This article throws light upon the top four transport systems in India developed under British Rule. The four transport systems are: 1. The Railways 2. Road Transport 3. River Transport 4. Air Transport.

Transport System # 1. The Railways:

The relationship between the growth of British capitalism and the evolution of a dependent, colonial economy in India is greatly manifested in the development of Indian railways, roads and bridges, irrigation works, etc.

Of these, railway construction profoundly altered India’s destiny. Marx predicted in 1853 that “the railway system will therefore become in India truly the forerunner of modern industry”.

But railways were not developed in India to stimulate industrial development.


The first important consideration that led to the construction of railways in India was the commercial needs of the Lancashire mills for good and clean cotton as its carrying by typical local mode of transport (i.e., cart) led to dirt.

The second consideration that required railway construction was the military strategy. Railways would provide quick and reliable transportation of goods, troops, and stores. Thus, surely commercial and political objectives encouraged the building up of an extensive railway system in India.

While estimating its overall impact, Marx in 1881 commented that the railways were ‘useless to the Hindus’ as much of the burden arising out of guaranteed interest system was borne by the poor Indian taxpayers. In addition, the normal ‘multiplier’ effects of railway investment were conspicuously absent in colonial India.

Before the introduction of railways in India, transportation was costly, undependable and difficult. With the acquiring of political power, the Government of India together with the British Government realised the importance of the improved means of transport and railways were thought to be most ideal so far as low transport costs, reliability, and speed were concerned. Not long after railway construction began in England (1825), the idea for the construction of railway lines in this country was first mooted in 1832.


However, the country had to wait for about 20 years when the first railway passenger train was steamed off from Bombay to Thane — 16th April 1853 was a historic one. 

Railway Rates Policy:

It is said that while the expansion of railway industry along with its linkage effects produced some favourable results in the Indian economy, the same cannot be said for the railway rates policy. Theoretically speaking, the determination of railway rates is a complex one. But no one denies the importance of just and fair fares and freights as this would ensure sound financial position for the railways, and overall economic development of the country.

When the cost of service principle is employed in the determination of a structure of railway rates, a higher rate may be demanded on rail routes passing through low railway user areas or where the cost of construction is high. High rates may also be justified for goods travelling not too far distances or for goods difficult to handle.


Railway rates may also be determined by the principle of ‘what the traffic will bear’ in view of the element of joint cost involved in railway expenses. By practicing price discrimination it can charge some goods and passengers more than others. In fact, while determining the rate structure, one had to rake into account the price and availability of alternative, direct regulation of rates by government and the degree of competition within the industry itself.

Railway rates policy came in for sharp criticisms from the beginning of the journey of Indian railways. The short-sighted objective and commercial orien­tation of railway development in India is vivid in the railway rates policy. Railway rates in India had an individualistic character as every railway company designed its fare structures as the Government did not fix or regulate railway rates. “Whatever the type of ownership, whatever the kind of guarantee, each railway company operated as a profit maximising entity, independent in its setting of rates, fare, and service policies.”

Virtual absence of competition from other modes of transport made the companies monopolists—at least in setting their prices. As a result, a ‘complicated and irrational’ rate structure of different rail companies ensued. Rates that were fixed by companies had been based solely on individual interests and, more importantly, they were manipulated to help the European merchants.

Another charge was that the rates fixed were high, the objective being to obtain a large income with a small amount of work. The private English railway companies were obsessed by the idea that the lines should be remunerative from the very start. But business propositions say that traffic should be nurtured by low rates at the embryonic stages.

For an individual company, the ‘market’ was not all-India; it had business in the region where its track was located. Further, because of the absence of alternative modes of transport, customers had few options. For all these reasons, many of the companies enjoyed greater freedom in fixing rates than what their ‘market’ shares dictated.

As the demand for the service of the individual companies tended to be less elastic than what it would have been under some sort of competition, they fixed higher rates. Right from the beginning, several committees condemned high rates. It had been found throughout the 19th century that heavy rates were being accompanied by low growth in traffic.

Mr. Roberton, in his report in 1902, found that though in money term rates in India were lower than in England, considering the prevailing actual circumstances in these two countries, freight rates should have been 30-60 p.c. lower and passenger fares by 18-40 p.c. than they were.

This is not the only objectionable aspect of railway rate structures. Unfettered by fear of the pricing behaviour of the fellow companies because of individualistic character of companies, companies also practised price discrimination by charging different prices to different customers. For instance, considerably low rates were set for long-haul freight than those for short-haul freight.

Companies also charged lower rates to and from ports than for shipments in similar distance between two inland points. ‘Block rates’ were also instituted. By ‘block rate’ we mean a higher mileage charge imposed on traffic moving from one railway line to a rival route.

Thus, the purpose of instituting block rate was to ‘block’ the traffic from passing on to a rival route. In addition, terminal charges, transshipment and ghat charges and other charges were levied by all railway companies with the objective of extracting as much as possible from traffic. As a result, railway rates structure became so complicated that even experienced railway staff experienced unfathomable difficulty in calculating them.

