Pre-colonial Assam had a feudal economy. The Assamese king was the absolute owner of all land except the royal grants of land to the high officials in the administration and the grants to the temple and Vaishnavite Satras (monasteries). The peasantry had no private property (land). As there were plenty of land available with a sparse population, there was always a tendency of the Assam peasantry to shift their cultivation sites. The mode of business was barter because money was not in vogue. The people were self sufficient and agriculture was the main occupation. Though the kingdom of Kamrupa (ancient Assam) had international trade practice, the Ahom imperial Government did not encourage much trade with the outside world and foreigners were frowned upon. With a self sufficient feudal economy, with no money or coins introduced till the 16th century, with a very low volume of trade with foreign kingdoms, the market system did not develop in pre colonial Assam. There were of course a trading system between the hills and the plain’s people of Assam.
The revenue collection of the Ahom administration was based on the khel system. The administration did not have a money oriented revenue system. The entire male population with the exception of the artisans, fisherman, gold washers and other non agricultural profession was divided into khel or clans numbering from 1000–5000 men in cash. The system was based on personal service and an article of produce rather than monetary taxes. The khels were then sub-divided into different gots or units. Each got consisted of three or four pikes or individuals. The paik was the lowest unit of khel system. These paiks were assigned to different jobs, such as building of roads, embankment etc and had to serve the country or the aristocracy for one third of the year. Except for a small batch of regular army guarding the capital and the royal household, the Ahom imperial administration had a peculiar Army system. During a war ever paik had to take part in war once called by the king. The paiks becomes the army and all the able bodied Assamese males go to war. The whole populace becomes the army. With the repeated Mughal invasion from 1615, the Ahom monarchy established a regular army.
But with the annexation of Assam and the introduction of British revenue rules and regulation of land rights to the peasants slowly disintegrated the khel system and the paiks were freed from personal labor. The dismantling of the paik system had reduced the Ahom nobility to poverty because there was no body to serve them or cultivate their land. The cultivator of the soil and the aristocracy become the same. The paiks become the ryots under the British system. The British established the cash or money system of payment.
The Wasteland Grand Rules, 1838 was formed to attract foreign capitalists. The Assam Company, the first Indian Tea Company was flouted in 1839 in London and was granted about 33,665 acres under the Wasteland Grant Rules. Later it was modified to suit the British and the European tea planters and they slowly became the biggest land owners in Assam by paying the least revenue per acre land. Many tea planters encroached land belonging to the Assamese people. The ownership of Assam’s land right was transferred from the Ahom king to the British. By 1901, about one fourth of the total settled area of Assam Proper, i.e. about 6, 42,418 acres came under the tea gardens. Though the Assam land and Revenue Regulation of 1868 were introduced in Assam with their best intention of regularizing the land rights to the Assam peasantry who practiced shifting cultivation, the British became the absolute land owner. The dearth of paying land revenue on long term land leases forced many Assamese landless. The pre-colonial system of cultivating anywhere was stopped. The Assamese peasantry was totally confused with the sudden change of the land rights and the mode of cultivation. The Assamese learnt about the value of long term land leases when vast tracts of land were allotted to tea cultivation on one hand and with the land hungry East Bengali immigrants started settling in the chapori belts or flood plains used by the Assamese peasantry for shifting cultivations.
Though Assam was annexed in 1826 and wild tea plants were discovered in 1823 by Robert Bruce, the opium war with China diverted the attention to the newly conquered territories of Assam. Chinese tea was to be imported to England by The East India Company and it was a monopoly trade. The Charter of 1833 stripped the monopoly business of the East India Company but allowed Europeans to hold land on a long term lease outside the Presidency towns which opened the colonial plantation economy in Assam. When Assam tea was auctioned in London in 1839 it created the Assam Tea Mania.
Since 1840’s, the next few decades witnessed a global investment in far off remote Assam in the tea sector which gradually destroyed the Ahom’s feudal institutions and economy and led to the growth of the capitalist economy. The British introduced the monetized economy in Assam. The tea industry identified Assam with the commercial map of the world. The huge capital investment did help to the growth of modern capitalist economy in Assam by the turn of the 19th century. The tea economy not only changed the political and economic scenario, but also environmental changes. The tea plantation required huge plots of land. The tea planters cleared the jungles for tea cultivations. In the process destroyed most of the forest cover in Assam. The tea industry as well as the timber industry was mainly responsible for the rampant deforestation which permanently transformed Assam’s landscape and greatly affected the climate and the culture of Assam in the next century. The forest policy was also introduced to suit the colonial and the tea planter’s needs.
