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    Indian Economy On The Eve of Independence

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    Harini B
    The Indian economy on the eve of independence was in poor shape due to British colonial rule. [1] The British framed policies that favored Britain and unjustly enriched themselves at India's expense, leaving India with a crippled economy when they left in 1947. [2] Agriculture was the main source of livelihood but was facing stagnation under colonial rule due to factors like the land revenue system, lack of resources for farmers, and commercialization of crops. [3] Industry had also declined, as the British followed a policy of de-industrialization that destroyed India's traditional handicrafts and promoted only industries that enlarged Britain's market in India like railways.

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    Indian Economy On The Eve of Independence

    Uploaded by

    Harini B
    2K views12 pages
    The Indian economy on the eve of independence was in poor shape due to British colonial rule. [1] The British framed policies that favored Britain and unjustly enriched themselves at India's expense, leaving India with a crippled economy when they left in 1947. [2] Agriculture was the main source of livelihood but was facing stagnation under colonial rule due to factors like the land revenue system, lack of resources for farmers, and commercialization of crops. [3] Industry had also declined, as the British followed a policy of de-industrialization that destroyed India's traditional handicrafts and promoted only industries that enlarged Britain's market in India like railways.

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    Features of Indian economy

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    Indian economy on the eve of independence

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    The Indian economy on the eve of independence was in poor shape due to British colonial rule. [1] The British framed policies that favored Britain and unjustly enriched themselves at India's expense, leaving India with a crippled economy when they left in 1947. [2] Agriculture was the main source of livelihood but was facing stagnation under colonial rule due to factors like the land revenue system, lack of resources for farmers, and commercialization of crops. [3] Industry had also declined, as the British followed a policy of de-industrialization that destroyed India's traditional handicrafts and promoted only industries that enlarged Britain's market in India like railways.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    2K views12 pages

    Indian Economy On The Eve of Independence

    Uploaded by

    Harini B
    The Indian economy on the eve of independence was in poor shape due to British colonial rule. [1] The British framed policies that favored Britain and unjustly enriched themselves at India's expense, leaving India with a crippled economy when they left in 1947. [2] Agriculture was the main source of livelihood but was facing stagnation under colonial rule due to factors like the land revenue system, lack of resources for farmers, and commercialization of crops. [3] Industry had also declined, as the British followed a policy of de-industrialization that destroyed India's traditional handicrafts and promoted only industries that enlarged Britain's market in India like railways.

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    © All Rights Reserved
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    of 12

    Indian economy on the eve of independence

    Economy of a country includes all production, distribution or economic activities that relates
    with people and determines the standard of living. On the eve of independence Indian economy
    was in a very bad shape due to the presence of British colonial rule.

    The Britishers generally framed policies that favoured England. The only purpose of Britishers
    was to unjustly enrich themselves at the cost of India’s economic development. Thus in 1947
    when British transferred power back to India, we inherited a crippled economy.

    India’s National and per capital income under colonial rule there were no efforts from the part
    of the colonial government to measure the national and per capital income of India. Some
    individual attempts were made to measure such incomes but produced conflicting and
    inconsistent results contribution of VKRV Rao and Dadabhai Naroji are considered are
    considered very significant in this context.

    Low Economic growth under colonial rule

    India had an independent economy before the arrival of British rule. But the Britishers,
    dominated it for over a period of 200 years. Britishers framed policies that protected and
    promoted the economic interests of their own country. They transformed India into supplier of
    raw materials and consumer of finished goods from the factories of Britain. Such policies
    affected Indian economy very adversely.

    State of Agriculture sector

    Agriculture was the main source of livelihood for most of the people of India, and about 85%
    of the country’s population loved mostly in villages and derived livelihood directly or indirectly
    from agriculture. In spite of such a large segment of the population being dependent of
    agriculture, either directly or indirectly, this sector was facing stagnation and constant
    deterioration, as is brought forward through the following points.

