1. Indian Economy on the Eve of Independence

Indian Economy on the Eve of Independence

Agricultural Sector

During the pre-British period, the condition of Indian agriculture was not at all satisfactory.

• 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 Reason for Stagnation in Agricultural Sector

The stagnation in the agricultural sector was caused due to the following reasons:

1. Land Settlement System:- The most important reason for stagnation in agricultural sector was the introduction of ‘Zamindari System’ by the colonial government.

• Under this system, profits accruing out of agricultural sector went to the zamindars in the form of ‘lagaan’.
• The main interest of the zamindars was only to collect lagan regardless of the economic condition of the cultivator.

2. Commercialization of Agriculture: Commercialization of agriculture means the production of crops for sale in the market rather than for self-consumption.

• During the British rule, farmers were given higher prices for producing cash crops, like cotton or jute. 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 British Industries.
• Thus, British rule promoted shifting of crops from food crops to cash crops.

3. Low level of Productivity:- Low levels of technology, lack of irrigation facilities and negligible use of fertilizers 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.

4. Scarcity of Investment:- India’s agriculture was facing scarcity of investment in terracing, flood-control and drainage. Although some farmers changed their cropping patterns from food crops to commercial crops, a large section of tenants, small farmers and sharecroppers neither had resources and technology nor had incentives to invest in agriculture.

 

Industrial Sector

Indian industries, producing certain special products, enjoyed a worldwide reputation. India was particularly well known for its handicraft industries. The poor state of Industrial sector during the British rule is illustrated in the following points:

1. De-industrialization – 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-industrialization was two-fold:

• To get raw materials from India at cheap rates to be used by upcoming modern industries in Britain;
• To sell finished products of British industries in Indian market at higher prices.

2. Adverse effects of decline of Handicraft Industry:- Decline of handicraft industries adversely affected the Indian economy in the following ways:

• High level of Unemployment: The decline of Indian handicrafts resulted in unemployment on a mass scale.
• Import of Finished Goods: The Indian-made goods could not withstand the foreign competition of machine-made cheap goods.

 

3. Lack of Capital Goods Industries:- Capital goods industry refer to those industries that can produce machine tools, which are, in turn, used to produce articles for current consumption.

• During the British rule, there was hardly any capital goods industry to promote further industrieazation in India.

 

4. Low contribution to Gross Domestic Product (GDP):- The growth rate of the new industrial sector and its contribution to the GDP or Gross Value added (GVA) remained very small.
5. Limited role of Public Sector:- Due to lack of public investment, India could not develop a sound industrial base under the colonial rule. The Public sector remained confined only to the railways, power generation, communications, ports and some other departmental undertakings.

 

 

INDUSTRIAL SECTOR DURING THE BRITISH RULE

 

 

 

Foreign Trade

India has been an important trading nation since ancient times. However, the restrictive policies adopted by the colonial government adversely affected the structure, composition and volume of India’s foreign trade.

1. 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 woolen clothes and capital goods like light machinery, produced in the British Industries.
2. Monopoly Control of British Rule:- The 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 a 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 a huge export surplus due to excess exports.

 

 

Demographic Condition

The demographic condition during the Colonial rule is described in the following points:

1. 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.
2. Extremely Law 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%.
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.
4. 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.
5. Low Life Expectancy:– Life Expectancy refers to the average number of years for which people are expected to live. Life expectancy was also very low – 32 years, in contrast to the present 67 years.
6. 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 county.

Occupational Structure

• Primary Sector:- It includes production units exploiting natural resources like land, water, subsoil assets, etc. For example – farming, fishing, mining, animal husbandry, forestry, etc.
• Secondary Sector:- It includes production units which are engaged in transforming one good into another good. These units convert raw materials into finished goods. For example – firm engaged in converting sugarcane into sugar, construction companies, power generation, etc.
• Tertiary Sector:– It includes production units engaged in providing services. For example – transport, education, finance, government administration, etc.

Infrastructure

Infrastructure refers to all such activities, services and facilities, which are needed to provide different kinds of services in an economy. It includes infrastructure associated with means of transport, communication, energy and banking (i.e. Economic Infrastructure) and infrastructure associated with facilities of health, education and housing (i.e. Social Infrastructure).

The state of infrastructure as inherited from the British rule is discussed below:

1. Roads:- The colonial admiration could not accomplish much on construction of roads due to scarcity of funds.

• The roads that were built, primarily served the interests of mobilizing the army and shifting raw materials.

2. Railways:- The most important contribution of the British rule was to introduce railway’s in India in 1850. The railways affected the structure of the Indian economy in two important ways:

• Railways enabled people to undertake long distance travel. It broke geographical and cultural barriers and promoted national integration.

