Indian Economy On The Eve Of Independence Flashcards
1.Origin of British rule
2.Basic purpose of British rule
3.Indian economy before the british rule
4.National income and percapita income of the people during colonialism
5. Meaning of colonialism
6.textile industry in bengal
1.The foundation of British Empire in India was laid by Battle of Plassey, fought in 1757.
2.[The main purpose of the British rule in India was to use Indian economy as feeder economy for the development of British economy. British colonial rule tempered the Indian economy very badly. They exploited India’s natural as well as human resources for the glory of their own country.
3. Prosperous Economy: India was an independent, self-reliant and prosperous economy.
Agrarian Economy: Agriculture was the main source of livelihood for most people and it engaged about two-third of the total population.
V Well Known Handicraft Industries: India was also known for its handicraft industries in the fields of cotton and silk textiles, metal and precious stone works, etc. Handicraft products enjoyed a worldwide market due to its reputation of fine quality of material used and the high standards of craftsmanship.
- However, no sincere attempt was made by the British Government to estimate India’s national and per capita income.
• Some individual attempts were made by experts like Dadabhai Naoroji, William Digby, Findlay Shirras, V.K.R.V. Rao and R.C. Desai. But, all these estimates produced conflicting
and inconsistent results.
However, estimates of Dr. Rao on national and per capita incomes were considered very significant.
° Most of the studies revealed that country’s growth of aggregate real output during the first half of the twentieth century was less than 2% and only 0.5% growth in per capita output per year.
- Colonialism refers to a system of political and social relations between two countries, of which one is the ruler and the other is its colonyThe ruling country not only has political control over the colony, but it also determines the economic policies of the dominated country. In case of India, the unequal relationship between the colony (India) and the ruling country
(Britain) resulted in underdevelopment of India.
- Muslin, a cotton fabric of plain weave, is a type of cotton textile which had its origin in Bengal (now Bangladesh), specially in places in and around Dhaka (spelled as ‘Dacca’ during the pre-independence period).
• ‘Daccai Muslin’ had gained worldwide fame as an exquisite type of cotton textile and was exported to Europe, Middle East, and other markets, in the 17th and 18th centuries.
• The finest variety of muslin was called malmal and foreign travellers also used to refer to it as malmal shahi or malmal khas, implying that it was worn by, or fit for, the royalty.
Agriculture sector in colonial period and reasons for its stagnation
India’s economy under the British colonial rule was overwhelmingly rural and agricultural in character.
• Nearly 85% of the country’s population lived mostly in villages and derived livelihood, directly or indirectly from agriculture.
Even with this large proportion of population engaged in agriculture, the country was not self-sufficient in food and raw materials for industry.
Main Reasons for Stagnation in Agricultural Sector
The stagnation in the agricultural sector was caused due to the following reasons:
1. Land Settlement System:
Zamindari System (also known as Permanent Settlement System) was introduced by Lord Cornwallis in
1793. The basic aim for starting this was to increase the revenue of Colonial Government.
Under the system, zamindars were recognized as owners of the land and were given the rights to collect the rent (Lagaan) from the farmers. Thus, the zamindars were to function as intermediaries between the cultivators and the British Government.
• This system was based on exploitation as zamindars were allowed to extract as much rent or lagaan as they wished. So, zamindars imposed exorbitant lagaan and the rates of lagaan were so high that farmers were not left with enough foodgrains to feed themselves.
• This made the farmers economically and physically weak. Zamindars were only interested in pleasing the British Government and did nothing to improve the condition of agriculture.
- Commercialisation of agricultural-During the British rule, agriculture was commercialized to cater to the needs of the British industries for necessary raw materials.
• The British industrialists were always in need of raw materials like cotton, jute, groundnut, sugarcane, etc. to keep their factories running.
• By offering high prices, the Indian peasants were attracted to production of commercial crops instead of food crops.
• The extent of commercial agriculture went so far as to make many peasants purchase their food requirements from shops in towns.
• This fall in production of food crops was responsible for frequent famines in India during the British days. However, this did not improve the economic condition of farmers because instead of producing food crops, they were producing cash crops, which were to be ultimately used by the British Industries. - Low level of Productivity: Low levels of technology, lack of irrigation facilities and negligible use of fertilisers resulted in low level of productivity.
