‘Pre-British Conditions of Indian Economy and British Rule in India 1.1. INDIAN ECONOMY DURING THE PRE-BRITISH PERIOD e jc ‘is and disorders because by this time tt |. The writings of Dr. Francis Bukanon, Charles Metacalfe and Prof. Gadgil made available sufficient informat ut the conditions of Indian economy during the pre-British period. Indi e one hand and on the other hand, there were number of towns which were the seats of administration, pilgrimage, commerce and handicrafts. was also very small. 1.1.1. Condition of Indian Villages and Village Communities during Pre-British Period During the pre-British period, the-village"community-was-composed of different "groups based on simple division of labour. There were farmers-who cultivated Jand-and tended-eatle. . oil pressers, barber-surgeons etc. All the above mentioned occupations were hereditary ‘These various groups of people were gelling their remuneration in'terms of erops during the harvesting period against the services rendered Agricultural and handicraft industry were interdependent and thus the village republics were able to function independently. Indian-villages-were~almost-self-sufficient-in- respect of daily-necessities excepting commodities like salt, spices, fine cloth, luxury and semi-luxury goods. In this con Sir Charles Metacalfe wrote, ‘The village communities are little republics having nearly everything ‘Scanned with CamScannerns. They seem to last ys n Tforming @ separate lille size, enjoyment of a great Poni, of foreign relatior each on and to the aa 2 independent ves, and almost f ea on of the village communities aes degree conducive 10 tneit app vis io c and independence” itself ‘of freedom v the-school teache tic, wereall village officers: 7 a me omplete administrative and economic unit. British Period ring the Pre-| Oe : i 1.1.2. Condition of Agriculture during 11° - . Jndian agricul od, ie, during the mid-eighteenth centiry. in India ?oor farmers had to aise as oe the main source of livelih y. ing those days, 4 iculture was a fda aire really very much painful. P The economic condition of Indian agriculturists Were ieeplalat ; rs. During those days Indian rulers had constructed and maintained s irrigation projects but these works were very much insufficient as compared to its requirement. Moreover former, were following traditional methods in their agricultural operations. ee crops which were grown by Indian farmers included mainly rice, wheat, bajra, jowar and minor cori alongwith the commercial crops like jute, raw cotton, groundnut tobacco e\6. HET the crop rotation practices of standard pattern were followed without any variation. Some strips of land were Weft fallow every year just forthe intrest of regaining ferility. In those days, the agricultural implements vrete mostly primitive and simple which included wooden plough, iron sickle, leather bag for drawing voter ete, During those days, agriculturists were applying only natural organic manures. Thus it is better to conclude with Dr. Buchanon and Prof. Gadgil that the conditions of Indian agriculturists in total were very much depressed. Moreover, i : ing agai and these policies were specially framed to serve the interests of rulers and zamindars of India. 1.1.3. Prices and Wages during the Pre-British Period During the pre-British period, the prices of foodgrains used to fluctuate widely between different places. Markets for most of the commodities were very much restricted to local areas in the absence of adequate means of transport and communications. Under such a situati i it sions. situation, agricultural produces and the other commodities prodi by arti i i ries we i Bae produced by artisans in the cottage industries were not getting remunerative Ww. Wages of village artisans were paid not in terms of cash but in kind. a i a |. The rate of wages were mostly determined by customs and conventions. 144, The Structure and the Conditions of Towns during th me he Pre-British Period tural-areas, Ne were merely out grown villages. Accord existence principally due to the followin; : ving i id those town: ling to Prof. D.R. Gadgi ee ines fadgil, towns of those days owed thei J. Quoted by Jawaharlal Neh ‘overy 947} 02, Quoted by Jawaharlal Nehru, Discovery of India (1947), p. 3 . P. a Scanned with CamScanner8 (for . example, Gaya, Benaras, Allahabad, Puri, Nasik etc. ds : i J . Province (for example, Bijapur, Golconda, Delhi. Lahore, Lucknow, Poona etc.) a . : 1 , : ' a i due to its trade imy lance (for Heer autate Mirzapur, Hubli, Bangalore tc). These towns were exising on difercn = jose towns which were actually the trade centres proved more sable, i fe Jc in the towns was completely different from that of the villages. In these towns, 4 Jarge categories of occupations and different varicties of trades were existing. Thus the sizes of populstion 1.1.5. Industries and Urban Handicrafts during the Pre-British Period in India Although agriculture had dominated the Indian economy duri hough agric i f \y during the pre-British period yet some Indian industries, producing certain special products, enjoyed worldwide reputation. During those days, many of the handicrafts produced in the urban areas of India were quite famous. Among. all those various famous urban handicrafts, 0 sprea over the whole country. During those days, the muslin of Dacca, silk sarees of Benaras, shawls-and carpets. of Kashmir and-Amritsar, the calicos of Bengal, dhoti and dopattas of Ahmedabad, silk and bordered cloth of Nagpur and Murshidabad etc. in international. markets. While recognising the skill of Indian artisans, T.N. Mukherjee wrote, “A piece of the muslin 20 yards long and one yard wide could be to pass through a finger ring and required six months to manufacture.”! Moreover, India was well known for her other artistic handicraft industries which include jewellery made of gold and silver, brass, copper and bell metal wares, marble work, carving works in ivory, wood, stone etc. Artistic glasswares were also produced in India during those days and had eamed international reputation during those days. India had also developed high level of metallurgy by those days and the cast-iron pillar standing near Delhi is a real testament of that. All these industries and handicrafts had its patronage of local administrators for their gradual development. In the urban area each handicraft was properly organised into a guild so as to safeguard their common interest. These guilds were enacting their own laws which were again respected by the then rulers of the country. According to M.G. Ranade, the Indian-industries “not only- supplied all-local-wants-but-also enabled India to export its finished products to foreign countries.”? During those days, Indian export i il fies; calicos, silk and i a woollen cloth and artistic wares made of glass and metal. Besides, the other export items were cinnamon, pepper, opium, indigo etc. Throughout the 17th and 18th century, European countries were purchasing the above mentioned manufactures of India. Thus considering this superior industrial state of India during the pre-British period, the Industrial Commission (1918) recorded the following lines : “At a time when the West of Europe, the birth place of modern industrial system, was inhabited by uncivilised tribes, India was famous for the wealth of her rulers and for high artistic skill of her craftsmen. And even at a much later period, when the merchant adventurers from the west made their first appearance in India, the industrial development of this country was at any rate, not inferior to that of the more advanced European nations.”* 1. Quoted by D.R. Gadgil, The Industrial Evolution of India, p. 34. 2. M.G. Ranade, Essays on Indian Economies, p. 171. 3. Industrial Commission Report, p. 1. Scanned with CamScannerg the Pre-British Period In the sep, Natur ly, me ey ' t s were cuboff duc to jy 7 and even some of the village sof Transport and Trade during hr period, there were 6. “condition A re-Briis During the P' nt flood. it was only in some parts of Northern India where some yy, ro sed for carrying passengers as well a fei? animals were considered 38 the stg, of men and materials Was very sgt by consequel asport, aden country boats \ bullock carts and pac ‘acondition, the movemen 4s were organised in different parts of the country and Most hese weekly markets. In some places annual fai, Thus, in fine, we can conclude that the trany British period were not at all satisfactory, followe' ct of water an le and small woo part of the countrys rt. Thus under such weekly market heir daily purchases from th nto these weekly markets. ket conditions in India during the pre- were navif’ But in most othet modes of transpo! During those day the people used to make t were organised in addit system as well as the ma 4.2. BRITISH RULE IN INDIA 4.2.1. Meaning of Colonialism an woe The word colonialism is very much related to foreign domination and thereby it-indicates that th, country-is-considered-as-a-colony=of-a-ruling-foreign.count _The-ecom f ; ne 7 7 3 Tuling-foreign country through its domination, Obviously, this would result a-backward-developmen The system of colonialism had its origin mostly from British imperialism. Thus the wor colonialism sfers10..system.of political, economic. and social relations between two such countrie: ie, the-ruler-country.and.its.colony. In-this-system,-the.ruling.country-has-its-sole-control.ove political set up of its colony and has the ultimate-wuthority-to-determine:the-economic-policies.of th Lean ‘Thus.the-people.of this.colony cannot take any independent decision and-initiativ ‘on economic-matters.like utilisation. of its resources, agricultural and industrial development, foreig wade