CBSE Class 11 Economics Indian Economy At The Time Of Independence Notes

The sole purpose of the British colonial rule in India was to reduce the country to being a raw material supplier for Great Britain’s own rapidly expanding modern industrial base.

Low Level of Economic Development Under the Colonial Rule

India was particularly well known for its handicraft industries in the fields of cotton and silk textiles, metal and precious stone works etc.
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.
Such policies brought about a fundamental change in the structure of the Indian economy - transforming the country into supplier of raw materials and consumer of finished industrial products from Britain.
Among the notable estimators - Dadabhai Naoroji, William Digby, Findlay Shirras, V.K.R.V. Rao and R.C. Desai - it was Rao, whose estimates during the colonial period was considered very significant.
The country’s growth of aggregate real output during the first half of the twentieth century was less than two per cent.

Agricultural Sector

India’s economy under the British colonial rule remained fundamentally agrarian — about 85 per cent of the country’s population lived mostly in villages and derived livelihood directly or indirectly from agriculture.
Agricultural productivity became very low and this stagnation in agriculture sector was mainly due to systems of land settlement that were introduced by the British Government.
The Zamindari system, the profit accruing out of the agriculture sector went to zamindari is instead of the cultivators, this led to discouragement amongst the cultivators to production less.

Industrial Sector

The British Government allowed tariff free export of raw materials from India and tariff free import of British industrial products into India.
But a heavy duty on the export of Indian handicrafts products, it led to decay of handicrafts industry in India.
Industrial revolution in Britain gave a stiff competition to the handicraft industries in India.
Due to low cost and better-quality product produced by machine forced the Indian craftsmen to shut down the handicraft Industry in India.
Owing to British rule in India, a new class of people emerged in India. This changed the pattern of demand
in India against the Indian products and in favour of British products. As a result, the Indian Industry
tended to Perish.

Foreign Trade

Due to discriminative tariff policy adopted by the British Government. India became net exporter of raw materials and primary products. On the other hand, it became net importer of finished goods reproduced by the British Industry.
Composition of exports and imports showed the backwardness of Indian economy. Exports and Imports were largely restricted to Britain only due to monopoly control of India's foreign trade.
Surplus profit made and account of foreign trade during the British rule was distributed on administrative and as well as on war expenses. It was only used to increase the pursuits of the British Government.

Demographic Condition

High birth and High death rate implied low survival rate, which was nearly 8 per thousand per annum.
Life expectancy was as low as 32 years which shows the lack of health care facilities, lack of awareness as well as lack of means for health care.
Literacy rate was as low as 16 per cent, which reflects the social and economic backwardness of the country.

Occupational Structure

Agriculture was the principal source of occupation and about 70-75 percent of working population was engaged in agriculture. While the manufacturing and the services sectors accounted for only 10 and 15-20 per cent respectively.

Infrastructure

Under the colonial regime, basic infrastructures such as railways, ports, water transport, posts and telegraphs did develop. However, the real motive behind this development was not to provide basic amenities to the people but to sub serve various colonial interests.
The British introduced the railways in India in 1850 and it is considered as one of their most important contributions.
Indian people gained owing to the introduction of the railways, were thus outweighed by the country’s huge economic loss.

Conclusion

The agricultural sector was already saddled with surplus labour and extremely low productivity.
The industrial sector was crying for modernisation, diversification, capacity building and increased public investment.
Foreign trade was oriented to feed the Industrial Revolution in Britain. Infrastructure facilities, including the famed railway network, needed upgradation, expansion and public orientation.
Prevalence of rampant poverty and unemployment required welfare orientation of public economic policy. In a nutshell, the social and economic challenges before the country were enormous.