History of the British salt tax in India

Taxation of salt has occurred in India since the earliest times. However, this tax was greatly increased when the British East India Company began to establish its rule over provinces in India. In 1835, special taxes were imposed on Indian salt to facilitate its import. This paid huge dividends for the traders of the British East India Company. When the Crown took over the administration of India from the Company in 1858, the taxes were not repealed.

The stringent salt taxes imposed by the British were vehemently condemned by the Indian public. In 1885, at the first session of the Indian National Congress in Bombay, a prominent Congress Leader S.A.Swaminatha Iyer raised the issue of the salt tax. There were further protests throughout the late 19th and early 20th centuries culminating in Mahatma Gandhi's Salt Satyagraha in 1930. This sathyagraha was followed by other sathyagrahas in other parts of the country. C. Rajagopalachari broke the Salt Laws at Vedaranyam in the same year. Thousands courted arrest and were imprisoned in large numbers. The administration eventually relented and invited Mahatma Gandhi to England to attend the Second Round Table Conference. Gandhi's Dandi March got wide news coverage and proved to be a turning point in the history of India's independence movement.

The salt tax, however, continued to remain in effect and was repealed only when Jawaharlal Nehru became the President of the Interim Government in 1946.

Taxation of salt

The German scholar M. J. Schleiden in his book "Das Salz" said that there was direct correlation between salt taxes and despotsCite web|url=http://www.mkgandhi.org/articles/the%20story%20of%20Salt.htm|title=The Story of Salt|accessdate=2008-05-09|author=Mohinder Singh] . This has been evidenced by history which stands testimony to the fact that highly despotic civilizations are the ones which tax salt production and trade.

Salt tax originated in ancient China. "Guanzi", a book written in around 300 BC recommends taxation of salt and propounds different methods for this purpose. It is quite well known that the recommendations of "Guanzi" became the official salt policy of early Chinese Emperors. At one point of time, salt taxes constituted over one half of China's revenues and contributed to the construction of the Great Wall of China.

Salt was also important in the Ancient Roman Empire. The first of the great Roman roads, the "Via Salaria", Salt Road, was built for transporting salt.However, unlike the Chinese, Romans did not monopolize salt.

Taxation of salt in India

alt-producing areas in India

Salt has been produced all along the Rann of Kutch in the west coast of India for the past 5,000 years. The Rann of Kutch is an extensive marshland which is cut off from the rest of the Indian subcontinent during monsoons when the seas inundate the low-lying areas. However, when the sea water evaporates during summer, it leaves behind a crust of salt which accumulate as salt pans. This salt is collected by laborers called "malangis".

In the eastern coast, salt could be obtained extensively along the coast of Orissa. The salt produced by the salt pans called "khalaris" in Oriya is of the finest quality in all India. There has always been a demand for Orissa salt in Bengal. When the British took over the administration of Bengal, they too felt its need and traded for salt. Gradually they monopolized Orissa salt all over Bengal. To check smuggling and illegal transportation, they sent armies into Orissa resulting in the conquest of Orissa in 1803.

Taxation of salt before British rule

Salt is a commodity which had been taxed in India ever since the time of the Mauryas. Taxes on salt have been prevalent even during the time of Chandragupta Maurya. The "Arthashastra" which describes the different duties of the people says that a special officer called "lavananadhyaksa" was appointed to collect salt tax. Taxes were also imposed on imported salt. However, they accounted for 25 percent of the total value of the saltCite web|url=http://iref.homestead.com/files/Salt.htm|title=The Salt Tax, Excerpted from The Great Hedge of India by Roy Moxham, Harper Collins, India 2001|accessdate=2008-05-08] .

In Bengal, there was a salt tax in vogue during the time of the Mughals, which was 5% for Hindus and 2.5% for Muslims.

Taxation of salt by the British East India Company

In 1759, two years after its victory at the Battle of Plassey, the British East India Company came in possession of land near Calcutta where there were salt works. Utilizing this opportunity to make money, they doubled the land rent and imposed transit charges on the transportation of salt.