relations. tax structure, infastuctral development ete. ‘The economic policy formulated by th eryes ‘sand thereby it retards th (cape eee Usually, in a colonial set up, the ruler country tied by thei economy with that of the colonial economy over a period of time so as to make them complementar to each other. The long history of colonies of Western imperialist countries have continued thei exploitation over colonies either through the policy of pursuasion or through the policy of deceit an thereby continued to appropriate the economic surplus of their colonies smoothly for the industria development of their parent country. These Western Countries have also used their colonies as th market for their industrial products and thereby systematically destroyed whatever small scale an cottage industries existing in those colonial countries. In this way, these colonies were systematicall: sro of cone cw or see primary products to such ruler countri ata considerable and raipreseaeaied seale and side b by. side scsuiiot of es cae plunged into deep problem af under develogment economies of these colonial countries ha! continued for about two hundred years since the commence Pee esi oes of aplolal Thus colonialism is long histor: orate CoMMENCEMEnt of industrial evolution in Engl Ploitation by the ruler country over its colonies. ‘Scanned with CamScannerRule in India 5 1.2.2. Colonial Exploitation in India : Forms and Consequences or Impacts In India. colonial exploitation is a long history spread over nearly 200 years. It would be better to look at the forms of colonial exploitation in India and its consequences. Exploitation of India which was started initially in the form of trade, later on other forms of exploitation were made through investment income in the form of dividends and profits and through payment of costs of British administration in the form of home charges. These included salaries of British army and civil officers, payment of pensions, furloughs and other benefits and also payment of interest on Sterling debt. Thus the main forms of colonial exploitation in India were : (@ Trade policies with the objective of developing a colonial pattern of trade in which India became an exporter of primary products like raw materials and food stuffs and an importer of manufactures: (ii) encouragement of British Capital to participate in direct investment in Indian consumer goods industries: (iii) encouragement of finance capital in the country through M: Agency S} forcing encouraging commercialisation of Indian agriculture in order to ansform Indian economy into a British colony. Thus the major trade policies which resulted huge exploitation of India were as follows : 1. Exploitation of Indian cultivators by the East India Company through its indigo planters to boost indigo exports by compelling the zamindars and cultivators to go for indigo cultivation. .. Exploitation of artisans through the agents of East India Company for delivering cotton and silk fabrics at a price much below the market price. Under that situation, artisan had to work in inhuman condition like bonded labour. 3. Exploitation through manipulation of import and export duties by the British rulers so as to destroy the supremacy of the Indian goods, especially cotton and silk fabries over the British goods and then to succeed ultimately in penetrating into the Indian market through its machine made goods. Accordingly, heavy import duties were imposed on Indian goods excluding raw materials and foodstuffs but a very nominal rate of import duties were imposed on British manufactures into India. (ii) Exploitation through export of British Capital to India. The-second-form-of exploitation== of India by the British was through investment by exporting British Capital to India. The main three. ing Daldh SOT , iad and communication; developing public utilities like generation of electricity and water supply works for exploiting natural resources; and to —promote-foreign:tradethrough-quicker disposal of goods by linking railways: with major parts and marketing Centres Of Mandis. The main fields of foreign direct investment into India include—(1) development of infrastructural projects such as railways, roads, communications, port, shipping, water works, generation of electricity; (2) promoting mining of coal, Petroleum, gold and development of metallurgical industries; (3) to promote investments in consumer foods industries such as cotton and jute textiles, woollen textiles, paper, matches, tobacco, sugar etc.; (4) promoting commercialisation of agriculture and undertaking investments in tea, coffee and rubber plantations; (5) investments in machine building, engineering industries and chemicals; and (6) investments in banking, insurance and trade. ‘Scanned with CamScannerce pe | h its subsidiaries. Again a pan o¢ en gvernment in India in tts Of stelng a India were—() Private foreign direct invest given to British Government in In ing infrastructural and public utility projey, *& ous estimates of foreign capital were fhe three important estimates of foreign capi.) i ese investments throug eae “eat, to the Britis! made all tt jionals of loans i vat pritish investment in ° vad cif) Sterling loans British moltinat gs vere inte FO iret wo aioe OT ining, mils ar PT isations for under in amining Mr nipublic organisations — i semi-] : publi and som oredgn Capital, AtHOUE Te timate of Fr imitations. Following + from ¥3 investmet they suffer ee TABLE 1.1 Reference year Amount (£ Mili, Fstimates = ne 1 Paish 1929 500 an mates, the estimates of Findlay Shirras (1929) and British Associate, Among these thes were considered fail reliable. Tt was observed that as per estimae Ca re tal amount of foreign capital in India was £ 500 million in 1929 and that ¢ of Fi i i ‘ommerce was £ 1000 million, which was about 20 per cent of th aa at eal i ee ‘The Chamber of Commerce estimate revealed that out of the tot, eaecel foreign capital in India, 38 per cent was in the form of Sterling debt ofthe Governmen 50 pe ot in companies registered outside but operating in India and 12 per cent in compan resistered in India andthe ret. After the Second World War, Indian businessmen earned huge prof ir industry and business and that enabled them to buy foreign business investments in India. As result, there was a decline in the magnitude of foreign business investments in India. ‘The Reserve Bank of India also made an estimate of foreign investments and accordingly ¢ 30th June 1948, published its first Census of India’s foreign liabilities and assets. As per RE estimates, total foreign business investments in India was to the extent of & 302 crore, out of whic British investments were % 230 crore, i.e., around 72 per cent of the total investments. British investments in India during pre-independence period thus revealed that British took a) of interest in developing economic infrastructure for maintaining administration and promotion « trade, Moreover, the British investments never promoted any basic and heavy industries rather the: investments were mostly made consumer goods industries and also for processing primary produc for its export. Finally, British tried to keep the ownership and management of its industries in the hands and Indians were placed in all low level and maintenance jobs. (iii) Exploitation in the form Finance Capital via the Managing Agency System. At the et of nineteenth Century, British investors started to invest a huge amount of their capital in India, major portion of which was actually looted earlier from India by the East India Company. Brit rulers invited British capital for the growth of railways in India and gradually repaid these loans t imposing taxes on the Indian people. Moreover, British capital increased the demand for Briti capital goods like iron and steel, machine and tools, coal etc. for Indian railway. As the plantatic industries, vic, tea, coffee and rubber were very much profitable in India, British capitalists had al: a a huge amount of capital on these industries, more particularly on tea industry. After th Bat ena also invested their capital on some other industries such as petroleum, coal, tramway rulers showed esnagpeaber ete. Thus withthe sole intention to strengthen British economy the Brit considerable interest towards the establishment of all these industries mentioned abov ‘Scanned with CamScannerPre-British Conditions of Indian Economy and British Rule in India f As Indian busi : inary by cee baad were not having any experience of the organisation of modem Worked 2s promoters coat Stock companies, the British merchants having trading firms mostly viene KAOWn ae, matt Pioneers in sting different industries lke jue, coal and tea. These merchants onipanies faced by oner The managing agency firms can be defined as partnership of 4 Persons having huge finan : mp They are entitled 0 the ene managemen wee ee col oe and business experience. ‘The main functions of managing agents were to float new concems, to provide fund and arrange finance, to act as agents for purchasing raw materials, stores, machinery and equipment and als: fo marketing the produce and to manage the entire affairs of business. 