CBSE Class 11 Economics Indian Economy At The Time Of Independence Notes Set 04

INDIAN ECONOMY ON THE EVE OF INDEPENDENCE

• Colonial Exploitation of the Indian Economy Under the British Rule
• Features of Indian Economy on the Eve of Independence
• Agricultural Sector on the Eve of Independence
• Industrial Sector on the Eve of Independence
• Foreign Trade Under the British Rule
• Demographic Profile During the British Rule
• Occupational Structure on the Eve of Independence
• Infrastructure on the Eve of Independence

I. COLONIAL EXPLOITATION OF THE INDIAN ECONOMY UNDER THE BRITISH RULE

Indian economy under the British rule was subjected to colonial exploitation. It implied a targeted exploitation of all sectors of the economy by the British Government. This is how it happened:

(1) Colonial Exploitation of Agricultural Sector: Agriculture was exploited through zamindari system of land revenue.

Zamindari System of Land Revenue

A system of land revenue that worked through middlemen called zamindars; an intermediary between the colonial government and the peasants.

Following observations highlight how this system led to exploitation of the Indian agriculture:

• Zamindars were declared as owners of the soil. They were to pay a fixed sum to the government by way of land revenue, and were free to extract as much as they wished (or as much as they could) from the tillers of the soil (farmers).
• The tillers of the soil (the actual cultivators) got bare minimum for survival. They were left with no surplus for investment in agriculture.
• The zamindars, on the other hand, spent their revenue income on the luxuries of life. Little or no investment was made for the development of agriculture.

(2) Colonial Exploitation of Industrial Sector: Prior to the British rule, industrial sector in India was well known for its handicrafts.

Indian handicrafts (work produced by hand labour) enjoyed a world-wide reputation for their variety and quality. But these were destroyed by the British government in two ways:

• Foreign demand for the Indian handicrafts was destroyed by way of heavy duty on their exports.
• Domestic demand for the Indian handicrafts was destroyed by way of duty-free import of the British goods in the Indian markets.

(3) Colonial Exploitation of International Trade: India's international trade was exploited through discriminatory tariff (a tax on imports) policy. It implied:

• Duty-free export of Indian raw material to fulfil the industrial needs in Britain.
• Duty-free import of British goods to expand demand for the British goods in the Indian markets.

It was owing to discriminatory tariff policy that India became importer of finished goods from Britain, and exporter of raw material to Britain.

Briefly, owing to its colonial exploitation, the Indian economy became both stagnant as well as backward.

2. FEATURES OF INDIAN ECONOMY ON THE EVE OF INDEPENDENCE

On the eve of independence, Indian economy had the following characteristics:

(1) Stagnant Economy: On the eve of independence, Indian economy was completely a stagnant economy. A stagnant economy is the one which shows little or no growth in income.

Between 1860-1925, growth rate of per capita income was as low as 0.5 per cent per annum and between 1925 and 1950 it was 0.1 per cent per annum.

On account of this stagnation, bulk of Indian population lived in poverty. Standard of living of the people remained miserably low. Epidemics and Famines were a recurring phenomenon.

(2) Backward Economy: Indian economy was a backward economy on the eve of independence. Backward economy is the one in which per capita income is very low.

In 1947-48, per capita income in India was just Rs. 230.

The bulk of the population was very poor, without sufficient food, clothing and shelter. Unemployment was rampant.

(3) Agricultural Backwardness: It is highlighted by the following facts:

• Nearly 72 per cent of the country's working population was engaged in agriculture. But, its contribution to GDP was only 50 per cent.
• Productivity was extremely low. Thus, per hectare output of wheat was only 660 kilograms, and of rice just 665 kilograms.
• Foodgrain production was barely enough for subsistence. In 1947-48, it was recorded to be just 527 lakh tonnes.

(4) Industrial Backwardness: Here, following facts are of underlined significance:

• There was a virtual lack of the basic and heavy industries in the country.
• Production of machines was almost negligible.
• Small-scale and cottage industries were almost ruined.
• For the bulk of its capital-goods requirement, the Indian industry was dependent upon imports from Britain.