3. Air and Water Transport:- The British Government took measures to develop water and air transport. However, their development was far from satisfactory.
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 law and order.

Positive Contributions of British Rule

British Rule also had some positive effects on the Indian economy. They are discussed as under:

1. Growth in Agricultural Sector:- Although agricultural productivity was very low during the British Rule, but in absolute terms, there was growth in agricultural sector due to expansion of aggregate area under cultivation.
2. Better means of transportation:- Development of roads and railways provided a cheap and rapid transport system and opened up new opportunities for 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. Uniformity in Monetary System:- British rule helped to bring uniformity in the monetary system in the Indian economy and there was enactment of Coinage Act to 1835. The British rule also undertook to build a banking system that could handle the deposit and loans necessary for the smooth functioning of domestic and foreign commerce.
5. Effective administrative setup:- The British Government had an efficient administration system, which served as a ready reckoner for Indian politicians.

 

State of Indian Economy on the Eve of Independence

1. Colonial Economy:- In Indian, colonial exploitation has a long history, spread over nearly 200 years.

• 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.

2. Semi-feudal Economy:- By the end 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.

3. Stagnant Economy:- A stagnant economy is one that 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 20% century was less than 2% and growth in per capita output was only 0i.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:

• Law 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.
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.

Short Answer Type Questions

1. Discuss the land settlement system introduced under the British Rule.

Answer:

The British introduced different land settlement systems to collect maximum land revenue. The three major systems were:

• Zamindari System: The zamindars collected land revenue from farmers and paid it to the British government.
• Ryotwari System: The government collected revenue directly from the cultivators (ryots).
• Mahalwari System: Land revenue was collected from the entire village or a group of villages.

2. How did commercialization of agriculture resulted in famines?

Answer: Commercialization of agriculture encouraged farmers to grow cash crops instead of food crops.

• More land was used for crops like cotton, jute and indigo.
• The production of food grains declined.
• During droughts and crop failures, there was a severe shortage of food.
• As a result, many famines occurred, causing large-scale loss of life.

3. “During the colonial period, the agricultural sector showed massive stagnation.” Do you agree agree with the given statement? Justify your answer with valid arguments.

OR – Discuss any two causes of India’s agricultural stagnation during the Colonial period.

OR- “Despite being the main occupation of about 85% of the country’s population during British rule, agricultural sector continued to experience stagnation.” Briefly explain any two reasons responsible for the backwardness of Indian agricultural on the eve of independence.

Answer: Yes, I agree with the statement. The agricultural sector remained stagnant during the colonial period because:

• Agricultural productivity was very low due to the use of traditional farming methods.
• Irrigation facilities were limited, and agriculture mainly depended on the monsoon.
• Farmers had little access to modern technology and institutional credit.
• The British land revenue system exploited farmers and reduced their ability to invest in

agriculture.

4. ‘During the colonial period, India’s foreign trade was characterized by a large export surplus, however, this did not result in any flow of gold or silver into India.’ Justify the given statement with valid arguments.

Ans. Although India had an export surplus during British rule, it did not benefit the country because:

• The export earnings were used by the British to pay for Home Charges, administrative

expenses and war expenditure.

• A large amount was spent on the salaries and pensions of British officials working in

India.

• The remaining amount was transferred to Britain as profits and interest on foreign loans.

Thus, the export surplus led to the drain of India’s wealth instead of bringing gold and

silver into the country.

5. “Decline of handicraft industry adversely affected the India economy”. Comment.

Answer: The decline of handicraft industries had a serious impact on the Indian economy.

• A large number of skilled artisans lost their traditional occupation.
• Many of them shifted to agriculture, increasing pressure on agricultural land.
• India’s exports of handicraft goods declined, while imports of British manufactured goods increased.
• As a result, unemployment, poverty and economic backwardness increased.

 

6. What do you mean by capital goods industry? Discuss the status of such industry during the British rule.

Answer: Capital goods industries are those industries which produce machinery and equipment used for producing other goods.

During British rule:

• Very little attention was given to the development of capital goods industries.
• India mainly depended on Britain for machines and industrial equipment.
• Only a few industries, such as TISCO, were established.

 

7. Write a short note on drain of India’s wealth during the British rule.

Answer: The Drain of Wealth refers to the continuous transfer of India’s income and resources to Britain without any benefit to India. It took place through:

• Home Charges
• Salaries and pensions of British officials
• Interest on foreign loans
• Profits earned by British companies

 

8. Explain the changes that were observed in India’s wealth during the British rule.

Answer: During British rule, there was very little change in India’s occupational structure.

