Indian Economy on the Eve of Independence PDF

***[Colonial Rule]*** 1. It refers to a system between two countries - Under which one country being the RULER and - Another being the COLONY and - The ruling country determines the economic policies of the colony. 2. In India, the colonial rule stays for around 200...

***[Colonial Rule]*** 1. It refers to a system between two countries - Under which one country being the RULER and - Another being the COLONY and - The ruling country determines the economic policies of the colony. 2. In India, the colonial rule stays for around 200 years (1757 -- 1947) under which the Britishers exploited the Indian country and form the economic policies in India. ***[Stagnant economy:]*** Stagnant economy refers to the economy which is stuck or very low at its path of development. ***[Features of Indian economy before colonial rule:]*** 1. Agriculture was the main source of employment and livelihood for the people of our country. 2. The farmer raised only those crops which he needed for his own self Consumption \[Subsistence farming\] 3. India was famous for its handicraft industries all over the globe. 4. Indian was an independent, self-reliant and prosperous economy. 5. Peaceful trade between Asia and Europe. ***[Agricultural sector at the eve of independence]*** ***[Zamindari system (land tenure system/ Land Revenue System):]*** 1. Under this system, ownership right of the land was transferred from farmers to zamindars i.e. Zamindars were the nominal head of the land who collects the revenue from the farmers (in the form of lagaan) and deposit it to the colonial government. 2. The zimandars collects lagaan from the farmers regardless to the economic condition of the cultivators. 3. The zamindar and the colonial government took no initiative to improve or to strengthen the condition of agriculture. ***[Commercialization of Agriculture:]*** 1. Commercialization of Agriculture refers to the production of crops for sale rather than for self-consumption. 2. Farmers were given higher prices for production of cash crops (like cotton, jute, indigo) so that they can use them as raw material for British industries. 3. High level of prices forced to farmers to produce cash crops rather than food crops. ***[Low level of productivity: ]*** 1. Productivity refers to the output per hectare of land. 2. During colonial period the productivity of Indian agriculture was very low due to the following Reasons - Lack of irrigation facility. - Dependency on Rainfall - Low level of technology. - Negligible use of fertilizes. ***[Small and Fragmented Holdings (Scattered land holding):]*** Landholdings were both small as well as fragmented, So most of the landholdings were uneconomic: yielding low output at high cost. ***[High degree of uncertainty:]*** During colonial period, the main source of irrigation was rainfall which results in high level of uncertainty. i.e., good rainfall implied good output whereas poor rainfall will result in low level of output. ***[Industrial sector at the eve of independence]*** 1. ***[Decline of Handicraft Industries]*** During Colonial Rule, the Britisher systematically destroyed the Indian Handicraft Industries and forced the people to Indulge in to agriculture sector. The basic motive of British rule behind de-industrialization was two-fold A. To get raw materials from India at cheap rate and thus to reduce India to a mere exporter of raw materials to the British industries; B. To sell British manufactured goods in Indian market at higher prices. 2. ***[Introduction of discriminatory tariff policy]*** - This policy allowed - free export of raw materials from India and - free import of British made goods to India and - Heavy duty on export of Indian handicraft products - It led to decline of handicrafts both in domestic as well in international market. 3. ***[Low priced machine made goods]*** - Machine made goods from British were low-priced and better in quality which gave competition to Indian handicrafts which were comparatively costlier. - Competition from British made goods declined the demand of handicrafts in India. 4. ***[Changes in tastes and preferences]*** - Due to impact of British culture, tastes and preferences of people were shifting in favour of British products. - This led to fall in Indian made goods which were mostly based on Indian handicrafts. 5. ***[Lack of Capital goods Industries]*** There was hardly any capital goods industry to promote further industrialisation in India because the British wanted Indians to depend on Britain for capital goods 6. ***[Low Contribution to GDP]*** - Growth rate of new industrial sector and its contribution to the Gross Domestic Product (GDP) had been very small. - It is because the industrial sector was not progressing at the overall desired rate. ***[Foreign Trade]*** India was well- known exporter of finished goods like silk, fine cotton, textiles, ivory work, handicrafts, precious stones etc. But the discriminatory trade and tariff policies of the British brought it to an end. ***[Condition of Foreign trade at the time of Independence]*** 1. ***[Exporter of primary products (Raw material) and importer of finished goods:]*** During colonial rule, India became the - exporter of raw materials (such as raw silk, cotton, indigo, jute etc.) which were of low cost and - became the importer of finished goods (such as capital goods, woolen clothes, silk clothes and other machine made products) which were of high cost. - Due to this the economic condition of our economy started to decline. 2. ***[Monopoly control on trade by the British: ]*** During colonial period the British government maintained a monopoly control over Indian trade policies. - Majority of trade was restricted to Britain (more than 1/2) while the rest was allowed with some other countries only (such as china, Sri Lanka (Ceylon) and Iran (Persia)) - Opening of Suez Canal in 1869 provides a direct trade route for ships operating between Britain and India. 