Indian Economy in Pre-independence Period#

1. ▸British Conquest and Its Impact
2. ▸Pre-Colonial Indian Economy
3. ▸Impact on Agriculture
4. ▸Industrial Sector
5. ▸Foreign Trade
6. ▸Demographic Trends
7. ▸Occupational Structure
8. ▸Infrastructure Development

---

Pre-British Conquests#

• ▸India had been conquered several times before the British, but invaders like the Portuguese settled in India
• ▸The distinctive impact of British conquest was the emergence of a new political and economic system whose interests were rooted in foreign soil

Key Characteristics of British Rule#

• ▸Main Motive: Exploit Indian resources for British advantage
• ▸Economic Policies: Focused on protection and promotion of British economic interests rather than Indian development
• ▸Systematic Changes:
  • ▸Shifted trade with the rest of the world
  • ▸Established railways, telegraphs, and legal systems
  • ▸Deliberately kept Indian economy stagnant

Comparative Economic Analysis#

• ▸1600: Indian GDP per capita was 60% of British GDP per capita
• ▸17th-18th centuries: Indian per capita GDP decreased steadily
• ▸19th century: Indian GDP stabilized while British growth surged
• ▸The Great Divergence: India fell further behind Britain due to India's decline and British growth

---

Independent Economy#

• ▸India had an independent economy before British rule
• ▸Well-known for handicraft industries:
  • ▸Cotton and silk textiles
  • ▸Metal and precious stone works
  • ▸High-quality craftsmanship recognized worldwide

British Colonial Transformation#

• ▸Aim: Reduce India to a feeder economy for Britain's industrial base
• ▸Fundamental Change: Transformed India into:
  • ▸Net supplier of raw materials
  • ▸Consumer of finished industrial products from Britain

Income Estimation#

• ▸Dadabhai Naoroji - "Poverty and Un-British Rule in India"
• ▸William Digby
• ▸Findlay Shirras
• ▸V.K.R.V. Rao (considered very significant)
• ▸R.C. Desai

---

Agrarian Economy Structure#

• ▸85% of population lived in villages
• ▸Livelihood derived directly or indirectly from agriculture
• ▸Sector was over-crowded with very low agricultural productivity

Problems in Agricultural Sector#

1. Stagnation

• ▸Very low agricultural productivity in absolute terms
• ▸Some growth only due to expansion of aggregate area under cultivation

2. Land Settlement Systems

• ▸Profits went to zamindars instead of cultivators
• ▸Zamindars did not initiate agricultural development

3. Lack of Agricultural Inputs

• ▸Low levels of technology
• ▸Lack of irrigation facilities
• ▸Negligible use of fertilizers
• ▸No investment in:
  • ▸Terracing
  • ▸Flood control
  • ▸Drainage
  • ▸Desalination of soil

4. Commercialization Impact

• ▸Farmers produced cash crops for British industries
• ▸Could not improve farmers' economic conditions

5. Partition Impact

• ▸Highly irrigated and fertile land went to Pakistan
• ▸Adverse impact on agriculture output, especially jute industry

---

Lack of Industrial Development#

• ▸India could not develop a sound industrial base
• ▸Decline of indigenous handicraft industries despite world-class quality
• ▸No corresponding modern industrial base was allowed

Policy of Systematic Deindustrialization#

• ▸Objective: Reduce India to status of mere exporter of raw materials for British industries
• ▸Turn India into a sprawling market for finished British products

Impact of Handicraft Decline#

• ▸Created massive unemployment
• ▸Caused rural distress

Modern Industry Development#

Slow Progress

• ▸Modern industry began in second half of 19th century
• ▸Progress remained very slow and stagnant

Key Industries

1. ▸
   Cotton and Jute Textile Mills
   • ▸Concentrated in Maharashtra and Gujarat
   • ▸Mainly Indian-owned
2. ▸
   Iron and Steel
   • ▸TISCO (Tata Iron and Steel Company) incorporated in 1907
3. ▸
   Other Industries
   • ▸Sugar, cement, paper came up after Second World War