• Around 70–75% of the population remained dependent on agriculture.
• The share of manufacturing and handicrafts declined.
• The service sector also showed only limited growth.

 

9. Briefly discuss the state of roads and railways during the British rule.

Answer:

• Roads were mainly constructed to move raw materials to ports and to transport British troops.
• Railways connected production centres with ports for easy export of raw materials.
• Although railways improved transport, they mainly served British economic and administrative interests.

 

10. Enumerate any three infrastructural development activities undertaken by the colonial government in India.

Ans. The colonial government developed the following infrastructure:

1. Railways for transportation of raw materials and finished goods.
2. Roads for administrative and military purposes.
3. Post and Telegraph services to improve communication and strengthen British administration.

11. State the two-fold motive for the systematic destabilization of indigenous India industries in the British era.

OR – What was the two-fold motive behind the systematic de-industrialization effected by the British in pre-independent India?

Answer: The British followed a policy of de-industrialization with two main motives:

1. To make India a supplier of cheap raw materials for British industries.
2. To convert India into a market for British manufactured goods.

 

12. State and explain the condition of Indian agriculture on the eve of independence.

Answer: On the eve of Independence, Indian agriculture was backward and stagnant because: Agricultural productivity was very low. Farmers used old and traditional methods of cultivation. Irrigation facilities were inadequate and agriculture mainly depended on monsoon. Farmers had very little access to modern technology and institutional credit.

 

13. Comment upon any two salient feature of the foreign trade policy of India, on the eve of Independence.

Answer: The two main features of India’s foreign trade during British rule were:

1. Foreign trade was controlled by the British Government to serve British economic interests.
2. India mainly exported raw materials and imported finished manufactured Goods from Britain.

 

14. “The pre-independent India’s occupational structure experienced growing regional variation.” Justify the above statement with valid explanation.

Answer: India’s occupational structure showed regional differences during the British period.

• States like- Tamil Nadu, Maharashtra and West Bengal** had relatively more people engaged in manufacturing and services.
• States such as- Punjab, Rajasthan and Odisha** had a larger population dependent on agriculture.

 

 

15. Enumerate any three demographic indicators under the colonial rule.

Answer: The demographic condition of India during British rule was poor.

Any three indicators were:

• High birth rate and high death rate.
• Low life expectancy of about 32 years.
• High infant mortality rate.

 

16. Identify and briefly explain three key features of the Indian economy on the eve of independence that contributed to its predominantly stagnant structure.

Answer: The Indian economy was stagnant because of the following features:

1. Backward Agriculture – Low productivity and dependence on traditional farming methods.
2. Poor Industrial Development – Capital goods industries were not developed.

 

3. Unfavorable Foreign Trade – Trade policy mainly benefited Britain and not India.

 

17. Explain any two shortfalls of the industrial policy under the British rule.

Answer: The industrial policy of the British had several shortcomings.

• Indigenous industries were neglected, leading to the decline of handicrafts.
• Capital goods industries were not encouraged, making India dependent on Britain for machinery.

 

18. Discuss briefly the estimates made by notable scholars regarding the national income and per capita income during the colonial rule in India.

Answer:

• During British rule, no official estimates of national income were prepared.
• Scholars like Dadabhai Naoroji, William Digby, Findlay Shirras and V.K.R.V.
• Rao made independent estimates.
• Their studies showed that per capita income remained very low and almost stagnant throughout the colonial period.

 

19. “Suez Canal was used as a highway between India and Britain.” Justify the given statement with valid arguments.

OR – “Opening up of Suez Canal helped in establishing the British monopoly control over India’s foreign trade”. Justify the given statement with valid arguments.

Answer: The opening of the Suez Canal in 1869 greatly benefited British trade.

• It reduced the distance between India and Britain.
• Transportation became faster and less expensive.
• It increased trade and strengthened British control over India’s foreign trade.

 

 

20. “Development of Railways during British rule encouraged colonial exploitation of the Indian resources.” Justify the given statement with valid arguments.

Answer:

The railway network mainly served British interests.

• It helped in transporting raw materials from different parts of India to the ports.
• British manufactured goods could easily reach Indian markets.
• Railways also helped the British in maintaining administrative and military control over the country.

 

Long Answer Type Questions

1. Discuss the main reasons for India’s agricultural stagnation during the colonial period.

Ans. During British rule, Indian agriculture remained backward and stagnant due to several reasons:

• Exploitative land revenue systems: Systems like the Permanent Settlement, Ryotwari and Mahalwari imposed heavy taxes on farmers, leaving them with little surplus for investment.
• Lack of investment: The British government did not invest adequately in irrigation, modern technology, fertilizers or agricultural research.
• Commercialisation of agriculture: Farmers were forced to grow cash crops like indigo, cotton and opium instead of food crops, causing food shortages.
• Decline of traditional institutions: The destruction of village self-sufficient systems weakened rural economies.
• Low productivity: Use of outdated farming methods and dependence on monsoon rains kept agricultural output low.
• Indebtedness of farmers: High taxes and exploitation by moneylenders increased rural poverty.

