India at the eve of independence economics .pptx

There is no doubt that our grievances against the British Empire had a sound basis.
India's share of world income collapsed from 22.6% in 1700, almost equal to Europe's share of 23.3% at
that time,
to as low as 3.8% in 1952. Indeed, at the beginning of the 20th century,
"the brightest jewel in the British Crown" was the poorest country in the world in terms of per capita
income.
— Manmohan Singh
INDIA AT THE EVE OF INDEPENDENCE

LOW LEVEL OF ECONOMIC DEVELOPMENT UNDER COLONIAL RULE
INDIA WAS KNOWN FOR ITS AGRICULTURAL PROSPERITY AND VARIETY OF
MANUFACTURING ACTIVITIES SPECIALLY INDIAN HANDICRAFT IN THE FIELD OF
COTTON AND SILK TEXTILES, METAL AND PRECIOUS STONE WORKS HAVING
INTERNATIONAL REPUTATION IN MATERIAL QUALITY AND CRAFTSMANSHIP.
COLONIAL GOVT IN INDIA WAS MORE CONCERNED WITH THE PROCTECTION AND
PROMOTION OF INTEREST OF HOME COUNTRY AND THROUGH ITS VESTED
POLICIES TRANSFORMED INDIAN ECONOMY INTO SUPPLIER OF RAW MATERIAL
AND CONSUMER OF FINISHED GOODS FROM BRITAIN
THEIR EXPLOITATIVE STRATEGIES NOT ONLY BROUGHT STAGNATION IN INDIAN
AGRICULTURE WITH VERY LOW PRODUCTIVITY BUT ALSO LED TO DE
INDUSTRIALISATION WITH TOTAL DEMOLITION OF INDIAN HANDICRAFTS

India had an independent economy before the advent of the British rule.
Though agriculture was the main source of livelihood for most people, yet, the country’s economy was
characterized by various kinds of manufacturing activities e.g. handicraft industries in the fields of cotton and silk
textiles, metal and precious stone works etc.
These products enjoyed a worldwide market based on the reputation of the fine quality of material used and the
high standards of craftsmanship.
By the 17th century, Bengali muslin was
associated with the power and elegance
of the Mughal court in India, as shown in
this 1665 depiction of princes Dara
Shikoh and Sulaiman Shikoh Nimbate.
The cloth is like
the light vapours
of dawn.
—YUAN
CHWANG,
Chinese traveler
to India,
629-45 CE
A Persian Ambassador on returning to his country
gifted a coconut to his emperor. The courtiers were
undoubtedly surprised at his uncanny selection of a
gift for an emperor. However, they were completely
taken aback, when they found that a 230 yard long
Muslin cloth was neatly packed inside that very
silk vendors of India

AIM OF POLICIES OF BRITISH GOVERNMENT
1. Protection and promotion of the economic interests of their home country than the development of Indian
Economy
2.Transforming the country into supplier of raw materials and consumer of finished industrial products from
Britain.
Though the colonial government never made any sincere attempt to estimate India’s national and per capita
income. Some individual attempts which were made by 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
were considered very significant.
most studies concluded that:
i) the country’s growth of aggregate real output during the first half of the twentieth century was less than two
per cent - 2% and
ii) half per cent growth (50 paise) in per capita output per year.
their exploitative strategies not only brought stagnation in indian agriculture with very low productivity but also
led to de industrialisation with total demolition of indian handicrafts

THIS ALL LED TO EXTREMELY LOW GROWTH OF REAL AGGREGATE OUTPUT.
DURING FIRST HALF OF 20TH CENTURY IT WAS LESS THAN 2%. AND PER CAPITA
INCOME GROWTH RATE : 0.5%!!
DADA BHAI NAROJI WILLIAM DIGBY V K R V
RAO SHINDLAY SHIRRAS

REASON FOR LOW LEVEL OF DEVELOPMENT UNDER THE COLONIAL RULE
BACKWARD, STAGNANT AND UNUSUALLY DETERIOTED AGRICUTLUTRAL SECTOR

1. Overpopulated and stagnated Agricultural sector
India’s economy under the British colonial rule remained fundamentally agrarian — about 85
percent of the country’s population lived mostly in villages and derived livelihood directly or
indirectly from agriculture. However, despite being the occupation of such a large population,

THE AGRICULTURE WAS STAGNANT WITH EXTREMELY LOW PRODUCTIVITY DUE TO:
LAND SETTELMENT SYSTEM AND REVENUE SETTLEMENT SYSTEM
LOW LEVEL OF TECHNOLOGY
LACK OF IRRIGATION FACILITIES
NEGLIGIBLE USE OF FERTILIZERS
NO PUBLIC INVESTMENT IN THE FORM OF TERRACING, FLOOD CONTROL OR
DESALINISATION.

