Social Scientist. v 15, no. 157 (June 1986) p. 3.

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Institutional Reforms and Agricultural Growth

GROWTH and development are so much associated with the institutional set-up that any analysis of growth in isolation from "relations of production' is an excercise in futility. Changes in production are not only dependent on technological changes but are also related to the mode of appropriation and use of economic surplus. Technological progress is also considerably influenced by the motivation which a particular set of "relations of production' provide for investment. The incentive fot investment in technology, ceteris paribus, is greater in a system where the class which appropriates the economic surplus pays the direct producers a fixed quantum than in a system which provides sharing of gross produce in a certain fixed proportion. In a system where on account of risk and small scale of production, the quantum of surplus which is appropriated is fixed, there is hardly any motive for those who appropriate surplus value, to invest in technological progress.

Before the advent of the British, agriculture was the most important activity and source of livelihood for people in India. The mode of appropriation of economic surplus from the direct producers in agriculture was mainly through land revenue and land rent, petty customary exactions (which varied in nature and content from place to place) and to some extent through usury.1 Though these obligations on the direct producers had the force of tradition, use of force by the hierarchy of landlords, ranging from autonomous chieftains to petty intermediaries, was not infrequent.2 "Thus, there emerged not only a variety of land rights but also a kind of a pyramidical structure in agrarian relations wherein rights of various kinds were superimposed upon each other. The burden of the shares of the different categories of zamindars and also of the imperial revenue demand ultimately fell on the cultivator and placed such a strain on the agrarian economy that much progress was hardly possible."8 The surplus which was appropriated was mainly used to raise military strength for power and prestige, to settle disputes and to control direct producers which was necessary in a situation where 'might was right\ There were conflicts of interests between the lords themselves,'between

*Professor of Economics, A.N. Sinha Institute, Patna.

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