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Manipur’s Economy: Historical Roots and Structural Evolution

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Manipur’s economy can be better comprehended through capturing its structural evolution, particularly from the colonial period. Deterioration of its economy despite independent India‘s free flow of fund calls for serious pondering. The same crisis is witnessed in the rest of the states in the region.

The purpose of this paper is to argue that the economic as well as social problems of the Northeast cannot be meaningfully addressed unless the structural dimensions of each state as well as the region is first put in the right perspective. The paper takes up the case of Manipur and gives a brief outline of the structural evolution of the State’s economy through time. The paper also attempts to highlight the historical structural distortions suffered by Manipur’s economy and how untapped opportunities of corrections have accumulated to shape a political economy that has a vested interest in the perpetration of a tertiarized economy that has a fundamentally weak productive base and survives on central doles.


The people of Manipur trace their history to Pre-Neolithic cultures some 6000 years ago.1 Tradition narrates that the people resided in the hills in pre-history, the valley being a swampy mass. People who descended to the valley from different directions in later periods formed the valley people known as the Meitei, and those who remained in the hills are the population known by different names such as Rongmei, Tangkhul, Kuki, Paite, etc.

The Meitei civilization in the valley traces its kingship lineages to AD 33 when Nongda Lairem Pakhangba was coronated.2 Between AD 1000 and AD 1500, Meitei state formation took a consolidated form reorganized in the geo-political relations with the then Burma, Shan states, etc. (3)

In spite of the stability of the food economy and high surplus of agriculture, 6 the manufacturing sector was extremely weak and of subsistence in nature. The principal manufacture at the turn of the nineteenth century was coarse clothes, muslin and silk. Silk was traded with Burma and Yunan.7 Chinese also took away wax, ivory, cloths and ponies from Manipur. Pemberton highlighted the subsistence nature of manufacture thus: ‘˜With the exception of woolen clothing, the country itself furnished every article that may be considered essential to the comfort and prosperity of its inhabitants’.8 The volume of trade as such was small.9 The bulk of the exports consisted of livestock like ponies, buffalos, elephants. Forest products like rubber, tea seeds, wax, elephant tusk, etc. and textiles like silk and coarse cloths were also exported.10 Finer textiles and goods of low volume were the main items of imports from the Cachar valley of British India.

The immediate reason for the low volume of trade was heavy duty on exports and imports. The British Agency Report of 1873’“74 cites some 75 articles of imports on which import duty was levied, ranging from 6 annas11 to 3 paise. Export duty on 23 items ranged from Rs 5 to 3 paise while livestock export duty ranged from Rs 20 for a pony to Rs 1 for a buffalo. The duty structure was thus more restrictive to exports than imports. However, the fundamental factors responsible for the low volume of trade, external as well as internal, could be traced to structural, institutional, political as well as physical barriers inherent in the native economy. The country had a mainly kind-based tax and revenue structure, the money revenue coming mainly from fishery rent, trade duties, transit duties and tributes from Lois, the outcast settlements of the population. The subsistence nature of the agrarian economy, kind tax and rudimentary market structure combined together to support a non-monetized economy. Even though the native coin (Sel) circulated, the culture of surplus production and accumulation was essentially absent because of the non-monetized character of the economy. The historical non-growth of a tertiary and manufacturing sector could be mainly attributed to frequent depopulation and war with the Burmese leading to periodic devastation of economic and population structures. The Seven Years Devastation of 1819’“26 is reported to have reduced the valley population to barely 20,000.12 Political and economic stability come only when the British Political Agency was established in Manipur in 1935, providing dependent security. The ‘˜forced labor’ institution of Lallup for state duty, and institution of Loi villages who were the main manufacturers, were the key institutional hurdles to spontaneous development of surplus generating manufacture and trade.