    1. Low level of productivity:


    Productivity, i.e output per hectare of land was very low. This led to a low level of
    output, in spite of a large area under cultivation.
    2. High degree of vulnerability:
    Agriculture was vulnerable to climatic factors and mostly affected by erratic rainfall.
    Poor rainfall generally led to a low level of output and also to crop failures. No effort was
    made by British government to provide permanent source of irrigation facilities for the
    farmers.
    The reasons for stagnation of agricultural sector were:
    i) Land revenue system:
    The Britishers introduced the zamindari system. The zamindars were
    recognized as permanent owners of the soil. Zamindars were to pay a fixed sum to
    the government as land revenue and they were absolutely free to extract as much
    from the tillers of the soil as they could. The main interest was in rent collection
    regardless of the economic conditions of cultivators and this caused misery and
    social tension among the latter. Apart from this there are two more systems
    namely the Ryotwari and Mahalwari were prevalent.
    ii) Lacking of resources:
    Because the tillers had to pay huge amount of rent, referred to as ‘Lagaan’, they
    were not left with any surplus to be able to provide for resources needed in
    agriculture in the form of fertilizers or providing for irrigation facilities.
    iii) Commercialisation of Agriculture:
    Commercialisaiton of agriculture refers to shift from cultivation for self –
    consumption to cultivation for sale in the market, It also refers to cultivation of
    cash-crops like cotton, indigo,etc,. Due to commercialization of agriculture, there
    was some evidences of a relatively higher yield of cash crops in certain areas of the
    country. But this could not help in improving the conditions of Indian farmers.

    State of Industrial sector

    In the Pre-Britiesh period, India was particularly well-known for its handicraft industries, in
    the fields of cotton and silk textiles, metal and precious stone works, etc., These products
    enjoyed a worldwide market based on the reputation of the fine quality of material used and the
    high standards of craftsmanship.
    But the Britishers followed a policy of systematic de-industrialization by creating
    circumstances conductive to the decay of handicraft industry and not taking any steps to promote
    modern industry and reduced India to a mere exporter of raw material and importer of finished
    goods.

    1. Decay of handicraft industry:


    The traditional handicraft industry in India enjoyed worldwide reputation, but the British
    misrule in India led to the decline of Indian handicraft industry. The Britishers adopted
    the following policies to systematically destroy the handicraft industry.
    a. Discriminatory tariff policy of the state:
    The Britishers followed a discriminatory tariff policy by allowing tariff free exports
    of raw material from India( to provide for the requirements of their industries in
    Britain) and tariff free import of British Industrial products(to promote British goods
    in India), but placed a heavy duty on the export of handicraft products.
    So, Indian handicraft products started loosing their domestic as well as foreign
    markets.
    b. Competition from machine-made products:
    Machine-made products from Britain were cheap and better in quality than the
    handicraft products. This competition forced many a handicrafts to shut down their
    business.
    c. Introduction of railways in India:
    The Britishers introduced railways in India, to expand the market of its market of
    its low priced industrial products. Consequently, the demand of high-priced
    handicraft products started to fall, thus leading to the downfall of handicraft
    industry.
    2. Slow growth of modern industry:
    Under second half of 19th century modern industry showed slow growth. This
    development was confined to the setting up of cotton and jute textile mills. Subsequently
    the iron and steel industries began coming up in the beginning of the 20 th century. In this
    context, the Tata Iron and Steel Company(TISCO) was incorporated in August, 1907 in
    India. It established its first plant in Jamshedpur(Bihar, at present Jharkhand)
    i) Limited growth of public sector enterprises:
    The public sector enterprises such as railways, power, post and telegraph were
    confined to areas which would enlarge the size of market for British products in
    India.
    ii) Lopsided industrial structure:
    The industrial growth was lopsided, in the sense that consumer goods industry was
    not adequately supported by capital goods industry.
    iii) Lack of basic and heavy industries:
    No priority was given for the development of basic and heavy industries. Tata Iron
    and Steel mills was the only basic industry in India. Textile industry in Bengal
    Muslin is a type

    State of Foreign trade:


    India has been an important trading nation since ancient times. But when the restrictive policies
    of commodity production, trade and tariff were imposed by the colonial government, it adversely
    affected the structure, composition and volume of India’s foreign trade.