Commercialisation of Agriculture: (not to be included in
stagnation
Producing cash crops for the purpose of selling crops in the
market is known as Commercialisation of agriculture. Productivity
of agriculture did increase and showed higher yield of cash crops.

But this increased yield benefited only Britishers whereas it could
hardly help farmers in improving their economic condition as,
instead of producing food crops, now they were producing cash
crops which were to be ultimately used by British industries back
home.

While a small section of farmers changed their cropping
pattern from food crops to commercial crops, a large
section of tenants, small farmers and sharecroppers
neither had resources and technology nor had incentive to
invest in agriculture.

INDUSTRIAL SECTOR
BRITISHERS MAIN MOTIVE WAS TO CONVERT INDIA
SUPPLIER OF RAW MATERIAL AND MARKET FOR
THEIR MACHINE MADE FINISHED GOODS. FOR THIS
THEY STARTED DE INDUSTRIALISING INDIAN
ECONOMY.
INDIA DID NOT HAVE ANY SOUND INDUSTRIAL BASE
DURING BRITISH RULE.
HOW DID THEY DO THIS!!!

The cloth is like the light
vapours of dawn.
—YUAN CHWANG,
Chinese traveler to India,
629-45 CE
By the 17th century, Bengali muslin was
associated with the power and elegance
of the Mughal court in India, as shown in
this 1665 depiction of princes Dara Shikoh
and Sulaiman Shikoh Nimbate.
“A Persian Ambassador on returning to his country
gifted a coconut to his emperor. The courtiers were
undoubtedly surprised at his uncanny selection of a
gift for an emperor. However, they were completely
taken aback, when they found that a 230 yard long
Muslin cloth was neatly packed inside that very
coconut.”

The British destruction of textile competition from India led to the first great
deindustrialization of the modern world. For the centuries the handloom weavers
of Bengal had produced some of the world’s most desirable fabrics especially
the fine muslins.
As late as the mid- eighteenth century,Bengal’s textiles were still being exported
to Egypt, Java,Persia, Japan,China along well established trade routes.
The value of Bengal’s textile exports alone is estimated to have been around
16million rupee annualy in 1750s. But when the British traders took power,
everything changed

i) Demolition of Indian handicraft
I). BY MAKING RAW MATERIAL EXPENSIVE
II) OFFERED PRICE LOWERED THAN THE COST PRICE
III) DISAPPEARENCE OF PRINCELY STATES
IV) LOANS AT TIED CONDITIONS
V) HARSH AND RUDE BEHAVIOUR OF GOMASTHAS
VI) NEW DEMAND PATTERNS
VII) MARKET FILLED WITH NEW MACHINE MADE
BRITISH GOODS

The railways facilitated the reach of these
goods to remotest parts in India and the
procuret menof raw materials from these
parts. The traditional handicrafts industry
faced a tough competition from these goods
produced in bulk.
The policy of free trade followed by the East
India Company helped them to dictate terms
of trade. They compelled the Indian
craftsmen to sell their goods below market
price and they hired their services at below
the prevailing wages.
This forced many a craftsman to abandon
their ancestral trade. The British exported
raw materials from India like cotton. As a
result the Indian weaver had to buy these
materials at higher prices. This in turn
raised the cost of Indian handicrafts as
compared to the machine made goods.
Indian goods were also subjected to high
tariffs in the English market whereas the
British goods gained duty free access into the
Indian markets.

Removal of princely states
and Nawabs who were
patronisers of handicraft

Indians Biggest
Imitators of
Britishers
As there was scarcity of home made commodities
due to expensive and less available raw
material
AND AT THE SAME TIM
E IM
ITATING TENDENCIES
OF ELITES OF INDIA LED TO
M
ARKET FLOODED
W
ITH BRITISH GOODS

De-industrialisation:
As a result of these policies Indian
handicrafts faced a severe challenge
from the foreign goods. India now
became the exporter of raw
materials to British industries and
an importer of ready-made goods
from Britain. This phenomenon of
the ruination of Indian handicrafts
industries is most well known as
Deindustrialization.

IMPACT OF DEMOLITION OF HANDICRAFT
1.MASSIVE UNEMPLOYMENT CREATED
2.SHORTAGE OF INDEGENOUS GOOD
3.NEW DEMAND PATTERN IN INDIAN WERE FULFILLED BY BRITISH
MANUFACTURED GOODS

II) SLOW GROWTH OF MODERN INDUSTRIAL BASE
A) DEVELOPMENT MAINLY CONFINED TO SETTING
UP COTTON AND JUTE TEXTILE MILLS
Tata's Empress mill in Nagpur in
1877. Photo: tata.com. Indian Jute Mill (Kolkata, India)

B) TISCO IN 1907
C) FEW MORE OTHER CONSUMER GOODS - SUGAR,
CEMENT, PAPER ETC.
D) NO CAPITAL GOOD INDUSTRY

III) CONTRIBUTION OF INDUSTRIAL SECTOR IN THE GDP OF THE
CONOMY WAS VERY LESS.
IV) LIMITED OPERATION OF PUBLIC SECTOR CONFINED TO POSTAL
AND TELEGRAPH, RAILWAYS ETC.

