UPSC EPFO

5 MCQs a day

Topic- Indian Economy under British Rule

Q. 1 Commercialisation of agriculture was one of important feature of Indian
agriculture during British rule, Consider the following statements in this context-

1. The commercial non-food crops substituted the food grains.

2. This has led to relatively higher yield of cash crops in certain areas of the
country.

Which of the above statements is/are correct?

A. Only 1
B. Only 2
C. Both 1 and 2
D. Neither 1 nor 2
Answer- C, both statements are correct.
Explanation-
Some specialized crops begin to grown not for use in village but for trade in domestic and universal
market.
• Commercial crops like opium, tea, coffee, sugar, jute, indigo, cotton, sugarcane, groundnut, tobacco
and oilseeds etc were more remunerative than food grains.
• The commercial non-food crops substituted the food grains. This had a devastating effect on the
rural economy and showed its impact in famines.
Example- Indigo was grown under a different system where all farmers were compelled to grow it on
3/20th part of their land. Unfortunately cultivation of Indigo left the land infertile for some years. This
made the farmers reluctant to grow it.
Q. 2 The colonial policies of the British government led to systematic de-
industrialisation of Indian Industry. In this context, which of the following statements
is/are correct?
1. The policies reduced India to a mere exporter of raw materials for modern industries
in Britain.
2. It led to dependence of Indian consumers on imports of manufactured goods from
Britain.
Choose the correct answer using the codes below-
A. 1 only
B. 2 only
C. Both 1 and 2
D. Neither 1 nor 2
Answer- C- Both 1 and 2 are correct.
Explanation-
Systematic de-industrialisation of Indian Industry - Reverse direction of textile trade between Britain
and India; Massive import of machine made clothes from English factories to Indian markets.
• Import of Cheap products from England = increase threat for the handicraft industries as the British
goods were sold at a much cheaper price.
• The British succeeded in selling their goods at a cheap price as foreign goods were given free entry in
India without paying any duty.
• On the other hand, Indian handicrafts were taxed heavily when they were sent out of the country.
• A new demand in the Indian consumer market, which was now deprived of the supply of locally made
goods. This demand was profitably met by the increasing imports of cheap manufactured goods from
Britain
Q.3 Which of the following statement is correct reason for generation of huge export
surplus throughout colonial period?

a) Huge demand and export of Indian handicraft to Britain and other European
countries.
b) Less dependence on imported capital goods.
c) The India’s Domestic market was self-sufficient for the supply of food grains, clothes
etc.
d) The value & volume of India's gross exports of primary goods exceeded the gross
imports of finished consumer goods
Answer- D
Explanation:
Generation of a large export surplus: During entire British colonial period, the value
& volume of India's gross exports of primary goods (food grains, cotton, raw silk, wool,
jute, sugar, Indigo ,etc.) exceeded the gross imports of finished consumer goods like
cotton silk & woolen clothes and capital goods like light machinery manufactured in
British factories. This led to generation of huge export surplus.
• But this surplus came as a huge cost to Indian economy. Several essential
commodities (food, clothes, kerosene) were scarcely available in domestic market.
• This also did not result in any flow of gold or silver into India (unlike pre -British
rule). Rather, this was used to make payments for ‘Home charges’.
Q. 4 Dadabhai Naoroji called economic colonisation of India as ‘Drain of wealth’.
Which of the following led to the drain of Indian wealth?
1. Payments for the expenses incurred by an office set up by the colonial
government in Britain.
2. Expenses on war, fought by the British government.
3. Import of invisible items
Which of the above is/are correct?
a) 1 and 2 only
b) 1 and 3 only
c) 1 only
d) 1, 2 and 3
Answer: D- 1, 2 and 3 all statements are correct.
Explanation:
In his book “Poverty and Un-British Rule in India” published in the year 1871 Dadabhai
Naoroji explained economic colonisation of India to service the needs of Industrial
revolution in Britain which was called Drain of wealth.
• The revenue and expenditure policies of British imperialist also put additional
financial burden in the form of ‘Home charges’.
• Home Charges: It was one of the major components of the drain of wealth that
included the administrative and military expenses of the Indian government in
Britain. Pension of army officers, expenditure on the office of the Secretary of States
for India., salaries of the members of the Indian Council, expenditure on the India
Office, and payments to the Bank of England for debt management were some other
expenditure which had little concern with India.
UPSC- EPFO- EO exam 2017
Question. 5

1. Officially, the British government was committed to a policy of laissez- faire, but it
was actually a policy of discriminatory intervention.
2. European entrepreneurs had connections to banks and agency on kin, family and
caste men.
3. When plantations were transferred to individual capitalist ownership, native
investors were deliberately ignored.

Select the correct answer using the code given below-

A. 1 only
B. 2 and 3 only
C. 1 and 3 only
D. 1, 2 and 3

Answer- D. All 1, 2 and 3 are correct.