• The cultivator had neither the means nor any incentive to invest in agriculture.
• The zamindar had no roots in the villages, while the British rule spent little on agricultural, technical or mass education.
• All this made it difficult to introduce modern technology, which caused a perpetually low level of productivity.
- Scarcity of Investment: India’s agriculture was facing scarcity of investment in terracing, flood-control and drainage. Although some farmers changed their cropping pattern from food crops to commercial crops, a large section of tenants, small farmers and sharecroppers* neither had resources and technology nor had incentive to invest in agriculture.
*Sharecropping is a form of agriculture in which a landowner allows a tenant to use the
land in return for a share of the crops produced on their portion of land. - Adverse Effects of Partition
India’s agricultural production received a further set back due to the country’s partition at the time of independence.
• A sizeable portion of the undivided country’s highly irrigated and fertile land went to Pakistan.
• Almost, the whole of jute producing area became part of East Pakistan (now Bangladesh).
India’s jute goods industry, which had enjoyed a world monopoly so far, suffered heavily for lack of raw material.
Industrial sector during colonial period and reasons for its low growth
1.4 INDUSTRIAL SECTOR
Although agriculture had dominated the Indian economy during the pre-British period, but some Indian industries, producing certain special products, enjoyed worldwide reputation.
India was particularly well known for its handicraft industries.
Like agriculture, India could not develop a sound industrial base under the British rule. The poor state of Industrial sector during the British rule is illustrated in the following points:
1. De-industrialisation - Decline of Handicraft Industry: British Government systematically destroyed Indian handicraft industries and no modern industrial base was allowed to come up. The primary motive of British rule behind the de-industrialisation was two-fold:
(i) To get raw materials from India at cheap rates to be used by upcoming modern industries in Britain;
(i) To sell finished products of British industries in Indian market at higher prices.
The two-fold policy of British rule was enforced to ensure the maximum advantage of their home country.
Reason for Decline of Handicraft Industry
The main reason for decline of India’s renowned handicraft industry was the introduction of Discriminatory Tariff Policy’ by the colonial government, according to which:
• There was Duty-free export of raw materials from India; and
•There was Duty-free import of final goods of British industry to India;
But, heavy duty was imposed on the export of Indian handicrafts.
As a result, Indian markets were full of finished goods from Britain which were low priced. It led to the decline of Indian handicrafts, both in the domestic market as well as in the export market.
2. Adverse effects of decline of Handicraft Industry: Decline of handicraft industries adversely affected the Indian economy in the following ways:
(i) High Level of Unemployment: The decline of Indian handicrafts resulted in unemployment on a mass scale. The displaced artisans were forced to take up agriculture for their livelihood. This increased the burden of population on villages and over-crowding in agriculture.
(i) Import of Finished Goods: The Indian made goods could not withstand the foreign competition of machine made cheap goods. It resulted in the new demand in Indian consumer market, which was not fulfilled through locally made goods. Rather, this demand was profitably met by increasing imports of manufactured goods from
Britain.
3. Lack of Capital Goods Industries: Capital goods industry refer to those industries which can produce machine tools, which are, in turn, used for producing articles for current consumption.
During the British rule, there was hardly any capital goods industry to promote further industrialisation in India.
• British rulers did not pay any attention for their promotion as they always wanted Indians to be dependent on Britain, for the supply of capital goods and heavy equipments.
4. Low contribution to Gross Domestic Product (GDP): The growth rate of the new industrial sector and its contribution to the GDP remained very small.
5. Limited role of Public Sector: The limited area of operation of the public sector was also a significant reason for drawback of the industrial sector. The Public sector remained confined only to the railways, power generation, communications, ports and some other departmental undertakings.
Finally, it can be concluded that India remained backward in the industrial sector during the British rule.
The state of indian foreign trade during British rule
Explain about suez canal
Exporter of Primary Products and Importer of Finished Goods: 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 woollen clothes and capital goods like light machinery, produced in the British Industries.
2. Monopoly Control of British Rule: British Government maintained a monopoly control over India’s exports and imports.
• More than ½ of India’s foreign trade was restricted to Britain while the rest was allowed with few other countries like China, Ceylon (Sri Lanka) and Persia (Iran).
• The opening of the Suez Canal in 1869 served as a direct route for the ships operating between India and Britain.