3. ***[Surplus trade but only to the benefit the British]*** Due to the exporter of raw material, India had a huge export surplus. But the amount of export surplus did not give any push to Indian economy as the amount of surplus was used by the government in non- developing activities, such as: - To meet expenses of war fought by the British government. - To make payment of office setup of colonial government. ***[Demographic Profile]*** Demography refers to the study of various aspects of population, such as age, education level, income level, marital status, birth rate, death rate etc. ***[Condition of Demographic profile ]*** 1. ***[High birth rate and death rate: ]*** - Birth rate refers to the number of children born per thousand in a year. During colonial period both birth rate is nearly 48 which is very high. - Death rate refers to the number of people dying per thousand persons in a year. During colonial period death rate is nearly 40 which is very high. - High Birth rate and High death rate suggest a massive poverty in the country 2. ***[Low literacy rate: ]*** - Literacy rate refers to the number of persons who is 7 years or above, who has the ability to read, write and understand any one language. - During colonial period the overall literacy rate of the economy was less than 16 per cent. Moreover, the female literacy rate was about 7 per cent. 3. ***[High infant mortality rate:]*** - Infant mortality rate refers to the number of infant dying before the age of 1 year per thousand live births annually. - The Infant Mortality Rate during colonial period was about 218 per thousand (before 1921). While at present it is 33 per thousand - High infant mortality rate is a sign of poor healthcare connected with extreme poverty. 4. ***[Low Life Expectancy]*** - It refers the average number of years for which a person is expected to live. - Due to poor health facilities, the life expectancy during colonial rule was as low as 32 years, whereas the current overall life expectancy of India is 69 years. ***[Occupational Structure]*** Occupational structure refer to distribution of working population across primary (Agriculture sector), secondary (Industrial sector) and tertiary (Service Sector) sectors of the economy. ***[Condition of occupational structure]*** 1. ***[Agriculture- the principal source of occupation]*** - As colonial government aims at making India as exporter of raw material, as a result about 72.7% of working population was engaged in Primary sector with agriculture - As the income generation rate of agriculture sector is very low, this predominance reflects backwardness of the economy. 2. ***[Industry- An insignificance source of occupation]*** On the eve of independence, barely 9% of working population in India was engaged in manufacturing industries 3. ***[Insignificance transition from agriculture to industry (Unbalanced Growth)]*** Growth of an economy is said to be balanced when all the 3 sectors are equally developed. But in case of Indian economy only primary sector is the main source of employment, whereas secondary and tertiary sector were in their infant stage of growth. ***[Infrastructure]*** Infrastructure refers to the elements of Economic Change (like mean of transport, communication, Banking, Power/ Energy) and the element of social change (like growth of education and health) which serve as a foundation of growth and development of the country ***[Condition of infrastructure at the time of Independence]*** 1. ***[Railways:]*** - One of the biggest contributions of colonial rule was the introduction of railways in India in 1850. - It helps to remove geographical and cultural barriers in the economy. - The benefits of railways was mostly restricted to Britishers during colonial period but it also helps in developing the Indian economy post-colonial period. 2. ***[Roads:]*** - The construction of roads during colonial rule was very limited (due to scarcity of funds). - The roads that were built, primarily served the interests of mobilizing the army and shifting of raw materials so that they can be transported to Britain via ports. 3. ***[Air and water transport:]*** - The colonial government took various measures for developing the ports and air transport. But the development was far from satisfactory measure of development. - Ports was mainly developed to handle export of raw material to Britain and Import of finished goods from Britain 4. ***[Communication (Post and telegraphs): ]*** - During colonial period, posts and telegraphs were the most popular means of communication to enhance the administrative efficiency. - The system of electric was introduced at a high cost to serve the purpose of maintaining law and order. ***[Positive impact of the British rule in India]*** 1. Introduction of railways and other means of transport facilitated the breaking of the cultural and geographical barriers. These means proved very useful in handling natural calamities like famines etc. 2. Commercialisation of agriculture widened the outlook of the self-sufficient farmers, who started looking beyond for profit-making. 3. Introduction of money as a medium of exchange replaced the traditional system of barter. This encouraged large scale of production based on specialisation. 4. Last but not the least, the British also left a legacy of \'well-run\' administration in the country. ***[Features of Indian Economy on the eve of Independence]*** 1. It was a stagnant economy, showing little or No growth in Income 2. It was a Backward Economy, Showing very low Per capita Income 3. Small scale and Cottage Industries are ruined and Heavy industries are showed a Bleak growth. 