The Manipuri economy in the pre-colonial period with the trade and manufacture described above was a classic peasant economy of the Schultzian Traditional Agriculture type.13 The structure of that agrarian economy is defined by the system of land holdings then prevailing and the land relations emanating there from. In 1891when colonial rule started, Manipur valley had 26,500 hectares of land under rice cultivation.14 All land was distributed by the king. Only 23.4 per cent was taxed and 76.6 per cent of cultivated land was distributed tax-free. The feature of rack renting that one often comes across in colonial India,15 seems to have been not there in Manipur as rent paid to state or land owner ranged between 1 per cent to 6 per cent on the best land, 2 per cent to 12 per cent on the worst land. Only a small slave population cultivating the king’s land had to share 50 per cent of the crop. The land relationship system was thus non-exploitative if rent is a criterion. The landed gentry, who did not cultivate, held 36 per cent of cultivated land but had very little incentive for economic extraction and exploitations as tertiary sector population was miniscule and there was virtually no market for surplus rice. Thus, the feudal mode of production’”system of localized production and localized appropriation’”and also an ensemble of extra economic coercion weighing on the peasantry and therefore retarding the expansion of agrarian capitalism were present in the native Manipur. However, during the Native Period, the agrarian sector was robust and expanding. With a moderate productivity of around 3,250 kg of paddy per hectare, the total product of land in the valley could feed 2.65 lakh people, higher than the 2.21 lakh population of entire Manipur. It was on this agrarian structure that the colonial economy was to be built in 1891.


Manipur came under British rule in 1891 after the Anglo-Manipuri war. The closed and agrarian economy of the native period was opened up and ushered into ‘˜open colonial agrarianism‘ by a new economic agent, the foreigner or the colonizer, in terms of the Fei and Ranis Model of transition from ‘˜agrarianism’ to ‘˜open agrarianism’.16 The instrument of transition is the addition of an export sector to the earlier agriculture and service sector. ‘˜The conversion of a closed agrarian society into open agrarianism under the impact of outside forces must be accompanied by the development of new institutional arrangements to replace the old social order.’ (17)

The Rayatwari system of land tenure was introduced in the Manipur valley. The new land system and its introduction of private property in land and taxation in money started the process of monetization and marketisation of the economy and commercialization of agriculture. The rush for patta (legal ownership paper) was such that agricultural land in the valley, which was only 26,500 hectares in 1891, had risen to 75,370 hectares in 1941. The population in the valley had grown from 1, 35,782 in 1891 to 3, and 43,694 in 1941. Thus the man-land ratio had risen from 0.195 in 1891 to 0.219 persons in 1941 whereas, by the end of the British rule, a hectare of land supported only 4.56 persons. Table 1 illustrates the quantum of surplus generation of rice during the colonial period.

During the colonial period, the population increased by 153 per cent as against an increase in cultivated area by 184 per cent. Based on our estimate of rice requirement and production, the agrarian sector in the valley had surplus potential of 26, 35, 42 and 34 per cent of production in 1891, 1901, 1931 and 1941 respectively. Confirming Brown’s Report of 1875 about the surplus potential of the valley’s rice production, the Administration Report of 1894’“95 writes, ‘˜At the present moment a two years’ food surplus is stored in the village.’ Productivity possibly declined as new land was taken up for cultivation and as such we have taken the lowest of the productivity reports. If productivity levels are scaled down further by 23 per cent, the economy was still generating 22 and 12 per cent rice surpluses in 1931 and1941. The export trends are highlighted in Table 2.

Rice and rice product export rose from 2655 tonnnes in 1900’“1901 to 21,694 tonnes in 1938’“39, an eightfold increase during four decades. The export business was facilitated by the introduction of a commercial class of Bengalis and Marwaris in the capital town of Imphal. The growth and the role of the commercial class during the colonial period is highlighted in the Administration Report of 1892’“93, thus: ‘˜A small but flourishing bazaar with some two dozen shops, all doing a thriving business, has been established and, were space available, would expand to much larger dimensions….’ (18)

By the second decade of British Rule, the vital road links to Cachar, Dimapur and Tamu, linking mainland India and Burma, had become fully operational and a railhead had reached Dimapur. Recorded trade statistics show that imports into Manipur had risen from Rs. 1, 90,596 in 1901’“02 to Rs. 3, 45,035 in 1906’“07, an 81.22 per cent increase in six years. Exports (rice, livestock and tea seeds) had increased from Rs. 2, 42,809 to Rs. 8, 06,333 during the period, a 23.09 per cent increase.