The growth of the tea industry necessarily led to the growth of communication and infrastructure network. The industry which was totally dependent on an external market required the basic routes to and from Calcutta. Building of roads and bridge were taken up. Navigation by the Brahmaputra river was introduced by the Assam Company by a steamer service from 1841. Railway lines were laid from Dibrugarh to Ledo in 1882 by the Assam Railways and Trading Company with the aim of joining the remote tea gardens to the streamer service.
The opening of the frontier land and the global investment led to an economic boom in Assam. European tea planters flocked in Assam by 1860s. The planters had faced difficulties because there was no basic infrastructure apart from the inhospitable terrain and epidemics. The transport and communication was mainly done by the rivers as there were no proper roads. The banking sector was in a very poor state. Though a few banks were set up by Govt. by 1870, there were always storages of coins in the treasuries.
The whole economy evolved around the tea industry even though the coal and the oil industry sprang side by side. From 1847 regular coal mining took place. The first refinery in Asia, the Digboi refinery was commissioned in 1901.By 1871, about Rs. 18.6 million had been invested in the Assam tea industry. The total investment by 1881 had touched Rs. 63.8 million. And the total investment in the organized economic sectors (tea, railways, coal, petrol and saw mills) from 1881-1901 was about 200 million rupees. It was one of the highest investments in a region in British India.
The transition of the pre-colonial feudal economy to a modern capitalist economy was too fast for the Assamese people to adjust to the new system. Suddenly the Assamese people faced land hungry East Bengali immigrants and tea garden labors from other Indian provinces in huge numbers. Bengali clerks, Marwari traders and Hindi speaking semi skilled labors flocked in the closed Assamese society. The population of Assam increased from an estimated 8 lakhs in 1826 to about 22.2 lakhs in 1901, out of which one third of the population were non indigenous . Modernization of Assam was accompanied with the formation of the Assamese middle class.
The huge British capital invested in Assam did not help in the growth of domestic capital of the Assamese people. The Assamese people remained mainly dependent on agriculture. The increased land revenue rendered the peasants poor and the savings was meagre. The economic situation hardly improved for the people. The tea planters made huge profit because the land tax was very nominal for them and the tea labors were poorly paid. The surplus income of the tea planters was usually remitted back to London or re-invented in the tea, timber, coal or oil industries. The immigrant labors, other professionals and the petty traders from India never invested their savings in Assam. In these ways, most of the income generated in Assam was drained out. The surplus of the foreign investment was never reinvested or diversified in the overall growth of the economy.
After 1901, foreign investments came down and the new investments came from income generated in India. But the land grabbing by the tea planters continued till 1947. The influx of the immigrants, specially from East Bengal began on a larger scale by 1911. The economic transformation of Assam witnessed the demographic shift in a big way encouraged by the colonial masters. After the partition of India in 1947, East Bengal became East Pakistan and then Bangladesh in 1971. The immigration continued unabated. The Indian state did nothing to stop the influx from the foreign country.
Assam’s present economy is simply a continuation of the British colonial economy. The transaction from the feudal economy to the modern capitalist economy without diversification to other traditional sectors hardly benefited Assam’s economy. The resource mobilization of Assam’s national wealth to fulfill the British interest was carried out in the same way under the Indian administration to benefit the Indian economy at the cost of Assam’s interest, which is already a most economically under developed region in the Indian sub-continent. In spite of its precious natural resources such as mineral oil, gas, coal, timber and tea, Assam remained basically an agricultural economy. Assam, which was previously internationally connected under British Raj became land locked in the post colonial period. Indian investment dried up by 1950s and after the Chinese intrusion in 1962 it was completely stopped. The Indian state started using Assam as its hinterland with neo colonial policies.
There was never an attempt to mobilize the natural resources internally for industrialization of the region. The Indian state, even after the liberalization of the Indian economy from mid 1991, never tried to maintain the priority and the trust applied by the British to boost the global investment in Assam. The economic liberalization and the new industrial policy of the Indian Government attracted huge foreign direct investment (FDI). From 1991 to September 2011, about 162.11 billion USD has been invested mainly in the services (financial and non-financial), telecom, IT, roads and highways, housing and real estate, construction and power sectors in the comparatively developed region in India. The under developed eastern region, especially Assam, was left out. The Look East Policy (LEP) was introduced as an extension of the economic liberalization policy of India to forge ties with South East Asia, but it is mainly guided by defense and strategic interests. No foreign country has invested in Assam. Foreign investment in Assam came only as loan through The World Bank (300.6 million USD), Asia Development Bank (420 million USD) and the Japanese Bank for International Co-operation (Rs. 1200 Cr) for development of rural infrastructure, agriculture, roads and highways, administrative and fiscal reforms, urban infrastructure, flood control, power sector, water supply and other urban services. The exploitative and the hegemonistic approach of the Indian state has to be abandoned for a healthy economic growth in Assam.