    1. Exporter of primary products and importer of finished goods:


    Under the colonial rule, India became an exporter of primary products such as
    raw silk, cotton, wool, sugar, indigo, jute,etc., and an importer of finished
    consumer goods like cotton, silk and woolen clothes and capital goods like light
    machinery produced in the factories of Britain.
    2. Britain’s Monopoly control:
    Britian maintained a monopoly control over India’s exports and imports. Due to
    this more than half of India’s foreign trade was restricted to Britain while the rest
    was allowed with a few other countries like China, Ceylon(Sri Lanka) and
    Persia(Iran).
    3. Drain of India’s wealth:
    An important characteristic of foreign trade throughout the colonial period was
    the generation of a large export surplus came at a huge cost to the country’s
    economic several essential commodities like food grains, kerosene were scarcely
    available in the domestic market.

    State of occupational structure:


    During the colonial period, the occupational structure of India exhibited its backwardness.
    The agricultural sector accounted for the largest share of the work force which remained at a
    high of 70-75% of the work force and the manufacturing and services sectors accounted for only
    10 and 15-20% respectively.

    There existed a growing regional disparity with few states such as Orissa, Rajasthan and
    Punjab witnessing an increase in agricultural workforce while the states which were the parts of
    Madras presidency. Bombay and Bengal witnessed a decline in the percentage of work force
    dependent on agriculture.

    State of Infrastructure:

    Infrastructure comprises of such industries which help in the growth of other industries.

    1. Road:
    Roads constructed before independence were not fit for modern transport. It was very
    difficult to reach rural areas during rainy season. The roads were built only to serve the
    purpose of mobilizing the army within India & transporting raw materials from the
    country side to the nearest railway station or the port for exporting it.

    2. Railways:
    British rules introduced railways in India in 1850 & it began its operations in 1853. It sis
    considered as one of the important contribution of Britishers.

    (1) It enabled people to undertake long distance travel & thereby break geographical &
    cultural barriers.
    (2) It fostered commercialization of Indian agriculture which adversely affected the self
    sufficiency of the village economies in India.

    So the social benefits provided by the Railways was outweighed by the country huge
    economy loss.

    3. Water & Air Transport:


    The colonial rulers took measures for the development of water transport. The inland
    waterways at times also proved uneconomical as in the case of the coast canal on the
    Orissa coast. The main purpose behind their development was to serve British Colonial
    interest.
    The colonial government also showed way to the air transport in 1932 by establishing
    Tata Airlines. Thus, in way it inaugurated the aviation sector in India.

    4. Communication :
    Modern Postal system started in India in 1837. The first telegraphy line was opened in
    1857. The introductions of the expensive system of electric telegraph in India served the
    purpose of maintain law & order.

    Demographic Condition :

    Various details about the population of British India were first collected through a
    census in 1881. Before 1921, India was in the first stage of demographic transition. The
    second stage began after 1921. However neither the total population of India nor the rate
    of population growth at this stage was very high. Though suffering from certain
    limitations, it revealed the unevenness in India population growth. The population grew
    at the rate of 1.2% up to year 1951.
    On the eve of independence the demographic condition was as follows;
    I) The overall literacy level was less than 16%
    II) The female literacy level was at a negligible low rate of about 7%
    III) Public health facilities were either unavailable to large chunks of population or
    when available, were highly inadequate. Infant mortality rate was 218 per
    thousand in contrast to present infant mortality rate of 63 per thousand.
    IV) Life expectancy was very low 44years in contrast to the present 66 years.
    V) Both birth rate and death rate were very high at 48 and 40 per thousand of persons
    respectively.

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