(5) Rampant Poverty: Bulk of the population was very poor. People were not getting two square meals a day. They lacked shelter and clothing. This was largely owing to widespread unemployment (caused by the destruction of handicraft industries).

(6) Poor Infrastructure: Infrastructural development (including means of communication and transport, generation of power/energy) was extremely low. In 1948, power generation capacity was merely 2,100 MW, length of railway lines was 53,596 km, pucca roads had a coverage of 155 thousand km only.

(7) Heavy Dependence on imports: The country had to depend on imports for machinery and other equipments of production. Armed forces of the country also depended heavily on foreign imports for most of the defence equipments. Besides, several consumer goods like sewing machines, medicines, kerosene oil, bicycles, etc. used to be imported from abroad.

(8) Limited Urbanisation: At the time of independence, bulk of the population of India lived in villages. In 1948, only 14 per cent of population lived in urban areas while 86 per cent lived in rural areas. Rural population lacked opportunities outside agriculture. This compounded their poverty.

(9) Semi-Feudal Economy: On the eve of independence, Indian economy was neither wholly feudal nor a capitalist economy. It was a mixed economy or a semi-feudal economy. Such an economy had the mixture of feudalistic and capitalist modes of production. Feudalistic mode of production leads to low productivity. Low productivity leads to backwardness.

(10) Colonial Economy: Indian economy was a colony of British government. It implied exploitation of the Indian economy for the benefit of the British economy. Following observations highlight how Indian economy suffered at the hands of the British rulers:

• British government curbed domestic industry by imposing heavy taxes. This forced the Indians to buy the British goods.
• Indian economy was used as a source of raw material for the British industries. Exports of raw material were almost duty-free. Thus, natural resources in India were drained for the growth of the British industry.
• Atrocities were committed on the Indian artisans so as to force them to close their cottage industries. This led to destruction of the Indian handicrafts.

3. AGRICULTURAL SECTOR ON THE EVE OF INDEPENDENCE

On the eve of independence, Indian agricultural sector revealed the following characteristics:

(1) Low Production and Productivity: Production refers to total output, while productivity refers to output per hectare of land. Both (production as well as productivity) were found to be extremely low on the eve of independence. It arose on account of lack of means as well as incentive on part of the cultivator (the peasants).

Notable Economists who Estimated India's National and Per Capita Income

• Notable Economists who estimated India's national and per capita income were: Dadabhai Naoroji, William Digby, Findlay Shirras, V.K.R.V. Rao and R.C. Desai.
• Most of them find that during the first-half of the twentieth century, growth rate of national income and per capita income were less than 2 per cent and 0.5 per cent respectively.

Table 1 shows production and productivity levels in 1947 for wheat and rice, compared with their levels in 2018-19.

Table 1. Production and Productivity of Wheat and Rice— A Comparison between the Levels in 1947 and 2018-19

[Source: (i) D. Bhattacharya: Economic History of India, Economic Survey 2018-19]

Table 1 shows that productivity of wheat was nearly 5.2 times lower in 1947 compared with its level in 2018-19. Productivity of rice was nearly 4 times lower in 1947 compared with its level in 2018-19.

Likewise, level of output of wheat was nearly 15.5 times lower, and that of rice was nearly 5.3 times lower in 1947 compared with their levels in 2018-19.

(2) High Degree of Uncertainty: Agriculture showed a high degree of uncertainty (in terms of farm output). Because, it was excessively dependent upon rainfall. Good rainfall implied good output, while poor rainfall implied poor output. No effort was ever made under the British rule to develop permanent means of irrigation (including wells and canals).

(3) Dominance of Subsistence Farming: Farming was taken mostly as a means of subsistence. Subsistence farming is a form of farming in which the crops are produced to provide for the basic needs of the family. There is little surplus left for sale in the market. Implying a lack of commercial outlook. Accordingly, backwardness prevailed and poverty dominated.