2 During those days, the pioneering managing agents were Messts Andrew Yule & Co., Martin Bums, Bird & Co., Williamson Major and Duncan Brothers. These European Managing Agents were actually the pioneers of modern Indian industries. a __ But these Managing Agents showed their exploitative character by charging commission on all of its agency activities related to purchase and sale activities of the company, by charging heavy officer allowances for management of the company and by sharing the profits of the company. In the later part various malpractices were developed in this managing agency system. In this regard, Dr. PS. Loknathan observed, “Finance, instead of being the servant of industry, has become its master.” Guided by its exploitative attitude, the whole system gradually became degenerated and inefficient. Gv) Exploitation through-Payments-for-the-Cost-of Administration. The-fourth-form-of Accordingly, British employed a large number of British officers both for maintaining its military and civil administration-of the-countrys"These British officers were paid higher salaries and allowances as compared to their Indian counterpart. The British officers were given immense administrative powers for awarding contracts for supplies and stores and in return they collected commissions from the contractors. These-officers-were-given-pensions-after a specified period of service. All-these-resulted a huge remittances in the form of savings, pensions and other benefits known as family remittances, causing-huge-drain-on-India's-resources. Moreover, a huge amount was also paid as interest on sterling loan taken for the construction of railway telegraph line and irrigation works. All these payments, known as House Charges, had resulted a huge drain of our resources which was to the extent of & 43 crore in 1931. Moreover, India was also forced to meet the cost of various wars faced by East India Company such as Mysore and Maratha Wars, Afghan and Burmese Wars. During the World War I and II, India attained positive balance of trade by exporting more and importing less. To fulfil its formality, Britain simply authorised the Government of India to issue more currency on the security of Sterling Balance held in England and thereby simply exported inflation to India resulting huge burden on Indian people. Consequences or Impacts of Colonial Exploitation Various forms of exploitation ultimately resulted the following consequences or impacts on Indian Economy : Cae - Lolo : comet FRM 2. Although India was an industrially advanced country during the 16th and 17th century but dustries to modernise its structure during the 18th the British policy-never permitted those in ‘Scanned with CamScannerNo direct British investment was ; industries rather all investments were made in Plant,” asic i : : i serminatingproestion 276 imperial preference Ne re : the Indian market and also to provide secure avenues, yntro! over remain jon in England created a serious impact on ae ae ae ‘composition of India’s foreign trade. This 7 a stn : ‘sing competition of British machine made goods and increas result of foreign influence. al e few. This had resulted ton 1 Baoncentraton of economic Poet in the hands of th Soe enon in agriculture and nS i ; se colonial exploitation through the en of British capital and finance capit ol trough the ‘a Home charges and for meet the “economyn ff systematic exploitation of Indian people b: ‘Thus the British rule in India was a long history 0! perialstic Government which led t0 stagnation a Colonialism and the Exploitation in India ‘The British rule in India can be broadly divided in two parts, 1¢., firstly the rule of East Indi: ‘Company covering the period from 1757 to 1858 and secondly, the rule of British Government Indi: from 1858 to 1947. During those days, British established the colonial rule in India. The colonial rule indicates a peculiar socio-political relationship between the people of the country and the forest rulers. Colonial rule starts its operation in the country when the foreign ruler frame the political and teonomic policies of a country in the interest of the ruler country. Colonial economy is normally organised in such a manner so that it can belp the ruler country in the expansion and development people cannot take any independent economic and socio-politce of its economy. In a colonial country, verison of their own for attaining development of their economy. Foreign colonial rulers are used to exploit and loot the different sectors and resources of the colonial economy and gradually establish ie ie ce Gaaeses a This leads to destruction of its cottage and small scale is way, the colonial economy gradually enters into the vicious circle of poverty. Paden deep of bar in 1757, the British East India Company ultimately managed (0 cme ao i as of ni nd tat asthe ar of colonial exploitation in India. During ts period fell rule the Company loted alos ll valable wealth and riches of India and gland. This move of the company had forced the country towards vicious circle of the im ind poverty of Indian economy. 4.2.3, Periods of British ‘Scanned with CamScannerpoverty and disaster, This motive of looting and exploitation could not find any change even when the Indian adminis ation was transferred from the hands of British Bast In Company to British mpire. By adopting its colonial system, British exploited the Indian economy in different manners during their long two hundred years of rule, This period of two hundred years of exploitation during British rule had been classified by the economic historians into three different parts, These were : @ 7 period of Mereantile Capital, (b) the period of industrial capital and (¢) the period of Finance Capital. (a) The period of Mercantile Capital. The period covering just from the start of battle of Palasscy in 1757 to the end of eighteenth century, is considered as the period of Mercantile Capital. ‘Thus, in 1757, the East India Company finally managed to conquer the political power in India days, feudal type of economy was existing in India. During this period, Bri tarted to obstruct the growth of Indian economy with their vested interests. They also exploited a huge amount of profit through trade and also by charging a higher rate of land revenue from the agriculturists by adopting a new land revenue system. This new land revenue system had led to disintegration of the village community partly alongwith untold exploitation of Indian peasantry and then the country had to face famines frequently. (b) The period of Industrial Capital. The period of Industrial Capital covers the entire nineteenth, century, ie. from the beginning to its end. During this second period, the industrial revolution in Britain had gathered its momentum through the utilisation of its mercantile capital and then started to exploit the Indian economy in a different manner. During those days, the main motive of the British regime was to transform the Indian economy as a primary producing country, concentrating on the production of raw materials and to create a potential market in India for sale of their industrial finished goods. Thus the strategy of free trade followed by the British had ruined the age old Indian textile industry as this industry could not stand in the competition with the machine made textiles produced by the British. Moreover, British capitalists gradually developed jute, tea and coffee industry in India on geographical reasons and finally exploited Indian labourers extensively. In this way British industrial capital had accelerated the process of economic drain from India alongwith the degree of exploitation and then set imbalances in Indian economy. (©) The period of Finance Capital. This period had its start from the end of nineteenth century and continued upto the year 1947, i.e., the year of achieving independence in India, During this period of Finance capital British investors started to invest a huge amount of their capital in India which was actually looted earlier from India by the East India Company. During those days, British rulers gradually started to incur a huge amount of expenditure for those different purposes which was not at all related to the welfare of general masses in India, Later on, they transformed all these expenditures into loan to the account of India and thus gradually raised the burden of loan. British rulers invited British capital for the growth of railways in India and gradually repaid those loan by imposing taxes on the Indian people. Moreover, British capital increased the demand for British capital goods like iron and stcel, machine and tools, coal etc. for Indian railway. As the plantation industries, viz,, tea, coffee and rubber were very much profitable in India British Capitalists had also invested a huge amount of capital on these industries, more particularly on tea industry. After that British capitalists also invested their capital on some other industries such as petroleum, coal, tramways, bank, sugar, textile, paper etc. Thus with the sole intention to strengthen the British economy, the British rulers showed considerable interest towards the establishment of all these industries mentioned above, Thus the British rulers were not at all interested in the development of Indian economy as such. These economic transformations, which include, commercialisation of agriculture, the development ‘Scanned with CamScannercilities, the expansion gpread of TIEDY the British with the ,! Pre-E Sr atenet iste Nee ST pom the TM ia during the colonial rule ung! cation, the CANN Te pecess OFA Mranforenatsons 1 Me for ac e ecomomnic ates apts OF the British Col swith the cases in India during ‘Oni Ah rts peo 1 Economic Transformation 1 Causes of nization £ British rule in the ninetec, 4.2.4. Importan n and Moder : ts during the British - Rule—Golonlzalon Ot jac a a tron in India under the follonigg 4.2 nnd econonnie teanstornt es of economic (78 Th etter to study the eas ccontury. Itwould be " gs! 0 | heading’ ¢ of Pax Britanica’, The 2 nd sind tte Bish Sas oo sh Seater u jishment Oo! (@ Bstablshirnet ity was established just with the establish the country. cf, economic progress. ' : ; a jstyed in 1850 and with it roads started to develop in various fn . All