The rich tropical forest of Manipur was also a source of direct and indirect surplus extraction. Royalty and duty on forest products alone amounted to Rs. 64,022 during 1898’“1932 out of annual revenue of Rs. 18,830. (19)

The budget was also an instrument of surplus extraction and various unilateral transfers through the operation of surplus budgets. In India between one-sixth and three-tenth of total taxation revenue were transferred abroad.20 In 1900’“01, out of the total Manipur State Budget of Rs. 6,92,041, expenditure was Rs. 3,75,192, leaving a closing surplus of Rs. 3,18,849, or 46 per cent. The largest share of the budgetary receipts came from land revenue accounting for 78, 68 and 58 per cent for 1900’“01, 1930’“31 and 1940’“41 respectively. The expenditures on ‘˜state works’ constituted 33, 21, 15 and 77 per cent of budgetary expenditure in the years 1900’“01, 1930’“31, 1940’“41, and 1944’“45 respectively, obviously showing the type of capital expenditure decline as colonial rule progresses in the Fei and Ranis model. (21)

The various aspects of the economy described above show, in terms of the Fei and Ranis model, how the closed agrarian economy was opened up, and how the introduction of an export sector led to the commercialization of the agriculture and the economy in general. The export sector revolved around the rice economy and the forest economy. Institutional changes in management of forest and agricultural land, the administrative and judicial structures, the nurturing of a commercial class of outsiders, modernization of communication and transport structures, all served the expansion of the export sector and budgetary extraction. By the end of colonial rule, forest resources had become depleted and excessive rice export affecting prices and local consumption leading to the Nupi Lal (Women’s Agitation) in 1939 against the export of rice, were clear signals of the limits to extraction.

The rapid expansion of area under rice cultivation, much faster than population growth, had a private property effect in it but was mainly spurred by the need to pay cash taxes and generate surplus for cash requirements in a monetized and marketised economy, flooded with new and cheaper consumption goods in the face of native de-industrialization and lack of new employment opportunities. The peasants faced an unfavorable term of trade as the price of paddy hovered around an average of Rs. 1 and 5 annas a maund. One paree (one hectare) of land at the productivity level of 40 pots (assumed) gave him 37.9 mounds of paddy and, after deducting his subsistence requirements for five persons (assumed), would leave him a surplus of 10.65 maunds or about Rs. 13 and 15.65 annas as surplus cash. After paying land revenue of Rs. 5, the peasant is left with only Rs. 8 and 15.65 annas as surplus cash. The peasant’s position was precarious. The landed gentry in the capital had to pay almost half of his paddy rent as tax. These were the people who resisted the new land taxes and agitated for lower land taxes.

The emergence of big landlords was effectively stopped by a Manipur State Durbar resolution of 1925, prohibiting the acquisition of more than 10 hectares of land.22 Feudal landlordism, as prevalent in India, was conspicuously absent, exploitation and extraction of surplus being in general extra and non-economic. De-industrialization and population growth during the colonial period led to expansion and colonization of new land, further thwarting tendencies towards differentiation and landlordism. The Census of India, 1951, reveals that landlords constitute only 2.4 per cent of the agricultural population; against these 85.3 per cent wholly or mainly owned their land and 12 per cent wholly or mainly un-owned their land. Agriculture labor was insignificant at 0.3 per cent (1,381 persons only). Low levels of tenancy and agricultural labor were further depressors of differentiation and landlordism in the state’s agriculture.

As for the state’s economy, as Utsa Patnaik has put it, ‘˜Colonial revenue-cum-rent exploitation promoted not the proletarisation of peasants so much as their pauperization, since a substantial share of economic surplus was transferred abroad’ and there was a structural shift towards tertiarisation of the economy and occupations. The state’s economy was experiencing ‘˜export-led retardation’.23 However, the structures of the modern state were in place at the end of the colonial rule. A monetized and marketised economy and open agrarianism were the basic character of the economy. The productive base of agriculture in the state had tremendously expanded and it was on this base that the impact of planned development would shape new agrarian relations and the structure of the economy,