Capital Goods Industry

• ▸Did not bloom despite being necessary for industrialization
• ▸Growth rate and GDP contribution remained dismal and piecemeal

Public Sector#

• ▸Limited area of operation
• ▸Confined to:
  • ▸Railways
  • ▸Power generation
  • ▸Communications
  • ▸Ports
  • ▸Some departmental undertakings

---

Historical Significance#

• ▸India had been an important trading nation since ancient times

Impact of British Policies#

• ▸Restrictive policies on commodity production, trade, and tariff
• ▸India became:
  • ▸Exporter: Primary products (raw silk, cotton, wool, sugar, indigo, jute)
  • ▸Importer: Finished consumer goods and capital goods from Britain

British Monopoly#

• ▸More than 50% of India's foreign trade restricted to Britain
• ▸Rest allowed with few countries:
  • ▸China
  • ▸Ceylon (Sri Lanka)
  • ▸Persia (Iran)

Suez Canal Impact#

• ▸Opening of Suez Canal intensified British control over India's foreign trade

Negative Consequences#

• ▸Acute scarcity of essential commodities:
  • ▸Food grains
  • ▸Clothes
  • ▸Kerosene
• ▸Indian revenue used for:
  • ▸Expenses of colonial government office in Britain
  • ▸Wars fought by British government

---

Census Documentation#

• ▸First census: 1881 (decennial)
• ▸Revealed unevenness in India's population growth

Stages of Demographic Transition#

• ▸1921: Called the "Big Divide"
  • ▸1st Stage: Before 1921
  • ▸2nd Stage: After 1921

Social Development Indicators#

Literacy

• ▸Overall literacy: Less than 16%
• ▸Female literacy: About 7%

Public Health

• ▸Either unavailable or grossly inadequate
• ▸Rampant water and air-borne diseases

Mortality Rates

• ▸Overall mortality: Very high
• ▸Infant mortality: 218 per 1000 (alarmingly high)

Life Expectancy

• ▸Only 32 years

Poverty

• ▸Extensive poverty prevailed
• ▸Contributed to worsening population profile

---

Definition#

Characteristics#

• ▸Very little change during colonial period
• ▸Stagnant occupational structure

Sector-wise Distribution#

1. ▸Agriculture: 70-75% of workforce
2. ▸Manufacturing: 10% growth
3. ▸Services: 15-20% growth

Regional Variations#

Decline in Agricultural Dependence

• ▸Madras Presidency
• ▸Maharashtra
• ▸West Bengal
• ▸Increase in manufacturing and services

Increase in Agricultural Dependence

• ▸Orissa
• ▸Rajasthan
• ▸Punjab

---

Colonial Purpose#

Roads#

• ▸Mobilize army within India
• ▸Draw raw materials from countryside to railway stations/ports
• ▸Reach rural areas during rainy season

Railways#

• ▸✓ Enabled long-distance travel
• ▸✓ Broke geographical and cultural barriers
• ▸✓ Facilitated commercialization of agriculture
• ▸✗ Adversely affected village economy self-sufficiency
• ▸✗ Export trade expanded with rare benefits to Indians
• ▸✗ Social benefits outweighed huge economic loss

Electric Telegraphs#

• ▸Served purpose of maintaining law and order in remote parts

Postal Services#

• ▸Useful but remained inadequate

Inland Trade and Sea Lanes#

• ▸Mixed reaction
• ▸Sometimes proved uneconomical (e.g., Coast Canal on Orissa coast)

---

Economic Condition Summary#

1. ▸Agriculture: Stagnant, overcrowded, low productivity
2. ▸Industry: Systematic deindustrialization, decline of handicrafts
3. ▸Foreign Trade: British monopoly, exploitative pattern
4. ▸Demographics: High mortality, low literacy, extensive poverty
5. ▸Occupation: 70-75% dependent on agriculture
6. ▸Infrastructure: Developed for colonial interests, not public welfare

Legacy of Colonial Rule#

• ▸Transformed India from independent economy to raw material supplier
• ▸Created structural weaknesses that persisted post-independence
• ▸Left India with massive poverty, unemployment, and underdevelopment

---

---