STATE OF INDIAN ECONOMY ON THE EVE OF INDEPENDENCE What is an Economy ? Sf Infrastructiufe 2. Features of the Indian Ecoilomy at the Demographic Structure ‘Time of Independence O€etpationél Structure State of Major Economic Sectors @ Sore Positive Impacts of British Rule State of Agriculture Industrial Segtor Foreign TrailePropreive Indien Economie Devdopwet QE jhe British rule that started with the conquest of Plassey battle in 1757, lasted for about 200 years, It had its far-reaching consequences. Indian poverty, in fact is deeply rooted in it, Prof. R.C. Dutt aptly remarked, “Through India is not a poor country, thanks to the British rule, it is a country of poor people.” The British rule converted our prosperous economy into a backward, stagnant, depleted and disintegrated economy. 1. Wuar 1s an Economy ? Before we come to know the structure of the Indian economy at the time of independe; Dane essential to understand the meaning of an economy. + An economy consists of all production units or institutionsisuch as farms," , workshops, mines, shops, railways, hospitals, schools, colleges, offic anise whi ie employment to its people on one hand and produce a variety of goods ariel services required by them regularly on the other. . Oy ‘« Inother words, economy is the aggregate of econor fe act ties county -within which various types of goods and services are produced, distpibuta aie * An economy, may broadly be classified into ad. imely primary, secondary and tertiary sectors. Primary sector (also known a: ture nsjsts of agriculture and allied activities e.g animal husbandry, forestry, fisheries etc. lay sector [also known as manufacturing sector} includes all manufacturing nstruction activities. S ctor is also known as industrial sector, as at is associated With different kinds of indus tertiary sector (which ive Services| like insrance, banking, transport, is also known as service sector) includes producti communication, trade ete, + Oo} 2. Features of THE Iypian Ecot ‘HE Ti [INDEPENDENCE ° ‘The Indian economy: ney igh many-chahges duri British rule. ‘The British rule turned our economy into a colonial semi-feudal, stagnant, agra dependent and disintegrated economy. An economy wi mad: a 01 insta, inte tS rulers is called colonial economy, 1. Feeder Be ‘economy for the growing British industries. India was le, India, wai supplying raw material for the fa ing British industries and was also a ready market for the machine-made British goods. ‘Thus, in both wavs, asa supplier ofraw material and as a consumer for thefinished goods, India served the interests JESS) Senne Een Eee of the Britishias a feeder economy. ;conomy : At the time of independence, Indian * Growth rate of output was less than 2 per cent. + Growth rate of per capita income ‘was just 0.5 per cent per annum, + Agriculture was the only eco- nomic activity. + Agricultural output increased only by 10 percent during 1893- 1946, ther completely feudal nor completely capitalist. ‘* Indi&n industrial sector was having lange industries of | cotton, jute, iron, paper ete, and these were converted | into capitalist enterprises. Besides, tea, coffee and rubber farms were also having capitalist structure. ‘© There existed feudalism in its agricultural sector, '*. The land settlement system introduced by Lord Cornwallis in 1893 gave birth to feudal relations (landlord-tenant relations). ‘The landlords used to charge very high rate of lagaan and were very cruel to the cultivators, 8. Stagnant Economy : During the British rule, the economy was stagnant, A stagnant economy is one wherein there is absence of development. As a result the level of per capita income remainsBRM sic of nti Economy on the Eve of independence zz almost constant, The colonial government never made any sincere effort to estimate India’s national and per capita income, However, some individuals made attempts in this regard, ‘© The individual estimates of the national income and per capita income were provided by Dadabbai Naoroji for 1867-68, According to him, the national and per capita income in this year were 3340 crore and 220 per annum respectively. Apart from Naoroji, William Digby, Findlay Shirras, V.KR.V, Rao and R.C. Desai were among the notable estimators. * Estimate by VK.R.V. Rao was considered the first scientific estimate. He estimated™hational income at 71,689 ctore income and per capita income at %62 for the year 1931-32, ‘© Most studies suggest that the country’s growth of real output during the first half 6f thétwenticth century was less than 2 per cent. ‘Somi-foudal Economy (rao) Existence of midaleren between the actual -~pulvators and the government atc ndustes Sierytehe rant such 2, cotton © The growth in per€apita income /ofitpuit per annuiawas, just half percent. * Theeviderfce of stagnatiofi Cin algo be found'in the trends!” yery low level of per capita of agriculttéral outputiltichywas the Bnly economic |” income activity of the time” Agricultural oatput increased onl by 10 per cent during the 52 year period of 1895.94 to | * hens {han 1¢ ee Peeled aa aid Dea te eg Under developed Beosiomy : At the end of British rule,” Very high Indian ceonomy\was underdeveloped and backward. An ! «The country was dependent on underdeveloped eeonamy is one in which level of per capita |” thet eanrics income and consecpuenthy living standard is low Most of the pegpleled a miserable life, Our agriculture and industry beth were, very backward, The underdevelopment of the econdémy was evident from the following ; © We had a very low per capita income. It was 7230 in 1947-48 peaple were very poor © ‘There was mags illiterney, In 1947, less than 16 per cent of the total popwilation (excluding children below 10 years) was literates, Female literacy was only about 7 per cent, © Birth and death rates were high. Birth ratc and death rate wore 45.2 per thousand (during 1921-41) and 40 per thousand (uplo 1911-21 decade) respectively. Due to lack of medical and health facilities, nutritious food, education cte, and also because of ard warkcand bad conditions of ‘work, death rate was high, Likewise, ignorance, literacy, orthodoxy, conservation and superstition ‘were the prineipal factors responsible forthe high birth rate, © At the time of independence, people had a very poor standard of living. People did not get Less than 16 per cent people + Industrial development was limited and that too was unbalanced,aa Propressne ndiav Economic Deveopment QI adequate quantity of food or clothing or housing; and millions of people starved, went naked and lived in huts or in the open, Moreover, some parts of India came under severe famine conditions. The famines were so severe that millions died. One of the worst famines in India was Bengal famine of 1943, when 30 lakh people lied 5. Depleted Economy : India was a depleted economy at the | backwardness and stagnati time of independence. Depleted economy is an economy | economy during the