Indian Economy on the Eve of Independence
Class 11 Economics · Indian Economic Development · Chapter 1
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Summary
India's present-day economy has its roots in nearly two centuries of British colonial rule, which lasted until independence on 15 August 1947. The sole purpose of that rule was to make India a supplier of raw materials and a market for Britain's industries, so colonial economic policy served Britain rather than Indian development. As a result, the economy stagnated: the growth of aggregate real output during the first half of the twentieth century was less than two per cent, with barely half a per cent growth in per capita output. Agriculture, on which about 85 per cent of the population depended, stagnated under land-settlement systems such as the zamindari system, where profit went to rent-collecting zamindars rather than cultivators, and was held back by low technology, scant irrigation and little fertiliser. India's world-famous handicrafts were ruined by a deliberate policy of de-industrialisation, while no modern industrial base was allowed to replace them; only a few cotton and jute mills, and later TISCO (1907), came up. Foreign trade was reoriented to feed Britain, generating an export surplus that drained India's wealth. Demographic indicators were poor — overall literacy below 16 per cent, very high infant mortality and low life expectancy of about 32 years. The occupational structure stayed agrarian (70–75 per cent in agriculture), and infrastructure such as railways (introduced in 1850), ports and telegraph was built to serve colonial, not Indian, interests.
Indian Economy on the Eve of Independence
Key terms
Colonial economy
An economy run to serve the interests of the ruling country; here, to supply Britain with raw materials and buy its finished goods.
Zamindari system
A land-settlement system in which zamindars collected rent from cultivators, with profit going to them rather than to the tillers.
De-industrialisation
The deliberate decline of India's handicraft industries under British rule without a modern industrial base to replace them.
Drain of wealth
The outflow of India's export surplus to meet British expenses, gaining India no gold or silver in return.
Commercialisation of agriculture
The shift from food crops to cash crops grown for British industry rather than for the cultivators' own use.
Occupational structure
The distribution of the working population across agriculture, industry and services.
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India gained independence on: