The Indian Economy Before and During British Rule

The Indian Economy Before British Rule

• India possessed a self-sufficient economy prior to British rule.
• Agriculture was the primary source of livelihood for most Indians.
• India had diverse manufacturing sectors, including handicrafts, cotton and silk textiles, metalwork, and precious stone carving.
• These products were highly sought after globally.

The Indian Economy During the Colonial Rule

• British economic policies prioritized British interests over Indian economic development.
• This led to India becoming a major supplier of raw materials and a consumer of British manufactured goods.
• The colonial government lacked a dedicated effort to calculate India's national and per capita income.

The Indian Economy During the Colonial Rule: National Income

• Indian economists like Dadabhai Naoroji, William Digby, Findlay Shirras, V.K.R.V Rao, and R.C. Desai attempted to estimate India's national and per capita income.
• V.K.R.V Rao's estimations were considered the most significant.
• He calculated a 2% annual growth rate for the Indian economy during British rule.
• Per capita income, however, grew at less than 0.5% per annum, signifying significantly slow economic growth.

The Indian Economy During the Colonial Rule: Agriculture

• India's economy was predominantly agrarian, with a majority relying on agriculture.
• The agricultural sector stagnated under colonial rule.
• Low agricultural productivity stemmed from antiquated technology, inadequate irrigation systems, limited fertilizer use, and other factors.

The Indian Economy During the Colonial Rule: Land and Revenue System

• The colonial government implemented various land and revenue systems, including the Zamindari system.
• The Zamindari system, established by Lord Cornwallis in 1793, appointed Zamindars as intermediaries to collect taxes from farmers.
• Zamindars prioritized rent collection over farmer well-being, leading to a drain of agricultural profits to the British.

The Indian Economy During the Colonial Rule: Industry

• Indigenous handicraft industries declined during the colonial period, causing widespread unemployment.
• The Tata Iron and Steel company emerged as a significant industrial establishment in 1907.
• The absence of capital goods industries hindered broader industrial development in India.
• The industrial sector's growth rate and contribution to national income remained limited.
• The public sector was primarily focused on railways, power generation, communication, ports, and similar departmental projects.

The Indian Economy During the Colonial Rule: Foreign Trade

• India boasts a long history of significant trading activity.
• Policies related to commodity production, trade, and tariffs negatively influenced the Indian economy.
• Policies favored British interests, promoting raw material exports and manufactured imports, hindering Indian economic growth and self-sufficiency.

### Impact of British Policy on Trade

• India primarily exported raw materials under British rule.
• Key exports included raw silk, cotton, wool, sugar, indigo, and jute.
• India imported finished goods, such as cotton, silk, and woolen fabrics.
• This trade imbalance resulted in a net economic loss for India.

The Suez Canal

• The Suez Canal is a man-made waterway connecting the Mediterranean Sea to the Red Sea, built under British guidance.
• It significantly reduced the cost and time taken to transport goods by water.

Foreign Trade Characteristics During the Colonial Period

• India saw a substantial export surplus during the colonial period.
• Despite the surplus's apparent positive nature, it negatively impacted the Indian economy.
• The surplus limited India's access to crucial commodities.
• India's exports primarily benefited British economic interests, not India's own.
• The export surplus did not lead to a substantial increase in India's gold or silver reserves.

Demographic Conditions

• The first census of British India took place in 1881.
• Before 1921, India experienced the first stage of demographic transition.
  • Characterized by high birth and death rates, along with low population growth.
• Post 1921, India entered the second stage of the demographic transition.
  • High birth rates, declining death rates, and higher population growth.

Post 1921 Demographic Changes

• 1921 marked a significant demographic shift in India.
• High mortality rates, particularly infant mortality, posed challenges.
• Life expectancy remained comparatively low, at approximately 32 years.
• The total literacy rate was only 16%, with female literacy at a mere 7%.
• Infant mortality was high, at 218 per 1000 live births.

Occupational Structure

• Agriculture employed roughly 72.56% of the workforce.
• Manufacturing employed approximately 10%.
• The service sector comprised between 15 and 20% of employment.

Infrastructure

• The British established fundamental infrastructure in India, including railroads, ports, waterways, and postal and telegraph systems.
• Railroads were built to facilitate troop movement and the transportation of raw materials.
• Railroads accelerated the commercialization of Indian agriculture and increased export volumes.
• Investments were also made in roads, inland waterways, and sea transportation.

Explore the evolution of the Indian economy from self-sufficiency before British colonization to the exploitation of resources during colonial rule. This quiz covers key economic changes, national income calculations, and impacts on agriculture and manufacturing. Test your knowledge about the economic landscape of India in these crucial historical periods.