British wherein no arrangements have heen made to replace the depreciated physical assets on account of their excessive use. This type of economy has no engineering and capital goods industries. ‘* The Second World War which took place just befo final days of British rule in India depreciated the economy. © Inorder to meet war time requirements, India; had to work day and night. Thus, there was a of plant and machinery in terms of wear and © Their replacements were not available becaus® the country’: had only a few engineering and capital goods in Dg Dependent Economy ba ‘© The country was almost corapletelydependent on other t countries for plant and machinery» nec economi development. The country also ha consumer goods like sewing mach to maintain current life and acti the outside world ce * We began host manufac sugar) ‘© India’s foreign trade sed to nd. y on England. It depended upon Bhglandfor its and exports. ‘7. Disintegrated Pat tl independence, British rulers dliviced! the counti ’9 countries India and Pakistan, © This division ofthe country had deeply shaken the Indian eco} is a result, Indian economy became a «d economy’. ¢/%his diyision of the country resulted in many adverse wots which include is “+ Problem of rehabilitation of refugees from Pakistan, “+ Shortage of raw-materials, Eran serene nets Perret treed Sere Rent eos belonged to them 7 Heavy land taxon were on the peasants, minatory Industrial and policies : [ndustrial - iercial policies were used by the British rulers, tive was to transform : jomy of this county into plementary economy of i of wealth during the British rule was the major cause behind | increasing poverty in India, 1 the nineteenth century, certal expenditures in sterling were in curred by the Indian goverment in England which were calle “home charges”. These expendi tures included dividends to share- holders of East India Compeny, interest on loan raised by the gov emment of India in England, price of the stores bought in Englanc on behalf of India, expenditures | on the Bitish army stationed i India ete. Colonial Trade Policy of th British Government resulted i ‘monopoly control of India’s Forcign trade, Exports and imports in India were largely restricted to England. ‘significant rechiction in transport cost (due to opening of Suez Canal in 1869 which served a direct route between India end Britain) | prompted monopoly control of India's foreign trade by the British £ Government. i + Shortage of foodgrains, Loss of markets, Problems related to transportation.BRM sic of nti Economy on the Eve of independence 15 }. State or Mayor Economic Sectors Main Causes of Backwardness peers Reet eee nscenertore eoecnen (v) British Capital: In the mid-— nineteenth century, the ‘The state of our major economic sectors namely agriculture, industry and trade at the time of independence is briefly described below : 3.1 State of Agriculture ‘The state of agriculture was highly wulnerable, India’s agricltaral sector had the following features on the eve of inclependence : (a) Stagnation : Agriculture was the main activity ofthe people at the time of independence. © About 70-75 percent of the total workforce ofthe coun pended upon agriculture for their means of livel Iecontributed 58.7 per cent of national income. © Despite being the oceupation of large por agriculture was a subsistence and stagnan Indian farmers used to produce solely and excl sclfconstumption, So Indian farmers mainis concentrated ton the produiction of food craps, Whatever ps were grown, they too were tsed to mecttheir own ne : example cotton for clathes, oil s ns Were © The use of agricultural inputs like irrigation chemical ee eel fertilizers modern techniques. of pfoductionwas very ee limited. : i Causes 4 ‘There were two main Indian agriculture d wodern industry. The British ts acted as promoters in several industries like jute, | These persons were! feernaeyeoeete pers ener Raccetice sorry |e India’s forcign trade depended on England for its imports and exports. + Dependence of agriculture on eduction and Productivity : Agricultural production in India was less than its (or tennure) Systems + [At the time of independence, there were 2 land revenue systems in existence : (2) Zamindari system : Zamindari system was introduced by Cournwallis in 1798 through permanent settle act (or ‘also known as Permanent Settlement System). Under this system, zamindars were male owners of the lands and were given rights to collect the rent (lagaan) from the peasants, Lord Cornwallis entered into permanent settlement with landlorels with a view to increasing the revenue of the East India Company. Under this system, the zamindars were to function as intermediaries between the cultivators (ie. tenants) and the government. Under this system zamindars were given unlimited rights to collect as much as rent (Jagan) as they desired, At the time of independence, this system was, prevalent in West Bengal, Bihar, Orissa, Uttar Pradesh, Andhra Pradesh and Madhya Pradesh. (2) Mahalwari system : This system was introduced in 1833 by Willian Bentinck in Agra and Oudh, It was later extended fo Madhya Pradesh and Punjab, In this system, the whole village (Mahal) was treated as a unit as far as payment of Jand revenue is concerned. The responsibility for collecting the land revenuie and depositing it in the treasury was of the village headman, The ownership of land under this system was collective.Progressive Iuian Economie Development ‘© It produced only 508 lakh tonnes (1947-48) of foodgrains as against the present level of 275.68 million tonnes in 2016-17, The level of agricultural productivity (output per hectare of land) was very low. For example productivity |The main factors responsible for the of wheat was 660 kg as against the present (2016-17) ‘decay of Indian handicrafts during the level of 3216 ke. British period were as follows : i ‘© India’s agricultural production received a further setback (\) The British rulers wentefor dis-! | criminatory tariffpoticy. this | due to country’s partition, when highly irrigated and policy, imports to In ade | tariff free while heavy tafiffs were | mposed on..th of Indian! fertile land went to Pakistan. (c) Forced commercialisation of Agriculture : + of ‘alts made their Commercialisation of agriculture means: shift rom food crops | vandicrat if on the! to cash crops Ne il i ‘© Indian farmers were forced to shift to commercial créps, (indigo, in particular) from the traditional food crops (like Tice and wheat). Farmers were given higher pfices for producing cash crops like cotton, jute, so that such crops could be used as raw-materials for British/industties. ors], state patronage to handicrafts came toan end. Consequences : lian handicrafts could not face snk competition of | sng) © Asa result, ofcommercialisation ofagriculture therewas fall in the production of food crops. This fallin produetion™ of food crops went fo an extent that