3. Drain of Indian wealth during British rule: Under the British rule, India became an exporter of primary products (raw material) and an importer of finished goods. There was huge export surplus due to excess exports. However, export surplus was used:
(i) To make payments for expenses incurred by an office set up by the colonial government in Britain.
(ii) To meet expenses on war fought by the British government. (in) To import invisible items.
Suez Canal is an artificial waterway running from north to south across the Isthmus of Suez in north-eastern
Egypt.
• The opening of Suez Canal in 1869 reduced the cost of transportation and made access to the Indian market easier.
• The canal provided a direct trade route for ships operating between Britain and India and avoided the need to sail around Africa.
• Strategically and economically, it is one of the most important waterways in the world.
In 1869, the Suez Canal was opened, greatly reducing the distance between Britain and India by some 5,100 miles as ships no longer needed to travel round southern Africa.
Demographic conditions of india under british rule and why is 1921 called as year of great divide
High Birth Rate and 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 rate and death rate were very high at nearly 48 and 40 per thousand respectively.
2. Extremely Low Literacy rate: Literacy rate refers to total number of literate persons, expressed as a percentage of the total population. The overall literacy level was less than 16 per cent. Out of this, the female literacy level was at a negligible low of about 7 per cent.
3. Poor Health facilities: Public health facilities were either unavailable to large mass of population or, when available, were highly inadequate. As a result, water and air-borne diseases were widespread and took a huge toll on life.
- High Infant Mortality Rate: Infant mortality rate refers to number of infants dying before reaching one year of age per 1,000 live births in a year. The infant mortality rate was quite alarming - about 218 per thousand, in contrast to the infant mortality rate of 44 per thousand in 2011.
- Low Life Expectancy: Life Expectancy refers to the average number of years for which people are expected to like. Life expectancy was also very low - 44 years, in contrast to the present 68
yedro. - Widespread Poverty: There was no reliable data about the extent of poverty. But, there is no doubt that extensive poverty prevailed in India during the colonial period. The overall standard of living of common people in India was very low and there was widespread poverty in the country.
Before 1921, India was in the first stage of demographic transition with very high birth and high death rates. The death rate luctuated from year to year, and as a consequence, the size of population remained almost stationary.
With the beginning of decline in death rates, the population of the country entered the 2nd stage of ransion, The second stage of transtion began after 1921. From the year 1921 onwards, Indias population never declined and recorded a consistent rise. Due to this reason, 1921 is called Year of Great Divide’.
Define occupational structure and the structure of india while colonial rule
Occupational structure refers to distribution of working persons across primary, secondary and tertiary (service) sectors of the economy. So, all the production units of an economy are grouped into three broad
sectors:
Predominance of Primary Occupation: The agricultural sector accounted for the largest share of workforce with approximately 72%. The manufacturing and service sectors accounted for 10% and 18% respectively..
2. Regional Variation: Another striking aspect was the growing regional variation.
• The states of Tamil Nadu, Andhra Pradesh, Kerala, Karnataka, Maharashtra and West Bengal witnessed a decline in dependence of workforce on the agricultural sector with a commensurate increase in the manufacturing and service sector.
• However, during the same time, there had been an increase in the share of workforce in agriculture in states such as Orissa, Rajasthan and Punjab.
Positive contributions of british rule
British Rule also had some positive effects on the Indian economy. They are discussed as under
1. Self sufficiency in food grain production: Commercialization of agriculture initiated by
British Government resulted in self-sufficiency in food grain production.
2. Better means of transportation: Development of roads and railways provided cheap and
rapid transport system and opened up new opportunities of economic and social growth
3. Check on Famines: Roads and railways worked as a great check on the occurrence and impact of famines as food supplies could be transported to the affected areas in case of droughts.
4. Shift to Monetary Economy: British rule helped Indian economy to shift from barter system of exchange (exchange of goods for goods) to monetary system of exchange.
5. Effective administrative setup: The British Government had an efficient administration system, which served as a ready reckoner for Indian politicians.
Infrastructural development and reasons for development by colonial government
The state of infrastructure as inherited from the British rule, is discussed below:
1. Roads: The coloman administration could not accomplish much on construction of road. due to scarcity of funds.
due to scarcity of funds built primarily served the interests of mobilising the army and shifting raw materials.