these have arts of our country. Morcover, rail r ation of villages and also © ‘xpanded-markets-of-our-commodities by resulted into breaking the isol: Gi) Impact of Western System and Ideals. With the gradual adoption of es and English education system and with the growing contact with Britishers alongwith their ideas and Fe fotions, the old traditional and value-system of Indian people had to face a lot of changes. All these factors had resulted in serious impact on the traditional economy of India both directly and indirectly. (iv) Influx of Foreign Capital and Entrepreneurs : ‘The establishment of British rule in India alongwith the entry of a good number of foreign entrepreneurs. i i sven obedesia plantation industries like tea and coffee, indigo, coal-mining -railway, transport See ae remained stagnant over centuries for all practical purposes. During those days, rate of savings was very poor and morcover that meagre amount of savings were agai it : i : t gain habituall invested in gold and silver ornaments and also in real estates. Under such a situation, the inflow of foreign-eapital-and-its productive investment opened=vast-opportunitiesbefore-Indian” people and an brought a continuous flow in its economy. (©) Industrial Revolution in England. Afterthe Industrial REVOWutiOH IN 1750 eee str and more especially foarte Teer alth factory Products stertedto-enterinto-Thdian-markets-at-a.very- cheaper rates (vi) Commercial and other Policies, Dating the colonial. rule-British-government enforced is by the British had trade policy of the B a. enforced Moreover, the change in the tened our home industries, leading to a total 1. SSM. Desai, Economic History of India, Pp. 26-27. E ‘Scanned with CamScannerPrecHritinh Conditions of Indian Keonomy and Nritish Rule In Indla " production sys country, Al these 1 ned the pri had transformed the Indian econen : he Indian economy int producing ¢ panting mostly raw materials, tea ete, and importing British induerl pro of Introd hese policies Ising drainage of pre * ie OF precious resources of Ind ‘Thus the above mentioned factors were j economy during the British tule, ‘Thus the Indi sulfcient economy into colonial economy. marily responsible for the transformation of Indian y transformed from a self Ao Impact of British Colonial Rule and Underdevoelopment of Indian Economy il ing 1, Destruetion-of-Indian-handierafts. The Industrial Revolution in England created a verious impact on Indian economy as it reversed the character and composition of India's foreign trade, This led to destruction of Indian handicrafts although there was no substantial growth of modesn factor industry. The factors whichm were responsible for the gradual decay-of-lndian-handicrafts-were disappearance of princely courts and ther patronage, aggressive trade potiey ofthe Eas Tn Company and the British Government, increasi ii sand increasing demand for Western commodities as a result of foreign influence, The destruction of Indian handicrafts created a vacuum in Indian markets which was subsequently fed by British manufactured goods. The ‘ ‘seriously affected. Moreover, this unemployed crafimen and artisans could not find any alternative occupation open to thenvand:thus they-had-to-returm-to-ngriculturabseetor leading to ‘progressive ruralisation of India’ Thus, this dependence of population on agriculture gradually increased from 55 per cent in 1901 to 72 per cent in 1931 and this led to progressive sub-division and fragmentation of agricultural holdings. 2. New Land System, Newsland:system-of-the-British-ruler-also-created-a-serious-impact-on the-Indian-economye-During the East India Company rule, the company administrators imposed land revenue at exorbitant rates and thereby realised larger returns izom land. Thereafterthe=British Government introduced the land settlement in 1793. Permanent settlement was introduced in Bengal and other neighbouring areas, and then.graduallycxtended.to.other.states. This-settlement-led-to introduction of zamindary system where zamindars were responsible for collecting and remitting the Jand-revenue-to-the-British-rulers. Later on, another system knownsaseryotwary-settiement-was-also introduced-in-Bombay-and>Madras and then subsequently to north-eastern and north-western India re-direetly-responsible othe-state for the-annual-p Slandheauaae the-land-revenue-or-the-rent-fixed-were-excessively-high and this led to village community in India, In this connection, Daniel and Alice Thomer Under both these systen destruction of the organi r wrote, “Whereas the zamindary system made the landlords masters of the village communities, the Ryotwary system cut through the heart of the village communities by making separate arrangement between each peasant cultivator and the state”.' Thus the new land system of the British created a class of absentee landlords making way for exploitation.of.the.peasants. Thus both the zamind: system and the Ryotwary system introduced by the British led to the concentration of economic power in the hands of few. This resulted total depression in agriculture and industry. sation of Agriculture, Gommercialisation of Indian agriculture during-the British 3. Commerciali period created.a. serious impact.on_the Indian economy. Commercialisation-of-agriculture.indicates production.of-various-crops-not-for-home-consumption-bu-for’sale. Industrial-revolution-in-Britain 1. Daniel and Alice Thormer, Land and Labour in India (1962), p. 53: Scanned with CamScannerMe reached to such an extent that the peasants eye, Engk ‘ gricw jalisation of atic exe anisole et ion and ‘aiiddaldaiuiciasealooderticig N, that i - raesetion also intensified the commercialisation of ag to it = ithe development of itis ue Moreover, , The-developmentof an-elaborate-railway n: for lisation of agriculture reduced the production of foodgrain; § Occurrence of Famines. i . Commercial prod ‘ ‘on of food crops to non-food crops like industrial raw mates” built-in-depressor a it retarded the process of agriculyyy : ia sure of populat transferring land from the cultivati The new land system worked as development, Moreover, t and: All these led to frequent occurrent the Indian cultivators and general people. 6. Transforming Trade Pattern. Colonial exploitation of the Indian economy by the Britis, . Moreover, colonial exploitation through the entry of British capital ang finance capital and also through the payment for the costs of administration led to huge economic drain of India weakening the base of Indian economy. .ce of famines in India causing untold misery and suffering f Thus the British rule in India was a long history of systematic exploitation of Indian people by the imperialistic Government. 1.2.6. The Theory of Drains—its Pros and Cons Meaning of the Drain During the last quarter of the 19th century a great controversy arose over the question of “The Drain’ between the nationalist leaders of India and the Protagonists of Britain. Indian nationalist thinkers developed the theory of Drain mainly for analysing main cause of poverty in India. The main agreement that was advanced in this respect was that “a significant portion of India’s national wealth was transferred to England without any quid pro quo.” The experts described suich ‘Drain’ on India's resources as the transfer of resources from India to England either by getting nothing in return or getting only disproportionately a smaller part of such transfer of resources. The person who fist raised this issue of drain of resources from India to England was Dadabhai Naoroji in his book “Poverty and Un-British Rule in India” published in the year 1871. Dadabhai Naoroji tried to explain in his book the causes of drain, to measure the extent of such drain and to find the consequences of such drain. Thus the British siphoning system adopted to take away India’s resources and wealth has been termed as “The Economic Drain’ by economists like R.C. Dutt, Dadabhai Naoroji and others Causes of the Drain Dadabhai Naoroji in his book observed, “ arising from the remittances by European Official England for their various wants both there and The drain consists of two elements the firs! Is of their savings, and for their expenditure i in India ; from pensions and salaries paid i ‘Scanned with CamScannerPre-Briti of Indian Keonomy and British Rule in India 13 England; and the second that arisin, that in order to meet the req to its imports, i# from remittances by non-official Europeans; ments of the economic d This indicates India had to export much as compared Dadabhai Naoroji observed that the hope following factors were responsible for the economic drain from Ini 1. Remittances to England by European employees for supporting their families and education of their children—which may be considered a feature of colonial system of government. 2, Remittances of savings by invest at home, the employees of the East India Company as they preferred to 3. Remittances for purchasing British goods demanded by British employees as well as purchasing British goods in India. 