many farmens had to buy foorgrains from the mparket\even for their own % oa aa Bl requirement, Se ia who liked British goods vis-a ‘© Not only this, fall in food. graisis prottuction svas alsO.) \ vis Indian goods, This changed the responsible for frequent famines dinandia uring the, i= pattem of demand against Indian British period. products, (a) Heavy dependence on rainfall: Agriculture was heavily |(y) With the development of railways | dependent on,raififallN6 efforts, were made by the British | in India, the marketing of British rulers to develop petmanentt faeans of irrigation. manufactures across the different | (c) Landlord tenant relations /Diiring the Biitish Yule, the | regions of the country became: owners of land {i.e., JAndlortis) were Aotthe atual tillers | easier. Thus the size of market for of the soil, They were @m6p-sharers.arthseldom shared the ; lowcost British goods expanded and ; i cost of output, Theyalways remainethirterested to collect i... {tatof Indian products contracted. | ‘maximum land revenue from the farmers. (9) Subsistence Farming : Farming was a means of subsistence. Subsistence farming is that kind of farming in which farmers grow crops just to meet basic needs of the family. There is little surplus left for sale.in the market, «Despite of the fact that the tillers were exploited and were reduced to the status of landless labourers, they continued to stay in agriculture due to lack of alternative occupations. conten (8) Ryotwari system : This system was initially introduced in Tamil Nadu by Thomas Munro in 1820 and was later extended to Maharashtra, Bihar, East Punjab, Assam, Under this system, the responsibility of paying land revenue to the government was of the cultivator (or individual ryof himself and there was no intermediary between him and the state, The ryot had full rights vegarding sale, transfer and leasing of land and could not he evicted from the land as long as he paid the land revenue, ‘Though the ryorwari eystem appears satisfactory, yet it also developed various obstacles, In these areas, moneylenders ane mahajans granted loans to cultivators by mortgaging their lands. Soon substantial portion of land slipped out of cultivators’ hold and became the property of moneylenders and mahqjans, The latter started giving land for cultivation fon lease and soon a new zaindar class (with all its exploitative practises) started developing,BRM sic of nti Economy on the Eve of independence 3.2 Industrial Sector © Due to exploitative policies of British rulers, Indian industrial sector was very poor, © The British rul cotton and sil Ing textiles, metal and precious stone works ete. © Due to lack of investment opportunities, growth of modern industries did not come up. ‘The poor state of industrial sector becomes clear from the following : (a) De-industrialisation : De-industrialisation (a term opposite toindustriatisation) implies destroying the industrial activities in a country or region. The policy of de-industrialisatic India as adopted by the British government had two objective AW ‘* First, to reduce India to the status of a mere Groen of important raw-material for the upco; adern industries in England and ‘© Second to convert India into.a market for fink of those same industries, Consequences © This led to the decline of indigenous and massive unemployment Ke ndlicra that increased the barden of populationan agriculture, x: The Indian made ld ign cor of machine ma goods. Itencotira ora on Bh ; SS Very few ni ust lopment on modern lines, was Jimite plage during the second half of the Noycentury. jose industries were developed whic! Id ser ish interests, These industries inchided¢otion, jute, i steel, plantations, ining ete. So industries like sugar, papor, match industries etc. were also sct up with the help of British capital fits were not further re-invested instead used ited to Britain, the pital goods industries : Capital goods industries which ) i) those industries which can produce machine tools, rr, in tur, used for producing consumer goods ‘* During the British rule, there was hardly any capital goods industry to promote further industrialisation in India, Tata Iron and Steel Company (TISCO) was the only important basic industry at that time which was established in 1907. © British rulers did not pay any attention for their promotion as they always wanted Indians to be dependent on Britain, for the supply of capital goods and heavy equipment. (d) Limited role of public sector : Another drawback of the modern industrial sector was the very limited area of aN ° yy led to the decay of world fame traditional Indian handicrafts in the field of India’s Agricultural Sector at the eee etc (i) About 72% of the Gi) (iil] During the second half of the 19th : from serait) {) Dgenite proportion} RASS was 4 Nn subgimertee and stagnant! dueto the use of old techniques ‘of preduetion and lack of irrigation were being forced to: commercial crops due to +h famines were taking place, | no modern industrial base was allowed to come up. Thus, Britis! rulers deindustrialised the Indiai ‘economy. During the British rule, there was hardly any capital goods industry to promote further industrialisation in India. century, modem industries started | developing, though very slow! which were mainly confined to! cotton textile and jute mills. | (iv) The contribution of industrial | ow sector to GDP was very small. It was about 17%, ‘There was very limited area ol ‘operation of the public sector i the country. Public sector was confined only to the railways, power generation, communication, ports and a few departmentalProgressive Indian Economic Development A operation of the public sector. Public sector was confined only to the railways, power generation, communications, ports and some other departmental undertakings etc, (c) Managed Agency System : British rulers introduced ‘Managing Agency System’ for establishing industries in India. Under this system, big industries in the country were managed by agents who got high commission for their services. (0) Contribution to GDP : The growth rate of the industrial sector and its contribution to the country’s gross domestic products (GDP) was very small. It contributed only one sixth (about 13%) of the GDP. And it provided one-tenth of employment. (@) New Pattern of Demand : Owing to the impact of British culture, a new class of people emerged in India which was keen to adopt the western lifestyle. This reduced the demand forIndian products in favour of the British products. In this process, the Indian industry had to suffer, 3.3 Foreign Trade ‘The state of India’s foreign trade at the time of independéiice is discussed’as under (0) Exporter of primary products and importer of finished goods: © Since ancient times, India was well known for its'exports of good8 like fine cotton, silk textiles, iron goods, precious stones, ivory work and wooden goods. ‘© But the restrictive