Sate of Indian Economy on the Eve of Independence, Synopsis: Before the British Rule During the British Rule Components of Indian Economy Agricultural Sector in India During Colonial Rule Industrial Sector in India During Colonial Rule Foreign Trade in India During Colonial Rule Demography in India During Colonial Rule Occupational Structure in India During Colonial Rule Infrastructure in India During Colonial Rule Positive Impacts of British Rule in India Class XI AND XII, Economics, NCERT

1. State of Indian Economy on the Eve of
Independence
Class- XII

2. Synopsis
1. Before the British Rule
2. During the British Rule
3. Components of Indian Economy
4. Agricultural Sector in India During Colonial Rule
5. Industrial Sector in India During Colonial Rule
6. Foreign Trade in India During Colonial Rule
7. Demography in India During Colonial Rule
8. Occupational Structure in India During Colonial Rule
9. Infrastructure in India During Colonial Rule
10. Positive Impacts of British Rule in India

3. Before the British Rule
• India had an independent, self-reliant and prosperous economy.
• Colonial rule over India started from 1857 and lasted for nearly 200 years
till India gained independence on August 15,1947.
• During 18th century India was an agrarian economy.
• India was also known for its developed handicraft industries, like cotton
and silk textiles, metal industries, precious stone works, gold and silver
jewellery.
• These industries had fine quality and high standards.

4. During The British Rule
• Colonial Government followed
policies of protection & promotion.
• This transformed India as a supplier
of raw materials as well as consumer
of finished products from Britain.
• Colonial Government never
estimated India’s national and per
capita income.
• Estimates by V.K.R.V. Rao were
considered to be significant.

5. Components of Indian Economy
1. Agricultural Sector
2. Industrial sector
3. Foreign Trade
4. Demography
5. Occupational Structure
6. Infrastructure

6. Agricultural Sector in India During Colonial Rule
• Agrarian: 85% of the population lived in villages.
• Agricultural Productivity: Remained very low.
• Stagnation: Various land settlement system led to no investment in agriculture
and all profits went to Zamindars.
• Revenue Settlement Terms: If Zamindars failed to deposit fixed revenue on the
specific date, then they would loose land rights.
• Lack of modernisation: No irrigational facilities were available, farmers depended
on monsoon for crops.
• Commercialisation of Agriculture: Britishers forced farmers to grow cash crops
particularly Indigo, which spoiled their lands.

7. Industrial Sector in India During Colonial Rule
• Deindustrialisation: Britishers reduced India’s status as raw material supplier and
turned it into a sprawling market for British industries finished products.
• Decay of indigenous handicraft industries.
• Slow progress of modern industries like TISCO in 1907.
• Lack of capital goods industry for producing machine tools.
• Growth rate of the new industrial sector and its GDP contribution remained
small.
• Limited public sector operations which remained confined to railways,
communication, power, ports, etc.

8. Foreign Trade in India During Colonial Rule
Image By: Byju

9. Foreign Trade in India During Colonial Rule
• Restrictive policies of production, trade and tariff by Colonial
Government adversely affected India’s Foreign trade.
• Reduced status of India as an exporter of raw material and
importer of finished goods.
• Monopoly control by Britain over India’s exports and imports.
• Suez Canal intensified British control over India’s Foreign
trade.
• Misuse of large export surplus (exports were more then
imports) by Britishers even when India had limited food
grains for self consumption, which led to the drain of Indian
wealth.

10. Demography in India During Colonial Rule
• First population census of British India was conducted in
1881.
• 1921 is the year of Great Divide, as low death rate was
noticed after that year.
• Literacy rate was less than 16%.
• Inadequate public health facilities.
• Infant Mortality rate was high.
• Life expectancy was low at 32 years.
• Extreme poverty existed.

11. Occupational Structure in India During Colonial Rule
• Occupational structure means the
distribution of working persons across
different economic sectors.
• Economic sectors comprises of Primary
Sector, Secondary Sector and Tertiary
Sector.
• Madras Presidency, Bombay and Bengal
witnessed a decline in agricultural sector
and increase in manufacturing and
service sector.
Image by: Byju

12. Infrastructure in India During Colonial Rule
• Infrastructure is the basic physical and organizational facilities, which includes buildings, roads,
power supplies, etc.
• Roads constructed was primarily to use the army and raw materials within India to send them in
England via railway or port.
• British introduced the railways in India in 1850 to enable people to undertake long distance
travel.
• Railways also increased commercialisation of Indian agriculture.
• Some measures were taken to develop Inland trade and sea lanes but inland waterways proved
to be costlier.
• The introduction of the expensive system of electric telegraph in India, served the purpose of
maintaining law and order.

13. Positive Impact of British Rule in India
• Development of railways which brought unity to the originally
disconnected areas and helped developed a modern economy.
• Development of transport and communication which helped in the
regulation of food supply and medical facilities during famines.
• Monetary system of exchange which helped India to overcome the
problem of double coincidence of wants under barter system.
• Effective administration by Britishers left a legacy of effective work culture
for the people of India.
• Commercialisation of agriculture.