In 1764, following the victory at the Battle of Buxar, the British began to control all the revenues of Bengal, Bihar and Orissa. Clive, who returned as Governor-General in 1765 made the sale of tobacco, betel nut, and salt apart from other accessories and essential spices and condiments, the monopoly of the senior officers of the British East India Company. Contracts were given to deliver salt to depots. Merchants then had to buy all their requirements from these depots.

Outrage was experessed by the authorities in England who declared:

Clive responded by offering the Company 12,00,000 per annum from the profits made.

However, the authorities in England were stubborn and due to the pressure exerted by them, monopoly of tobacco and betel nut was stopped on September 1 1767. This was followed by the annulment of the monopoly of salt on October 7 1768.

In 1772, the then Governor-General Warren Hastings brought salt trade once again under the Company's control. However, the salt works were leased out to farmers who agreed to deliver salt at a fixed rate to the Company. The Company sold the leases to the highest bidders. However, corruption dealt a severe blow to the Company that the revenue from salt trade had fallen to 80,000 rupees by 1780. This along with the exploitation of the "malangis" or salt workers by their landlords forced Hastings introduce a new system in 1780.

In 1780, Warren Hastings brought salt trade once again under Government control. The salt works were divided into Agencies each under an Agent. These Agencies were governed by a Controller. This system persisted with minor modifications till India's independence in 1947. According to this new system, the "malangis" sold the salt to the agents at a particular price. Initially, this price was fixed at 2 rupees a "maund" with a tax of 1.1 to 1.5 rupees a "maund". This new system was a success. In 1781-82, the salt revenue was 2,960,130 rupees. The Company received a revenue of 6,257,750 rupees from salt in 1784-85.

From 1788 onwards, the Company took to selling to wholesalers by auction. Due to this move by the British East India Company, the tax increased to 3.25 rupees a "maund". The wholesale price of salt increased from 1.25 rupees to about 4 rupees a "maund". This was an exorbitant rate and few could afford the privilege of having their food with salt.

On 1 November 1804, the British monopolized salt in newly conquered Orissa. In return, they advanced money to the "malangis" against further salt production. As a result, the "malangis" eventually became debtors of the British and were virtually brought down to the level of slaves. The Orissa Zamindars who earlier controlled salt trade were alarmed at the monopolization which resulted in a sudden loss of income and tried to bear upon the "malangi" not to work for the British but to no avail.

In the early 19th century, to make the salt tax more profitable and stop the smuggling, the East India Company established customs check points throughout Bengal. One Mr. G.H.Smith established a "Customs Line". This was the boundary across which transportation was salt involved payment of high customs duties. In the 1840s, a thorn fence was erected along with western frontiers of Bengal province to prevent smuggling of salt. Eventually, after 1857, the thorn fence grew to be 2,500 miles long all along India's eastern frontier and Orissa.

Taxation of salt by the British Raj

The taxation laws introduced by the British East India Company were in vogue during the ninety years of British Raj which followed the demise of the Company. The construction of a fence to prevent smuggling of salt which was commenced during the Company's rule was completed during this period. Sources indicate that by 1858, British India derived 10% of the revenues from its monopoly of saltcite book | title=A History of India | url=http://books.google.co.in/books?id=V73N8js5ZgAC&pg=PT290&dq=british+salt+tax&as_brr=3&sig=gScw3czHTkytpPkAr9UlGIycTF4#PPT290,M1| last=Kulke| first=Hermann| coauthors=Dietmar Rothermund| date=2004| pages=290] . However, by the end of the century, the tax on salt had been considerably reduced. In 1880, income from salt amounted to 7 million poundscite book | title=Hind Swaraj and Other Writings | url=http://books.google.co.in/books?id=oc47gUOPZfcC&pg=PA20&dq=british+salt+tax&as_brr=3&sig=Jpvh3FITF2Z6lwDF5okHaVRCACA| last=Gandhi| coauthors=Anthony Parel| date=1997| pages=20| publisher=Cambridge University Press] .

