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Indian History for UPSC

ECONOMIC IMPACT OF BRITISH RULE ON INDIA
I. INDIAN ECONOMY DURING THE FIRST HALF OF THE EIGHTEENTH CENTURY • The decline of India‟s trade and commerce began during the closing years of Aurangazeb‟s reign when the Indian economy was afflicted with factor of so-called “shrinking economy”. II.TRASFORMATION OF INDIAN ECONOMY INTO COLONIAL ECONOMY • The Company‟s servants captured the trade in commodities like salt, betel-nut and tobacco which had so long been prohibited to all European traders. • In 1765 Clive established monopoly of salt manufacture and trade trough a Society. • This system was abolished in 1768 and the Zamindars and Indian merchants were permitted to manufacture salt, subject to payment of a duty of 30% to the company Government. • In 1772 this privilege was withdrawn, and the Company‟s monopoly was re -established. • In 1776 Warren Hastings introduced a new scheme of leasing out to individuals the privilege of manufacturing and selling salt. • In 1780 Warren Hastings assumed for the Company‟s Government the exclusive right to manufacture salt. • In 1758, Robert Clive secured from Mir Jafar. • Monopoly of the saltpetre trade in Bengal for the company. • Saltpetre was an ingredient for the manufacture of gunpowder. • By 1793 indigo became another important item of export. • The company also established its monopoly on the opium of Bengal and Bih ar which was largely exported to China. • The inventions of Hargreaves, Arkwright and others during the years 1767 to 1785 helped extensive production of cotton goods in England. • In 1786, the Court of Directors made the first tentative efforts for sale of Lancashire cotton cloth in Bengal. • In 1793 “the calicoes and muslins of India, even for Indian use, were supplanted in Bengal by the products of the steamlooms of Manchester” • In 1815 the Bengal Government reduced the import duty on British goods by 2 ½ per cent, delivering thereby a severe blow to Indian Industry.

from 1757 to 1813. there used to be an annual settlement (of land revenue). Varanasi division of UP.P. • During the time of Cornwallis. Dutt in his monumental work India Today has made a brilliant analysis of the Indian colonial economy and has elaborately commented upon Karl Marx‟s theory of three phases of British colonialism and economic exploitation of India. • He started the system of auctioning the land to the highest bidders. • During this phase. India grew poorer. and the rest was handed over to the company. the East India Company completely monopolized trade and by manipulating low prices of Indian finished goods for exports to England and Europe. The third stage of British colonialism is known as Finance Capitalism which began after 1860. • Initially this settlement was temporary. and as England became richer. • With the second industrial boom in England. • Under the Permanent Settlement of 1793. Permanent Settlement or the Zamindari System: • Permanent settlements are made in Bengal. the Zamindar was declared the absolute owner and proprietor of his estate. Free Trade Industrial or Mercantile Capitalism (1813-1858). • The British Zamindar under the Permenant Settlement was a petty capitalist (“a mushroom . • A new class of zamindars was declared to be owners of the land and they had to collect land revenue of which 1/10th to 1/11th was retained by them as their remuneration. viz. a 10 years‟ (decennial) settlement was introduced and it was made permanent settlement in 1793 in Bengal.The Stages of British Colonialism • Every year the wealth and resources of India began to be drained out. and Northern Karnataka. • R. which roughly covered 19% of the total area of British India.. began the direct the plunder of India‟s wealth. Bihar and Orissa. i. • Warren Hastings changed it from annual to quinquennial (five-yearly) and back to annual again. • The decline of India‟s centuries-old handicrafts and village industries. India entered the second phase of classic British colonialism. the Mercantilist phase. • During the first phase.THE ECONOMY IMPACT OF BRITISH RULE ON INDIAN ECONOMY (1) Impact on Indian Agriculture (a) British Land Revenue and Tenurial Systems and the Ruin of Indian Agriculture • The earliest land revenue settlement introduced by Warren Hastings in Bengal was made on the assumption that all land belonged to the sovereign. Bihar. • Permanent settlement is also known as the zamindari system. and agriculture became the only source of sustenance to the Indians.e.. • When Robert Clive obtained the diwani of Bengal. but in 1793 Cornwallis made it permanent. III. Orissa. India was converted into a free market for the import of industrially manufactured British goods and a source of raw materials to be exported to England.

