took on the responsibility of railway construction. However, the guarantee system was revived in 1879 with a fixed interest rate of 4% or less, continuing until 1900.
• The government also adopted a policy of buying private companies involved in railway construction, and by the 1920s, all such private companies were acquired.
• In 1905, the Railway Board was established . Over the years, various committees and commissions, such as the Mackay committee (1908), Acworth committee (1921, which introduced a separate railway budget), and P.A. Pope committee (1932), were appointed to focus on railway development.

Railways as a Tool for Colonial Interests

• The planning, construction, and management of railways in India during the colonial period did not prioritize the economic and political development of the Indian people.

Import and Export:

• Railways facilitated the collection and export of raw materials and agricultural goods from the interior of India.
• They enabled imported English manufactured goods to reach the interior of the country.
• Railway lines were primarily laid to link India’s raw material-producing areas with ports for export.
• The needs of Indian industries regarding markets and sources of raw materials were neglected.

Discriminatory Tariff:

• Railway freight rates were fixed to favor import and export while discriminating against the internal movement of goods.
• It became more difficult and costlier to distribute Indian goods than imported goods.
• There was no interconnection between internal market cities, and preferential freight charges reflected this bias.

Ecological Imperialism:

• Railways contributed to ecological imperialism by facilitating the exploitation of forest resources.
• Timber exploited from forests was used for laying sleepers.
• In some areas, construction work disturbed the ecology, disrupted the natural sewage system, and contributed to malaria epidemics, such as in Bengal during the 19th century.

Financial Imperialism:

• Railway construction in India encouraged capital goods industries in Britain by allowing English capital to invest in railway companies operating in India.
• Unlike Western Europe and the USA, where railway construction promoted auxiliary industries like engineering, iron and steel, and mining, India was denied such development.
• Railway companies in India imported all necessary materials, preventing the growth of local industries.

Home Charges:

• Nationalists criticized the railways for the drain of wealth through guaranteed interest payments, which led to wasteful construction.
• They believed that irrigation would have been a more suitable area for public investment, offering higher social benefits.
• Railway development increased home charges for India, with heavy interest (5%) paid to British investment companies, resulting in significant losses for the public exchequer.

Administrative and Military Motivations for Railway Construction in Colonial India:

• The British government actively invested in railway construction, particularly in frontier regions and areas prone to famine. Railways served crucial purposes such as:
• Strengthening administrative control over distant parts of India.
• Facilitating rapid troop movement to suppress internal disturbances and defend against foreign attacks.
• Guarding India's frontiers against potential threats from other powers.
• Railways significantly enhanced military capabilities, allowing for swift suppression of peasant and tribal revolts through rapid troop mobilization.
• Lord Hardinge emphasized that Indian Railways were designed to prevent insurrections, swiftly end wars, and ensure the empire's safety.
• Despite some unintended positive impacts such as uniting India and fostering nationalism, railways primarily served as tools of colonization.
• By 1946/47, India had 65,217 kilometers of railway tracks, covering 78 percent of the total area.
• Railways also promoted the construction of feeder roads and strategic roads, helping to integrate the Indian market and providing a cost-effective mode of transportation for people and goods.
• Beyond facilitating trade and commerce, railways played a vital role in uniting India. Sir Edwin Arnold noted as early as 1865 that railways could achieve what historical figures like Akbar and Tipu Sahib could not, potentially making India a cohesive nation.

 The Electric Telegraph

• Daihaousie is considered the Father of the Electric Telegraph in India, having introduced the system in 1852.
• O’Shanghnessy was appointed the Superintendent of the Electric Telegraph Department in the same year.
• Despite facing numerous challenges, O’Shanghnessy’s determination and energy led to the successful establishment of the telegraph system.
• The first telegraph line, connecting Calcutta to Agra, was opened in 1854, covering a distance of 800 miles. By 1857, the line was extended to Lahore and Peshawar.
• Nearly 4,000 miles of electric telegraph lines were constructed, linking Calcutta with Peshawar, Bombay, Madras, and other regions of the country.
• In Burma, a telegraph line was established from Rangoon to Mandalay, facilitating easy message transmission across distances.
• The Telegraph Department played a crucial role during the Great Rebellion of 1857-58. A rebel, facing execution, famously remarked, “It is that accursed string (the telegraph) that strangled us,” highlighting the telegraph’s impact.

 Postal Reforms

Lord Dalhousie and the Modern Postal System:

• Foundation of Modern Postal System: Lord Dalhousie laid the groundwork for the modern postal system in India.
• New Post Office Act of 1854: Based on the recommendations of an expert commission, a new Post Office Act was enacted in 1854.
• Key Features of the New System:
  • Director-General: A Director-General was appointed to oversee Post Offices across all Presidencies.
  • Uniform Postage Rate: A uniform rate of half-Anna per letter was introduced, regardless of distance.
  • Introduction of Postage Stamps: For the first time, postage stamps were issued.
• Establishment of Postal Department: A postal department was set up to manage the entire country.
• Transformation of Post Offices: Post offices, previously a financial burden, became revenue sources for the government due to these reforms.
• Benefits to the People: The modern postal system greatly benefited the public, contributing to social, administrative, financial, and educational development.
• Dalhousie’s Vision: These improvements reflected Dalhousie’s commitment to promoting material progress in India.
• Impact of Communication Systems: The expansion and enhancement of railways, postal services, and telegraphs had significant social and cultural impacts, fostering nationalism and uniting India, though these were unintended consequences of British imperialism.