Fifteen Eighty Four

The field of South Asian economic history has changed dramatically since the publication of The Cambridge Economic History of India, Vol. 2 (CEHI 2, 1983). CEHI 2 was a pathbreaking reference work when it appeared. But it was a largely descriptive narrative that avoided comparative analysis, theoretical debates, and historiography. Its exclusive focus on India, its silence on many themes now central to the field, such as migration, education, environment, artisans, and living standards, and its lack of engagement with global history warrant a new resource  more suitable for teaching and research today. Over the past two decades, scholarship has shifted toward hypothesis-driven, data-rich, and globally connected research. We  now need a reference that links this new analytical work to earlier debates about colonial legacies.

The Cambridge Economic History of Modern South Asia provides that bridge, offering comprehensive thematic coverage across both colonial and postcolonial South Asia, in a structure consistent with other Cambridge Economic Histories. The volume comprises thematic chapters arranged chronologically. The key themes and debates shift according to the timespan.

The volume is divided into two parts. Part I examines economic change in colonial India, while Part II continues the story in postcolonial South Asia. The transition between them was shaped by the upheavals of the mid-twentieth century: World War II, the Bengal famine, rising political tensions, and the violent partition of India and Pakistan in 1947. As new nations emerged, including  Bangladesh later, their economic paths diverged sharply, unlike the more uniform patterns under British rule. Part II focuses on these long-term, distinct development trajectories in India, Pakistan, and Bangladesh, exploring how governments, policies, markets, and global forces shaped South Asian economies after independence.

From colonial constraints to developmental ambitions

The key theme for Part I is the impact of British colonial rule on growth and inequality in the directly ruled territories and areas under indirect rule. Around 1700, India accounted for about a quarter of global textile output and led global textile production. Over the eighteenth and nineteenth centuries, the East India Company shifted from trading to territorial rule, paving the way for the British Raj. At independence in 1947, India was  far poorer than Britain, with low life expectancy and limited schooling. Nationalist critics of the Raj argued that colonialism made India poorer by draining its resources and unleashing deindustrialization.

Others have pointed out that the  Raj introduced some economic improvements such as Punjab’s canal colonies and a railway system that ultimately proved beneficial for economic growth and welfare. But the Raj’s ability and motivation to support broad development was weak. Taxes barely grew, customs duties were removed to promote free trade, and indirect taxes were politically constrained. Most revenue went to defence, debt, and administration, leaving little for investment. The performance of different sectors of the economy diverged. Artisanal textiles declined under competition from British manufacturers, though modern mills emerged in Bombay and Calcutta. Services grew more productively, but agriculture stagnated, trapping most workers in low-yield farming and leaving the countryside vulnerable to monsoons and recurring famines. Part I essays shed light on this complex record.

Statism, globalization, and uneven gains

After independence, India, Pakistan, and later Bangladesh expanded the state’s role, adopting rapid development and poverty reduction as central goals. Public spending rose, and planning signalled a break from the colonial model. The new developmental state used its fiscal powers to drive capital‑intensive industrialization, offer subsidies, and build protectionist trade and industrial regimes, especially in India. By the 1970s, however, growth slowed, crises mounted, and the enlarged state proved fiscally burdensome and administratively overstretched.

From the 1990s, South Asia entered a third phase of transformation. Trade liberalisation, deregulation, and a reduced state role in industry coincided with mass labour migration, rising exports of labour-intensive goods, expanding services trade, and growing foreign and domestic investment. India advanced in services as communication costs fell and private investment strengthened. Financial markets deepened, new institutions emerged, courts partially adapted, and public spending shifted toward infrastructure.

Yet the most decisive forces of change were not planned. The uneven spread of the Green Revolution, large-scale overseas migration and remittances, Bangladesh’s garment boom, India’s software and business services surge, the rise of private technical education, satellite-driven media growth, and the outflow of students to Western universities were all driven by private actors seizing global opportunities. Governments often followed rather than led.

Outcomes diverged widely. India grew rapidly, but with rising inequality and weak job creation in high-wage sectors. Manufacturing lagged while diverse service industries surged. Traditional industries continued to face barriers to modernisation, and a banking sector hobbled by regulation and small scale affected investment capacity. Regional disparities persisted, shaped by irrigation access and entrenched social hierarchies. By contrast with India, Bangladesh exceeded expectations, combining labour-intensive industrialisation with social progress, especially for women. Pakistan’s path remained uneven, marked by volatile growth and recurrent macroeconomic instability.

Post-liberalisation gains in South Asia, therefore, were significant yet contentious. Growth-first strategies clashed with demands for greater welfare investment amid persistent weaknesses in state capacity and human capital. Gender gaps and exceptionally low female labour force participation further constrained progress. Climate change now adds risks, heightening the need for resilient infrastructure, urban planning, and social protection.

The next research frontier

South Asia’s recent economic history has been shaped by three forces: globalization, political institutions, and the rise of private capital. Globalization broadened trade and investment. Compared with other emerging markets, growth relied more on local capital markets than on foreign inflows. Political institutions steered how reforms unfolded. India’s stable democracy avoided sharp policy swings but still moved decisively toward markets in the 1990s. Pakistan’s alternating civilian and military rule affected who benefited from growth. Bangladesh combined dominant-party politics with market reforms and strong export performance. Across the region, business groups became increasingly influential, helping anchor pro-market policies despite social and political pressures.

Since the 1980s, capitalism, defined by private investment driving economic change, has returned across South Asia. Firms shifted from seeking favours from the government to shaping broader rules, though cronyism did not end. Private capital now leads growth, bringing faster expansion, more economic variety, and deeper global integration, but also wider gaps across regions, sectors, and social groups.

Five significant challenges lie ahead: generating jobs for young populations; improving the quality of large-scale education and health; expanding women’s economic participation and safety; modernising slow, uncertain legal and regulatory systems; and addressing climate risks through  adaptation. These tasks require long-term institutional reform. India struggles to balance services growth with labour-intensive manufacturing. Bangladesh needs to sustain export competitiveness while upgrading skills. Pakistan must restore macroeconomic stability and predictable policymaking.

Students exploring these new frontiers will find in The Cambridge Economic History of Modern South Asia a valuable guide to the past. Research prospects on the region are  promising. New data and archives allow detailed studies of provinces, districts, and firms, while long-standing patterns, such as productivity gaps between the urban and rural jobs, invite work that links colonial and postcolonial histories. South Asia’s growth remains a multidimensional story.