policies of production, trade and tariff adopted by the British government adversely allected the structure, composition and volume of India’s foreign trade. © Consequently, India became anexporter of primary | products such as cotton, jute, indigo, raw-silk, wool etc. | and an importer of consumer goods, ég, cotton, silk, | woollen clothes and capital goods like machinery. (b) Monopoly control of India’s foreign trade: . © India was being a British.colony, exports and imports of _ the country (which were earlier spread-acrossall parts of | finished goods. | the world) became utider monopoly control of the British | . India has large export surplu government. | Which, however, could not result in © Purther, the opening of Sued Canal in'1869 greatly ___any flow of gold or silver into India. reduced the transportation cost between India and == Britain. The camtal provided a direct toute for the ships operating between India and Britain avoiding the African continent. '® More than 5O)per cent of India’s foreign trade was restricted to Britain. Tably tia /Foteign Trade of India (1938-39 - 1947-48) rete eeteeivant noe eran een rners ee rete ene {both exports as well as imports). Half of the trade was restricted t Britain. © India was net exporter of raw) materials and net importer of Year Exports | Imports | Balance of Trade (erore) _ (% crore) @ crore) 1938-39 169 152 +17 1945-46 266 245, +21 1946-47 319 288 +31 Indian 1947-48 403 389 +14 Atlantic (c) Surplus Trade : The most important feature of India’s | “Ocvun foreign trade was the generation of large export surplus. Export surplus refers to a situation in which exports of a Suez Canal used as waterway country exceed its imports. between India and BritainDIY non Fnomyon thee finden British allowed trade with few other countries like China, Ceylon (Sri Lanka) and Persia (Iran). There was export surplus throughout the colonial period, but it did not result in any flow of gold or silver into India. According to Dadabhai Naoroji India had exported an average of 1,30,00,000 pounds worth of goods to Britain each year from 1853 to 1872 for which there was no corresponding return of money. There was drain of India’s wealth into Britain, because of the following : (9) The surplus was used to make payments for the expenses incurred by the office set up by the colonial government in Britain, {b) The surplus was used to pay expenses on war fought by the British government. (0) Surplus was used to pay for the import of invisible items. Such payments were termed as ‘home charges’ which amounted to ¢40 crore per annum. 3.4 Infrastructure Infrastructure refers to the facilities and services which are-usefilfor economic arid social development of the country. © During the British rule some basic infrastructure was, developed in farm of roads, railways, ports, water transport and posts and telegrams. © However, the real motive behind this development was to serve their own interests instead of providing basic amenities to the people. For example, roads were built primarily to mobilize army within India and carrying out raw-materials to the rieatest reilway station orto the port to setidit to Britain. Similar was the motive behind the development of railways in India. Railways were developed to transport finished goods from England to the interiors of the colonial India. Further, post and telegraphs were developed to make the British administration efficient. (a) Railways : The British Introduced railways iit 1850 and Indian railways begun operations in 1853, when the first railway train was started between Bombay (Mumbai) to Thane, adistance of 34 kms, India’s First passenger train between Bombay and ‘Thane (distance 34km or 21 miles) on April 16, 1953 Since then railways were developed rapidly. By 1900, there were nearly 40,000 kms of railway tines, At the time of independence, the total raibway lengths were 50,100 kins, out of which India obtained 40,300 kms and the rest went to Pakistan. The railways affected the structure of Indian economy in many ways. > Itencouraged the process of industrialisation India’s industrial development. e.g. cotton textile industries in Bombay, jute industry in Calcutta, tea plantation in Assam and Bengal owe their development to the expansion of railways. > Tt enabled people to move from one region to another thereby reduced the isolation between different regions of the country. It, thus, promoted national unity.eT Progressive Indian Economic Development * It encouraged commercialisation of Indian agriculture and thus affected adversely the self sufficiency of the Indian village economy. > The volume of India’s foreign trade expanded substantially, But its benefits did not accrue much to the Indian people. (b) Roads : British rulers could not develop much roads due to shortage of funds. There was an acute shortage of all weather roads, The state of roads in India in 1951 can be seen from table given below ‘Table 1.2 : Roads in India in 1951 Type "000 kms National Highways 22.00 State Highways paging Other Roads R34” Oh Total 400.00 Besides railways and roads, the Britishers also took meastires\for.the development of water transport, However, these measures were far“from satislactory,,A\system of electric telegraph was also introduced in India, But it too served the colonial interests and was used to maintain law and order situations in the country, . (c) Power : The total generation of powerifiindia since 1950-51 was 6.billion kwh, The major sources. of power were : (i) coal (57.1%) (i) Gil and gas (37:1.96) and [ii) water 58%) (4) Irrigation : Against a total netsown area of 291 million areas(in)1 960-51, irrigation facilities were available to about 51.5 million areas of landWhich comes tol?.7% of the net sown area. (c) Health facilities : Health facilities were quite inadequate. The spread of health infrastructure was, limited to big towns. This was accessible only t0 a few select sections of the society, Inadequacy of health infrastructure gotyeflected in heavy ificidence of epidemics that occurred frequently, high death rate, high matérnial mortality pate and high infant mortality rate. 3.5 Demographife Structure, (a) Size of Population : Various détails of demography under British rule were first collected through acensus in 1881. The year af 1921 ig Fegarded as the Year of Great Divide. Prior to 1921, size of population in India, kepy’on flictuating,(i.e, increasing in one census and falling in the other), but from the year 1921 onward, the sizeof Indian population never declined. It showed a consistent rise, The size of population in Indiasince 1891 can be seen from the table given below : ‘rable 1.3 : Growth of Population in India (1891-51) Year Population in Crores Change (Crore) 1891 23.87 = 1901 23.83 = 0.04 1911 23.21 +138 1921 28.14 -0.07 1931 27.90 +2.76 1941 31.86 +2.96 1951 36.10 $4.24 (b) High Birth Rate of Death Rate : Birth rate refers to number of live