but the second remained unfulfilled. Main Features a) Assessment upon individual cultivators. • Under this system. which invested the Zamindars with arbitrary powers to eject the cultivator or attach his agricultural stock and implements for non-payment of rent. • This system. This caused difficulty to the Government. • The rising of the indigo-cultivators followed in 1859-60. the raithwari system revolutionized the relations between the creditors and debtors and thus introduced another grasping and exploiting elements into the rural society”. • The government passed the notorious Regulations of 1799. • During the three decades preceding the passing of the Rent Act of 1859. the ryots were given the ownership and occupancy rights in land and they were individually responsible for the payment of land revenue to the state. • The law of 1799 opened the floodgates of exploitation of the helpless peasantry. • It was officially stated that the ryot could not be ejected so long as he paid the rent. The first aim was realized. • The Bengal Tenancy acts of 1859 and 1885 aimed at ameliorating the position of the tenant. East Bengal and portions of Assam and Coorg (part of present Karnataka). though opposed to the spirit of the Permanent settlement. the Muslim peasants in certain districts and the Santhals in the Bengal-Bihar border region restored to violence in defence of their customary rights. Mahalwari System . • This system led to perpetual struggle between the money-lenders and the cultivators. and then it was gradually extended to Maharashtra (former Bombay Presidency). whose position was that of a mere tenant at the will or mercy of the Zamindar..e. For this purpose a regulation (known as Haptam) was passed in 1799. „dependent tenures settled in perpetuity at fixed rent‟. • “The zamindari system had revolutionized the relations between the landlords (revenue farmers) and tenants. b) Measurement of field and an estimate of produce. • Patni taluks i. Thus a system of present proprietorship was introduced. • Failure to collect rent regularly from the tenants sometimes compelled the Zamindars to default in payment of revenue to the Government. • Lord Wellesley considered it necessary to strengthen the authority of the • Zamindars. • The competition for land increased and there emerged a chain of middleman and intermediary rent – receiving interests between the original landlord and the cultivator. was recognized by law i n 1819. Raithwari System • First introduced in Tamil Nadu (former Madras) by Thomas Munro and Captain Reed. • The primary aims of the raithwari system were the regular collection of revenue and amelioration (improvement) of the condition of the ryots. c) Fixing of government demand at 55% of the produce.gentleman”).

3. The transit and customs duties. 6. England destroyed Indian industries principally by means of : 1. • The Bengal famine of 1943 claimed 3 million lives.D. Imposing heavy duties on Indian manufactures in England.The forcing of british free trade on India. Growth of Rural Indebtedness • Due to expanding indebtedness of the agriculturists.• In this system. • The mahalwari system was first adopted in Agra and Awadh. nearly 24 famines hit India. 8. between 1854 and 1901. (3) Decline of Village Industries and Town Handicrafts • B. . for the sum assessed by the government on the mahal. Granting special privileges to the British in India. Compelling Indian artisans to divulge their trade secrets. large-scale transfer of land from the hands of the peasant proprietors to the money-lenders took place in the raithwari areas and mass ejection of tenants from land occupied by them in zamindari zones. Basu has enumerated the following principal measures taken by the British to bring about the collapse of Indian handicrafts. • the ownership and occupancy right was reserved for the individual peasants and cultivation was to be done individually. 2. the basis of assessment was the produce of mahal or estate and all the proprietors of a mahal were jointly and severally responsible. in their persons and property. 5. 7. It was a two -fold settlement. and later extended to other “added (ceded) and conquered” parts of the United Provinces. The export of raw products from India 4. Building railways in India. (2) Growth of Poverty • According to one estimate. Holding of the exhibitions. in which about 29 million people perished. Commercialization of Agriculture • Practice of growing specialized crops by the peasants. • This settlement was made with the old village community jointly and severally. • the peasants were jointly responsible for paying the land revenue to the state.

G. tea and coffee were the first to be introduced in India.080 million. “the moral and material drain” from India was the continuous theme of other papers written by Nauroji viz. The Wants and Means of India (1870) and On the Commerce of India (1871).G. • The Drain Theory was officially adopted by the Indian National Congress at its Calcutta session in 1896. • The national debt of India rose from ₤70 million in 1858 to ₤140 million in 1876. R. coffee. • The foreign banks in India held nearly 3/4th of the total bank deposits. Poverty and Un-British rule in India (1867). and coal mining industries were started in India. • Subsequently. ₤224 million in 1900.C. It stood at ₤69 million when the rule of the company ended. • It was in Nauroji‟s paper “England‟s Debt to India” read before a meeting of the East India Association. Pensions and gratuities payable in England to retired civil servants of the company. Drain of Wealth • The theory of „Drain of Wealth‟ by the nationalists like Dadabai Naouroji. etc).(4) Growth of Foreign Capital and the Rise of Modern Industries in India • In terms of chronology.). The home charges consisted of many items such as: Purchase of military stores. rubber. • It has been estimated that before 1914 nearly 97% of British capital investments in India was diverted towards completion of government projects (railways. in 1872. and development of financial houses (banks. 1867. that the Naouroji first put forward the idea that Britain was extracting wealth from India as the price of her rule in India.. insurance companies. M. jute. Non-effective charges of the army. Lorrence Rosinger estimated the drain at ₤135 million annually. Expenditure on India Office Establishment Interest on debts. etc. • During the 1850s cotton textiles. the plantation industries of indigo. • William Digby has given the figure of total drain from the 19th century onwards as ₤60. road transport. . on May 2. Ranade delivered. • In 1945. Justice M. • The debt of the company began to increase immensely. • Two other Indian Leaders rose to point out the evils of the drain of wealth. etc). London. Ranade and others. ₤274 million in 1913 and ₤884 million in 1939. Dutt. who in the preface to the first volume of the Economic History of India (1901). a lecture in Pune on Indian Trade and Industry. plantation industry (tea. Interest on railway capital investment.