Owners of the Soil vs. Tillers of the Soil

Owners of the soil were the zamindars and tillers of the soil were peasants and labourers who worked on the farms of zamindars.

(4) Gulf between Owners of the Soil and Tillers of the Soil: Agriculture, during the British Raj was characterised by a gulf between 'owners of the soil' on the one hand and 'tillers of the soil' on the other. While the owners shared the output, they seldom (hardly) shared the cost of production. They were merely interested in maximising their rental income (in terms of share of output). The tillers of the soil were merely given enough for subsistence.

Indebtedness of the Tillers of the Soil and Conspicuous Consumption of the Owners of the Soil

• During the British rule, while tillers of the soil confronted absolute poverty and accepted indebtedness as their way of life, the owners of the soil indulged in conspicuous consumption.
• The tillers of the soil viewed agriculture merely as a source of subsistence. The owners of the soil viewed it as a hereditary source of income without investment.

Partition of the Country and its Impact

• The partition of the country had a negative impact on Indian agriculture.
• India got 82 per cent of population and 65 per cent of food grain area.
• Rich food producing areas of West Punjab and Sindh went to Pakistan.
• This aggravated the food crisis in the country.

(5) Small and Fragmented Holdings: Landholdings were both small as well as fragmented. [Fragmented holdings mean a piece here and a piece there]. Accordingly, most landholdings were uneconomic: yielding low output at high cost.

(6) Land Revenue System under the British Raj: The British government in India introduced a unique system of land revenue. It set up a triangular relationship among the government, the owner of the soil and the tiller of the soil. This was popularly known as zamindari system of Land Revenue. The distinct features of this system were as these:

• The zamindars were recognised as permanent owners of the soil.
• The zamindars were to pay a fixed sum to the government as land revenue.
• The zamindars were free to extract as much from the tillers of the soil as they could.

The implications of the land revenue system were alarming for the farmers and the farming. Most importantly:

• It led to unlimited exploitation of the tillers of the soil by the zamindars.
• Rates of land revenue were frequently raised by the zamindars which led to frequent eviction of the tillers of the soil.
• Tillers were reduced to the status of landless labourers.
• As landless labourers, the tillers merely got subsistence wage (in kind).

Backwardness of tillers (as landless labourers) meant that they had no means and little interest in improving agriculture. The zamindars, on the other hand, led a lavish lifestyle and spent all their revenue income on luxuries of life. Improvement of agriculture was totally neglected.

(7) Forced Commercialisation of Agriculture: Commercialisation of agriculture refers to a shift from cultivation for self-consumption to cultivation for the market. Following are some notable points in this context:

Mention need to be made of cash crops such as cotton, jute, sugarcane which had a high demand in the market were increasingly cultivated.

• Farmers were forced to shift to commercial crops (indigo, in particular) from the conventional subsistence crops (like rice and wheat). Reason: Indigo was required by the textile industry in Britain for dyeing/bleaching of the textile.
• The farmers were either lured or forced to accept advance payments for the cultivation of indigo. It exposed the subsistence farmers to uncertainties of the market.
• While earlier they would grow grain for their family consumption, now they needed cash to buy it from the market. But they would seldom have cash owing to their mounting indebtedness. Consequence: Perpetual indebtedness of the farmers and perpetual stagnation of farming.

Famines in India During the British Rule

• Famines refers to a severe shortage of food (as through crop failure) resulting in violent hunger and starvation.
• Throughout the period of British rule, most Indians always lived on the verge of starvation.
• From 1760 till 1943, India was hit by terrible famines on a regular basis.
• The most significant amongst those was the great famine of Bengal of 1769-70, which claimed a large toll of lives.
• More than 85 million people died owing to repeated famines.
• In contrast, there have been no famine related deaths since independence.

Briefly, on the eve of independence, Indian agriculture was both backward as well as stagnant (non-vibrant). Backwardness of agriculture is explained in terms of the following factors:

• Low production and low productivity,
• High degree of uncertainty, owing to huge dependence on rainfall,
• Dominance of subsistence farming, and
• Small and fragmented holdings.

