Indian Economy On The Eve Of Independence

 Indian Economy On The Eve Of Independence

The main purpose of this Topic is to make you familiar with India’s economy in 1947 and present some important factors that leads to underdevelopment and stagnation of the India’s Economy.
The structure of India’s present day economy is not just of current making, It  has it’s root steeped in the history specially British India.
It’s important for us to know country ‘s economic  conditions before Independence to understand present economic condition.

Two most important purpose of Britishers are-
  • To reduce the India to being a feeder economy for Great Britain’s own rapidly expanding modern industrial base.
  • To protect and promote economy interest’s of Britain than with the development of the Indian economy.

Overview of Indian economy during British rule
  • Before Britishers-Independent economy, agrarian society, India famous for Handicraft Industries(silk, cotton, metal & precious stone works ).
  • The above two main policy transformed India into a net supplier of raw material and consumer of finished Industrial product from Britain.
  • Country’s growth rate-less than 2 %(percent)
  • Per -capita  output-less than half percent.

Agriculture sector
  • Indian society was mainly agrarian society about 85 % of population directly or indirectly involved in agriculture.
  • Agriculture was continuously stagnated and deteriorated.
  • Little growth in agriculture due to expansion of area under cultivation .

Cause for low productivity and stagnation of agriculture during British rule
Low productivity in agriculture during British period is due to land settlement system.

Zamindari system
  • Profit which came from agriculture went into the hands of Zamindars instead of cultivators.
  • Zamindars did nothing for the development of agriculture sector because there main aim was to gain profit ignoring whatever the economic condition of cultivators.
  • Revenue settlement process-zamindars had to deposit fixed amount of money within given date if they fail to do this they lose their rights.

It is one of the reason for the more harsh attitude of  zamindars towards cultivators .

Ryotwari System
  • Ryotwari System was introduced by Thomas Munro in 1820.
  • British Government collected taxes directly from the peasants.
  • ownership rights were handed over to the peasants.
  • The revenue rates of Ryotwari System were 50% where the lands were dry and 60% in irrigated land.

Mahalwari System
  • Mahalwari system was introduced in 1833 during the period of Warren Hastings.
  • The villages committee was held responsible for collection of the taxes.

 However, the British officers hardly cared of these rules. This created widespread discontent among the Indians

Low levels of technology-There is negligible use of scientific techniques

Negligible use of fertilizers-fertilisers are rarely used

Lack of irrigation facility-irrigation facility and tools are not adequate .

Growth in Agriculture-commercialisation of agriculture results in high yield of cash crops in some areas but in no way help farmers because it was used by Britishers .

Partition-Highly irrigated and fertile land went to Pakistan this affects India’s output.

Industrial sector
  • Like agriculture industrial sector could not develop during British rule.
  • World-wide famous Indian handicraft Industries declined during British rule and to take it’s place no other modern industry was allowed to come.

Reason behind failure of industrial sector during British rule

British India wants to make India only exporter of raw material to Britain and feeder of the finished products from Britain .

Results of failure of industrial sector during british rule

Unemployment, demand in the Indian consumer market this result in more imports of cheap manufactured goods from Britain.

Hardly any Capital goods industry (which produce machine tools)
Lack of this lower the rate of industrial development in India.

Small growth rate-Growth rate of new industrial sector and it’s contribution to the GDP remained very small .

Limited area of operation-new industrial sectors confined only to the railways, communications, ports, power generation and some other departmental undertaking.

Positive Signs
  • Modern industry began to grow during the second half of the 19 century but it’s progress remained very slow.
  • In the beginning the major industry were cotton and textiles mills.
  • In the starting of 20 century The Tata Iron and Steel Company(TISCO) was setup in 1907.
  • After second world-war-Paper, sugar , cement etc industries also setup.

Foreign Trade
  • Restrictive policies of commodity production,trade and tariff persuaded by the colonial government adversely affected the structure,composition and volume of India’s foreign trade.

Exports from India-raw silk,wool,sugar,jute, indigo etc

This export did not result in any gold or silver into India it is one way development and that is towards Britain

Imports to India-Finished goods like cotton, silk and woolen cloths and capital goods like machines.

Monopoly-Britain maintained monopoly control over India’s export and imports.

Demographic Condition

Neither the total population nor the rate of population growth rate was  very high during colonial rule.
  • Overall literacy-16% (out of this female literacy was less than 7%)
  •  Public Health facilities-Highly inadequate
  • Mortality rate-overall mortality rate was  very high ,infant mortality rate was about 2018 per thousand in contrast to present infant mortality rate  of total: 44.6 deaths/1,000 live births
  • Life expectancy –it is very low 32 years in contrast to the present 67.3 years(2014)
  • Extensive poverty spread during colonial period .

Occupational structure

Agriculture sector accounted for the largest share of workforce,which is usually  remained at a high of 70-75 percent while the manufacturing and the services sector accounted for only 10 and 10-15 percent respectively.

Under the British rule basic infrastructure develops such as railways, ports, water -transport, telegraphs and posts did develop, main motive behind it to serve various colonial interests instead of providing basic amenities to the people.

The British introduced the railway in India in 1850 most important contribution.

It helps the people to travel long distance within short time and help in the commercialisation of agriculture.

Conclusion-condition of economy during British rule is not very appreciating the agricultural output is very low due to wrong policies of colonial government ,Industrial sectors was crying for modernization, diversification, capacity building and increased public investment.
In nutshell , the social and economic challenges before the country were enormous.
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