Information about Indian Economy on the eve of independence

1. INDIAN ECONOMY ON THE EVE
OF INDEPENDENCE
IMRAN SIR SUCCESS POINT

2. Introduction to east India company
• The EIC come to India in the 1600 E.C.. The establishment of EIC
in India for the purpose of trade.They ruled nearly 400 years in
India.
• In 1600 E.C. Akbar was the king ruler of India he was the third
Mugal emperor who ruled in India from 1556 to 1605.
• The British rule over India changed the course of history in India.
The foundation of British Empire in India was laid by Battle of
Plassey fought in 1757.
• The BOP was fought between the forces of Nawab of Bengal Siraj-
ud-daulah and the English EIC led by Robert Clive.
• In this battle EIC was defeated by the Nawab.
• After the defeat the EIC make a plan and he join the hand with
commander in Chief of Nawab Mir Jafar and Mir kasim.
• In the battle of Buxar 1964 EIC defeat the Nawab siraj-ud-daulah by
the cheating of his commander in chief.

3. • The revolt of 1857 has a great change in the India’s Freedom. The
revolt was start at barakpur chawani in Merrut. Many of the persons
are involved in this revolt like, Nana saheb, Tatya tope, Mangal
Pandey and many more.
• The fire of this revolt is spread at all over the India.
• And Finally we got Independence on 15 August 1974.

4. Basic purpose of British Rule
• The basic purpose of the British rule in India was the 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.
• Colonialism:-
• It refers to a system of political and social relation between two countries of
which one is the ruler and the other is its colony.
• The ruling country not only has political control over the colony but it also
determines the economic policies of the dominated country.
• The unequal relationship between the colony(India) and the ruling
country(Britain) resulted in underdevelopment of India.

5. Low level of Economic Development Under Colonial
Rule
• Before the advent of British rule Indian economy was characterized
with the following features.
• 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.
• 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 enjoyed a world wide market due to its reputation of fine
quality of material used and the high standard of craftsmanship.
• The economic policies pursued by the colonial government in india
were concerned more with the protection and promotion of the
economic interests of their home country than with the development
of the Indian economy

6. • Transforming the country into supplier of raw material and consumer of
finished industrial products from Britain.
• The colonial government never made any sincere attempt India’s
National income and per captial income.
• Some individual attempts which were made to measure such incomes by
experts like by V.K.R.V. RAO, R.C. Desai , DADA BHAI NOROJI,
WILLIAM DIGBY, FINDLAY SHRIRAS conflicting and incontinent result.
• It was Mr. Rao whose estimates during the colonial period was
considered very significant.

8. Agriculture sector
• Indian Economy under the British colonial rule remained fundamentally
agrarian. Nearly 85% of the country’s population lived in villages and derived
livelihood directly or indirectly from agriculture.
• Main reasons for stagnation in agriculture:-
• Land Revenue System/Zamindari System:- The british govrnment in
India introduced a unique system of land revenue. It set up a tringular
relationship among the government, the owner of the soli and tiller of the soil.
• Under this system profit accruing out of agricultural sector went to the
zamindars in the form of lagan.
• The main interest of the zamindars was only to collect lagan regardless of the
economic condition of the cultivators.
• The date for depositing specified sums of lagan to British government were
also fixed, failing which the zamindars were to loose their rights.
• The Zamindars and the colonial government did nothing to improve the
condition of agriculture.
• Rates of land revenue were frequently raised by the zamaindars.

9. Commercialization of Agriculture:-
• It means production of crops for sale in the market rather than for self
consumption.
• Farmer were forced to shift to commercial crops(indigo) form the conventional
subsistence crops (Like rice and wheat). Reason Indigo was require by the
textile industry in Britian for bleaching of the textile.
• The farmer were forced to accept advance payments for cultivation of Indigo.
• The British Rule promoted shifiting food crops to cash crops.
• Agriculture was Commercialized to carter to the needs of the British industries
for necessary raw material.
• The British gov. were always need of Raw material like Cotton jute groundnut
sugarcane etc. to keep their factories running.
• The extent of commercial agriculture went so far as to make many peasants
purchase their food requiremnt form shop in town.

10. Low Level of Productivity
• Low levels of technology, lack of irrigation facilities and neglible 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 the villages, while the british rule spent on
agriculture technical or mass education.
• Production refers to total output which productivity refers to output per
hectare of land.

11. High Degree of Uncertainty
• It was excessively dependent upon rainfall.
• Good Rainfall implied good output, while poor rainfall implied poor output.
• No efforts was ever made under the british rule to develop permanent means
of irrigation (Wells and Canals)
•Adverse effect of Partion
• A sizeable portion of the undivided country’s highly irrigated and fertile land
went to pakistan
• The whole of jute producing area became part of east Pakistan (now
bangladesh)
• India’s jute good industry which had enjoyed a world monopoly so far,
suffered heavily for lack of raw material.

