Indian Economy On The Eve of Independence: Colonial Rule

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Indian Economy on the Eve of Independence

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British Rule in India from 23 June 1757 to 15 August 1947. The foundatioin
of British Rule in India was laid by Battle of Plassey, fought in 1757. It is
a victory of British East India Company. Over the Nawab of Bengal (Siraj
ud-Daulah) and his french allies on 23 June 1757 under the leadership of
Robert clive.
The basic purpose of the British Colonial Rule over India was to use
the resources of India for the development of Britain in the process of
industrialisation.
They supplied raw-material from India to Britain for the betterment and
advancement of their home country.
They serve Indian economy as a feeder economy due to this India's natural
as well as human resources badly damaged.
Colonial Rule
The policy or practice of a country (wealthy or powerful) maintaining or
extending its control over other countries for the purpose of exploting
resources of dominated country and development of ruling country.
Backward Economy
Backward economy is the economy which is characterised by low standard
of living, poor health services, high death rates, high birth rates, low per
capita income and majority of populatioin is depending on agriculture for
subsistence.
Developing Economy
A country with a relatively low industrial base and depending on
agriculture reduced. Their per capita income is rising and in terms of
transformation from agriculture sector to industrial and service sector.
This is also called less developed economy.
Stagnant Economy
A country having slow growth rate or no growth rate is considered as a
stagnant economy.
Vibrant Economy
A vibrant economy is characterised by dynamic changes in terms of
emerging role of technology in the process of production also. Productioin
is more market oriented and profit motive.
Before the Advent of British Rule, Indian economy was characterised
with the following features:
(i) Prosperous economy: Country was independent no dependence on
foreign countries for survival, self reliant and prosperous economy.
(5)
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(ii) India was rich in terms of food grain (Rice, Wheat, Maize, Pulses and
other food crops).
(iii) Agrarian economy: Majority of population engaged in agriculture
for their livelihood around two-third population.
(iv) Well known Hindicraft industries: India was well known for its
handicraft industries. They were popular in fields of cotton and silk
textiles, metal and precious stone works, etc. Many craftsman getting
employment due to those handicraft industries. Export of handicarft
products was high. It enjoyed a worldwide market due to its reputation
of fine quality of material used and the high standards of craftmanship.
State of Indian Economys
Different sectors on the eve of independence.
(i) Agricultural sector
(ii) Industrial sector
(iii) India foreign trade
(iv) Demographic condition
(v) Occupatioinal structure
(vi) Economic & social infrastructure
(I) Agricultural Sector
Majority of people engaged in agriculture still India was not self sufficient
in food and raw material for Indian industries. India was backward in
agricultural sector on the eve of independence. Here are the following
reasons.
(i) Land Settlement System: Under this system British Govt. set a
triangular relationsip among the govt. owner of the soil and tiller of the
soil. This was popularly known as Zamindari system of land revenue.
According to this system Zamindar’s were recognised the owner of the
soil. They have to pay a fixed sum of the Govt. as land Revennue, and
they are free to extract as much from the Tiller of the Soil (Peasants).
The main interest of zamindards was to collect lagaan regardless the
economic condition of cultivator. Both the Zamindar’s & colonial Govt.
did nothing to improve agriculture sector as well as the conditiion of
farmers.
This Zamindari system is the main reason for stagnation in agricultural
sector during British Rule.
(ii) Commercialization of Agriculture: It refers to a shift from cultivation
for self consumption to cultivation for market. Farmers were forced to
shift to cash crops from food crops. They are offered high price for cotton
or jute because they are required by Britishers for British industries.
Peasants purchase their food requirement from shops in towns and this
fall in production of food crops was responsible for frequent famines in
India during British days.
Indian Economy on the Eve of Independence 7

(iii) Low level of Productivity: It means output per hectare of land


was extremely low. India’s productivity was very low despite large area
under cultivation. Low levels of technology, lack of fertilizers and lack of
irrigation facilities leads to low level of 2productivity during British Rule.
(iv) Scarcity of Investment: There was no investments made by any
one in agricultural sector farmers depends upon rainfall. There were no
irrigation facilties and no technology used in agriculture this leads to
scarcity of investment and many farmers changed their cropping pattern
from food crops to commercial crops.
II. Industrial Sector
Before the advent of British Rule India was particularly well known for its
handicraft industries but British Rule exploit our industries.
These following points explains how Britisher’s exploit our world famous
handicraft industries. They transformed the country in to a supplier
of raw materials and consumers of finished industrial products from
Britain.
(i) Decline in handicraft industry: The primary motive of Britisher’s is
to get raw materials from India at cheaper price and bring finished goods
from Britain. They want to promote Britain finished goods in India and
want to exploit handicraft. They made a discriminatory tariff policy. This
policy allowed free export of raw materials from India and free import of
final goods of British industry to India. But heavy duty was imposed on the
export of Indian handicrafts. This leads to decline of Indian handicrafts,
both in the domestic market as well as the export market.
(ii) Adverse effects of decline of Handicraft Industry:
(a) High level of unemployment: declined in handicraft industry leads to
unemployment on a mass scale. People shift to agriculture and there was
over-crowding in agriculture.
(b) Import of finished goods: Indian made products are high priced hence
it could not stand in front of British low priced goods. This encouraged
the import of manufactured goods from Britain.
(iii) Lack of capital goods industries: There was hardly any capital
goods industries to promote industrialisation in India. Capital goods like
Machineries, tools etc. Which are used in manufacturing of other goods.
Britishers wants Indian dependency on Britain goods so they did noting
to improve industralisation in India.
(iv) Low Contrinbution to GDP: due to lack of industrilisatiion in India
its contribution to GDP was very low.
(v) Limited Role of Public Sector: There was a limited role of public
sector this leads to backwardness of industrial sector. The public sector
operates only railways, power generation, communications, ports and
few other departmental undertakings.
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III. Foreign Trade