4. Government purchase of stores manufactured in Great Brita 5. Interest charges on public debt held in Britain (which excluded interest Payment on railway loans and other debts incurred for productive works), Asa result of political, administrative and commercial connections established between India and England, the Government of India had to make huge payments to the people of England. All these payments were known as ‘Home Charges", Home charges were consisting of interest on public debt raised from England, annuities on account of railways and irrigation works and payments to British employees, employed in India as well as pensions to retired employees worked in India. Versa Anstey made an estimate of these Home Charges to the extent of 35 million pounds annually. Moreover, the British rulers realised the cost of battles they fought with native rulers from India by raising loans, Estimate of the Drain Although it was impossible to make a correct estimate of the extent of drain from India in the form of resources and gold bullion flowed from India to Great Britain, during the British rule, however some estimates were made on the extent of such drain, Verelst estimated that during the Period of five years just after Battle of Plassey, total volume of drain from India in terms of goods and bullion was 49,41,611 pounds sterling. $.B. Saul also made an estimate of such drain based on balance of payments alone and his figure for the year 1880 alone amounted to 4.14 per cent of India’s national income. Dadabhai Naoroji also made an estimate of drain which was around & 8 million, Later on, the volume of drain estimated by Naoroji was € 12 million in 1870, % 25 crore in 1893. In 1897, Naoroji made another estimate of drain for the ten year period of 1883-92 and found the total drain at 359 crore. In 1905, total amount of drain calculated by Naoroji was & 51.5 crore”. Another estimate was made by G.V. Joshi for the period 1834 to 1838 and total amount of drain from India during this period was estimated at nearly 600 million sterling’. DE. Wacha’s estimate of drain in 1901 was to the extent of & 30 to & 40 crore per yeat. S.N. Banarjee’s estimate of average annual drain for the last 30 years of 19th century was of the order of 30 million’, 1. Dadabhai Naoroji, Poverty and Un-British Rule in India, p. 34 2. Naoroji, Poverty, p. 566 and 687. 3. GY. Joshi, Speeches and Writing. pp. 639-45. 4. Congress Presidential Addresses, p. 409. ‘Scanned with CamScannerB. 14 Indian Kenn, “~) R.C. Dutta's estimate of drain was found to be around 20 million per year during the eat, of 20th century! Pr Considering this huge drain of resources from India, Irfan Habib observed, “The hat 9, India had to have a rate of saving of 4 per cent of its national income just to pay the Tribute io te tome in mind when economists speak ofthe lack of internal capacities for developmen pat ™ tow per capita income base. from which the British could not lift the Indians, however much te i tried a Consequence of the Drain The huge amount of drain of resources and bullions from India to England created & sei, impact on the economy of India and a favourable effect on the economy of England. Such consequer,. of drain were studied in detail by various Indian economists like Dadabhai Naoroji, M.G. Ranas, RC. Dutta, G.K. Gokhale, G.V. Joshi and others and emphasised in detail the extremely deleteriy,, effects of the Drain. While criticising the drain of resources and capital from India to England, M.G. Ranade observes! --Of the national income of India, more than one third was taken away by the British in some‘ form or the other.” In 1901. R.C. Dutta observed that “the drain from India was unexplained in any country o: earth at the present day, one half of the net revenue flows annually out of India varily the moisture of India blesses and fertilisers other lands...... So great an Economic Drain out of the resources of land would so impoverish the most prosperous countries on earth; it has reduced India to a land of famines, more frequent, more widespread and more fatal than any other known before in the history of India, of the world”? It would be better to study the effects of Drain on both England and India. Effects of the Drain on England A huge volume of drain of resources and capital from India to England resulted a better standard of living in Great Britain. The Drain also resulted huge investments in England agriculture and industry after 1750. These investments were partially responsible for agriculture revolution in England and the 18th Century and also for Industrial Revolution in England after 1750. England attained the take-off stage of its growth by utilising the resources drained out of India. Huge amount of remittances from British officials in the form of saving and pensions after serving in India empowered those people to devote on construction of roads, railways and canals, new inventions and also for bringing rapid changes in all different sectors of its economy. Thus Drain of resources were responsible for laying foundation of economic prosperity in England. Effects of Drain on India Huge drain of resources from India into England had resulted disastrous effects on Indian economy and its people. Huge amount of these resources which could be invested in India were snatched and siphoned off to England. Huge public debt undertaken by the Goverment and its payment of interest necessitated increasing tax burden on the people of India, which were highly regressive in nature. As per Dadabhai Naoroji’s - R.C. Duta, Economic History of India, Vol. Il, p. 21, 48, 85. 2. Habib Irfan, Problems of Accumulation in Precolonial and Colonial India, Mimeo. 3. RC. Dutta—Speechs Vol. II, p. 21; Economic History of India, Vol. 1, p. xii and xiii ‘Scanned with CamScanner15 estimates, tax burden in India during 1886 was 14.3 Per cent of its total income which was very high as compared to 6.93 per cent in England, Moreover, these tax Proceeds were mostly used for making payments to British creditors and not for the social services and welfare activities of Indians, This type of drain of tax proceeds from India impoverished the agriculture, industry and trading activities in India and was largely responsible for stagnant stage of its economy during the 18th and 19th centuries. Although the British undertook res; and judicial administration, roads, rail resources Was {00 excessive leadin, of Indian masses. National Ponsibility of maintaining law and order, centralised political ways, educational set up etc. but the extent of draining out of 16 (0 stagnation of the economy and poor and miserable condition leaders of India analysed the various harmful effects of Drain in different ways. __As per Dadabhai Naoroji’s opinion, the drain of resources was the major and sole cause of India’s poverty. Naoroji, R.C. Dutta and S.N. Banerjee were also of the opinion that the drain hed generation of income and employment in the country. In this connection, R.C. Dutta observed, “For when taxes are raised and spent in a country, the money circulates among the people, fructifies trade, industries and agriculture, and in one shape or another reaches the mass of the people. But when the taxes in a country are remitted out of it, the money is lost to the country forever. It does not stimulate her trade or industries or reach the people in any form." ‘The national leaders were of the opinion that drain of resources resulted loss of capital rather than loss of wealth. Drain resulted a huge depletion of productive capital leading to fall in the volume of investable resources in the country. This aspect of the Joss of capital was considered as core issue of the Drain theory of Naoroji. This drain of resources resulted industrial retardation in our country G.V. Joshi, in this connection observed, “No nation can stand such a drain and yet hold its own in the industrial field.” R.C. Dutta had also tried to establish a causal relationship between the drain of resources and the improvement of the peasantry. He argued that the drain was paid mainly out of land revenue realised from the peasants. Methods of Reducing the Drain In order to reduce the burden of the Drain, nationalist leaders mentioned several measures. The first measure suggested by them was the Indianisation of the civil and military services and thereby reducing the number of British personnel and increase the number of Indian personnel to a reasonable Proportion. The second method suggested was the reduction of Home Charges realised from India and bearing a major part such home charges by England, The third method suggested for reducing the burden of drain was to purchase government stores in India and also by checking increasing import of private foreign capital Thus, this huge economic drain of resources from India put a serious hurdle in the path of capital formation in India. Moreover, British brought back the drained out capital to India and Bradually set up various industrial concerns in India owned and managed by British industrialists, With the active patronage of British government, British could secure nearly a monopoly position in the area of trade and principal industries. As a result, British industries established in India drained Out further resources in the form of regular remittances of interests and profit from India into Britain, ‘Scanned with CamScanner16 - aa ' on nomic drain created 2 serious hurdle in the path of economi "y, se size of ecOn0 “Thus such a large st a till 1947 and wast no agely eesponsible for growing poverty in the country, Pre-k ‘ ap tions of Indian Economy during British Perlod : Agriculture, ing, impo 1.2.7. Con know rade : Transport and 7 pact on the Indian economy and therchy, radical changes tangy, $F British r ete Stage but quite rapidly after 1850 in various areas like orgagy"% place ite stowy in Ie report and communications, trade, social and politcal instituigy®® re of age athe people of the country, It would be Beer 10 study conditions of Ke at auaes and Was of the peopl en aides the Brith pio der the aforessid Heads, yo * (griculture. Indian agriculture remained completely traditional and primitive during, et B st Aktfam 1757 to 1947, Farm technology followed during those days was simple njy ES aa mean was adopted into it, There was an increasing pressure on agricultural sector a5 tcsforsine of urban handicrafs in Tndia, This bas