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This chapter asks three questions about the British state in India. Why was it poor? How did fiscal capacity matter? What was colonial about the colonial fiscal state? The chapter shows that the poverty of the state had owed to reliance on land revenue. Although reforms in property rights in land delivered a boost to the revenues between 1800 and 1860, the effect wore off. The puzzle is, British India had relatively easy access to the London money market, but reduced its reliance on debt from the last quarter of the nineteenth century. The chapter suggests that the restrained use of debt was a response to the nationalist attack on the ‘drain.’ Weak state capacity did not affect business adversely, but limited the ability of the state to transform a resource-poor agriculture. British India shared with many other colonial territories some of these features; the politics of the public debt made the Indian story somewhat distinct.
Official revenue collections in French Indochina were low compared with most other colonies in East and Southeast Asia. This fact stands in contrast to a large body of literature that claims French tax demands were a crushing burden on many indigenous people. French Indochina is often put forward as an example of one of the most extractive colonial states in Asia. This chapter reconciles these seemingly opposing interpretations by examining the formation of the colonial fiscal state, its capacity, and the potential impact on the local population. We argue that the French colonial administration is best characterized as complex, bureaucratic, and centralized. Its fiscal capacity was heavily dependant on the expansion and growth of commercial activities. This led to significant geographical asymmetries in wealth generation and investments, and a complex system of budgetary transfers amongst the different levels of administration. French rule was, however, indirect and responded to local differences. Pre-colonial fiscal institutions survived under French colonial rule, but were not adequately recognised in the figures. This reinforces the claim that the burden to the majority of the population was greater than officially recorded, but it was unevenly distributed.
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