Indian Economy on Eve of independence Detailed notes.pptx

INDIAN ECONOMY AT
THE EVE OF
INDEPENDENCE

OBJECTIVE
To become familiar with the state of the
Indian economy in 1947, the year in
which India got independence.
Understand the factors that led to the
underdevelopment and stagnation of the
Indian economy.

TOPICS TO BE COVERED
•Low level of economic development under
the colonial rule
•Agriculture sector
•Industrial sector
•Foreign trade
•Demographic condition
•Occupational structure
•Infrastructure

Introduction
The primary objectives of
British colonial rule in India was
to turn India :
• As a supplier of raw materials.
• As a consumer of finished goods.

Colonialism
Colonialism is the policy of a country seeking to extend or retain its authority over other
people or territories, generally with the aim of economic dominance.In the process of
colonisation, colonisers may impose their religion, language, economics, and other cultural
practices on indigenous peoples.
In case of India, the unequal relationship between the colony [India] and the
ruling country [Britain] resulted in underbelly of India.

LOW LEVEL OF ECONOMIC DEVELOPMENT
UNDER THE COLONIAL RULE
Before the arrival of British in India, our country has
an independent economy. Agriculture was there main
source of livelihood for most of the people. Along with
agriculture there were other people who performed
manufacturing activities. The handicraft industry of
out country was well known as over the world. The
products were well known for their fine quality for the
material and the high standard of craftsmanship.
‘DACCAI MUSLIN’ , a type of cotton textile found in
Dhaka was famous all over the world

LOW LEVEL OF ECONOMIC DEVELOPMENT
DURING THE COLONIAL RULE
In India the colonial government adopted the
policies only to promote their interests. There
policies were adopted only to vendor the
economic interest of their home country. They
totally neglected the development of the Indian
economy. Such polices by the colonial
government changed the structure of the Indian
economy. India was transformed into a supplier
of raw material and costumer of final good from
Britain

ESTIMATION OF NATIONAL INCOME
DURING THE COLONIAL GOVERNMENT
RULE
The colonial government never tried to estimate India’s national and
per- capita income. Some individuals attempted to measure but their
results were conflicting and inconsistent. Some of them were :
• Dada Bhai naroji
• William digby
• Findly Shiras
• V.K.R.V Rao
• R.C desai

The estimate given by
V.K.R.V Rao during
colonial period was
considered very
important.
Most studies price that the
country’s growth of
aggregate real output was
less than 2% during first
half of 20th century.
The growth in
port capita
output per
year was
nearly half
percent.

Agriculture sector
Agricultural Sector on the Eve of Independence
India’s agricultural sector (on the eve of independence) exhibited three
principal characteristics, these characteristics pointed to
backwardness of India’s agriculture as well as its stagnation
•Low level of productivity
•High degree of vulnerability
•A wedge between owners of the soil and tillers of the soil.

FACTORS CAUSING BACKWARDNESS AND
STAGNATION OF INDIAN AGRICULTURE DURING
THE BRITISH RULE
Land revenue
settlement
under the
British Raj
Forced
commercialisation of
agriculture
Lack of
Marketing
Facilities
Lack of
Productive
Investmen
Social Factors
Natural
Calamities

INDUSTRIAL SECTOR
In the pre-british period, India was particularly well-known for its
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.
But the Britishers followed a policy of systematic de-industrialisation by
creating circumstances conducive to the decay of handicraft industry
and not taking any steps to promote modern industry and reduced India
to a mere exporter of raw material and importer of finished goods.

THE FOLLOWING POINTS BRING FORWARD THE
STATE OF THE INDUSTRIAL SECTOR AT THE EVE
OF INDEPENDENCE
Decay of Handicraft Industry :
The traditional handicraft industry in India enjoyed worldwide reputation,
but the British misrule in India led to the decline of Indian handicraft
industry. The Britishers adopted the following policies to systematically
destroy the handicraft industry.
Slow Growth of Modem Industry :
Under second half of 19th. Century, modern industry showed slow
growth. This development was confined to the setting up of cotton
and jute textile mills.

FOREIGN TRADE
India has been an important
trading nation since ancient
times.
But when the restrictive policies
of commodity production,
trade and tariff were imposed
by the colonial government, it
adversely affected the structure,
composition and volume of
India’s foreign trade.