births per thousand in a year Death rate refers to number of people dying per thousand persons in a year. Both birth rate and death rate were very high. Birth rate was 45.2 while death rate was $3.3 during 1931-41. In contrast to the present levels (2016) of 20.4 and 6.4 per thousand respectively.BRM sic of nti Economy on the Eve of independence 114 (c) Literacy + Literacy rate is defined as the total number of literate persons as a percentage of total population. At the time of indepenclence, the overall literacy level was less than 16 percent which means more than 80 per cent of country’s population was illiterate. Female literacy was ata very low | (I) India remained primarily ai level of about 7 per cent. agricultural country throug (a) Poor Health Facilities : Public health facilities were either | Out the British period..And ite unswaiable io large weaves of population or were Lichiy Gyr inadequate, Consequently, the overall infant mortality rate was quite alarming. It was 218 per thousand as against the present infant mortality rate of 34 per thousand. Infant mortality rate refers to the number of the deaths per 1000 li birth of children under one year. Life expectancy was low. (Life expectancy refers to the average number of {for which people are expected to survive). Itwas 4 contrast to the present level of 68.8 years in 20) was massive poverty in India, rc. (o) Widespread Poverty : There were no reliable the extent of poverty. But, there is no doubt poverty prevailed in India during the colonial ‘The average per capita income was just €20 to annum, Asa result, the standard of lying of commonpeople in India was very low. i 3.6 Occupational Structure _)) O OQ) s Occupational structure meaisthe distri saa brcaning ) Through the managing agency different sectors of the . The s} of occul in system, the Britishers appropriate: os . pes se ‘about 50 percent of the gross profit | al sector oes ae ee Wah wae | yt tis rs aed developed by them in India ‘b_he Manufacturing | "Indian economy through economi atest lance ioe renner rn een Brose i shiek! Perce ako (2) World famous ha fe forcign trade to theit - economic infrastructure owing sclecline of handicrafts, more and more people were made to depend on agriculture. ‘This is clear from the following diagrams + in 1891, only 60 per cent of the working population was engaged in agriculture. It rose to 70 per cent in’ 1901 and then to 72 per cent in 1951. ‘This clearly shows that India was going backward. ‘Our agriculture could not absorb this increasing pressure of population on land. Agriculture was, taken largely as a means of subsistence and less as a profession of profit. 4. Some Positive Impacts or British Rute British rule also had some positive impacts on the Indian economy. They are discussed as under : (i) Improvement in Agricultural Productivity : Commervialisation of agriculture initiated by British Government resulted in improvement in agricultural productivity, Agriculture gradually came to be accepted as a profitable venture rather than merely a means of subsistence.4.12 Proprssne ndiav Economic Development QI (i) Better means of transportation : Development of roads and raihvays provided cheap and rapid. transport system and opened up new opportunities of econamic and social growth. Modern Postal System : In 1837, the British introduced the modern postal system. The postal services served a useful public purpose. The expensive electric telegraph system was introduced in India, which was useful for the purpose of maintaining law and order, (ai) Check on Famines : The development and expansion of roads and railways worked ag a great check on the occurrence and spread of famines as food supplies could be transported to thealfected areas in case of droughts. : (iv) Shift of Monetary Economy : British rule helped Indian economy to shift from, ae ‘system of exchange (exchange of goods for goods) to monetary system of exchange, (v) Effective administrative setup : ‘The British Governme: which serves as a ready reckoner for Indian politicians fidan sffectinigdhgtiot ation system, + The estimate of national income by V,K.R.O. Rao estimate during the colonial pe + The battle of Plassey in 1757 laid woman + The country's ingrowth cra ge oo ry was less than 2 percent. > The growth in per capita — +> Zamindari nope wa jntrodus + Thomas wake ae + Mahalwap 1 ee Os in 1833, > India’s first \pril Oy Ne Bombay to Thane. is known as the year of Great Divide +flo ‘cent of the workforce was engaged in primary sector, while the manufacturing and lice Sectors accounted for only 10 per cent and 15-20 per cent respectively. “> Demographic © Literacy rate— less than 16 per cent. Infant mortality rate was 218 per thousand. Life expectancy was 44 years. ‘Modern postal system was introduced in 1897, Bengal Famine of 1943 took lives of 30 lakh people. @ ° ° @BARI of ttn Economy on Br of nepenence RE CuapTeR Pot FV mer tLe © Colonialism : It refers to a system of political and social relations between two countries of which one is the ruler and other is its colony. ‘© Meaning of Economy: An economyis the aggregate of economic activities ina country ora Seger area in which various types of goods and services are produced distributed and consumed, eof an economy is indicated by the total volume of its goods and services produced in a oN ‘© Features of indian Economy at the Time of Independence: (i) Feeder economy (i) Semyj-feudal economy, (ji) stagnant economy, (iv) backward economy, (v) depleted economy, (vi) de ‘onomy and (vil) disintegrated economy. \/ ~~) ‘© Colonial Exploitation of the Indian Economy : Indian economy under the oy le was exploited in fol 1g ways: . (Agriculture was exploited through Zamindar Cd i esha were free to extractas much as land revenue from the farmers. Farfner duce status of landless labourers. ed py making Wapotts (il) Indian handicrafts were systematically dest kin ‘of British machinemade goods tariff free. (ill) India’s foreign trade was: meegoee go policy, Britainfhad monopoly control India’s foreign trade. ‘© State of Agriculture at the time 6f ndepende: op About int of the working population (i) Agriculture was the main activity of the onal income. depended on agriculture and iteontribut Agricultural production wasless t ‘gricultural productivity was very low. (ii) Agricultural was ve rarddte| utilisation of agricultural inputs, e.g, seeds, fattorslike:| fertilizers, mee teal) large number of middlemen, (c) increasing aie” CS (iv) Agriculture Was taker jeans en, ce. 1 cofhimer (v) There was s ire but it did not benefit the farmers. lisatio ‘cul ‘© Industrial Sector 65 (i) The share Ko ‘DP Q): ‘17 per cent. (i) Due to poli industrialisatioi, Indian handicraft industries declined. (iil) Due to discriminatory tariff policy, import of British goods were made tariff free to Indian markets a \dicrafts were imposed heavy export duty. (ivyterpfew modem industries began to be established during the second half of the 19th century. italgoods industries were lacking. (vi) Théarea of operation for the public sector was confined torailways, power generation, communication, ports, airways etc. (vil) Managing Agency system was in operation in big industries. (vil) New Pattem of demand. ‘© Foreign Trade : British government had a monopoly control over India's foreign trade. We had a large export surplus. However this surplus did not result in any flow of gold or silver into India. Due to the colonial policy of the British government, India became a net exporter of raw-materials and primary products like raw-silk, cotton, jute, indigo, wool, sugar, etc. and a net importer of manufactured goods.cen Progressive Indian Economie Development © Infrastructure: Infrastructural facilities were lacking, Whatever little development of infrastructure took place was to serve colonial interests. ‘* Demographic Condition: First population census was conducted in 1881, The year 192115 called the year of the Great Divide . Mortality rate was high. and life expectancy was low. It was 44 years in the decade 194151. 80 per cent of country’s population was illiterate. In the decade 1931-41 birth rate was 45.2 per thousand and death rate was 33.3 per thousand. Male literacy rate in 1951 was 21.2 per cent: cc literacy rate was 7 per cent. infant mortality rate in the second decade of the twentieth cé 218 per 1000 live births (in 2016, it was just 34 per 1000 live births). Life expectancy in the, was 44 years. In 2016, it was 68.8. '® Occupational Structure : At the time of independence agricultural sector as cherie largest share of workforce which was 7075 pet cent. Only per ca ‘8 er cena Che were ‘employed in the manufacturing and service sectors respec ‘© Some Positive Side Effects of the British Rulein india: place largely in terms of railways, (i) Development of, and telegraph services, (iv) Shift of monetary eco! ent of ern took Vii) Development and expansion of post ee ooss Toy Fk OBJECTIVE TYPE QUESTIONS eRe EME Muttipte Choice Questions: ‘1. The foundation of British rule ia India s laid by the Battle of Plassey fought in rae J (v) fa5% {9 1763 4 . fu, 1987 2, At the time of independence, the ligeracy rate in India was : (a) 10% (b) 24% [o) 28% {d) 10% 8. In 1951 ofthe working population was dependent on agriculture. (a) 60% (%) 72% (9 80% (a) 75% 4. India’s first official census was undertaken in : (a) 1981 () 1947 (9 1881 (@ 1921 5. Railways were introduced in India in : {a) 1850 (b) 1881 {9 1869 {a 1901 6. About of the population of undivided India was left with India. [a) 77% (b) 72%. () 90% (d) 82%BI of tn zoom on te Eve of ndapendnce VI ‘7. Suez canal was opened for transport in (a) 1850 (b) 1853 (9 1869 (a) 1901 8. During British period, Indian economy was : (a) Backward (b) Semi-Feudal Economy (6) Both (a) and (b) (@) Neither (a) nor (b) ©. Who made the first scientific estimate of national income in India during British period ? (a) Findley Shirras (0) Willam Digby (6) Dadabhai Naoroji ( V.K.RV. Rao 10.The contribution of secondary sector in National Income of India in 1947 was : fa) 20% (©) 13% (0) 14% (a) 10%, 1LWhich industry suffered a major setback due to discriminatory trade policy adopted by the British? (a) Handicraft (b) Iron aitd steel (©) Paper (@ Jane 12.The most important infrastructure developed during colonial pétiod was : fp airways (b) Waterways (0 Railways (a None of these 119.The opening of Suez Canal provided a direct route for ships operating between : (a) India and Sti Lanka (hindi and BSA (©) India and England (a) Bngldnd aiid OSA 114.When did Bengal Famine took place? (a) 1907 (e Peso (9 1984 (auioaa 15. The Indian economy on the eve of the independence was : {a) Semi feudal {b) Backward (b) Stagnant (@) All the above 16.Decay of Kisndicrafts was caused by : [a) Diseriminatofy tariff policy (b) competition from British goods (c) Beclitie in demand (d) All the above 17.Durlig the colonial period, India’s demographic feature was : (a) High birth rate (0) High death rate {© Low literacy rate (6) Allof these 18.Which one of the following was high during British rule in India ? {a) Literacy rate (b) Female literacy (6) Infant mortality rate (@) Life expectancy Aas. 1(¢), 210), 810), 4(¢), 5(a), 6), 71), 8(2), 91d), 10(b), 11(@), 12(c}, 19(0), 1444), 18(c), 16(c), AFA), 18(4.|e Pgs Indien Exon Derdopest EE Fit in the Blanks with Appropriate Answers 1. The zamindari system was introduced in India by 2 was the first scholar who estimated India’s per capita income during the colonial period. 3. An industry that produces machines for production of goods meant for consumption is called 4. TISCO was established in 5. and industries were adversely affected due to partition of the ee ©. Production of crops for market rather than for ee is called 7. had monopoly control over India’s foreign trac Deugy ut nes sriod. 8. Suez canal was opened in ©. The infant mortality rate on the eve of varnanegry {oa thousand. jAns. 1. Cornwallis, 2. V.K. IR.V. Raoy 3. | 6 com Match the Following 1, From the set of statements given in Column I : + ‘a. _ India’s economy under the Britis! ®) lari system a echoes ‘The money value of all final goods b. Asystem of Li a © ome and services produced in the economy Drain of India a. (iv) Agrarian Ans. ¢ (iii 2. Identify the c nce «QS; ives given in Column II by matching them with respective tems in Colu Column I )pefling of Suez Canal i 1787 AS Iron and Steel Company a 1793 C. Battle of Plassey iil 1907 D.Zamindari system iv 1869 Choose the correct alternative (a) ii, i,iv, i, ©) iv, ili, i, ii (0) is ivi, ii (@) ii, ii, v Ans. (b)BRM sic of nti Economy on the Eve of independence rEH EEE state whether the following statements are True or False 1. Indian economy was a stagnant economy on the eve of independence. 2. ‘The year 1921 is known as the ‘Year of Great Divide’ in Indian demographic history. 8. Mahatwari system of land revenue was introduced by Lord Cornwallis, 4. The British rulers laid more emphasis on the production of food crops. 5. Zamindarisystem was mainly responsible for agricultural stagnation during the Britis}rrulen India, 6. On the eve of independence, agriculture was the principal occupation of the peopléin India, 7. During the entire colonial period, India’s exports exceededhits imports. 8. Railway was the most important infrastructure develofied dubing the British ritle, Ans. 1, True, 2. True, 3. False, 4. False, 5. True, 6. Trey 7 Tele, 8. True. Il. IMPORTANT, HOTS & VALUE BASED QUESTIONS Q.1. What do you mean by the colonial economy ? Ans. An economy which is made to servé the interest of 1t8 rillers is called ‘¢olohial economy’ Q.2, Mention the most crucial economic challenge at the time of independence. (HOTS) Ans. Problem of rehabilitation of labge number, of Felugees from Pakistan. 0.8. What were proportions of areas and population obtained by India after partition ? Ans. India got 77 per centlof total land ateaanthnéarby 82\per cent of the population of united India. 