Opium, history and economics

Source: The post is based on the article “Opium, history and economics” published in Business Standard on 14^th September 2023.

Syllabus: GS 1 – History – Modern Indian History

Relevance: About opium production in India during the colonial period

News: The West usually credits its economic growth to factors like science, tech, entrepreneurship, and trade. However, recent scholars argue that imperialism, colonialism, slavery, and opium trade were also major contributors.

The article explains how India was utilized as a colony for opium production, leading to substantial profits.

What was the opium production history in India during the colonial era?

Under Dutch East India Company

Opium, used for centuries for medicinal and elite recreational purposes, saw a shift with the emergence of “smoking opium” in the 18th century.

The Dutch East India Company’s introduction of this new form from East India to the East Indies led to mass consumption, substantial profits, and a monopoly on distribution.

The Dutch were the first to use opium as a tool of colonialism, and India under British rule perfected this model, becoming heavily dependent on drug profits.

Under British East India Company (EIC)

Purvanchal: After the East India Company (EIC) secured victories at Plassey and Buxar, they expanded their control westward to include Purvanchal (now Bihar, Jharkhand, and eastern UP), a region where poppy was cultivated.

In 1772, Governor Warren Hastings of Bengal decreed that opium produced in Purvanchal could only be sold to designated EIC Agents, creating a monopoly.

In 1799, the East India Company (EIC) created the Opium Department (OD) with significant control over pricing and rules. The department dictated who could grow opium, how much, and at what price.

The EIC used force to make farmers produce opium, and corruption was widespread. They set up a big surveillance system that caused trouble for everyone except EIC officials who made money from selling opium in Calcutta.

The oppressive system lasted in Purvanchal for over a century, hindering the region’s progress. Another setback for the region came in the mid-19th century after the 1857 War of Independence.

Before the war, Purvanchal supplied about half of the East India Company’s sepoys (Indian soldiers).

However, after the British won the war, they began recruiting sepoys from other regions like Punjab, causing a decline in Purvanchal’s economic and social development.

Malwa: Malwa was another significant poppy-growing area in the 18th century, which included parts of Madhya Pradesh, Maharashtra, Gujarat, and Rajasthan.

Unlike eastern India, in Malwa, small farmers voluntarily cultivated poppies and sold their products to traders from various religious backgrounds.

This was possible because the East India Company’s influence was mainly restricted to Bombay in western India.

The British East India Company attempted to halt opium production and sales in Malwa, but local merchants resisted. Eventually, the EIC chose to tax the Malwa opium trade.

This decision led to the flourishing of Malwa’s opium, surpassing the amounts exported from Calcutta. Following the Opium Wars, British-Indian opium exports skyrocketed, becoming a significant part of global trade.

The key difference between the Malwa and Purvanchal opium trades was that the Malwa trade benefited many farmers and numerous traders, financiers, and shippers in western India.

Further, the success of private enterprise in western India, in contrast to the east, can be attributed to the Maratha kingdoms’ enduring resistance, vision and strategy against colonial exploitation.