One must not ignore the fact that the development of railways reduced cost of freight movement to nearly one-twentieth of the estimated cost by bullocks. But the rates that were designed by every company did augur well neither for the Indian people nor for the Indian economy.

Discriminatory rates, block rates, and other rates were designed to stimulate traffic to and from the profits at the expense of internal traffic. This, in effect, meant a favour to the import of British manufactured goods and the export of raw materials. This preference for import- export traffic put the Indian at a comparative disadvantage.

Orientation of the railway rate structures in favour of foreign merchants and manufacturers worked to the detriment of India’s industries, especially infant industries, particularly those not located at the ports. Indian industries were plagued with the twin problems of paying more to the railways for the transport of raw materials and for distribution of their finished manufactured goods than foreign manufacturers using Indian material and selling in various Indian markets.

Nationalists and Indian industrialists complained bitterly about this step-motherly policy reflected in the structure of railways rates. For example, charges for shipping imported matches from Bombay to Delhi were the same as those shipping matches made in Ahmedabad to Delhi, even though Ahmedabad was 300 miles nearer to Delhi.

In case of sugar, special rates at 13 ½ annas per maund were quoted for the despatch of sugar from Bombay to Kanpur—a distance of 840 miles, Indian-made sugar paid 18½ annas per maund for a distance of 640 miles (from Kanpur to Akola). As for the leather industry, “grant of port rates nearly 50 p.c. less than the internal rates … discouraged Indian tanning”. There were many similar cases.

Another objectionable part of railway rates policy was the use of ‘block rates’ that led to an artificial diversion of traffic inconvenient to industry and trade. It did indeed impede the establishment of industries that would have served internal markets. The Acworth Committee reported that through the block rates, the BBCI—a railway company—killed the shipping industry at Broach.

Not only did the structure or rates tilt against Indian industries but the high rates also refused to give any impetus to the development of national industries. “High transport charges increased costs and made competition with foreign industry more difficult.” It was the coal-using industry that suffered most. The incidence of high transport cost made coal the most expensive input.

Thus any industry using coal as an input faced the music of rising costs. It is said that the East Indian Railway made it so costly to transport by rail that imports from Britain could compete with the Indian coal in India markets. John M. Hurt’s comment may be recorded here: “The almost consistently high price of coal had an especially dampening effect on the expansion of industries since so many required it as a source of energy. But whether for coal or other inputs or for finished goods, the relatively high level of transport costs was a major factor in the slow growth of industry in India”.

D. R. Gadgil observed that the rates had been particularly hard on the industrial centres in the interior of the country and this had resulted in a concentration of large scale industries that did develop in India around port towns. The obvious effect was that these differential railway rates helped the port industries as well as the foreign industries in their competition with the industries of the interior.

One could expect the growth of urban centres following an expansion in commercial activity and industry in the port towns. Consequent upon this, employment opportunities expanded and population in port towns of Bombay, Calcutta, Karachi, and Madras grew rapidly. “While contributing to the growth of some urban centres, such as ports, railways caused others to lose their economic functions.”

As a result, there was little change in the proportion of India’s population living in urban towns. Actually, the urban population “was rearranged” as it shifted from the cities to the ports and to interior rail junctions, thereby leading to the “geographical re-organisation” of India’s economic activity.

The effect of high rates was less severe in Indian agriculture. Rather, agriculture was relatively favoured by railway rates. Still it did not prove to be a growth sector because of agriculture’s limited linkages to other sectors and its institutional framework. John M. Hurt went on saying that agriculture’s response to changes in the cost of transport suggests that existing institutional and other bottlenecks did not present insurmountable barriers to expansion, and that railway rates were an important, if not crucial, factor. Some of these defects in the railway rates structure ceased to be significant only since the 1920s. After independence, in 1948, the fare and freight rates were rationalised.

Transport System # 2. Road Transport:

Like the railways, road transport forms the backbone of the transportation system, particularly in an agrarian country like India. Unfortunately, by the standards of the time (18th century), the immediate prospect of road transport in India was a melancholy one. As usual, because of unsympathetic attitude of the British Government, the state of road vis-a-vis railways was in terrible condi­tion. It is true that only the river transport was comparatively better placed before 1800. Anyway, the means of internal communications were highly defective till the mid-19th century.

As is known to all, the trunk road system built during the Mughal rules was totally inadequate compared to the size of the country and its population. Above all, most of the roads fell into pitiable condition after the fall of the Mughal Empire. The EIC neglected road construction as railway construction was thought to be more important from the profitability point of view.

Since roads were in a poor state, movement of goods driven by carts rather than the wheeled traffic was virtually impossible and in its place bullocks came to be used thereby doubling the cost of transport. As a result, overland trade could not make any mark. Had road transport been somewhat better, the country could have averted famines by mitigating local scarcity of foodstuff.

One possible development, but a belated one, was the acknowledging of the importance of road transport and, hence, fund allocation, only from the 1830s. Meanwhile, the feasibility study of railway development in India started gathering its strength.