0.4. What was the most important cause of growing poverty in India during the British rule ? Aus. ‘The policies of the British Goverhfhent! Q.5. Mention the name of two important industries which were adversely affected by the partition. Ans. (i) Cotton teXtile, (i) Jateintdustry. .6, Why the jute mills of Calcutta (now Kolkata) were started starving for raw material ? Ams. Because the jufe mill3\of Calcitta)(n6w Kolkata) had to go without raw-jute of East Pakistan (now Bangladesh). Q.7. Mention the canse of food shortage in India after partition. (Hors) Ans. The niin cause of food shortage in India after partition was that the food surplus areas of West Punjab atid, Sindh went to Pakistan, 0.8, Mention the most important infrastructure developed during the British period. Ans. Devélopmentof the railways was the most important infrastructure developed during British period, 2.9, When was the first train started in India ? Ans. The first railway train was stared in 1853 in India between Bombay and Thane. (0.10. How did the opening of Suez canal help Britain to further consolidate its control over India’s foreign trade? Ans The opening of Suez canal in 1869 reduced the cost of transportation between India and Britain, (QL. What is occupational structure ? Ans. It refers to the distribution of working population according to the three broad sectors namely primary secondary and tertiary sectorQ.12.What do you understand by the drain of Indian wealth during the colonial period? (HOTS) Ans. Drain of Indian wealth during the colonial period implies flaw of gold or silver or foreign exchange from India to make payments for the expenses incurred by an office set up by the colonial ‘government in Britain and for the import of invisible items. Q.18.What is meant by the commercialisation of agriculture ? Ans. Commercialisation of agriculture implies production of crops for sale in the market rather than for self-consumption. Q.14.Why were Indian farmers forced to shift from food crops to commercial crops?» (*07S) Ans, Farmers were forced to shilt from food crops to commercial crops like cotton and juie to ensure the supply of raw-materials for British Industries, Q.15.When was India’s first official census operation undertaken ? Ans. In 1881 Q.16. What is meant by subsistence agriculture 2. Ans. Subsisience agriculture is a form of farming inWhich the\crép& raised are intended to provide for the basic needs of the family with little surplus for marketing. (0.17. What was the main reason for the stagnation in the agricultural sector under the British rule? Ans. Zamindari system introduced by"the/British rulers, Q.18.Name the different land revenue systems (or land settlements) that existed at the time of independence. Ans. At the time of independence, three land revenue s () Zamindari System (i) Mahalwari Sysiem|and sstens Were in existence (iil) Ryotwari'System: Q.19.What do you understand by de-industrialisation ? Ans. De-industrialisatiog (an opposite ferify to ihdustrialisation) implies destroying the industrial capacity (or activities} in a country ortegion, 0.20. What was the effect of the decline of the handicraft industry in India ? Ans. ¢ It created lineimployment on a large scale. ¢ Thevallin the supply of locally made goods created a demand for the imports of British goods, .21. What were the industries on which the British Capitalists invested a huge amount of capital in India? (OTS) Ans. (i) Jute incustry, (ii) Plantation industry .22,Give meanings of the following items : (=) Life expectancy (b) Infant mortality rate Ans. (a) Life expectancy : The number of years on an average a new born survives. (b) Infant mortality rate : The number of deaths before completing one year of age per 1000 live births during a year is called infant mortality rate. 2.29. What were the main items of export of India during the colonial period ? Aus. Export items were : raw cotton, jute, silk, wool, indigo.BRM sic of nti Economy on the Eve of independence Ill. NCERT TEXTBOOK QUESTIONS Q.1, What was the focus of the economic policies pursued by the colonial government in India? What were the impacts of these policies ? Ans. Focus : The economic policies pursued by the colonial government in India were focussed on the protection and promotion of British economic interests of their home country rather than the development of Indian economy. Impacts : () Land revenue- system caused stagnation in the agricultural sector. (i) The policy of de-industrialising India led to the collapse of India’s world faniiouls handicraft industries. (ii India was reduced to the status of a mere exporter 6f raWmnAterials and importer of finished consumer goods. 0.2, Name some notable economists who estimated India’s per capita income during the colonial period. Aus. Dadabhai Naoroji, William Digby, Findlay Shirrs, V.K.RxV /Rao'andl R.C. Desai. 0.3, What were the main causes of India’s agricultural stagnation during the colonial period ? Ans. Causes of stagnation in the Agricultural Sector # The main causes of stagnation in the agricultural sector were — (a) Land revenue systems introduced by the colonial government) Forexample under the zamindari system, interest of the zamindars was ohly tOcollect rent. regardless of the economic conditions of the cultivators, (b) Low levels of techiiology, lack oftirrigation lacilitiSandonegligible use of fertilizers, 0.4, Name some moder industriés which were in operation in our country at the time of independence. Ans. Cotton textiie)industries ute mills, Iron and Steel industries, Sugar industries, Cement and Paper indiiatries. Q.5, What was the two-fold motive behind the systematic de-industrialisation effected by the British in pre-independent India ? Ans. Two-fold Motives Thé policy of.systematic de-industrialisation adopted by the Britishers had the followingitwo objéctives — () To reduce Iria to the status of a mere exporter of important raw materials for the upeorning médérn inddstries in Britain, (i) Te,thirm Indian into a wide market for the finished goods of those industries. Q.6. The traditional handicrafts industries were ruined under the British rule. Do you agree with this view? Give reasons in support of your answer. ‘Ans. Yes. | agree with this view, ‘The British rule in India resulted in decay of world famous handicraft industries. ‘The main causes responsible for their collapse were as follows : (Imports to India were made tariff free while heavy tarifs were imposed on the exports of Indian handicrafts. (ij) Indian handicrafts could not face the increasing competition from British machine made goods. (iii) State patronage to Indian handicrafts came to an end with the start of British rule in India.What objectives did the British intend to achieve through their policies of infrastructure development in India ? Ans. Objectives behind