Mumbai: British-controlled opium production in India was an important feature of the empire, especially for its ability to extract wealth from China. However, research now suggests that this opium production could have also hurt India’s development. In a new study, Jonathan Lehne of the Paris School of Economics shows that the social and economic effects of opium production under British rule continue to play out in some regions of India. The study finds that those parts of Bihar, Jharkhand and Uttar Pradesh where opium was produced under British rule lag behind much of India in terms of income, literacy and access to public goods. And Lehne argues that state-run extraction of opium rents contributed to these regions’ current underdevelopment.

Studying the geographic suitability for poppy cultivation and administrative restrictions that confined production to specific areas, he shows that areas with opium production are associated with lower literacy and lower rates of public good provision compared to bordering areas, with similar characteristics, but where opium cultivation was prohibited.

Lehne attributes these effects to the “natural resource curse" where an abundant commodity providing a large share of government revenue can undermine the incentives for public good provision. Using local administrative data from the late 19th and early 20th century, Lehne finds that greater opium cultivation was associated with less per capita public spending on health and education by the British administration.

However, opium cultivation is associated with a greater concentration of police officers. As such, extraction of opium rents and policing the state’s monopoly power became a governmental priority in these regions, while the incentive to invest in the wider economy took a backseat. This, according to Lehne, is why the adverse effects of opium production during British rule have persisted long after the opium agencies were shut down.

Also read: An opium curse? The long-run economic consequences of narcotics cultivation in British India