The colonial economy of Manipur, which India inherited in 1949 through a Merger Agreement with the then Maharaja, was an agrarian economy producing huge surpluses of rice. A budding modern tertiary sector had become functional, and substantially arable land was still there to be colonized. The population was still small at 5, 77,635 in 1951, the decadal growth rate being merely 1.28 per cent. Colonial rice exports being stopped and being internalized in terms of consumption, saw its impact on Manipur’s population growth rate which jumped to 3.75 per cent and 3.26 per cent during the fifties and sixties24 (India’s population growth rate were 2.5 per cent and 2.41 per cent during the same decades). From a net exporter of huge rice surpluses during the colonial days, Manipur had turned into a net importer. Food grain production gaps ranged from 12.57 to 29.31 per cent during 2000’“01 to 2003’“04. (25)

The structure of the economy as illustrated in Table 3 has moved along the usual line of falling shares of primary sector and rising shares of the other sectors. A striking feature of the Table is that while the primary sector’s contribution to Net State Domestic Product (NSDP) has fallen from 53.62 to 38.02 per cent, employment share has increased from 66.27 to 70 per cent during 1960’“61 to 1919’“91. This is a classic example of Geertz’s Agricultural Involution in the absence of alternative employment opportunities in a non-diversifying agrarian economy.26 Though we observe a rise in the NSDP shares of the secondary and tertiary sectors, there has been a role reversal of employment shares in the two sectors. Thus, the secondary sector which employed 23.05 per cent of work force in 1960’“61, employed only 9.66 per cent in 1990’“91. On the other hand, the tertiary sector which employed only 10.68 per cent of the work force in 1960’“61, employed 20.34 per cent in 1990’“91. These are clear symptoms of de-industrialization and tertiarisation of the state’s economy in the pre-reforms period. In absolute terms, the primary sector employment (mainly agriculture) increased from 2.4 to 5 lakh from 1960’“61 to 1990’“91, the secondary sector employment decreased from 8.3 to 8.6 lakh and tertiary sector employment increased from 0.38 to 1.4 lakh (by the census reports of India) during the same period.

The Indian economy had also seen slow growth of the secondary sector, specially manufacturing, and an inordinate growth of the tertiary sector, which led writers to term India’s structural evolution of the economy as retrogression.27 The tertiary sector becoming predominant even before high levels of industrialization, and the tertiary sector’s low employment absorption compared to NSDP contribution were issues of the Indian economy.28 However, the sheer contrast of the structural dimensions of Manipur’s economy and that of the rest of the country need to be highlighted. In 1990’“91, the primary sector in Manipur contributed 38.02 per cent of NSDP as compared to 34.08 per cent for India. For the secondary sector, the figures are only 10.21 per cent for Manipur and 26.65 per cent for India. Within the secondary sector, manufacturing contributed only 6 per cent of Manipur’s NSDP as compared to the national figure of 12.43 per cent. Construction contributed 8.11 per cent of NSDP for Manipur as against 4.81 per cent for India. Even the small growth in the secondary sector of Manipur was construction-propelled rather than manufacture-led. In1990’“91, the tertiary sector contributed 51.77 per cent of NSDP in Manipur compared to only 39.27 per cent for India. Out of the 51.77 per cent of NSDP, 27.66 per cent came from the government sector as against 11.57 per cent only for India. Tertiary sector growth in Manipur was propelled by government jobs, whereas in India as a whole it was led by growth in trade, hotels, restaurants, banking and insurance, etc.

In the pre-statehood period (1950’“71), Manipur’s economy was getting increasingly integrated in the mainstream economy and there was a decline of employment in the secondary sector from 82,500 to 45,361 persons during 1961’“71, a massive 45 per cent decline in employment in the secondary sector as a second phase of decline in household industries set in (by the Census Reports of India, 1961 and 1971). In the first decade of statehood (1971’“81), the secondary sector employment climbed back to 76,568 persons but again declined to 68,404 in the second decade 1981’“91 (Census Reports of India, 1981 and 1991). The negative swing in the secondary sector development during the sixties and eighties was absorbed by the other sector, mostly by the primary sector. Thus in the eighties, the primary sector absorbed 67.61 per cent and tertiary sector 32.39 per cent of the increase in labor force, including the release from the secondary sector.