4. The country had to depend on import of Machinery and Other Equipment's of Production 5. Majority of the Population lived in villages due to Limited urbanization. 6. It was a semi-feudal economy, showing characteristics of both Feudalistic and capitalistic mode of operation. ***[Other Questions/ Point related to the chapter]*** 1. ***[Economic condition of the tillers of the soils at the time of Independence]*** At the time of independence the tillers and cultivators of land were in a very poor condition. They were forced to pay huge revenue to the zamindars in the form of money as well as foodgrains. However, Zamindar do nothing to improve the condition of production and productivity. 2. ***[Economist who estimated India's National income and per capital Income during the national period]*** - Dadabhai Naoroji - William Digby - Findlay Shirras - V.K.R.V Rao - R.C. Desai 3. Demographic transition stage a. Stage 1: High Birth rate and High Death rate (Before 1921) b. Stage 2: High Birth rate and Low Death rate (After 1921 to 1971) c. Stage 3: Low Birth rate and Low Death rate (1971 onwards) 4. The first population census in India (Under British rule) was conducted in the year 1881 5. Railway was introduced in the year 1850 6. First railway bridge built in India was in 1854 on the Mumbai-Thane route. Question ======== Name some modern industries which were in operation in our country at the time of independence. ***[Answer:]*** The Tata Iron and Steel company (TISCO) was incorporated in August 1907 in India. It established its first plant in Jamshedpur (Bihar). Some other industries which had their modest beginning after Second World War were: Sugar Industries, Cement Industries, Cotton textile Industries and Paper industries. Question ======== What are capital goods industries? ***[Answer:]*** Capital goods industry refer to those industries which can produce machine tools which are, in turn, used for producing articles for current consumption. Question ======== What do you understand by subsistence farming? ***[Answer:]*** It is a form of farming in which the agricultural produce is not sold but is kept for the consumption of the family. ***[Question ]*** When was the Suez Canal opened? How did it affect the Indian economy? ***[Answer:]*** Suez Canal was opened in 1869. It reduced the cost and time of transportation and made access to the Indian market easier. In other words, the exploitation of Indian market now became easier. ***[Question ]*** What were the main reasons for slow growth of population during British rule? ***[Answer:]*** Following are the main reasons for slow growth of population during British rule: 1. The death rate was quite high. 2. Infant mortality rate was also high. 3. Spread of epidemics and famines was quite frequent. ***[Question ]*** What problems were created by the partition of the country? ***[Answer:]*** The partition of the country caused a severe setback to the Indian economy. 1. A major portion of India\'s highly fertile and irrigated land went to Pakistan. This negatively affected the agricultural output. 2. The loss of fertile areas after partition made India dependent on imports of food grains. 3. The most important jute-producing areas now became part of East Pakistan (now Bangladesh). This caused a lack of raw material for India\'s jute industry, which suffered a serious setback. ***[Question ]*** What is export surplus? How did it prove disadvantageous to India during British rule? ***[Answer]*** Excess of exports over imports is called export surplus. Export surplus during British rule proved disadvantageous to India due to the following reasons: 1. Commodities were not available to Indians but were being exported. 2. This export surplus was used to fulfill administrative and war expenses of Britain. This was called drain of Indian wealth. This export surplus did not lead to any flow of gold and silver into the country. ***[Question ]*** \"The railways affected the structure of the Indian economy positively as well as negatively.\' Discuss. ***[Answer:]*** ***[The railways affected the structure of the Indian economy positively in the following ways:]*** 1. It enabled people to undertake long-distance travel and thereby break geographical and cultural barriers. 2. It fostered Commercialisation of Indian agriculture as agricultural produce could be sent to distant places. Farmers started viewing agriculture as a business rather than a way of subsistence. 3. Railways enabled the government to supply foodgrains fastly to famine-affected areas. ***[The railways affected the Indian economy negatively in the following ways:]*** 1. It enabled the goods from British factories to be transported to various parts of the [ ] country, thereby expanding their market. 2. It facilitated the transport of raw materials to the port cities and ensured their easy exportability. 3. Commercialisation of agriculture affected the self-sufficiency of the rural areas. ***[Question ]*** What objective did the British intend to achieve through their policies of Infrastructure Development in India? ***[Answer:]*** 1. To Expand the Indian Market for the British Products through the Expansion of Railways. 2. To Handle export of Raw material to Britain and Import of Finished goods from Britain through the development of Ports. 3. To Facilitate transportation of Raw material from different part of the country to the ports through the development of Roads. 4. To Enhance administrative efficiency through the development of Post and telegraphs. ***[Question ]*** Underscore Some of India's Most crucial economic challenge at the time of Independence. ***[Answer:]*** 1. Agriculture sector of the economy was backward, stagnant and Non-Vibrant. 2. There was a Urgent need of Modernisation, Diversification and Increased Public Investment in Industrial Sector. 3. Prevalence of Rampant Poverty and unemployment