FOREIGN TRADE
RESTRICTIVE POLICIES OF COMMODITY PRODUCTION, TRADE AND TARIFF ADVERSALY
AFFECTED THE STRUCTURE, COMPOSITION, DIRECTION AND VOLUME OF FOREIGN TRADE
i)COMPOSITION OF TRADE:
INDIA BECAME EXPORTER OF PRIMARY GOODS eg. COTTON, WOOL, SUGAR,
INDIGO, JUTE AND IMPORTER OF FINISHED CONSUMER GOODS eg.COTTON WOOL
SILK READYMADE CLOTHES AND CAPITAL GOODS eg. LIGHT MACHINES
ii)DIRECTION OF TRADE:
MORE THAN HALF OF THE FOREIGN TRADE WAS RESTRICTED TO BRITAIN AND THE
REST WAS WITH CYLONE, CHINA AND PERSIA.

iii)AFTER OPENING UP OF SUEZ CANAL FURTHER INTENSIFIED BRITISH CONTROL OVER INDIAN FOREIGN
TRADE.
Its opening reduced the cost of transportation and made access to the Indian market easier and economical. A
significant reduction in transport cost prompted monopoly control of India's foreign trade by the British government.
The Suez canal was opened in 1869.
The canal separates the African continent from Asia, and it provides the shortest maritime route
between Europe and the lands lying around the Indian and western Pacific oceans.
Suez Canal was opened which reduced the distance between Britain and India considerably by almost some
4,500 miles. This helped the ships to go directly to Europe without the need to travel round the entire southern
Africa.

iv) DRAINAGE OF EXPORT SURPLUS:
INDIA’S FOREIGN TRADE EARNED EXPORT SURPLUS THROUGH OUT BUT WAS
COMPLETELY DRAINED OUT ON ACCOUNT OF :
a) shortage of essential commodities in domestic markets
b) no inflow of gold and silver
c) drained out to make payments for:
● office set up by colonial government in britain
● expenses on war fought by British government
● imports of invisibles

Enamelled gold and jewel encrusted crown
presented by the Taluqdars of Awad to the
Prince of Wales in 1876. Splendours of the
Subcontinent: A Prince's Tour of India 1875-
6. Courtesy Royal Collection Trust © Her
Majesty Queen Elizabeth II 2017
The Koh-i-Noor Diamond: This 105-carat diamond
is one of the largest and most valuable in the
world and has a long and storied history. It was
originally mined in India and was given to Queen
Victoria in 1850 as part of the Treaty of Lahore,
which marked the end of the Second Anglo-Sikh
War.

Enamelled gold and jewel encrusted
crown presented by the Taluqdars of
Awad to the Prince of Wales in 1876.
Splendours of the Subcontinent: A
Prince's Tour of India 1875-6. Courtesy
Royal Collection Trust © Her Majesty
Queen Elizabeth II 2017
pair of large morchals, or fly-
whisks, which doubled as fans.
They are set with layered bands of
gold tinsel and inlaid with diamonds.

DEMOGRAPHIC CONDITION: (FIRST CENSUS-1881)
i) India entered in the second phase of DEMOGRAPHIC
TRANSITION (HIGH BIRTH RATE AND LOW DEATH RATE)
in the year 1921.

II) OVERALL LITERACY RATE WAS LESS THAN 16% AND IN
FEMALES IT WAS ONLY 7%

Cornelia Sorabji (15 November 1866 – 6 July 1954) was an Indian lawyer, social reformer and
writer. She was the first female graduate from Bombay University, and the first woman to
study law at Oxford University. Returning to India after her studies at Oxford, Sorabji became
involved in social and advisory work on behalf of the purdahnashins, women who were
forbidden to communicate with the outside male world, but she was unable to defend them in
court since, as a woman, she did not hold professional standing in the Indian legal system.