The impact of the structural shifts, especially in labor, has been telling on the agricultural sector. The impact of high population growth rates on agriculture and the near constancy of labor force shares of 70 per cent are clearly visible in data from the 48th round of NSS. Small and medium farmers holding below 2 hectares of land constitute 92.15 per cent of all land holdings. The medium farmers (4 hectares) have become insignificant (0.09 per cent) and operate on only 0.39 per cent of land and the large farmers (above 10 hectares) have completely disappeared. Thus, de-industrialization and tertiarisation of the economy has led to marginalization, structural retrogressions and near stagnation in agriculture, turning agriculture into a secondary occupation for many part-time farmers.

The evolving tertiarised structure of the economy is mainly explained by the patterns of plan investments in the State and the type of political economy that has emerged out of that development process. The state plans reveal that there has been neither consistency of purpose nor direction in goals. How else does one explain the fact that up to the Ninth Plan only 4.28 per cent of investments went into industry, 12.54 per cent into agriculture and all of 78.0 per cent into transport, water, power and the social sector? (29)

The focus of the plans has been mainly on administration, health, education, roads and bridges and other physical infrastructures. These are the reason why the government sector accounted for one-third of NSDP in 2001’“02. One can imagine the strength of the vested interest groups, consisting of contractors, bureaucrats and politicians, who had a large say in the execution of schemes involving 78 per cent of all plan funds, and why this group would want this pattern of investment to continue as it is.

By the time statehood was conferred in the early 1970s, the hold of the contractor-bureaucrat-politician nexus was consolidated and any corrective measure towards real growth and industrialization was bound to lack political will and subject to sabotage. The public sector industrial units of the 1980s’”the spinning mill, sugar mill, fruit processing, cement factory and latter paper mill, etc.’”all based upon the State’s own resources, have been done to death and the opportunity of building the ‘˜commanding heights’ of the State’s economy effectively derailed. With the advent of the ideology of privatization and the virtual withdrawal of industrial entrepreneurial support systems, Manipur is yet far away from real industrial development. Heightened tertiarisation of the economy is but inevitable under these circumstances.

The colonial rule had left an economy that was distorted and tertiarised to some extent, but having a strong agricultural base with sizeable surpluses upon which an economy with a stronger productive base could presumably be built. But in the pre-liberalization period, tertiarisation of the economy and occupations had been heightened, while the productive base of industry has not expanded significantly, and that of agriculture is moving towards stagnation. The impact of the evolving power structure in the State’s polity and the changing nature of the State’s economic structure could not but have its reflections and consequences on the future trajectory of investments. It is already visible.

Tourism, information technology, communication, health and education, infrastructure, et al, all to be geared to the needs of the ‘˜new economy’ are the latest cry of the ruling elite. Who cares that the insurgents’ bullets are going to keep away tourists and prospective investors from Northeast India for quite some time as long as the funds are merrily coming from without much accountability. The Northeast needs to remind itself that the productive base of agriculture and manufacture (‘˜the old economy’) is the springboard of the ‘˜new economy’, and that putting the cart before the horse would not take us anywhere. Even the present Prime Minister is trying to go to the basics by forming a task force for agricultural development to ensure that the masses of India are not hoodwinked by new economy mongers of urban India. If Manipur and all Northeastern states fail to strengthen its agrarian base and push for real industrial development based upon its own natural resources or otherwise, the region is likely to continue to be the market for mainland industrial and other products and remain the ‘˜the infant economy’ that it really is today.

Table 1: Area, Production and Rice Surplus in Manipur Valley (1891’“1941):

Year Valley
Demand(Tones) Rice Production(Tonnes) Surplus(Tonnes) Percent
1891 1,35,782 26,500 28,107 38,160 10,053 26
1901 1,91,207 42,283 39,580 60,755 21,175 35
1931 2,86,843 71,316 59,376 1,02,695 43,319 42
1941 3,43,694 75,370 71,145 1,08,533 37,388 34

Source: Administrative Reports for population and area under paddy.

(i) Demand per person per annum at 207 kg as in NSS.
(ii) Production at the rate of 40 pots per paree. Least of 75 pots (R. Brown), 43 pots (Admn. Report 1897’“98), 40 pots (Admn. Report 1901’“02).
(iii) One pot of paddy is 54 kg vide R. Brown, op. cit., p. 86. (iv) Paddy gives 2/3 rice when husked.

