The Indian economy at independence was primarily agricultural with over 85% of the population engaged in farming. Agriculture was stagnant under British rule, with low productivity and output growth of just 0.5% annually. The industrial sector was also underdeveloped to serve British interests in maintaining India's role as an exporter of raw materials and importer of British manufactured goods. Infrastructure like railways began under the British but mainly benefited their economic and administrative needs rather than broader development. Overall, the Indian economy was in a poor state with a large rural population and little industrialization by the time of independence.

3. INTRODUCTION
Indian economy on the eve of independence deals with
the Indian economy as we inherited it from the British in
1947.
It focus on the following points.
State of agriculture and industrial sectors on
the eve of independence.
India’s foreign trade under the British rule.
• .

4. AGRICULTURAL
SECTOR
INDUSTRIAL
SECTOR
FOREIGN
TRADE
DEMOGRAPHIC
CONDITION
OCCUPATIONAL
STRUCTURE
INFRASTRUCTURE

5. .
Indian agriculture became backward, stagnant and non-vibrant
under the British rule.
1.Weak productive accumulation.
2.Unemployment and underemployment
3.Low levels of production and productivity.
4.Subdivision of landholdings.
Indian agriculture was primitive and stagnant. The main causes
of stagnation of agriculture sector was as follows:
1.Land Tenure system
2.Zamindari system
3.Mahalwari system and
4.Ryotwari system
5.Commercialization of agriculture
6.Partition of the country
.

6. Agriculture plays an important part in economic development. It
provides the food security to the country. Also, it’s a backbone for
many industries.
At the time of independence, almost 85% of the total population was
depended on the agriculture. India’s agriculture sector saw no growth
during the colonial period. Productivity was stagnant. In fact, it was
deteriorating. The total output increased by just 0.5% per annum
before independence. Farm output from year 1891 to 1947 was not
more than 0.11%.
Many reasons were behind that. But prominent were the land
settlement and exploitation of Indian farming by the British India for
their benefit. In the Zamidari system the real benefits of the agriculture
went straight in the hands of Zamidar’s. Farmers end up getting
nothing, even after toiling hard for it.
Lack of fertilizers, inferior quality of seeds and less use of modern
technology were also responsible for the murky state of agriculture.
Adding fuel on that was the commercialization of it.

7. British India compelled Indian farmers to grow more of cash crops
instead of main crop. This eventually helped the British industries
back home as they were getting raw material at very low prices. But
farmers were still on the darker side with no real benefits.
Neither the Britishers nor the Zamidars did any thing for the farmers
or farming. Their main interest was only to collect taxes. Even in the
conditions of drought, Famine or floods there was no mercy upon
farmers.
Further jolt happened to agriculture because of the partition. Highly
irrigated land went to Pakistan. On the western front Punjab, which
was rich in producing wheat and East Pakistan (now Bangladesh)
known for jute production, went to divided nation. Thus, Indian jute
industry suffered heavily.
In a sense contribution from agriculture sector to Indian economy
was nil at the time of independence.

8. TRADITIONAL METHOD
.

9. Indian Industrial sector was also crying off for the development in the
colonial rule. Like agriculture. No importance was given for the
development of Industries.
To see India growing industrially was against British rule. There were
two reasons for keeping India away from modern Industries.
One was to keep India reduced to just as an exporter of prime raw
materials for the major Industries in Britain.
Two, it was to turn the domestic market of India into a prime
consumer of finished British goods. And industrialization of India
could have weighed down both the prospects of British India.

10. But these unfavorable policies lead to
decline in the indigenous handicraft
industry. This created enormous
unemployment in the country. Also, a
market which was now deprived of
the supply of locally made goods.
Second half of the 19th century saw a
little progress in industrial
development. But the pace was very
slow and was confined to certain
sectors only. Jute and cotton textile
mills were the first ones. Later, paper,
sugar, cement etc. were set up.
Major development came in the form
of Tata Iron and Steel Company
(TISCO) in 1907. However, there were
hardly any capital goods industries to
promote further industrialization of
India.

11. India’s foreign trade goes back to ancient times. It
used to be one of the most important trading
country. In the colonial period India’s foreign trade
was restricted to Britain only. They had the
monopoly over the Indian exports.
India was allowed to trade with only few
neighbour countries. Still, there was the generation
of large export surplus. This surplus came with
heavy cost. A spurt in export didn’t bring any
fortunes to India. Rather, it was used to pay for
British expenditures on maintaining the army and
setups.
So, even high export couldn’t turn around the
murky picture of Indian economy.

12. DEMOGRAPHIC CONDITION
Details of the population of British India were collected first in 1881, through
a census. this census suffered for certain limitations but it revealed the fact
that the population was uneven in its growth. after 1881, a population
census was taken every ten years. India was in the stage of a first
demographic transition before 1921. the second stage of such a transition
happened after 1921. at this stage, however, neither the population growth
nor the total population of India was very high.
The social development indicators were also not very encouraging at that
time. the overall literacy was less than 16% and female literacy was around
7%. public health facilities were unavailable to a very large sector of
people. they were inadequate wherever they were available. hence, water
and air borne diseases attacked people in huge numbers and spread causing
a large number of deaths. the overall mortality rate was very high and
infant mortality was alarming. it was 21 per 1000 compared to the present
rate of 63 per thousand. life expectancy was 32 compared to the present
day 63. due to insufficient data, it is not possible to predict and discuss the
level of poverty but considering the situation, it obviously must have been
high contributing to the further deterioration of India.

13. There are two important features of India’s occupational structure
during the British period:-
i) 70% to 75% of India’s working population was involved with
agricultural sector.10% were engaged with manufacturing sector
and 15% to 20% were with service sector.
ii)Growing regional variation.

14. The occupational structure, i.e. the distribution of working
people across different industries and sectors showed very
little sign of change during the British rule. The largest
workforce was in agricultural sector accounting for about
70-75% of the working people. The manufacturing sector
had 10% while the service sector accounted for about 15-
20% of the working population.
A main feature was the growing regional variation. Areas
of the then madras presidency (today's Tamil Nadu,
Karnataka, Andhra Pradesh, and Kerala), Maharashtra and
west Bengal saw a decline of the workforce in agriculture
with a parallel increase in the manufacturing and services
sector. during the same time, there was an increase in the
workforce in the agriculture sectors in Orissa, Rajasthan and
Punjab.

15. 1) The state of infrastructure facilities especially in the field
of transport, communication and energy was very poor in
India during the British rule in India. However some efforts
were made to develop basic infrastructure like roads,
railways, ports, water transport, and post by the Britishers
2) The British rulers introduced railways in 1850 and Indian
railways begun operations in 1853.

16. 3)The development and the construction of railways by the British
rulers had affected the Indian economy in the following ways:-
i)It provided cheap and rapid transport system especially for distant
travel.
ii)It broke geographical barriers and thus promoted national unity
and understanding
iii)It created new employment opportunities
iv)It helped in controlling famines
v)It promoted foreign trade but benefited British more than Indians
vi)It encouraged the process of industrialization
4) The main reason of British rulers behind the beginning of railways
in India were as following:-
i) To have effective control and administration over the vast country.
In view of this Britisher tried to link important administrative and
military centers through railway.
ii) Earning profit