In 1900 and 1905, India was one of the largest producers of salt in the world with an yield of 1,021,426 metric tons and 1,212,600 metric tonnes respectively.

In 1923, under the viceroyalty of Lord Reading, a bill was passed doubling the Salt tax. However, another proposal made in 1927, was subsequently vetoed. It was one of Finance Member Basil Blackett's first deeds when producing his first budget in February 1923.

alt laws

The first laws to regulate the salt tax were made by the British East India Company.

In 1835, the Government appointed a salt commission to review the existing salt tax. It recommended that Indian salt should be taxed to enable the sale of imported English Salt. Consequently, salt was imported from Liverpool resulting in the increase of salt rates. Subsequently, the Government set up a monopoly on the manufacture of salt by the Salt Act. Production of salt was made an offense punishable with six-months imprisonment. The committee also recommended that Indian salt be sold in maunds of 100. However, they were sold in much lesser quantities. In 1888, the salt tax was enhanced by Lord Dufferin as a temporary measure. Cheshire salt imported from the United Kingdom was available at a much cheaper rate. However, Cheshire salt was of highly inferior quality than those made in India. India's salt imports reached 25,82,050 metric tons by 1851.

In 1878, a uniform salt tax policy was adopted for the whole of India, both British India as well as the princely states. Both production as well as possession of salt was made illegal by this policy. The salt tax which was one rupee and thirteen annas per maund in Bombay, Madras, Central Provinces and the princely states of South India was increased to two rupees and eight annas and decreased from three rupees and four annas in Bengal and Assam to two rupees and fourteen annas and from three rupees to two rupees and eight annas in North India.

Section 39 of the Bombay Salt Act which was the same as Section 16-17 of the Indian Salt Act empowered a salt-revenue official to break-into places where salt was being illegally manufactured and seize the illegal salt being manufactured. Section 50 of the Bombay Salt Act prohibited the shipping of salt overseas. The India Salt Act of 1882 included regulations enforcing a government monopoly on the collection and manufacture of salt. Salt could be manufactured and handled only at official government salt depots, with a tax of Rs1-4-0 on each maund (82 pounds).

Effects of the salt tax

The high price of salt made it unaffordable resulting in a number of diseases arising due to iodine deficiency.

Abhay Charan Das in his "The Indian Ryot" published in 1881 has written:

As late as 1942, when India was embroiled in the Second World War, there were innumerable deaths due to salt deficiency

Early protests against the British Salt Tax

Since the introduction of the first taxes on salt by the British East India Company, the laws have been subjected to fervent criticism. The Chamber of Commerce in Bristol was one of the first to submit a petition opposing the Salt tax:

The Salt Tax was criticized at a public meeting at Cuttack in February 1888. In the first session of the Indian National Congress held in 1885 in Bombay, a prominent Congress member, S.A. Swaminatha Iyer pleaded against the salt taxcite book | title=Indian National Movement and the Raj| last=Bakshi| first=Shiri Ram| date=1989| pages=56| publisher=Criterion Publications| location=India] cite book | title=The Rise and Growth of Economic Nationalism in India: Economic Policies of Indian National leadership, 1880 to 1905| last=Chandra| first=Bipan| date=1966| pages=232| publisher=People's Publication House| location=India] cite book | title=Struggle for Independence| last=Bakshi| first=S R| date=1994| pages=181 & 182| publisher=Anmol Publications| location=India| id=ISBN 8170417147] .

At the Allahabad session of the Indian National Congress in 1888, Narayan Vishnu, a delegate from Poona vehemently opposed the Indian Salt Act. A resolution was passed wherein the delegates present declared 'That this Congress do put on record its disapproval of the recent enhancement of the salt tax as involving a perceptible increase to the burden of the poorer classes, as also the 'partial adoption, in a time of peace and plenty, of the of the only financial reserve of the Empire.' The 1892 session at Allahabad concluded thus: '... We do not know when the tax will be reduced. So that there is every necessity for our repeating this prayer in the interests of the masses, and we earnestly hope that it will he granted before long'. A similar sort of protest was also issued at the Congress session at Ahmedabad. The Salt Tax was also protested by eminent people like Dadabhai Naoroji. On August 14, 1894, he thundered in the House of Commons:

In 1895, George Hamilton stated at a session of the House of Commons that:

When the Salt tax was doubled in the year 1923, it was sharply criticized in a report by the Taxation Enquiry Committee which was published two years later. This raise also evoked sharp reactions from Indian nationalists. In 1929, Pandit Nilakantha Das demanded the repeal of the Salt Tax in the Imperial Legislature but his pleas fell on deaf ears. In 1930, Orissa was close to open rebellion.

