INDIAN ECONOMY ON THE EVE OF INDEPENDENCE
The sole purpose of the British colonial rule in India was to reduce the country to being a raw material supplier for the Great Britain’s own rapidly expanding modern industrial base.
Economic Development under colonial rule:
The economic policies pursued by the British in India were concerned more to protect and promote the economic interest of their home country.
The British were not at all interested in the development of Indian economy.
The country was fundamentally changed into a supplier of raw material and consumer of the finished industrial goods from Britain.
Most of the studies found that India’s real gross domestic product during the British period was less than 2% and the per capita income growth was less than 0.5%.
Consequences of the British Rule on Indian Agriculture:
Indian economy under British rule remained fundamentally agrarian. 85% of the population lived in villages and depended on agriculture.
Agricultural sector continued to experience stagnation and unusual deterioration of agricultural productivity.
Various Land tenure system like the Zamindari system introduced by the British worsened the situation. The government or the Zamindars did nothing to improve the condition of agriculture but at the same time the income accruing out of the sector was taken away by them in the form of a fixed rent or Land Revenue.
Low level of technology, irrigation, negligible use of fertilisers contributed to the dismal level of agricultural productivity. Commercialisation of agriculture and production of cash crops were ultimately used by the British industries back home.
Large sections of tenant and small farmers had no resources and technology to invest in agriculture and lived in absolute poverty.
Consequences of the British Rule on Indian Industries:
India could not develop a sound industrial base during the British Period. India’s world famous handicraft industries were destroyed and no corresponding modern industries were allowed to come up.
India was systematically de-industrialized by:
a. By reducing India a mere supplier of raw materials of the British Industries
b. By turning India into a sprawling market for finished goods from British industries.
The decline of indigenous industries has created massive unemployment and created new demand for British industrial goods.
There was hardly any Capital good industries to promote further industrialization.
The growth rate of new industrial sector and its contribution to GDP was very small.
Finally the operation of public sector in the industries were very limited.
Foreign Trade under British Rule:
The restrictive policies of commodity production, trade and tariffs have adversely affected the structure and composition of India’s foreign trade.
India became an exporter of primary products and an importer of finished consumer goods. Britain maintained a monopoly control over India’s exports and imports. More than half of India’s foreign trade was restricted to Britain and the remaining were to other countries that were under the British rule.
India’s foreign trade throughout the colonial period generated large export surplus which was created through the export of essential goods like food grains, cloths, kerosene etc. that were scarcely available.
The export surplus did not benefit India because it was used to pay for expenses incurred for war,payment for British officials in Britain and other forms of invisible.The foreign trade was directed to drain India’s wealth in favour of the British.
Demographic profile of India during the British period:
The first population census was taken by the British in the year 1881.Before 1921 India was in the first stage of demographic transition. During this period India’s population growth was uneven.
The second stage of demographic transition started from 1921. However neither the total population nor the rate of growth of population was very high. The overall Literacy rate was less than 16% out of this the female literacy rate was just 7%.
Water born and air-borne diseases were rampant and took a huge toll on life. The public health facilities were unavailable or inadequate.The overall mortality rate was very high and the infant mortality rate was as high as 218.
The life expectancy rate was just 32 years.There was rampant poverty among the people and the population profile was worsening.
The occupational Structure during the British period:
The occupational structure of India did not change during the British period.Around 75% of the total work force were depended on agriculture, 10% depended on manufacturing sector and only around 15% depended on service sector.There was regional variation in the structure.
Infrastructural facilities during the British Period:
The real motive for the infrastructural development was not for the development of India or for the benefit of the people but to serve for the interest of colonial rule.
a. Roads:
Roads were built primarily for the mobilizing the army within India and for drawing raw-materials from country side to the nearest railway station or to the port to send it away to England.
There was acute shortage of all-weather road in the rural sector.
b. Railways:
The British introduced railway in the year 1850.
It enabled the people to undertake long distance travel.
It fostered commercialization of agriculture. This adversely affected the self-sufficiency of Indian village economies.
The volume of India’s export significantly increased but without any benefit to the people.
The economic loss of introduction of Railways was much higher than gain from the introduction of the railways.
c. Water-ways:
The British took measures to develop inland and the sea lanes.
The inland water ways and coastal lanes proved to be uneconomical and their further development was discarded.
d. Electric telegraph and postal system
The electric telegraph was proved to be very expensive. It was mainly used for the purpose of maintaining law and order.Postal system proved to be very useful but was extremely inadequate.Important economic challenges that India had to face at the time of independence
a. Agricultural sector was characterized by surplus labour and suffer from low productivity.
b. The Industrial sector was crying for modernization, diversification, capacity building and increased public investment.
c. Foreign trade was directed to feed the industrial revolution in Britain.
d. Infrastructural facilities including railways needed upgradation, expansion and public orientation.
e. Prevalent of rampant poverty and unemployment required welfare orientation of public economic policy.
TERMS
Colonialism: The practice of acquiring control, power or rule by a country through conquest over the political and economic interest of the area outside its borders and making them dependent.Commercialization of agriculture: It means production of crops for the market rather than selfconsumption.
Demographic transition: It is the typical pattern of falling death and birth rate in response to better living condition associated with economic development.
De-industrialisation: Destruction of existing industries and no corresponding modern industries were allowed to come up.
Capital goods industries: Industries that produce machineries, equipment and tools which in turn used for producing consumer goods.
Per capita Income: Average income of an individual which is national income divided by the population.
Invisible: Various items that constitute the current account of balance of payment which are invisible that means services transport, airways, insurance, banking etc.
Mortality rate: It is annual number of death per one thousand people.
Infant mortality rate: It is the number of death of infants before reaching the age of one per thousand live birth in a year.
Life expectancy: The number of years that a new born is expected to live in the country.
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