Stagnation of agriculture is explained in terms of the following factors:

• Gulf between the owners of the soil and the tillers of the soil,
• Land Revenue System under the British Raj, and
• Forced commercialisation of agriculture.

Pre-British Period Agriculture

• Backward, stagnant and non-vibrant agriculture during the British Raj sharply contrasted with the pre-British period agriculture.
• Prior to the British Raj in India, rural India was described as a system of self-contained village communities. These village communities included farmers and the functionaries.
• The farmers were engaged in crop farming or cattle farming while the functionaries would render essential services like that of blacksmiths, goldsmiths, washermen and shoe-makers.
• There were no intermediaries (like zamindars) between the state and the farmers; the farmers would pay land revenue directly to the king.
• Prosperity and stability were the key characteristics of life in rural India. Thus, the French traveller, Bernier, described Bengal in 17th century as "richer than Egypt" producing amply for self-consumption and exporting in abundance.

4. INDUSTRIAL SECTOR ON THE EVE OF INDEPENDENCE

Systematic de-industrialisation is the term that describes the status of industrial sector during the British rule. It implied two things:

• Decay of world famous traditional handicraft industry owing to discriminatory policies of the British government, and
• Bleak growth of modern industry owing to lack of investment opportunities.

Decay of Handicrafts

Prior to the British rule, handicraft in India enjoyed the worldwide reputation of excellence and quality. But, the British Raj contributed to their decay. It was owing to discriminatory economic and political policies pursued by the British government. Following points may be noted in this regard:

(1) Discriminatory Tariff Policy of the State: The British rule in India coincided with industrial revolution in Britain. The British found India as the best source of raw material as well as the best market for their industrial products. Accordingly, a discriminatory tariff policy was pursued. It allowed:

• tariff-free export of raw material from India, and
• tariff-free import of British industrial products into India.

But, at the same time, heavy duty was placed on the export of Indian handicraft products which reduced their competitiveness in the international market. As a consequence, while the British products started gaining the Indian markets, the Indian handicraft products started losing their domestic as well as foreign market. Decay of handicrafts was the end-result.

(2) Disappearance of Princely Courts: Prior to the British rule, nawabs, rajas, princes and emperors ruled different parts of the country. They used to patronise the handicrafts because of which the Indian handicraft industry had acquired international reputation. The beginning of British rule implied the end of princely courts. Consequently, the handicrafts started decaying.

(3) Competition from Machine-made Products: Machine-made products from Britain were low cost products and gave a stiff competition to the handicraft products in India. Also, machine-made products out-excelled Indian handicraft products in precision and quality. Competition forced the Indian craftsmen to shut-down their enterprises.

(4) New Patterns of Demand: Owing to the impact of British culture, a new class emerged in India which was keen to adopt the western lifestyle. This changed the pattern of demand against the Indian products and in favour of the British products. In the process, the Indian industry started losing domestic market, and ultimately perished.

(5) Introduction of Railways in India: With the introduction of railways, size of the market for the low-cost British products tended to expand while it started shrinking for the high-cost Indian products. This hastened/quickened the process of decay of the Indian handicrafts.

Two-fold motive behind the Systematic De-industrialisation during the British Rule in India

• To exploit India's wealth of raw material and primary products (like cotton and jute). It was required to fulfil the emerging needs of industrial inputs in the wake of industrial revolution in Britain.
• To exploit India as a potential market for the industrial products of Britain.

The twin motive resulted in twin consequence:

• destruction of handicrafts in India.
• impetus to the process of industrialisation in Britain.

Briefly, the British government converted the Indian economy into a colonial market for the British industrial goods. Implying, exploitation of the Indian market as: (i) a source of raw material (for the British industry) and (ii) a destination of demand for the British products. In the process, the handicraft industry in India was finally eliminated.