resulted sudden swelling in the number, ws atts Feng to a continuous sub-divisions and fragmentation of agricultural land. Ti aevind the problem of uneconomic holding and unproductive agriculture in the county. Ty, & feviclture remained merely a means of subsistence for most of the farmers. In the second tal : 1 Toth century, famines deteriorated the conditions of agriculture further. The British rulers took» suffic int steps to develop irrigation facilities. the 19th century, there was a little change in the agricultural practices adopted in Ind ‘Throughout the past centuries, Indian farmers were growing the same crops. Rice and Wheat wee the two principal crops in India followed by jawar and barley. Other crops, produced in India fron the very beginning, were consisting of pulses of different types, oil seeds, jute, cotton, indigo an: ices. All these crops were produced in the country with the use of simple implements and tools li light wooden plough, sickle and spade, supported by animal power. Open field type of cultivatic with no enclosures was practised in India. The rotations of crops of traditional type was followed t regain fertility. Farmers were using only natural manures. Storage and marketing facil inadequate. ies were total Commercialisation of Agriculture : Towards the end of the 18th century, the East Indy Company realised the export potentialities of some of the Indian agricultural commodities like indiga jute, cotton and oilseeds. This was mostly resulted from growing demand for-agriculuural raw-materas inet . i : ae ry of Indian agriculture. ‘The commercialisation of agriculture simply indicates the process of production of some crop for selling it in the market for deriving cash rather than for subsistence or family use. Developmest of roads and railways atter 1850 had boosted the process of commercialisation of Indian agriculture Major effects of commercialisation of Indian agriculture include (a) increase in the production of eash=cropstike-cotton=-juteoilseeds;-sugareane tobacco etc. by substituting=foodgrains and their growing localisation into certain areas; (b) widening-of-markets-for-Indian-cash-crops, (0) S® in.the.income.of-a.section.of-agriculturists-producing-cash crops; (d) introduction and growth of ne crops like, tea, coffee, groundnut, potato, fruits, different types of oilseeds etc. and (e) disappearasct of-village-self-sufficiency: © 2. Industry. The process of industrialisation in India during British period must be traced bs} from 1750 onwards. India was quite well known for her industrial products. The industry which 8 very much famous in India during those days was the urban handicraft industry. Again the mo: ‘Scanned with CamScannerPreBritish Conditions of Indian Eeonomy and British Rule in India Ww important urban handicraft industry in India during those days was the textile industry. The well known pralucts produced by this textile industry include cotton textile, Dacea mmusin, dhotis and dopattas of Ahmedabad, Chintzes of Lucknow, sarees of Madurai etc, These products were quite famous throughout the country and also outside the country. Moreover, silk fabric produced in Bengal, Poona, Ahmedabad ete. was also quite famous. The woollen articles vic, Kashmiri shawls preuced in Kashmir and in some parts of Punjab were also quite famous within the country and also in Europe. Again a good number of metal industries flourished in India which include brass, copper and bell-metal industries established in Banaras, Nasik, Poona, Hyderabad, Tanjore. Vishakhapattnam ete, Besides these industries, other industries which were existing in India at the time of arrival of East India Company included stone carving, gold and silver thread work, enamelled jewellery. sandal wood work, marble work, glass bangles making, tanning and leather works, melting and forging of iron, ship building ete. Towards the end of the 18th century and thereafter, there was a rapid decline of most of the aforesaid handicrafts industries, These was mostly resulted from increasing competition faced by Indian handicrafts industries with the factory-made goods produced in England after the Industrial Revolution started in England after 1750 and especially in the first half of 19th century. The policy followed by the British in respect of its industries and trade are also responsible for the decline of Indian industries. ‘The British industrialists took interests only in those industries which they failed to set up elsewhere for geographical reasons. These industries include jute and plantation. British capitalist established jute mills in Bengal and also started tea, coffee and indigo plantation which made it possible to exploit Indian labourers extensively. In this way, India was forcibly transformed from 2 country of combined agriculture and manufacture into an agricultural colony of British ‘manufacturing capitalism. Therefore, Indian industries were more or less destroyed gradually making way for growing market for British manufacturers.* ‘Thus during the period of industrial capital, the industrial revolution in Britain had gathered its momentum through the utilisation of its mercantile capital and then started to exploit the Indian economy in a different manner. During those days, the main motive of the British regime was to transform the Indian economy as a primary producing country, concentrating on the production of raw materials and to create a potential market in India for the sale of their industrial finished goods. Thus the strategy of free trade followed by the British had ruined the age old Indian textile industry as this industry could not stand in the competition with the machine made textile produced by the British. Moreover, British capitalists gradually developed tea, jute, and coffee industry in India due to geographical reasons and finally exploited Indian labourers extensively. In this way, British industrial capital had accelerated the process of economic drain from India alongwith the degree of exploitation and then set imbalances in Indian econom 3. Transport and Communications : Development of transport and communications bas been considered quite significant from strategic, administrative, economic, political, cultural and social point of view. During the British period, the transport and communications system in India was totally backward. (A) Road Communications. Road communications in India were extremely underdeveloped in the early part of 19th century. Whatever few trunk roads that were developed in the country by the 1. Jawahar Lal Nehru, Discovery of India. p. 299. 2. Dadabhai Naoroji, Poverty and Un-British Rule in India, p. 34. Scanned with CamScanner18 Indian p,, arted deteriorating due to lack of proper care and mainte, sal emperors, they Nance, es were totally disconnected and remained "ey all-weather roads, the villages were totally d A isolated 4, abeence of Oi mee Banerjee in his book entitled, “Internal Market gt ly, Peer 19 fe daaarved in this connection, the observations of W.P. Andrew as, “when Englang a aw : 1) ae India, probably there never was a country with people so rich and intelligent jg ve develop, dominar the firs : 1 so difficult i roads were so few and travel : * service Although British constructed a few roads during the early part of their conquest of Ingig, In 184 most of then were abandoned after their conquest of the country. Till 1936, the East Indin Cont Easter did not pay any attention to the construction of roads for the developmei Nt Of transportation ®) Rail PaNy 09K Someigne’ of Be Of Calcutta-Dethi ro,y? Oct! ind also Bombay ang, * 2 ™ for strategic considera ‘stem and commerce. It was only 1836, the East India Comy to introduce postal communications and thereby taken up the construction the estimated cost of £1.5 million, Again in 1842 Calcutta and Bombay at were connected by roads. All these road constructions were undertaken both and also for general social improvement. Rail During the early part of the British rule, the factors which mostly prevented the rapid constrsigg op of roads were the shortage of funds and the organisational loopholes. Such an inefficient and imadequay means of transportation and communications in India during the early part of British period ty M resulted in village isolation, prevalence of local economy, self-sufficiency of villages, small scale oj th production and limited division of labour, immobility of labour, peo ples conservative attitude, dislocatig di of local economies during floods, drought and famine. fe It was only during the regime of Lord Dalhousie, established in 1850 and real initiative was taken to const Lord Dalhousie abolished the Military Boards and set up of Bombay, Madras and Bengal in 1854-55, Thus till the middle of the last century, condition. The East India Company neglected the central public works department was uct roads in various parts of the county, Public Works Department in the provinces the road transport in India was in a most backwart the road development by assigning the responsibility of road development tothe Provincial Military Boards instead of Public Works Department Considering such unsatisfactory condition of Indian roads, Lord Dalhousie initiated a more vigorous road policy. Accordingly, in addition to the Central Public Works Department, similar departments were created in each province in 1855, Considering the growin ig need for building more roads and to examine the question of rout development, the Government oi India appointed Road Development Committee in 1827. The committee Suggested that the Grand Trunk Roads be maintained by the Central Government and the Temaining roads be maintained by provincial government and local bodies. The committee