 

2. “British rule adversely hampered the Industrial sector of India.” Do you agree with this view? Give reasons in support of your answer.

Ans. Yes, British rule negatively affected India’s industrial development.

Reasons:

• Decline of handicrafts: British machine-made goods flooded Indian markets, leading to the collapse of traditional industries like textiles.
• Discriminatory policies: Indian industries faced unfair competition from British industries.
• Drain of wealth: A large portion of India’s resources was transferred to Britain, reducing funds for industrial growth.
• Limited industrialisation: The British promoted industries that served their own interests, such as railways, plantations and mining.
• Lack of capital and technology: Indian entrepreneurs received little government support.

 

3. Discuss the state of India’s foreign trade during the colonial rule.

Ans. India’s foreign trade during British rule had the following features:

• Export-oriented economy: India mainly exported raw materials like cotton, jute, spices and minerals.
• Import of manufactured goods: Finished goods from Britain were imported into India, damaging local industries.
• Trade surplus but no benefit: India often had a trade surplus, but the earnings were used to pay for British administrative expenses and other charges.
• Change in trade pattern: India became a supplier of raw materials and a market for British products.
• Control by Britain: Foreign trade policies were designed according to British economic interests.

 

4. “The demographic condition during the British exhibited all features of a backward Indian economy.” Do you agree? Give reason in support of your answer.

Ans. Yes, the demographic condition reflected the backwardness of the Indian economy.

Reasons:

• High birth rate and death rate: Both remained very high, showing poor healthcare and living conditions.
• Low life expectancy: Average life expectancy was around 32 years during the early 20th century.
• High infant mortality: Lack of medical facilities caused high infant deaths.
• Low literacy rate: Education facilities were limited, especially in rural areas and among women.
• Poor public health: Frequent famines and epidemics affected population growth.

 

5. Describe the salient features of India’s occupational structure during the British period.

Ans. The occupational structure during British rule had the following features:

• Dominance of agriculture: A large majority of the population depended on agriculture for livelihood.
• Slow industrial growth: The industrial sector employed only a small proportion of people.
• Decline of handicrafts: Many artisans lost employment due to competition from British goods.
• Regional variations: Some regions experienced growth in industries, while others remained dependent on agriculture.
• Lack of diversification: The economy remained largely primary-sector oriented.

 

6. Briefly discuss the state of infrastructural facilities during the British period.

Ans. During the British period, infrastructure in India developed mainly to serve British economic and administrative interests. The major developments were:

• Railways: The British introduced railways in 1853. They helped in transporting raw materials from villages to ports and moving British goods across India.
• Roads: Some roads were built for administrative and military purposes, but the road network remained inadequate.
• Ports: Ports like Bombay, Calcutta, and Madras were developed mainly for export of Indian raw materials.
• Communication: The British introduced the telegraph and postal systems, which improved communication.
• Irrigation: Some irrigation projects were started, but they were limited and mainly benefited commercial crops.

 

7. Briefly discuss the various reasons for development of infrastructure by the British government.

Ans. The British government developed infrastructure in India due to the following reasons:

1. Movement of raw materials: Railways and ports were developed to transport raw materials like cotton, jute, and minerals to Britain.
2. Expansion of markets: Better transport helped British manufactured goods reach Indian markets.
3. Administrative control: Infrastructure helped the British govern and control a large territory.
4. Military purposes: Railways and roads helped in the quick movement of British troops.
5. Trade and profit: Infrastructure supported British commercial interests and increased colonial revenue.

Thus, infrastructure development was mainly aimed at strengthening British rule and economic benefits.

 

8. Discuss the state of Indian Economy on the Eve of Independence.

Ans. At the time of independence in 1947, the Indian economy was weak and underdeveloped due to nearly two centuries of British rule.

• Low economic growth: India experienced slow growth and widespread poverty.
• Agriculture dominance: Around 70% of the population depended on agriculture, but productivity was very low.
• Industrial backwardness: Modern industries were limited, and traditional handicrafts had declined.
• Poor infrastructure: Transport and communication facilities were inadequate and mainly served British interests.
• High poverty and unemployment: A large part of the population suffered from low income and poor living conditions.
• Low literacy and health facilities: Education and healthcare systems were poorly developed.