Indian Economy on Eve of independence Detailed notes.pptx

FOLLOWING WERE THE REASONS BEHIND THE
POOR GROWTH OF FOREIGN :
Exporter of Primary Products
and Importer of Finished Goods
Under the colonial rule, India
became an exporter of primary
products such as raw silk, cotton,
wool, sugar, indigo, jute, etc and
an importer of finished consumer
goods like cotton, silk and woollen
clothes and capital goods like light
machinery produced in the
factories of Britain.
Britain’s Monopoly Control
Britain maintained a
monopoly control over India’s
exports and
imports. Due to this, more than
half of India’s foreign trade was
restricted to Britain while the rest
was allowed with a few other
countries like; China, Ceylon (Sri
Lanka) and Persia (Iran). The
opening of Suez Canal in 1869
further intensified British control
over India’s foreign trade.

EXPORT SURPLUS WAS USED FOR :
An important characteristic of foreign
trade throughout the colonial period was
the generation of a large export surplus.
But this surplus came at a huge cost to the
country’s econo Several essential
commodities like food grains, kerosene,
were scarcely available in the domestic
market.
Also, this surplus was not used in any
developmental activity of India. Rather,
it was used to maintain the
administrative set-up of the Britishers
or bear the expenses of war taught by
Britain.
All of this, led to the drain of Indian
Under the British rule,
India became an exporter
of raw materials and an
importer
of finished goods.
There was a huge
export surplus due
to excess exports.
To make payments
for administrative
expenses incurred
by the British
government in
Britain
To meet
expenses on
the war
fought by the
British
Government.

DEMOGRAPHIC PROFILE
Various details about the population of British India
were first collected through a census in 1881. Before
1921, India was in the first stage of demographic
transition. The second stage began after 1921.
However neither the total population of India nor
the rate of population growth at this stage was very
high. Though suffering from certain limitations, it
revealed the Unevenness in India’s population
growth. The population grew at a rate of 1.2% up to
the year 1951.

ON THE EVE OF INDEPENDENCE THE
DEMOGRAPHIC PROFILE OF INDIA WAS AS
FOLLOWS:

OCCUPATIONAL STRUCTURE
During the colonial period, the occupational structure
of India exhibited its Duringbackwardness. The
agricultural sector accounted for the largest share of
the work force which remained at a high of 70-75% of
the work force and the manufacturing and services
sectors accounted for only 10 and 15-20% respectively.
There existed a growing regional disparity with
few states such as Orissa, Rajasthan and Punjab
witnessing an increase in agricultural workforce
while the states which were the parts of Madras
presidency. Bombay and Bengal witnessed a
decline in the percentage of work force
dependent on agriculture

INFRASTRUCTURE
Infrastructure comprises of such industries which help
in the growth of other industries. Under the colonial
period, basic infrastructure such as railways, port per
transport, posts and telegraphs developed.
However, the real motive behind this development
was not to provide basic amenities to the people but
to sub serve various colonial interests.

ROAD
S
Roads constructed before independence were not fit for modern
transport. It was very difficult to reach rural areas during rainy season.
The roads were built only to serve the purpose of mobilising the army
within India and transporting raw materials from the countryside to the
nearest railway station or the port for exporting it.

RAILWAYS
British rulers introduced railways in India in 1850 and it began
its operation in 1853. It is considered as one of the important
contribution of Britishers.
The railways affected the structure of the Indian economy in
the following two ways
It enabled people to undertake long distance travel and thereby
break
geographical and cultural barriers.
It fostered commercialisation of Indian agriculture which
adversely
affected the self-sufficiency of the village economies in India.
So, the social .benefits provided by the Railways was
outweighed by the
country’s huge economic loss.

WATER AND AIR TRANSPORT
Water and Air Transport
The colonial rulers took measures for the development of water transport.
The inland waterways, at times, also proved uneconomical as in the case of
the coast canal on the Orissa coast. The main purpose behind their
development was to serve Britain’s colonial interest.
The colonial government also showed way to the air transport in 1932 by
establishing Tata Airlines. Thus, in this way it inaugurated the aviation
sector in India.

COMMUNICATION
Modern postal system started in India in 1837.
The first telegraphy line was opened in 1857. The
introduction of the expensive system of electric telegraph
in India served the purpose of maintaining law and order.

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