Bleak (Notional) Growth of Modern Industry

Under the 'British Raj', modern industry saw only a bleak growth. It was only in second half of the 19th century that the modern industry showed its emergence.

Three observations need to be noted in this regard:

(i) Some industries were established by the private entrepreneurs. These included: iron and steel (Tata Iron & Steel Company was founded in 1907), sugar, cement and paper industries. These were established in the wake of worldwide scarcity of industrial good because of World Wars I and II.

(ii) The state participation in the process of modern industrialisation was limited. It was confined to such strategic areas (like railways and means of communication) which helped expansion of the Indian market for the British products.

(iii) There was no capital goods industry worth the name. Capital goods industry produces goods like machines and industrial plants which are used for further industrialisation. In the absence of this industry, industrialisation in India remained lopsided.

Briefly, industrial sector on the eve of independence revealed four core characteristics, pointing to its backwardness and limited growth:

(i) Handicraft industry was systematically destroyed by the British government. It was largely owing to the discriminatory tariff policy of the British government.

(ii) Modern industry showed a bleak expansion. It was by and large restricted to the expansion of railways. It helped expansion of the Indian market for the British products.

(iii) Capital goods industry (which is the core element of industrial growth) was almost non-existent.

(iv) While the traditional Indian industry (handicrafts) were decaying, modern industry remained in an infant stage. This again pointed to the backwardness of the Indian economy with little or no evidence of dynamic change.

5. FOREIGN TRADE UNDER THE BRITISH RULE

India had acquired eminence in the area of foreign trade, since ancient times. The Romans used to call India, “the sink of world’s bullion”. But the British rule in India brought an end to it. India was a well-known exporter of finished goods (such as fine cotton, silk, textiles, iron goods, wooden goods, ivory work and precious stones). But the British converted India into a net exporter of raw material and importer of finished goods. It was all due to discriminatory policy of trade and tariff pursued by the British government.

State of India’s foreign trade at the time of independence can be described in terms of the following observations:

• Net Exporter of Primary Products and Importer of Finished Goods: Owing to colonial exploitation of the Indian economy, India became net exporter of raw materials and primary products (like raw silk, cotton, wool, jute, indigo, sugar, etc.).

  On the other hand, it became net importer of finished goods produced by the British industry. Our imports included cotton, silk and woollen clothes, besides several types of capital goods produced in England.

  Composition of exports and imports reflected utter backwardness of the Indian economy.

• Monopoly Control of India’s Foreign Trade: During the British rule, exports and imports of the country came under monopoly control of the British government. In this context, two observations are of critical significance:
  • More than 50 per cent of India’s foreign trade was directed towards Great Britain.
  • While exports of primary products (raw material) from India supplied inputs to the British industry, imports of finished goods from Britain provided a huge market to the British industry.

Suez Canal and Access to Indian Markets

• Opening of Suez Canal in 1869 significantly reduced the cost of transportation of goods between Britain and India.
• Because, this canal served as a direct route for the ships operating between India and Britain avoiding the African continent.
• A significant reduction in transport cost promoted monopoly control of India’s foreign trade by the British government.

• Colonial policy of the British government resulted in a monopoly control of India’s foreign trade.
• Exports and imports were largely restricted to be between India and Britain.
• India’s exports provided raw material to the British industry, while India’s imports provided a huge market for the British industry.

These are typical characteristics of a backward economy.

Drain of India’s Wealth

• Huge administrative expenses were incurred by the British government to manage their colonial rule in India.
• Also, huge expenses were incurred by the British Government to fight wars in pursuit of their policy of imperialism.
• All these expenses were borne by the Indian Exchequer.
• This implied a drain of India’s wealth.

• Surplus Trade but only to Benefit the British: Surprisingly, during the British regime, our exports exceeded our imports. It implied a surplus of balance of trade. But, note these points carefully:
  • This surplus was owing largely to the export of primary goods (not the industrial goods) which is a sign of economic backwardness.
  • The trade surplus was not used for growth and development of the country. Instead, it was used to meet:
    (i) administrative expenses of the British government in India, and
    (ii) expenses of wars fought by the British government.
  • Administrative and war expenses led to a huge drain of wealth from India. It compounded the backwardness of the Indian economy.