also recommended {0 create a separate fund called ‘Road Fund’ by imposing an additional duty of 2 annas. per gallon of petrol for providing grants to the Provincial Government for the construction of roads. Accordingly, the Government of India created a Road Fund in 1934 on a permanent basis, After 1880, there was extensive road construction in the country and by 1943, there were nearly 95,054 miles of metalled roads and 2,01,414 miles of Kacha roads under the British regime. But considering the rapid expansion of motor transport, the aforesaid mileage of roads was inadequate for a vast country like India Accordingly, the Chief Engineers meeting held at Nagpur (Nagpur Plan) recommended to construc additional 40,000 miles of roads in different Parts of the country. But the Progress on road constructio! wwas very slow due to various difficulties and growing shortage of funds, Again the conditions of district Toads and village roads deteriorated due to increasing load « traffic and limited fund available with local bodies, ‘Scanned with CamScannerPre-British Conditions of indian Roonomy and British Rute in India 19 (©) Relleay Development tn India, Developmen of riley hes development of Indian economy during Britis rips as it the first quater of the 19th century and the yed a pivotal role in the h period. Railways was introduced in England during service in England in 1825, 1n 1832, the fret a pial er altar coccion ee esa proposal for railway construction in India was made, In 1844-45, a number of surveys were carried ‘out in India for the c cl f railway Ii Eastem and South-west India, In. 1849, the East India Commany ant te cen nn, lines in ee E ompany and the Great Britain Peninsula Railway Company entered into a contract for consinictng nn experimental rilway line between nore of Bombay and Cotton growing track of Borat. The constuction work fot the sane becsn an bin October, 1850 and the frst railway passenger iain left Bombay for Thann for. digas of ews, 21 miles, Again on 16th April, 1853, the Bombay-Thanarulvay coute wne need fe wane ean ; T + the Bombay-Thana railway route was opened for traffic officially Moreover, in subsequent years, the East India Company entered into contracts with 12 more Railway companies for railway construction du ng the period 1844-1860. As a result, some short routes Tike Howrah to Panduah (38 miles), Howrah to Raniganj (120 miles) coal field etc. were opened. Lord Dalhousie Iaid down the general principle of railway development in India in his second Minute of 1853. Accordingly, he advocated the construction of some trunk railway routes to link up the principal port in each Presidency with the interior of that Presidency along with linking up different Presidencies with each other under the Old Guarantee System. This system was in operation for about 25 years, ie., between 1844 and 1869. During this first phase of railway construction, ie. during 1859-69, 4.600 miles of railway lines were constructed. The second phase of railway construction, i.e, the State Construction of Railway was undertaken during 1869-1879 and only 2,200 miles of railway lines were constructed under this scheme. The third phase of railway construction under the New Guarantee Scheme was based on the partnership between Government of India and British Private Companies and the phase was continued during 1880-1900. Again during the period of 1900-1914, the State Ownership of Railways was introduced as the Government bought most of the railway lines on the expiry of contract with various private railway companies. Thus by the beginning of 20th century, there were nearly 25,000 miles of railway lines in India. Since then the railway mileage in India was gradually extended to cover new areas. Accordingly, total railway mileage in India stood at 40,525 miles on August 1947. After partition of the country, 6.659 miles of railway lines had gone into Pakistan's territory, leaving the rest 33,865 miles of railway line for India. Effects. Construction of railways in India from 1850 onwards had resulted important consequences on economic, social and political conditions of the country. Railway construction had helped to bring commercialisation of Indian agriculture and also gave a big stimulus to India’s foreign trade. It also Provided sufficient impetus to the development of internal trade and also helped in the development of modern industries in India which include cotton textiles, paper, sugar, coal, iron and steel. Finally, development of railways had resulted extensive social and political changes within the country. (C) Water Transport, India has been enjoying the benefit of water transport both in the form of (i) Inland waterways, and (ii) Oceanic Waterways to a limited extent, (0 Inland Waterways. Although there is a good number of rivers in India but these rivers are Not so suitable to serve as natural waterways as in England, While the major rivers of Northen and Eastern India viz., the Ganges, Jamuna and Brahmaputra remained navigable for hundred of miles above their mouths but the rivers of South India are not having that sort of navigability. Only a few of those rivers are navigable only at and near the mouth and that too during rainy season. History also suggests that inland waterways was of considerable use in the Northern and Eastern India in ‘Scanned with CamScannerae 7 ‘As for example, Ganga was considered as a grea, 20 é i Le ghal period ¢ rowth of many towns. ray nd also UriNe Mop ue its banks facilitated the gi raat ve Tike agin amare ety vrmerce and ceo periot!, £000 umber of British navigation compan. waterways OF 6 ing the British Pere and Brahimaputra rivers. %, ana re of trades ra acity of Ganga Jamuna an in en sera the AavigANE CEPT yea set-back afer he cially charged with sty, the inland waterway reat e absence of a representative specially charged with their jn! ee —t forests ofthe railways Mave Prevented yay srways) the vested tion that has been given (0 them in other countries with such Satigy? io a ty imposed on inland waterways, the importance of this ,, " ‘on (1916) and the National Planning Commission (1, develop this inland waterways side by side “l results. oo i 1 limitation gpite of various physical : dase felt, The Industrial Commi: ansport Was str otras ge then Bits Government 10 railways. . ws. In respect of Oceanis oe 1c Waterways, India was occupying 2 pote, (i) Ocean oy peginning, Although India was having a coast line of 4,000 miles but itd from the Very tine as available in England. But considering its exten ge of indented coast ! ring its ext ‘al location, India could aspire to become a principal carte, position sess the advanta ‘ reaboard and the country’s geographic world trade. : ‘As the first pat of 19th century, India was known as a great sea-faring country and the s, ite excellent. In 1800, the Governor General wrote, “Ti building capacity of the country was also quit 800, th Ger port of Calcutta contains about 10,000 tons of shipping, built in India, of a description calculated fy the conveyance of Cargoes to England.” The teak wood vessels of Bombay were superior to that the “Oaken’ Walls of Old England.? Moreover, the passenger ships built in India were also mu larger than anyone built in contemporary Europe, excluding the ships built by the Portuguese, Thereafter, with the introduction of iron-made ships, India was deprived of her differents advantage in respect of timber. Regarding the decay of Indian shipping, Willium Digby observe. “The rapid improve-ment in naval architecture and the introduction of mechanised sea transport, te jealousy of the British shipping interests and the operation of the British Navigation Acts which wee applied to India as she came under the British subjugation may be regarded as the chief causes whic led to the decay of Indian shipping.” It has been estimated that at the beginning of World War Il, the share of Indian vessels in is coastal trade was around 40 per cent and in oceanic trade was nearly 4 per cent. But the share c British in India’s oceanic trade was around 66 per cent. The British Indian Steam Navigation Compa and some other British companies dominated in the coastal and overseas trade of India for more tht hundred years and suppressed the Indian shipping companies by forming a ‘conference’ betweet s, through the weapons of (a) Deferred Rebate System and (b) the Rate Wars. ee ee eee dese titles Gantaaien , the first regular airline service started to function. Again, in 193. dl ian companies were organised to operate regular air services in the country. Moreover, a fe" intemational air companies started to use India of thei i 7 i inna seen of their regular route flights. In 1948, the Air Ind» ee Private enterprise in the joint sector was set up with 49 per cet |. Industrial Commission Report, p. 279, 2. Willium Digby, Pros itis ‘Scanned with CamScannersh Conditions of Indian Economy and British Rule in India aoe Government holding to operate on overseas routes, Again, in 1949, 12 air companics were operating inland air services throughout the country with limited capacity. ‘Thus it is found that although the air transport services were developed in India during the fag end of the British period but it could not gain momentum due to lack of infrastructural facilities and scarcity of investment. (E) Postal and Tele-communication Facilities, The East India Company in its carly rule just continued the postal communication system, operated through personal carriers moving on horses or on foots adopted during the pre-Mughal and Mughal periods. It was only during the regime of Lord Dalhousie, the present system of uniform postage throughout the country and use of postage stamps (instead of cash) was developed in 1856. It was again during Lord Dalhousie’s regime that the system of electric telegraph line was installed between Calcutta and Agra in 1853, covering a distance of about 800 miles. By 1855, nearly 4,000 miles of telegraph lines were installed. In 1950-51, there was only one post office for every 10,000 population of the country and the condition of the postal services in rural areas was deplorable. The number of telegraph office in 1950-51, was just a quarter of the total number of post offices and the telephone facilities were mostly avai cent of the total population of the country. 