Before advent of British Role India export handicraft to all over the world
at that time India was a well known exporter of finished goods (such as
fine cotton, silk , textiles, iron goods, wooden goods and precious stones).
But the British Rule in India converted India into a net exporter of raw
material and importer of finished goods.
State of India foreign Trade during eve of independence as follows.
(i) Exporter of Primary products and importer of finished goods: owing
to colonial exploitatioin India became on exporter of raw silk, cotton,
wool, sugar, indigo, jute, etc. and importer of finished goods produced by
the British industry.
(ii) Monopoly control of India’s foreign trade: Britishers have monopoly
control on the export & import of India.
Suez canal built in 1859 and completed in 1869 which connects
mediterranean sea and red sea by Egypt govt. It helps Britishers to take
more raw-materials from India at low cost to Britain. The canal provides
a direct route for ships operating between Britain and India due to this
nearly 50% of India’s foreign Trade was restricted to Britain and rest was
allowed to China, Srilanka and Iran.
(iii) Drain of export surplus during British Rule: as we all know due
to discrimnatory Tariff policy India became exporter of primary product
and importer of finished goods. This leads to generate export surplus but
these funds are used by Britishers to set up colonial government, to meet
expense on war fought by British govt. and to import invisible items.
Export surplus was not used as investment for future growth this also
leads to backward of Indian economy.
IV. Demographic Condition: 
Demographic condition of India was very bad. Year 1921 was known
as year of great divide. Before 1921, The population was not stable,
sometimes it increased and at other times it decreased. Hence after
this year there has been considerable and continuous increase in the
population 1st official census was conducted in year 1881. It was carried
out after every 10 year last census was in 2011.
The following points shows the demographic condition of India on the eve
of independence.
(i) High Birth Rate & Death Rate:  Birth rate refers to number of children
born per thousand in a year. Death rate refers to number of people dying
per thousand persons in a year. Both birth and death rate were very high
nearly 48 and 40 per thousand respectively.
Current Birth Rate 19 per thousand (2016)
Current Death Rate 7 per thousand (2016)
Current Population growth rate 1.19% (2016)
(ii) Low literacy rate: Literacy rate was less than 16% out of which
female literacy rate was 7%.
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Current literacy rate 74.04% of which male literacy rate is 82.14% and
female literacy rate is 64.46%. Overall literacy rate high in Tripura as
94.65% and lowest in Bihar 63.82%.
(iii) Low life expectancy: There was no medical facilities, poor health
condition continuous famines leads to low life expectancy i.e. 44 years.
Presently it is 68 years.
(iv) High infant mortality rate:  It refers to number of deaths of children
before attaining the age of one year in every 1000 live births in a year.
Due to lack of immunization and poor health facilities of women. It was
low as 218 per thousand. Currently it is 44 per thousand.
V. Occupational Structure
It refers to distribution of working population across primary, secondary
and tertiary sectors of the economy.
In 1951
(i) Primary sector 72.7
(ii) Secondary sector 10.1
(iii) Tertiary sector 17.2
(i) Dependency on Agriculture: nearly 75% of work in population
engaged in agriculture sector rest 25% engaged in manufacturing and
service sector.
(ii) Unbalanced growth:  Growth is said to be balanced when all sectors
of the economy are equally developed. In India there is predominance in
Agriculture sector only.
(iii) Regional variation: Few states of Tamilnadu, Andhra Pradesh,
Kerala, Karnataka, Maharashtra and West Bengal witnessed a decline
in dependence of workforce on the agriculture sector and shift to
manufacturing and service sector. However states such as Odisha,
Rajasthan and Punjab remains work in agriculture sector.
VI. Infrastructure
Infrastructure refers to basic systems and services that a country needs
in order to function properly like, roads, airports, railways, energy,
utilities, communication, education, healthcare and social. It is not
denying the fact that there was some infrastructural development in the
areaof transport and communication.
Railways:  Railways of course, was a major development by Britishers
but for the benefit of Britain. Railway introduced in 1850 and 1st train
from Mumbai (Boree Bunder) to thane 33.8 km in 57 minutes on 16th
April, 1853.
After commercialisation of agriculture they need to collect raw material
from rural villages and send it to Britain. So railways introduced it broke
geographical and cultural barriers. It is also true that construction of
railways led to huge economic losses to the Indian economy.
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Impact of Railways in India:


1. Railways help people to break the barriers of distance and undertake
long journeys.
2. Helps in long distance movement of goods.
3. It facilitated expansion of the market. Thus led to rise in export and
import.

(ii) Communication:  Posts and telegraphs were the most popular means
of communication. Electric telegraph used in India to maintain law and
order. Postal services are basically used for public purpose.
*Positive Contributions of British Rule:
1. Self sufficiency in food grain production:  Due to commercialisation
in agriculture peasants produce goods for sale it leads to more output.
2. Better means of transportation: Development of roadways and
railways gives a better means of transportation to Indians it opens a
growth opportunity also.
3. Shift to monetary economy:  British rule helped Indian economy to
shift from barter system to monetary system.
4. Check on famines: Due to good transportation facilities foods are
supplied to the affected areas in case of draughts.
5. Effective administrative set up:  They had an effective administratioin
set up which they left as a legacy. It helps our politicians and planners.

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