• Surplus generated as balance of trade was only spent to meet administrative and war expenses by the British government in India.
• These expenses led to a huge drain of wealth as it was not used for investment.
• Consequently, poverty and backwardness were elevated.

6. DEMOGRAPHIC PROFILE DURING THE BRITISH RULE

Demographic conditions during the British rule exhibited all features of a stagnant and backward economy. Here, we focus on the following parameters:

• Birth Rate and Death Rate: Both birth rate (BR) and death rate (DR) were very high—nearly 48 and 40 per thousand respectively. High BR and High DR suggest a state of massive poverty in the country.
• Infant Mortality Rate: Infant mortality rate (death rate of children below the age of one year per 1000 live births) was very high. It was about 218 per thousand, while at present, it is 32 per thousand. High infant mortality is a sign of poor healthcare associated with extreme poverty.
• Life Expectancy: Life expectancy (average life of a person) was as low as 32 years, while presently it is 69.4 years. Low life expectancy reflects lack of healthcare facilities, lack of awareness as well as lack of means to avail them.
• High Mortality Rate and Low Life Expectancy are important social indicators of backwardness and poverty of the masses.
• During the British rule, frequent famines and recurring epidemics were the prime causes behind a high mortality rate.
• While famines occurred largely due to droughts, epidemics occurred due to the neglect of public health services.

(4) Literacy Rate: Literacy rate (referring to those who can read and write) was nearly 16 per cent, reflecting social backwardness as a reflection of economic backwardness. Female literacy rate was still worse—only 7 per cent. This indicated gender-bias in the society.

Demographic Transition

Following are some notable points relating to demographic transition in India:

(i) In the history of demographic transition, 1921 is regarded as the ‘Year of Great Divide’.

(ii) Prior to 1921, population growth in India was never consistent. Size of population kept fluctuating, increasing in one census and decreasing in the other.

(iii) After 1921, population in India recorded a consistent rise.

(iv) Thus, the census 1901 showed a decline of 0.04 crore in total population (from 23.87 crore in 1891 to 23.83 crore in 1901).

(v) The census 1911 showed a rise of 1.38 crore (from 23.83 crore in 1901 to 25.21 crore in 1911).

(vi) Again, the census of 1921 showed a decline of 0.07 crore (from 25.21 crore in 1911 to 25.14 crore in 1921).

(vii) From the year 1921 onwards, total population in India never declined; it showed a consistent rise: the census 1931 recorded a rise of 2.76 crore; the census 1941 recorded a rise of 3.96 crore; the census 1951 showed a rise of 4.24 crore, and so on.

(viii) A consistently rising population (on the eve of independence) led to excessive burden of maintenance investment. It is an expenditure which a country has to incur on the maintenance of the existing population.

(ix) When the maintenance investment is high, growth-oriented investment remains low.

(x) High maintenance and low growth-oriented investment on the eve of independence is another feature of the Indian economy pointing towards its backwardness and stagnation.

Population Census

• Population census in India is a detailed estimation of population size, along with a complete demographic profile of the country.
• It was first conducted under the British rule in 1881. Since then it is conducted after every ten years.

High maintenance investment (expenditure on the maintenance of existing population) and low investment for growth and development kept India in a state of perpetual backwardness.

• (xi) However, the underlying fact is that till 1951, the rise in India’s population was never alarming; it ranged between mild to modest.
• (xii) It was only from 1951 onwards that the rise in population became explosive in nature, and the country started facing a serious challenge in terms of population explosion.

7. OCCUPATIONAL STRUCTURE ON THE EVE OF INDEPENDENCE

Occupational structure refers to distribution of working population across primary, secondary and tertiary sectors of the economy.

Table 2 shows occupational structure of Indian economy at the time of independence. The data relates to the 1951, because reliable statistics for the year 1947 are not available.