infrastructure development : The British government in India intended to achieve the following objectives through infrastructure development — (i) Railways were developed to market the finished products into the interiors of India. {ii) Roads were constructed to mobilize the army within India and for carrying raw-materials from, the country side to the nearest railway station or port to send it to England (iii) The post and telegraph were developed to serve the objective of maintaining/law end order situation in India Critically appraise some of the shortfalls of the industrial policy pursued-by the British colonial administration. Ans. Shortfalls of the Industries Policy : © The policy of de-industrialisation followed by the British government resulted in decline of world famous handicraft industries ¢ The collapse of these industries furthet resiilied in miassiv@ unemployment in India. © There was hardly any capital goods industiyt6 promote further indiiStrialisation in the country © The area of operation of publieSeétor was very lifhited. 2.9. What do you understand by the drain of Indian wealth during the colonial period ? Ans. During the colonial period, India was obligéd te.make payments for the expenses incurred by an office set up by the colonial government in Britain, expenses an! war, and fought by the British government, All this is called the drain Of Inelfan wealth. (0.10. Which is regarded as the defining year to mark the demographic transition from its first to the second decisive stage ? Ans. The year 192is regifed the Uefining year f mark the demographic transition from its frst stage to second stage Q-11.Give a quantitative appraisal of India’s demographic profile during the colonial period. Ans. Demographic features during colonial period : ‘The main feattireg6f India’s population during colonial period were as follows (i) The size oftndia’s population kept on fluctuating till 1921. After that it went on rising, Population of India in 1941 stood at 31.86 crore. (i) Both)birthyand death rates were very high {iff Lite expectancy was very low. It was 44 years at the time of independence. (i))Infant mortality rate was placed at a high level of 218 per thousand. (¥) The literacy rate was less than 16 per cent, (Q.12. Highlight the salient features of India’s pre-independence occupational structure. Ans. The agricultural sector accounted for the langest share of workforce, which usually remained at a high of 70-75 per cent while the manufacturing and the services sectors accounted for only 10 and 15-20 per cent respectively. 0.19, Underscore some of India’s most crucial economic challenges at the time of independence. Ans. ‘The partition of the country disrupted the entire economy. The most critical economie challenges at the time of independence wereBRM sic of nti Economy on the Eve of independence Ez ()) Problem of rehabilitation of large number of refugees from Pakistan. (i) The acute shortage of raw materials for cotton and jute industries as most of the cotton and jute growing areas went to Pakistan, Q.14.When was India’s first official census operation undertaken ? Ans. In 1881. Q.15.Indicate the volume and direction of trade at the time of independence. Ans. The composition, volume and direction of foreign trade undergone a significant during the British period, Wotamse of Trade s Iie il large exearh, surpluns 1 Ngporls ex rts, During 1947-48, India’s exports and imports were estimats Fore au crore and thus generating an export surplus of 714 crore, Direction of Trade : More than half of India’s c as re Britain, ‘The rest was, allpwed ith few other opunires Ihe Ching, Son | (sri a sia (Iran). The opening of Suez Canal in 1869 further intensified ol Ray eth reien trade. Q.16.Were there any positive contributions made ? Discuss. Ans. Yes, British rule also had some positive ona ns () Development of roads and 's opened mS economic and social growth. (i) British rule helped mans “ey no) Ba oO oa to monetary system of exchange. Very Short < (Carrying 1 Mark each) 1. Mention the land 31 ‘existed in thdia @y: > s time of independence. Who introduced, \dari s} Oy: and when ? When was th in India OY. during British rule ? jahalwari system in India and when ? 3. 4. Who int 5. Where textile mills established in the 19" century ? 6. 7 or ity did India become an exporter during British rule ? mn tiko causes for downfall of the Indian handicrafts during the British rule, 8, what do you mean by cash crops ? Give an example. ©. Why did the British government insist on the production of cash crops in India ? 10, What is under developed economy ? 11, What is meant by a stagnant economy ? 12, What was the condition of foreign trade at the time of independence ? 13. State one feature of Indian economy at the time of independence. 14, What is colonial economy ? 15, What were proportions of area and population that had come to India after partition ?e Progressive Indian Economie Development 15, What was the rate of growth of per capita income at the time of independence ? 17, When was the Tata Iron & Steel Company (TISCO) established? 18, What do you understand by the term export surplus? Short Answer Type Questions (Carrying 3/4 Marks each) 1. Explain two causes of backwardness of Indian economy at the time of independence. ee 2. “Indian economy was a semi-feudal economy at the time of independence*. Justify foment, 8. What was the two fold motives behind the systematic de-industrialisation em x oe in pre-independent India? < 3 s a 5 e z g § 3 5 Z 5 5 : § eae = 2 a z 3 a = a g 8 & 2 z a z = ©. Why was trade surplus not utilised for grow! 10, What was the state of Inclia’s foreign trade at the ti India during the British rule? iden of independence? 11. Which challenges were present bef Indian 12, Point out three beneficial effects of British rule in In 19, How did Dadabhai Naoroji define the cohee; rain Oo fe egoue Long Answer Type ane ‘Marks each) 1. Describe briefly < a S hherited from her colonial past. Briefly disc’ ister the Indian. & the time of independence. 2. What objecti achieve through its economic policies ? 9. The traditional Randi lustre ruined under the British rule, Do you agree with this view? Give reaso rt of 4. Mention some of t crut lenges at the time of independence. 5. Indicate the vol direction of fade at the time of independence. 6. say that the British established very important infrastructure of the economy, which jomnie development of our country? Mention these infrastructures and give some 7 88 the economic consequences of partition on the Indian economy, 8. Write’anote on colonial exploitation of India’s foreign trade, or Discuss the forms of exploitation adopted by British rulers in India. ©. During the period of British rule, we had favourable balance of trade. Even then, it is characterised las econamic drain, why? 10, Discuss the principal causes of the backwarciness of Indian economy at the time of independence. gag