Ultimately, the alien rule preferred railways to road construction as railways would act as ‘engine’ of development. The end result of this big bargain was the neglect as well as indifference of road transport by the British Government/Company rule. “The few new roads which the Company built were primarily for military purposes and the government did little even to maintain the existing roads.”

It was only after the First World War that motor transport received strong support and with it the importance of good metalled roads. In 1927, a committee on road development was set up that recommended larger financial assistance.

In spite of this, the increase in road mileage was insufficient —approximately 25 p.c. of the total— compared to the needs of the country. This poor state of road development was recognised by the Agricultural Commission in 1928 in the light of marketing of agricultural crops. Although during the inter-war period there had been an increase in the use of motor trucks and other motor vehicles, road development lagged behind mostly because of low volume of investment.

In fact, the railway expansion-backed borrowed funds acted as a drag on road construc­tion. With the advent of the Second World War, the need for development of roads and road transport was emphasised. This then induced road construction of strategic importance under the military supervision.

Consequent upon the publication of the classic report on Road Development; the balanced development of all kinds of roads was given full consideration in 1943 at Nagpur. The Nagpur Plan aimed at bringing all villages within five miles from the main road. The plan proposed a programme of constructing roads from 2,20,000 miles in 1943 to 3,31,000 miles in 1953.

Roads to be constructed were of four categories—national highways, state or provincial highways, major district roads, and village roads. Anyway, this ambitious road development had been handicapped by fund crunch and physical shortage of construction materials. The final assault came from the partition of the country when as many as 57,000 miles of road went to Pakistan and the rest 2,39,000 miles allocated to India.

In brief, road transport in India could not develop till the outbreak of the World War II, as government opted for only railway expansion. Truly speaking, road transport had to face severe competition from the railways. In an effort to bring fair competition between rail and road in a coordinated manner, the Motor Vehicles Act was passed in 1939.

This Act enabled to set up regional transport authorities at the state level. The responsibility of granting permit to motor vehicles was given to the regional transport authorities. Besides this, these regional authorities had been empowered to ensure safety, convenience, and comfort of motor transport users. After the end of the Second World War, the growth of road transport had been encouraged with all sincerity.

Transport System # 3. River Transport:

Before 1800, the river transport in India was a flourishing industry. In carrying internal trade, the role of boats was crucial. For long-distance carriage of bulky goods like food-grains, and salt, water transport enjoyed some advantage in cost terms.

However, the quickest as well as the cheapest mode of transport was country boats. With the introduction of steamships in the mid-19th century, not only travel time declined in respect of the movement of goods and passengers but it also enjoyed enormous cost advantage over country boats. However, no road and river traffic data was available. What was unique was its gradual decline due to stiff competition with the railways after 1860.

The shipping industry in India has had a chequered carrier. With the advent of the British rule, the Indian shipping industry came under brutal competition from the British ships. It was the sheer discriminatory and unjust practices of the British Government that caused the Indian shipping transport to languish.

A ‘near monopoly’ in the port-to-port traffic in India was established by the British shipping companies that remained the major carriers of Indian cargo during the entire British rule. Ashok Mehta observed: “A complex of forces destroyed Indian shipping. Britain was a sea power, shipping was its lifeline. The British came to India as traders but remained as rulers, but in that magical metamorphosis they never relaxed their hold over the sea—the carrying trade had become their monopoly”.

As far as ship-operation was concerned, the First World War acted as a boon. During the War, as all British ships were requisitioned for war purposes, her foreign trade suffered a serious jolt. As economic nationalism started to gather its strength, an effort for the revival of shipping was a floated in the post-war period. The Scindia Steam Navigation Company was born in 1919 as a crusade against the anti-national economic policy of the British Government.

Till then India’s imports were largely handicapped by the acute shortage of merchant navy. Public outcry for a merchant navy forced the Government of India to appoint the Indian Mercantile Marine Committee in 1923.

However, most of the useful recommendations of the Committee went unheeded, except the one—the establishment of training ship ‘Dufferin’. As a result of the hostile attitude of the alien Government, shipping tonnage prior to the Second World War was miniscule—only 0.23 p.c. of the world tonnage. The War damaged the prospect of growth of the shipping industry more. Anyway, Indian shipping transport had to struggle hard for survival against the British companies.

Transport System # 4. Air Transport:

The growth of air transport in India is just 100 years old—in 1911 the first air-mail service between Allahabad and Naini was introduced by the Posts and Telegraph Department of the Government of India. Several stray attempts were made afterwards, but the first international air service by the Indian Transport Continental Airways Ltd. began to function in 1932. By 1939, three air companies—the Total Airlines, the Indian National Airways, and the Air Services of India—were set up for internal operations.

A great boom for this transport system came during the World War II. In spite of this, there had been a haphazard and unplanned expansion of air transport in this country in the Post-War period. After the partition, the number of air companies operating in India increased to 10.

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