Table 2. Occupational Distribution of India at the Time of Independence

[Source: Census of India 2011]

Table 2 offers the following observations:

• (1) Agriculture—The Principal Source of Occupation: On the eve of independence, about 72.7 per cent of working population was engaged in agriculture.

  Percentage of population dependent on agriculture is much less in advanced countries of the world. For instance, in England and America 2 per cent, in Japan 12 per cent and in Germany 4 per cent of the population depend on agriculture.

  This establishes backwardness of the Indian economy at the time of independence.

• (2) Industry—An insignificant Source of Occupation: On the eve of independence, barely 9.0 per cent of the working population in India was engaged in manufacturing industries, mining, etc.

  As against it, 32 per cent in the USA, 42 per cent in England and 39 per cent in Japan are engaged in these activities.

  It further proves how backward the Indian economy was at the time of independence.

• (3) Unbalanced Growth: The table shows unbalanced growth of the Indian economy.

  Growth is said to be balanced when all sectors of the economy are equally developed. However, in case of India, secondary and tertiary sectors were in their infant stage of growth.

  Hence, the conclusion that Indian economy at the time of independence was lopsided and therefore, backward.

Agriculture as a Means of Subsistence

• Greater dependence on agriculture (as suggested by occupational structure on the eve of independence) implied lesser availability of land per head of the farming population.
• Accordingly, agriculture was taken largely as a means of subsistence, and less as an occupation for profit.

• Assessed in terms of occupational distribution of the working population in India at the time of Independence, we get a disappointing picture of the Indian economy.
• Since bulk of the working population was engaged in agricultural sector (along with the fact that agriculture was merely a means of subsistence), Indian economy was in a state of extreme backwardness.
• The masses led their life in extreme poverty.

8. INFRASTRUCTURE ON THE EVE OF INDEPENDENCE

Infrastructure refers to the elements of (i) economic change (like means of transport, communication, banking, power/energy), and the elements of (ii) social change (like growth of educational, health and housing facilities), which serve as a foundation for growth and development of a country.

The state of India’s infrastructure on the eve of independence can be described in terms of the following observations:

• (i) Railways were developed to transport finished goods from Britain to the interiors of the colonial India (with a view to widening the size of the market). It aimed at widening the size of the market for the British products in India.
• (ii) Ports were developed to handle export of raw material to Britain and import of finished goods from Britain.
• (iii) Post and telegraphs were developed to enhance administrative efficiency.
• (iv) Roads were developed to facilitate transportation of raw material from different parts of the country to the ports.

Briefly, some modest infrastructural change in the economy during the British Raj is not denied. But, the motive behind this change was not the growth and development of the Indian economy; rather it was the growth and development of the British economy through colonial exploitation of the Indian economy. Consequently, Indian economy remained to be backward.

IMPACT OF RAILWAYS IN INDIA

Positive Impact

(i) Railways facilitated expansion of the domestic market. Accordingly, exports and imports of the country showed a significant rise.

(ii) Railways facilitated commercialisation of agriculture, as goods could then be moved to distant places. This implied a modest change in the outlook of the farmers. They started viewing farming as a business, rather than merely as a source of subsistence.

(iii) Railways enabled people to break the barriers of distance and undertake journeys to far off places. This promoted cultural affinity among the countrymen.

(iv) Faster movement of food grain across different parts of the country (owing to Railways) helped control the spread of famines. Food supplies could reach the people before they were driven to starvation.

Negative Impact

(i) Railways contributed to colonial exploitation of the Indian economy. Because, primary goods (raw material) could then be easily transported from the fields and farms to the ports for the purpose of exports to the British economy.

(ii) Finished goods coming as imports to the Indian economy could be easily transported to the interiors of the country for purpose of sale.

(iii) Thus, the spread of railways led to the spread of the domestic market for the British products.

Was there any Positive Impact of the British Rule in India?