Mahatma Gandhi and the Salt Tax

Mohandas (Mahatma) Gandhi wrote his first article on the Salt Tax way back in 1891 in the periodical "The Vegetarian". While in South Africa, he wrote in "The Indian Opinion":

In 1909, Mahatma Gandhi wrote in his "Hind Swaraj" from South Africa urging the British administration to abolish the Salt tax.

Dandi March

"See also Salt sathyagraha"

At the historic Lahore session of the Indian National Congress on January 26, 1929 in which "Purna Swaraj" was declared, a passing reference was made to the infamous and oppressive salt law and resolved that a way should be found to oppose it. In the first week of March 1930, Gandhi wrote to Lord Irwin apprising him of the prevailing social, economic and political conditions in the country.

On March 12, 1930, Mahatma Gandhi embarked on a sathyagraha with 79 followers from Sabarmathi Ashram to Dandi on the Arabian Sea coast. This march known as the "Dandi March" was highly sensationalized by the international press and video clippings and pictures of Mahatma Gandhi relayed in distant corners of the world. Gandhi reached Dandi on April 6, 1930. After his morning bhajan, he waded in to the sea shore and picked up a handful of salt proclaiming that with the handful of salt he was proclaiming the end of the British Empire. The police arrived and arrested thousands of national leaders including Gandhi. Gandhi's bold defiance of the Salt law encouraged other Indians to break the law as well [cite book |last=Gandhi |first=Mahatma |coauthors=Dalton, Dennis |title=Selected Political Writings |publisher=Hackett Publishing |year=1996 |isbn=0872203301 p. 72.] .

Other salt satyagrahas

Soon after the conclusion of the Salt sathyagraha at Dandi, Gandhi intended to lead a pack of sathyagrahis to Dharasana Salt works in Gujarat but was arrested by the police. A few days later, Congress leader Abbas Tyabji was also arrested. So, the mantle fell upon Sarojini Naidu to lead the sathyagrahis at Dharasana. The sathyagrahis marched to Dharasana where they were confronted by a deportment of the police who stopped them. The non-violent sathyagrahis proceed to confront the police and were beaten down. American journalist Webb Miller who witnessed the gruesome scene counted around 320 bodies.

In April 1930, Congress leader Chakravarti Rajagopalachari lead a salt sathyagraha in Madras province. The satyagrahis reached Vedaranyam on the east coast of India on April 28 where they prepared salt illegally on April 30Cite web|url=http://www.thehindu.com/2008/04/30/stories/2008043058730300.htm|title=The day Rajaji broke the Salt Law |accessdate=2008-05-09|author=Syed Muthahar Saqaf ] Cite web|url=http://www.hinduonnet.com/mag/2005/04/10/stories/2005041000240400.htm|title=Marathon march |accessdate=2008-05-09|author=La. Su. Rengarajan] .

Aftermath

The British Raj turned deaf ears to the massive protests against the Salt tax which rocked the country during the early 1930s. The Dandi March was only partially successful in the sense that though it forced the British rulers to come to the discussion table the Salt tax continued to remain. It was only on April 6 1946 that Mahatma Gandhi made a formal request to Sir Archibald Rowlands, the finance member of the Viceroy's Executive Council to remove the oppressive Salt tax. Sir Rowlands formally issued an order abolishing the Salt tax but the order was vetoed by the Viceroy Lord Wavell. The Salt Tax continued to remain till October 1946 when it was abolished by the Interim Government of India headed by Jawaharlal Nehru.

Notes