Table 2: Rice and Chira (in tones) Export from Manipur during 1901’“40

Year 1900’“01 1911’“12 1924’“25 1932’“33 1934’“35 1938’“39
Rice 2,655 4,107 7,589 10,541 9,334 14,143
Chira ‘“ ‘“ ‘“ ‘“ 5,311 7,551
Total 2,655 4,107 7,589 10,541 14,645 21,694

Source: Administrative Reports of relevant years.
Note: Chira (pound rice) data recorded 1933’“34 onwards only.

Table 3 (A): Percent Sectoral Shares of N.S.D.P.

Sector 1960’“61 1970’“71 1980’“81 1990’“91
Primary 53.62 49.69 49.11 38.02
Secondary 6.26 6.42 7.65 10.20
Tertiary 40.12 43.89 43.24 51.78
Table 3 (B): Percent Sectoral Allocation of Work Force

Primary 66.27 71.30 69.61 70.00
Secondary 23.05 12.23 13.35 9.66
Tertiary 10.63 16.47 17.04 20.34



1. O.K. Singh, Neolithic Stone Tools of Manipur, (Kakching: People’s Museum), 1991, p. 6.

2.  L. Ibungohal Singh, Introduction to Manipur, (Imphal: Friends Union Press), 1960, p. 56.

3. ALokendra Arambam, Meitei Cultural History, Economy, Society and Ideology from Early Times to the Eighteenth Century A.D, Unpublished PhD thesis, Manipur University, 1996.

4. Ibid., pp. 142 & 144

5. R. Brown, Statistical Account of the Native State of Manipur and the Hill Territory under its Rule, (Calcutta: Office of the Superintendent of Government Printing), 1873

6. In 1987 only half the arable land was cultivated.

7. R.B. Pemberton, Eastern Frontier of India, (Delhi: Mittal Publications), p. 33.

8. Ibid

9. For export/import data given by the Manipuri authorities to the British Political Agency in 1865’“69, see E.W. Dunn, Gazetteer of Manipur, (Delhi: Vivek Publishing House), 1981, p. 62.

10. Annual Administrative Report, Political Agency, Manipur, 1873, p. 6.

11. 6 annas = Rs. 1

12. HR.B. Pemberton, op. cit., p. 48

13. T.W. Schultz, Transforming Traditional Agriculture, (Delhi: Lule Depot), 1970, p. 25.

14. A.W. Howell, A Short Account of Land Revenue in Manipur, Political Agency, Manipur, 1891, p. 9.

15. Utsa Patnaik, The Long Transition, (Delhi: Tulika), 1999, p. 45.

16. John H. Fei and Gustav Ranis, ‘˜Agriculture in the Open Economy’, The Role of Agriculture in Economic Development, (New York: National Bureau of Economic Research), 1969, p. 125.

17. Ibid., p. 60.

18. Annual Administrative Report of Manipur, 1892’“93, p. 4.

19. M. Bhattacharya, Gazeteer of Manipur, p. 20.

20. Utsa Patnaik, op. cit., p. 3.

21. Fei and Ranis, op. cit., p. 141.

22. Census of India, 1961, District Census Handbook, Manipur, p. 17.

23. Utsa Patnaik, op. cit., p. 3.

24. Government of of Manipur, Economic Survey, 2002’“03, Directorate of Economics and Statistics, p. 6.

25. Ibid., p. 72.

26. Clifford Geertz, Agricultural Involution: The Process of Ecological Change in Indonesia, (New York: University of California Press), 1963.

27. V.K.R.V. Rao, ‘˜Changing Structure of Economy’, in Uma Kapila (ed.), Indian Economy since Independence, (Delhi: Vikas Publishing House), 1997, p. 771.

28. B.B. Bhattacharya and Anup Mitra, ‘˜Excess Growth of the Tertiary Sector in Indian Economy: Issues and Implications’, Economic and Political Weekly, November 3, 1990, p. 2449.

29. Government of of Manipur, Statistical Hand Book of Manipur, 2002, Department of Economics and Statistics, 2003, pp. 354’“59.

*The paper is written by Ch. Priyoranjan Singh.

* The article was originally published at

* The article has been published with due permission from the Manipur Research Forum.

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