Since India had been controlled by the British, it regressed to a lower stage. Poverty had been a lived reality for Indians, including for some of the Indian economists, since the late seventeenth century. International trade networks were disrupted by economic crisis and wars. Meanwhile, the Indian subcontinent was experiencing some of the most severe famines in its history. The Indian economists felt these crises sweeping their cities and villages. In particular, Dadabhai Naoroji and Romesh Chunder Dutt would spend most of their adult lives examining the regress that they saw in India. They would explore how it could be measured, how it varied from region to region, and its causes.

India experienced several turbulent decades after the official takeover by the British Crown, following the Indian Mutiny, in 1858. Becoming an official territory of the British Empire came with promises of progress. Already by the 1870s, though, the promises seemed hollow. The textile industry, once a flourishing sector that supplied fabrics to most of the world, was dwindling. The average Indian was sinking into deeper poverty. And millions died in the three largest famines of India’s history between 1873 and 1901. It goes without saying that India’s large territory, rich history and its dependent position within the British Empire rendered its context dense and complex. India was extensively linked to the global economy and had a long history of trading in the subcontinent, primarily in textiles during the Mughal period, and later as one of the main suppliers of raw materials to the growing textile industry in Manchester in northern England. This chapter aims to contextualise the first generation of modern Indian economists by identifying the major trends and events affecting India in the past four decades of the nineteenth century.

Some ideas get less attention than others. And as much as intellectuals may want to believe that an idea spreads, and only spreads, if it gets us closer to the truth, that is not the only reason an idea may be taken up and circulated. An intellectual’s class, caste, gender, nationality, physical location, time period and so forth radically affects whether the knowledge they produce will be read, accepted and passed on. Knowledge creation, in modern science and especially economics, is notoriously focused on western European and North American intellectuals. There seems, in other words, to be boundaries that define who can produce knowledge. I have questioned those boundaries throughout this book, to uncover marginalised economists that are seldomly analysed. The first generation of modern of Indian economists is a good example of marginalised thinkers. They worked within an imperial setting and were treated as inferior, while their addressees, mainly British, were considered superior. The Indian economists were thus producing economic knowledge from the margins. As such, the Indian economists often got – and still get – labelled as copiers of existing knowledge from Europe and North America. The imperialist context created a blindness to original Indian thought. Within the history of ideas, and more specifically the history of economics, studies are predominately about well-known figures such as Adam Smith and David Ricardo, while lesser-known figures are rarely cited or analysed. Expanding the history of economics, which this book is only one example, provincialises well known economic theories like economic development and provides perspectives often either ignored or critiqued and quickly forgotten. Relocating Development Economics exposes new ideas not previously taken seriously.

Indian Economics’ global development plan in the long run was universal industrialisation and free trade. The widely accepted plan for development in the nineteenth century was broadly based on David Ricardo’s comparative advantage model, which prescribed industrialisation for western Europe and condemned the rest of the world to producing raw materials. This international division of labour, argued Mahadev Govind Ranade, would not, like the model theorised, bring Indians the highest level of progress. Indian Economics envisaged a positive-sum game of global development where an industrialised Asia would not outcompete the already industrialised western Europe. Industrialisation in India would bring higher standards of living and increase global aggregate demand, leading people to buy more goods from Britain and other industrialised countries. Universal industrialisation would, argued the Indian economists, be win–win for the world economy.

In the 1870s, a generation of economists was born amid a troubling reality in India. The country faced many crises around this time – suffering some of the worst famines in its history, having an imperial administration that struggled to balance its budget, and the crumbling of its textile industry, to name but a few. Indian Economics, argued its founder, Mahadev Govind Ranade, in 1892, would create economic knowledge that explained India’s distinct problems and would find appropriate solutions. The first generation of modern Indian economists had been convinced that India was different. But they used their difference for other ends. By contrast, they intended to prove India’s difference in such a way as to render its economy, institutions and people visible. From the 1870s there had been an increase in the number of Indians studying and informing their imperial rulers about conditions in the country. This first generation of modern Indian economists started to study their economy from new perspectives. Ranade’s and Ganapathy Dikshitar Subramania Iyer’s founding texts of Indian Economics bundled the studies that started to come in the 1870s with a common goal of progress and placed future studies under the intellectual umbrella of Indian Economics.

The first generation of modern Indian economists in the late nineteenth century became known as the Early Nationalists, as they began India’s fight for independence. When historians and political theorists analyse them, they often portray them as political scientists and nation-builders who mostly regurgitated existing European economic thinking. Much less has been written on their contribution to economics, despite them being the first generation of modern economists in India. This book shows how they produced original, forward-thinking knowledge on economic development. The intention is not to define development a priori, but to use development as an overarching focus to tease out the concepts, theories, models and policy prescriptions that the first generation of modern Indian economists studied and disseminated, and to bring these Indian economists into the global debate around what progress and development mean. This book places these economists into the history of economics and offers economic historians new sources on the Indian economy at the end of the nineteenth century. The book explores their understanding of how India’s economy evolved, their prescriptions for bringing progress back to India, the economic consequences of imperialism, and a global plan for development. By relocating development economics to another time and space, the book uncovers new variations on the idea of development.

Indian Economics’ short-term development plan aimed to harness progress in the two main sectors of the economy – industry and agriculture. The peasants, factory workers and merchants needed specific policies to aid them in growing their crops, manufacturing their products and selling their goods, respectively. India needed agricultural production of raw materials, industrial production using raw materials, and distribution of the finished manufactured products. Indian Economics prescribed a balanced growth strategy, seen later in India’s post-independence five-year plans, the first of which was implemented by Jawaharlal Nehru (1889–1964) from 1951 to 1956.

A consensus had formed in the nineteenth century whereby the differences between Europe and the rest of the world could be explained by stadial theory. Different regions were different because they were in different stages of civilisation. Stadial theory conveniently created a narrative that legitimised imperialism by critiquing irrationality and poverty in the rest of the world. Located in a subcontinent over seven thousand kilometres from their foreign rulers, Mahadev Govind Ranade and Romesh Chunder Dutt saw another stadial theory. They tweaked the European version to fit their understanding of India’s history and current reality in the late nineteenth century. Ranade and Dutt remade the theory by including a lower stage to which India had regressed due to imperialism, and an earlier, higher stage of civilisation where India had enjoyed greater progress than it did in the late nineteenth century. Ranade and Dutt, along with their fellow Indian economists, could thus refute the idea that India could not skip to a higher stage of civilisation, because they had already experienced great progress in the past. They did not need to wait to progress and to gain independence, like the stage theorists from Europe argued.