III) PUBLIC HEALTH FACILITES EITHER WERE NOT AVAILABLE TO MEET MAJORITY AND IF
AVAILABLE THEN IT WAS INADEQUATE.
IV) OVERALL MORTALITY RATE WAS VERY HIGH DUE TO MALNUTRITION, PANDEMIC
EPIDEMIC CUASED DUE TO WATER AND AIR BORNE DISEASES GENERALLY AND
INFANT MORTALITY RATE WAS VERY HIGH i.e. 218 PER THOUSAND AGAINST 33 PER
THOUSAND CURRENTLY.
V) LIFE EXPECTANCY WAS JUST 32 YEARS AGAINST 69 YEARS PRESENTLY

OCCUPATIONAL STRUCTURE OF INDIA
DISTRIBUTION OF WORKFORCE ACCROSS THE DIFFERENT SECTORS OF THE ECONOMY IS KNOWN
AS OCCUPATIONAL STRUCTURE OF THE ECONOMY.
I) INDIAN OCCUPATIONAL STRUCTURE WAS BACKWARD AND STAGNANT.
• AGRICULTURE ABSORBED LARGEST SHARE OF THE WORKING POPULATION i.e. 70%-75%
• INDUSTRIAL SECTOR SHARED 10% OF WORKING POPULATION
• SERVICE SECTOR GAVE EMPLOYMENT TO 15%-20% OF THE WORKFORCE
2. GROWING REGIONAL VARIATION
• PARTS OF MADRAS PRESIDENCY, BOMBAY AND BENGAL WITNESSED DECLINE IN THE
DEPENDENCY ON AGRICULTURE AND GROWING EMPLOYMENT IN MANUFACTURING AND
SERVICE SECTOR.
• THERE HAD BEEN GROWING SHARE OF WORKFORCE IN THE AGRICULTURAL SECTOR IN ORISSA,
RAJASTHAN AND PUNJAB AT THE SAME TIME

During British rule, the industrial and service sectors in India's coastal regions primarily focused on supporting British trade and colonial interests, rather than fostering indigenous industrial development. While infrastructure like ports and waterways were developed, they were often used to facilitate the extraction and export of raw materials and the
import of manufactured goods to Britain, rather than to benefit the local economy.
Infrastructure Development:
Ports:
Coastal ports were developed to facilitate trade between India and Britain, allowing for the efficient shipment of raw materials and manufactured goods.
Waterways:
Inland waterways and sea routes were developed to improve communication and administration, but some, like the Coast Canal on the Orissa coast, proved uneconomical and were abandoned.
Telegraphs and Postal Services:
Telegraphs were primarily used to maintain law and order and support administrative control, while postal services were useful but inadequate for the needs of the population.
Roads and Railways:
Roads and railways were built to facilitate the movement of troops and the transport of goods to ports, but they did not necessarily serve the broader needs of the local population. The railways, introduced in the 1850s, had a significant impact on the economy, leading to increased commercialization of agriculture and the breaking down of traditional
self-sufficiency.
Industrial Development:
De-industrialization:
The decline of traditionDuring British rule, the industrial and service sectors in India's coastal regions primarily focused on supporting British trade and colonial interests, rather than fostering indigenous industrial development. While infrastructure like ports and waterways were developed, they were often used to facilitate the extraction and export of
raw materials and the import of manufactured goods to Britain, rather than to benefit the local economy.
Infrastructure Development:
Ports:
Coastal ports were developed to facilitate trade between India and Britain, allowing for the efficient shipment of raw materials and manufactured goods.
Waterways:
Inland waterways and sea routes were developed to improve communication and administration, but some, like the Coast Canal on the Orissa coast, proved uneconomical and were abandoned.
Telegraphs and Postal Services:
Telegraphs were primarily used to maintain law and order and support administrative control, while postal services were useful but inadequate for the needs of the population.
Roads and Railways:
Roads and railways were built to facilitate the movement of troops and the transport of goods to ports, but they did not necessarily serve the broader needs of the local population. The railways, introduced in the 1850s, had a significant impact on the economy, leading to increased commercialization of agriculture and the breaking down of traditional
self-sufficiency.
Industrial Development:
De-industrialization:
The decline of traditional Indian industries was a significant feature of the colonial period. British policies, such as the imposition of tariffs on Indian textiles and the flooding of the Indian market with cheaper British goods, led to the decline of local industries.
Raw Material Extraction:
India's economy was increasingly focused on the production of raw materials for British industries, such as cotton, opium, and indigo.
Limited Industrial Growth:
While some modern industries were introduced, like jute and tea production, they primarily served the needs of the British market and did not lead to widespread industrial development.
Coastal Shipping:
While some Indian companies emerged in coastal shipping, they were often restricted by agreements with British companies and faced competition from foreign concerns.
Service Sector:al Indian industries was a significant feature of the colonial period. British policies, such as the imposition of tariffs on Indian textiles and the flooding of the Indian market with cheaper British goods, led to the decline of local industries.
Raw Material Extraction:
India's economy was increasingly focused on the production of raw materials for British industries, such as cotton, opium, and indigo.
Limited Industrial Growth:
While some modern industries were introduced, like jute and tea production, they primarily served the needs of the British market and did not lead to widespread industrial development.
Coastal Shipping:
While some Indian companies emerged in coastal shipping, they were often restricted by agreements with British companies and faced competition from foreign concerns.
Service Sector:

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