Why Shashi Tharoor is wrong about Britain's colonial debt to India
How much does Britain owe India as reparations for its 190-year occupation and depredation of India?
Shashi Tharoor, the Congress MP from Thiruvananthapuram, in his book An Era of Darkness: The British Empire in India, quoted American historian and philosopher Will Durant: "The British conquest of India was the invasion and destruction of a high civilisation, utterly without scruple or principle, careless of art and greedy of gain, overrunning with fire and sword a country temporarily disordered and helpless, bribing and murdering, annexing and stealing, and beginning that career of illegal and 'legal' plunder which now (1930) has gone on ruthlessly for one hundred and seventy-three years."
Consider the damage Britain did to India. In Tharoor's words: "Taxation (and theft labelled as taxation) became a favourite British form of exaction. India was treated as a cash cow; the revenues that flowed into London's treasury were described by the Earl of Chatham as 'the redemption of a nation… a kind of gift from heaven'. The British extracted from India approximately £18,000,000 each year between 1765 and 1815. Taxation - usually at a minimum of 50 per cent of income - was so onerous that two-thirds of the population ruled by the British in the late eighteenth century fled their lands. Durant writes that '(tax) defaulters were confined in cages, and exposed to the burning sun; fathers sold their children to meet the rising rates'. Unpaid taxes meant being tortured to pay up, and the wretched victim's land being confiscated by the British."
While Tharoor's well-researched book has deservedly received wide coverage in India and abroad, an excellent article on the subject by Venu Madhav Govindu in The Wire (August 6, 2015) has passed relatively unnoticed.
Govindu throws light on what Britain owed India from an accounting point of view. These are empirical, official figures. From here we can extrapolate Britain's colonial debt to India, an exercise I first did in an article in The Illustrated Weekly of India in 1988: The Debt and Dishonour of the British Empire.
But first, Govindu's arguments: "In 1931, the debt owed to Britain by India was said to be about Rs 1,000 crore. At that time, the Indian National Congress argued that much of this amount was incurred by Britain in furthering its own interests. Based largely on the work of the Gandhian economic philosopher, JC Kumarappa, the Congress argued that the principle of natural justice would wipe out all of this debt and more. Therefore, it held that the future debt to be borne by a free India had to be subjected to the scrutiny of an impartial tribunal. The British political leadership and press roundly denounced this rather moderate position and treated it as a treacherous 'repudiation' of India's obligations.
"By the end of the Second World War in 1945, Britain had to finally reckon with the problem of its debt to India and other countries. Britain agreed to pay a debt of Rs 1,600 crore but other calculations showed a rather different figure. In 1947, Kumarappa estimated that the Indian share of the costs of deployment of its soldiers was Rs 1,300 crore. A similar amount of Rs 1,200 crore was spent in expenses pertaining to the war. He argued that these and other costs ought to be borne by Britain, which led to a figure of Rs 5,700 crore which was many times larger than the British figure of Rs 1,600 crore. Britain, Kumarappa asserted, should not be allowed to be the debtor as well as the judge and the jury and he lobbied for India to demand an impartial international tribunal on the matter. In the event, India failed to push for such an international settlement and the British view prevailed much to the detriment of independent India."
Let's take the Rs 5,700 crore figure estimated by Kumarappa in 1947 as the starting point of what Britain owed India in purely commercial terms, not taking into account intangibles such as the economic cost of human life caused by British brutality or the egregious strangulation of Indian economic activity and trade.
In 1947, the exchange rate was Rs 13 to one British pound sterling. Thus Rs 5,700 crore in 1947 was equivalent to £4.40 billion. What would that be in today's rupees/sterling?
The value of gold and real estate is an accurate indicator of how money appreciates over long periods of time spanning more than 70 years. In 1947, the price of 10gms of gold was Rs 80. In 2017, the price of 10gms of gold was Rs 31,000 - an increase of nearly 400 times.
The rise in the price of a basket of real estate, commodities and household essentials over the past 70 years gives a similar cost-inflation index of between 400 and 500 times. (The inflation-adjustment in British prices between 1947 and 2017 is around 150 times. But since our calculations are in rupees and a depreciation of the rupee-sterling rate between 1947 and 2017 has been factored in, the multiplier of 400x holds.)
Now to the math: according to Govindu, Britain's official debt to India in 1947 was Rs 5,700 crore (£4.40 billion) at the prevailing exchange rate of Rs 13 to one pound sterling. Multiply that by 400. At today's inflation-adjusted and exchange rate-adjusted figure, the debt is therefore £1.76 trillion.
But this is just the tip of the reparations iceberg. We haven't yet computed the cost of India's near-zero rate of GDP growth during vast time swathes of the 190-year British occupation, nor the cost of lost economic value due to Britain's wilful destruction of Indian mercantile trade.
If these are scientifically calculated, Britain's debt to India at today's prices would easily cross £3 trillion (Rs 270 lakh crore) - more than Britain's current GDP.
Tharoor says reparations aren't needed; an apology and a token payment of one pound sterling a year for 200 years will suffice. He is wrong. Reparations are needed. An apology and tokenism won't suffice. Writes Tharoor in his book: "India should be content with a symbolic reparation of one pound a year, payable for 200 years to atone for 200 years of imperial rule. I felt that atonement was the point - a simple 'sorry' would do as well - rather than cash. Indeed, the attempt by one Indian commentator, Minhaz Merchant, to compute what a fair sum of reparations would amount to, came up with a figure so astronomical - $3 trillion in today's money - that no one could ever reasonably be expected to pay it. (The sum would be larger than Britain's entire GDP in 2015.)"
Obviously £3 trillion (not $3 trillion as Tharoor writes) is a figure that needs to be ratified by an international arbitration panel of economists and technocrats. This mechanism had been demanded by the Congress, based on Kumarappa's work, even before Independence. Let's assume the final figure such a tribunal arrives at today as colonial reparations against Britain's debt to India is £2.50 trillion.
A payment schedule can stretch over 50 years, interest-free at £50 billion (Rs 4,50,000 crore) a year. That's less than 2 per cent of Britain's current GDP (£2.6 trillion) and not much more than the amount Britain intends in future to spend every year on the National Health Service (NHS).
Can Britain afford to pay India reparations of 2 per cent of its GDP for the next 50 years?
That isn't India's problem. It's Britain's.
For nearly 200 years Britain plundered India, committed brutal crimes on Indian civilians and strangulated GDP growth. In the process, it financed its industrial revolution, its Napoleonic wars against France, and built the world's largest economy in the 1800s. That led to the creation of Britain's post-industrial leisure society and the soft power of music, sports and culture that accompanied it.
What about Britain's contribution to India: the railways, unification, English, the ICS/IAS, universities, the rule of law?
Tharoor rightly sets each one in perspective. Consider, for lack of space, just one: the railways: "In this very conception and construction, the Indian Railways was a big British colonial scam. Each mile of Indian Railway construction in the 1850s and 1860s cost an average of £18,000, as against the dollar equivalent of £2,000 at the same time in the US."
In short, what Britain built in India with underpaid Indian labour and overtaxed Indian revenue was ruthlessly repatriated to pave the roads of London, finance British infrastructure and subsidise Britain's imperial wars. India in effect ended up paying for its own colonisation. All the benefits accrued to Britain. All the costs were borne by India.
Last week Virendra Sharma, a long-time British MP of Indian origin, tabled an Early Day Motion (EDM) in the House of Commons seeking a formal apology from the British government for the 1919 Jallianwala Bagh massacre. That is one of the tips of the reparations iceberg to which no price can be attached.
But to others it can. And Britain must pay.