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Law and the Economy in Colonial India

Since the economic reforms of the 1990s, India’s economy has grown rapidly. To sustain growth and foreign investment over the long run requires a well-developed legal infrastructure for conducting business, including cheap and reliable contract enforcement and secure property rights. But it’s widely acknowledged that India’s legal infrastructure is in urgent need of reform, plagued by problems, including slow enforcement of contracts and land laws that differ from state to state. How has this situation arisen, and what can boost business confidence and encourage long-run economic growth?
Tirthankar Roy and Anand V. Swamy trace the beginnings of the current Indian legal system to the years of British colonial rule. They show how India inherited an elaborate legal system from the British colonial administration, which incorporated elements from both British Common Law and indigenous institutions. In the case of property law, especially as it applied to agricultural land, indigenous laws and local political expediency were more influential in law-making than concepts borrowed from European legal theory. Conversely, with commercial law, there was considerable borrowing from Europe. In all cases, the British struggled with limited capacity to enforce their laws and an insufficient knowledge of the enormous diversity and differentiation within Indian society. A disorderly body of laws, not conducive to production and trade, evolved over time. Roy and Swamy’s careful analysis not only sheds new light on the development of legal institutions in India, but also offers insights for India and other emerging countries through a look at what fosters the types of institutions that are key to economic growth.

256 pages | 3 halftones, 8 line drawings, 15 tables | 6 x 9 | © 2021

Markets and Governments in Economic History

Economics and Business: Economics--Development, Growth, Planning, Economics--History, Economics--International and Comparative

History: Asian History

Law and Legal Studies: Legal History


“Among emerging economies, India stands out for having a legal system that is both highly sophisticated and cumbersome. How did this come to be? Roy and Swamy’s book is a masterly study of India’s complex legal codes and customs that predated the arrival of East India Company, the brew that was created by the colonial masters modifying and bringing in English Common Law, and the further changes that occurred at independence. This is a book that is fascinating to read and one that will be of as much interest to the historian as to the economic policymaker.”

Kaushik Basu, Chief Economist of the World Bank, Cornell University

“Although colonial institutions have been blamed for wealth and poverty around the world, no one has analyzed how they developed over the entire history of colony—no one, that is, until Roy and Swamy. Their novel research in Law and the Economy in Colonial India lays bare the political and administrative problems that shaped the evolution of Indian legal institutions, with major economic consequences that persist to this day.”

Philip T. Hoffman, California Institute of Technology

“Indian civil courts are notorious for a backlog of cases and a slow process of dispute resolution—arguably a major retardant to India’s economic growth. Yet, at the same time, Indian courts draw upon British legal origins, particularly the common law, which has been credited for being relatively responsive and flexible to contractual needs in cross-country comparison. By incorporating cutting-edge concepts and debates in the economic literature on law and development with a rich historical discussion of the law in the Indian context, Roy and Swamy go a long way toward explaining this paradox. This is an interesting and well-written work on a very important topic.”

Saumitra Jha, Stanford Graduate School of Business

“As Britain took over Indian territories in the nineteenth century, the colonial authorities found themselves trying to adapt religiously-based legal codes to the needs of a growing economy. Roy and Swamy provide a wonderful overview of this process. The Raj’s approach to law and regulation surely plays some role in India’s sclerotic state today. That the Indian economy continues develop even with this constraint raises a set of rich questions about the role of law in economic development.”

Timothy Guinnane, Yale University

"This is a splendid book, both explaining the evolution of much law in British India and tracing the origins of legal impediments of today’s Indian economy. Much has been written about such questions, but never before has there been such a balanced and convincing overview."

South Asia @ London School of Economics Blog

"Analyzes the evolution of British Indian law in the colonial period, considers why the process might have made market exchange more difficult, and explores how European colonial rule aided or obstructed institutional modernization in the non-European world."

Journal of Economic Literature

Table of Contents

List of Illustrations

ONE / Introduction

TWO / The Process of Legislation, 1772– 1857

THREE / Landed Property: Security and Incentives

FOUR / Landed Property and Credit

FIVE / Succession of Property: Joint versus Individual Right

SIX / Labor Law: From “Slavery” to Trade Union

SEVEN / Contract: Late Westernization

EIGHT / Corporate Law: Flawed Westernization

NINE / The Burden of Procedures

TEN / Conclusion

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