Certainly not, if the impact of the British rule is studied with reference to ‘motive’ of the British government in India. The motive was clear and focused: it was colonial exploitation of the Indian economy. However, the means to achieve the end yielded some positive side-effects. These are as under:

(1) Commercial Outlook of the Farmers: Forced commercialisation of agriculture under the British rule exposed the subsistence farmers to uncertainties of the market. True, but it also led to a gradual change in outlook of the farmers. The farmers started considering market price of the produce as an important determinant of their production decisions.

(2) New Opportunities of Employment: Spread of railways and roadways opened up new opportunities of economic and social growth.

(3) Control of Famines: Rapid means of transport facilitated rapid movement of food grain to the famine-affected areas. Accordingly, famines were controlled.

(4) Monetary System of Exchange: There was a transition from barter system of exchange to monetary system of exchange. Growth of monetary system of exchange facilitated division of labour, specialisation, and large-scale production.

(5) Efficient System of Administration: The British government in India left a legacy of an efficient system of administration. This served as a ready-reference for our politicians and planners.

Power Points & Revision Window

• Colonial Exploitation of the Indian Economy under the British Rule: Colonial exploitation of the Indian economy was achieved through: (i) Colonial exploitation of agricultural sector, (ii) Colonial exploitation of industrial sector, (iii) Colonial exploitation of international trade.
• Features of Indian Economy on the Eve of Independence: (i) Stagnant economy, (ii) Backward economy, (iii) Agricultural backwardness, (iv) Industrial backwardness, (v) Rampant poverty, (vi) Poor infrastructure, (vii) Heavy dependence on imports, (viii) Limited urbanisation, (ix) Semi-feudal economy, (x) Colonial economy.
• State of Agriculture under the British Rule: Indian agriculture under the British rule showed these characteristics:
  • Low production and productivity.
  • High degree of uncertainty: good harvest when it rains good and bad harvest when it rains bad.
  • Dominance of subsistence farming: tillers of the soil took to agriculture merely as a source of subsistence, never as a source of profit.
  • Widening gulf between owners of the soil (zamindars) and tillers of the soil.
  • Wastage of land revenue income on conspicuous consumption. Implying ‘low or no’ investment for the growth of agriculture. Net consequence: backwardness of farmers as well as farming.
• State of Industry under the British Rule: Indian industry (as dominated by handicrafts) which at one time enjoyed global reputation, suffered a systematic destruction during the British rule. It was largely owing to discriminatory policy of the British government. While cheaper industrial goods were allowed tariff-free access to the Indian markets, handicraft products from India were subjected to heavy export-duty. Handicrafts in India lost both domestic as well as international market. Growth of the modern industry was tardy. It lacked state-initiative. Capital goods industry was almost non-existent. Process of industrialisation remained lop-sided.
• State of Foreign Trade under the British Rule: Foreign trade of India took a hit in two ways:
  • Composition of trade showed a shift from the export of finished goods to the export of raw material and from the import of bullion (gold and silver) to the import of finished industrial products, largely from Britain, and
  • It was monopolised by the British government, ending multinational exports from India.
• Demographic Profile under the British Rule: India’s demographic profile showed high birth rate, high death rate, high infant mortality rate, low expectancy of life and low rate of literacy. These characteristics point to economic and social backwardness of the country.
• Occupational Structure under the British Rule: More than 70 per cent of working population was engaged in agriculture. Industry offered employment merely to 9 per cent of the working population. This is yet another pointer to economic and social backwardness of a country.
• Infrastructure on the Eve of Independence: Infrastructure—economic as well as social—continued to be highly deficient. There was a modest change, but only to facilitate colonial exploitation of the Indian economy.
• Some Positive Side-effects of the British Rule in India: With a view to enlarging size of the market for British goods in India, the British government needed to provide some infrastructural facilities in India. These included: (i) Transport facilities, largely in terms of railways, (ii) Development of ports, (iii) Provision of post and telegraph services. Besides, the British government left a legacy of a strong and efficient administrative set-up.