. Initted wawmaterained an acute shortage of all weather roads to reach out to rugs areas during the rainy season. As a result, people living in these areas suffered bad, during natural calamities and famines.
2. Railways: The most important contribution of the British rule was to introduce railwavs in India in 1850. The railways affected the structure of the Indian economy in two important
ways:
(i) Railways enabled people to undertake long distance travel. It broke geographical and cultural barriers and promoted national integration.
(in) It enhanced commercialization of Indian agriculture, which adversely affected the comparative self-
India’s First Passenger Train
sufficiency of the village economies in India.
ran from Bombay to Thane, a distance of 34 km
Railways also promoted the foreign trade but it benefited the
on 16th April, 1853.
Britishers more than the Indians. The construction of railways led to huge economic losses to the Indian economy.
3. Air and Water Transport: British Government took measures for developing the water and air transport. However, their development was far from satisfactory.
Inland waterways proved to be uneconomical, as in the case of the Coast Canal on the Orissa coast. This canal was built at a huge cost, but it failed to compete with the railways, and finally, canal had to be abandoned.
4. Communication: Posts and telegraphs were the most popular means of communication.
• The introduction of the expensive system of electric telegraph in India served the purpose of maintaining
J.R.D. Tata, pioneer of Indian
law and order.
aviation, in 1932
• The postal services, despite serving a useful public purpose, remained all through inadequate.
basic objective of British Government to develop infrastructure was not to provide basic amenities to the people, but to serve their own colonial interest.
1. The Roads were built for mobilizing the army within India and for drawing out raw materials from the countryside to the nearest railway station or port and to send these to England or other lucrative foreign destinations.
2. Railways were developed by the Britishers mainly for three reasons:
(i) To have effective control and administration over the vast Indian territory; (it) To earn profits through foreign trade by linking railways with major ports; (il) To make profitable investment of British funds in India.
3. The system of Electric Telegraph was introduced at a high cost to serve the purpose of maintaining law and order.
State of indian economy on the eve of independence
- Colonial Economy: In India, colonial exploitation is a long history, spread over nearly 2n
• British rule resulted in huge drain of wealth from India, in order to facilitate growing British industry with the supply of raw materials from India.
• They also encouraged commercialisation of Indian agriculture to transform Indian economy into a British colony.
• The impact of the British colonial policy was deep on India, even at the time of Independence. - Semi-feudal Economy: By the close of the British period, there were two aspects of the Indian economy.
• Introduction of Feudal System: The land settlement system gave birth to feudal relations (landlord-tenant relations). The landlords used to charge very high rate of lagaan and were very cruel to the cultivators.
• Introduction of Capitalist System: The establishment of modern industries led to creation of two classes - capitalist and labourers.
So, India inherited the features of both feudal and capitalist system in the Indian economy.
3. Stagnant Economy: A stagnant economy is one which is growing at a very low rate. On the eve of independence, Indian economy was a stagnant economy as country’s growth of aggregate real output during the first half of 20th century was less than 2% and growth in per capita output was only 0.5%.
4. Backward Economy: At the end of British rule, Indian economy was backward and underdeveloped. The main reasons for the backwardness of Indian economy were:
• Low level of productivity;
• Low per capita income;
• Traditional methods of agriculture;
• High birth and death rate;
• Mass illiteracy.
5. Depleted (or Depreciated) Economy: At the time of independence, Indian economy was a ‘Depleted Economy. Depleted Economy refers to an economy, where no arrangements have been made to replace the physical assets, depreciated due to excessive use.
• During the 2nd World War, Indian industries had to work beyond their capacities to meet the increased demand of plant, machinery, equipments, etc. for the war.
• However, British rulers did not make any arrangements to replace the depreciated physical assets. As a result, British rulers had left a seriously depleted economy.
6. Amputated Economy: The Britishers policy of ‘divide and rule’ always promoted discrimination between various groups on the basis of religion, caste, language and culture.
• As a result, on the eve of Independence, country was geographically divided into two parts: India and Pakistan.
• Partition of the country virtually disrupted the economy due to: (i) Problem of rehabilitation of large number of refugees from Pakistan; and (ii) Shortage of raw material for jute and cotton mills as most of the cotton and jute growing areas went to Pakistan.