13. Industrial Sector
• India could not develop a sound industrial base under the colonial rule.
• Even as country’s world famous handicraft industries declined no
corresponding modern industrial base was allowed to come up to take pride
of place so long enjoyed by the farmer.
• The Poor state of industrial sector during the british rule is illustrated in the
following points.
• Decline of Handicraft industry/ De-industrialisation:-
• British govt. systematically destroyed Indian handicraft industries and no
modern industries base was allowed to come. The primary motive of the
colonial government behind de-industrialisation India was two main fold.
• 1. To get raw material from India at cheap rate to be used by upcoming
modern industries in Britian.
• 2.To sell finished products of British Industries in Indian market at
higher price.
• The two fold policy of British rule was enforced the maximum advantages of
their home country

14. Reason for Decline Handicraft industries
• Introduction of Discriminatory Tariff policy by the colonial government.
• This policy allowed free export of raw material form India and free import of
Final goods of British Industry to India.
• But heavy duty was imposed on the export of Indian handicrafts products
which reduces their competitiveness in the international market.
• Indian markets were full of finished goods from britain which were low priced.
It led to decline of Indian handicraft both in the domestic market as well as the
export market.
• Adverse effects of Decline of Handicraft industries:-
• High level of Unemployment:- The decline of handicraft industries resulted in
unemployment on a mass scale. The displaced artisans were forced to take
up agriculture for their livelihood.This increase the burden of population on
villages and over crowding in agriculture.
• Import of Finished goods:-The Indian made could not withstand the foreign
competition of machine made cheap goods. It encouraged the import of
manufactured goods from Britain.

15. • Lack of Capital Goods industries
• Capital Goods industries refers 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 good industry to promote further
industrialisation in india.
• British Ruler did not pay any attention for their promotion as they always wanted Indian’s to
be dependent on Britian, for their supply of capital good and heavy equipment.
Competition from machine made products:-
Machine made products from Bratian were Low cost and a gave a stiff competition to the
handicraft products in india.
Quality of Machine product is fine.
They forced the Indian craftsman to shut down their enterprises.
Competition from machine made products:-
The Impact of british culture a new class emerged in India which was keen to adopt the
western lifestyle.
Change the pattern of demand against the Indian products and in favour of the British products.
Limited role of public sector:-The public sector remained confined only to the railways,
power generation, communication, ports and some other departmental undertakings.

17. Foreign Trade
• India has been an important trading nation since ancient times. But the restrictive
policy of commodity production, trade, tariff pursued by the colonial government
adversely affected the structure composition and volume of India’s foreign trade.
• The state of India’s foreign trade during British rule is discussed as under.
• Exporter of Primary products and Importer of Finished Goods:-
• 1. India become an exporter of Primary products like cotton , jute, silk , wool, indigo
etc.
• 2. Importer of Finished consumer goods like cotton , jute, silk , woollen and capital
goods like machinery, produced in the british industries.
• Monopoly control of British Rule:-
• 1. More than 50% of India’s foreign trade was directed towards Great Britain.
• 2. India become an exporter of Primary products and Importer of Finished
consumer goods .
• Drain of Indian wealth during British Rule:-
• 1. India become an exporter of Primary products and Importer of Finished
consumer goods .

18. • 2. There was huge export surplus due to excess exports.However export
surplus was used.
• (a) To make payment for expenses incurred by an office set up by the colonial
government in Britain
• (b) To meet expenses on war fought by the british government.
• (c) To improve invisible items.
Trade through the Suez canal:-
• It is an artifical water way running from north to south across the Isthmus of
suez in north-eastern Egypt.
• (a) The opening of suez canal in 1869 reduced the cost of transportation.
• (b) Make Indian market access easier.
• (c) Direct trade route for ship operating between Britain and India and
avoided the need to sail around Africa.

20. Demographic condition:-
• Various details about the population of British India’s were first collected
through a census in 1881.
• Through suffering from certain limitations, it revealed the unevenness in
India’s population growth.
• Every ten year such census operation was carried out.
• Before 1921 India was in the first stage of demographic transition.
• The second stage of transition began after 1921.
• The various social development indicators were also not quite encourgaging
• The overall literacy level was less than 16%.
• The female literacy level was at a trifling low of about 7.
• Public health facilities were either unavailable to large chunks of population or
when available were highly inadequate.
• Water and air borne diseases were rampant and took huge toll on life.
• Infant mortality rate was very high . It was about 218 thousand while it is 32
per thousand..
• Life expectancy was as low as 32 years while presently it is 69.4. It reflect
lack of health care facilities, lack of awareness etc.

22. Occupational Structure:-
• It refers to distribution of working persons across different industries and
sectors.
• During the colonial period the occupational structure of india showed little
sign of change.
• On the eve of independence about 75% of working population was engaged
in agriculture. Percentage of population dependent on agriculture is much
less in advanced countries in the world. For instance in England and America
2% in Japan 12% and in Germany 4% of the population dependent on
agriculture.
• On the eve of Independence barely 9% of the working population in India was
engaged in manufacturing industries and mining etc.32% in the USA , 42% in
the England and 39% in japan are engaged in these activites.
• Growth is said to be balanced when all the sectors of the economy are
equally developed..

24. Infrastructure
• Infrastructure refers to the element of (i) Economic change (Like means of
transportation, communication, banking, power/Energy) and the elements of (ii)
Social change (Like growth of educational, health, and housing facilities) which
serve as a foundation for growth and development of a country.
• The state of infrastructure as inherited from the British rule is discussed below.
• Roads:-1. The roads were built primarily served the interests of mobilising the
army and shifting raw material.
• 2. There always remained an acute shortage of all weather roads to reach out
to rural areas during the rainy seasons. People living in these areas suffered
badly effected.
• Railways:-1. Railway enabled people to undertake long distance travel.
• 2. It enhanced the commercialization of Indian agriculture
• 3. First Railway Bridge linking Bombay with thane 1854.
• Air and Water :-1. British government took measures for developing the water
and air transport.
• Communication:-Post and telegraph were the most popular means of
communication
• Ports were developed to handle export and import of material from Britian.