4. Foreign Trade. During the pre-British period, India was quite self-sufficient in foodstuffs and maintained a favourable balance of trade. But the composition, volurne and direction of foreign trade have undergone a significant changes during the British period. During the early part of British period, India experienced a little change in the composition of its foreign trade. At the beginning of 18th century, exports from India were mostly consisting of cotton and silk manufactures, indigo, spices and sugar and its imports were consisting of gold and silver, woollen goods and miscellaneous types of novelties. After the Industrial Revolution in England since 1750, factory industries started to produce various commodities on a large scale and thereby replaced the old small scale handicrafts. Thereafter, England wanted to establish market for their manufactured goods in India and also wanted that India should supply different types of raw materials to the newly developed industries in England. Thus England wanted to adopt a colonial pattern of foreign trade in India, Accordingly, during the first half of the 19th century India experienced fundamental changes in the composition of its exports and imports. India started to export more of primary products like foodgrains and raw materials, viz., raw cotton and jute, hides and skins, dyes and oilseeds. On the other hand, India started to import manufactured goods mostly from England. Among these manufactured goods cotton piece goods from Lancashire constituted about half of the total imports by the middle of 19th century. Import of other factory products with high quality at cheaper price had also led to decay of Indian handicrafts and cottage industries. During the second half of 19th century and possibly with the introduction and development of railways, development of roads, introduction of steam-ships, construction of ports and telegraphs and finally with the opening of Suez Canal in 1869, India had to experience fundamental changes in the volume and composition of its foreign trade. In the beginning of 20th century, In along with other countries had registered a considerable increase in its foreign trade, This is mostly resulted from increase in the production of gold and consequent rise in prices of all different types of goods. After the First World War, the volume of India’s trade declined to nearly half of the previous total and-imports declined more steeply than its exports. During the Second World War (1938-45), India again experienced considerable dislocation in the normal channels of its foreign trade leading toa change in the composition and direction of its trade. Again during the Post-War Years (1945-51), foreign trade of India rose steeply but the imports of the country rose much more steeply than exports. d by a mere 0.2 per ‘Scanned with CamScannere ~ iy fo xj raw cotton necessitated By the oss oy capital equipments, i ports of eapital equipments, spe : 1p economic development’ PrevBritl te oaigains, rave jute and food ie dasing volume of iM and to speed UI “Tis is mostly due 1 i cause of sid machines i ‘ " to Pakistan becaUse CTT replace old MICH gat due tO scarcity of goods, increasing dog % advanced industrial 8 Ma ia Could ot Fe as fas one, Goring the sountry. But exports FFM aan goods. eer needs destroyed Serna and rising Pee! OF 101 ah period excess of exports over Kno ae eeuteg yume During the major part of the Fe aain's exports over her imports dic nos full any gy and othe soon ita of wade. Ts ence OF Es ameant to make payment for invisible pny) England Giga and silver 10 India in ToT sats, of shipping and insurance comparics, eres on 5 Services of British army, Oe termed as “Home Charges”. Indian National leaders termed wet Slain England le which wer He grote per annum. ; ot * experienced a substantial change dingy ine Drain” of resource: or Moreover, te diction of Indi’ frcgn ade a aso epee ai ten ye the entire Brit ee eat During 1850s, about 75 per cent of India's imports and expon, “Cone mostly connected with Ct in, But with the growing industrialisation of U.S.A. Germany ay all was related to Unite abl its exports and imports contracts with other European counties a, of Japan. Ind emely. regarding India's imports, the shares of different countries at the end of 19 Wor Jap were as follows : UK (69 per cent), Germany (2.4 per cent), U.S.A. (26 per cent) and Jap, ser weno. But atthe begining ofthe 20th century, the shares of diferent countries in Id 6 we were as follows : UX. (27 per cend), USA. (7 per cent), Far East (24 per cent) ag serene countries (15 per cen). Again the share of U.K. in India's imports declined from 31 pe, ee 1938-39 to about 25 per cent in 1945-46 and then to 21 per cent in 1950-51, Similarly tte |p 24 per cent in 1913-14, gradually increased to 34.0 px © 1 share of U.K. in India’s exports which was cent in 1938-39 and then gradually declined to 28 per cent in 1945-46 and then to 22 per cent in 1950-51. Again the share of U.S.A. in India’s import trade gradually increased from 7 per cent in 1938-39 to 21 per cent in 1950-51. 1.2.8. Problems of Stagnation, Poverty and Backwardness during the British Period During the pre-British period the problem of stagnation, poverty and backwardness of the Indian economy was not so acute, But with the advent of British in India, the economic structure in India had to face a lot of change. Self-sufficient economy of the villages in India had to face a ruin and economic exploitation of the country was initiated with it. During the first period of hundred years, ie., from 1757 to 1857, British looted a huge amount of resources from India. During this period cottage industries in India were totally destroyed due to the colonial strategy followed by the British rulers. Dadabhai Naoroji, a distinguished economist of India, in his famous paper the ‘Poverty in India! (1876) analysed that the huge amount of drain of capital assets wealth from India which started after 1857 was mainly resoponsible for the economic backwardness in India, Even after the transfer of Power of crown in 1858, the drain still continued and it was mostly in the form of Home Charges. Rene een vest senliy about 10 per cent of the total national income of India was ee ee to a huge drain of economic surplus of a poor country like India which r-development of the country. é me the Indian economy was badly injured during the two hundred years of British rule sn fe comm, Dug the 16th and 17th century, Indian economy was considered as an industrially 1. Bipin Chandra, Colonial i identi a ialism and modernisation, Presidential address, Section Il, Indian History Congress (1970) ‘Scanned with CamScanner23 Se ie aha lo eae ish did not permit to modernize the industrial sector of the country destroyed by the advent Bech a famous Indi nd cottage industries were totally tured into an importer of Brit Pia fa wanufactures in India, In this way Indian economy was saree alsa aie mete ant aetted ods and exporter of te, coe, oilseeds, foods England. were considered essential for running British industries in bout t ; a roe, “The He din of wealth and capital from India during the British perio. Dadabhsi Naor ee aie ice an se Clements. First, that arising from the remittances by European Ooi iam peneiony a aor their expenditure in England for ther various wants both there and bythe non-official pails salaries paid in England; and second that arising from the remittances eerie cee This sort of economic drain of Wealth from India prevented formation of capital inthe country. This drained out capital was brought back by British for setting up industrial concerns in India owned by British nationals. In this way British secured a position of monopoly of all trades and major industries in India, These industries again drained off Indian capital in the form of interest and profits. Thus these huge economic drain initiated since the inception of British rule worked as a dampener towards the strategy of economic development in India till 1947. During British rule no official arrangement was made for measuring the national income of India. In the year 1867-68, Dadabhai Naoroji estimated and advanced fe Indian national income statistics of the first time, His estimate revealed that the national income of India during that year was % 340 crore, total population was 17 crore and the per capita income was estimated at % 20. Since then various other estimates of Indian national income were presented by different distinguished personalities like Findlay Shirras, Lord Curzon, V.K.R.V. Rao, Arora, Manu Mukherjee, Ayengar etc. and more interestingly these statistics were mostly conflicting and inconsistent with each other. Inspite of these differences in estimates, most of the Indian economists agreed that there was no advancement in the Indian economy during the British period and the standard of living of the Indian people was very low. As per the statistics advanced by Radhakamal Mukherjee, the real wages of Indian labourers, representing their standard of living were even reduced by 50'per cent during this British period. Occupational structure of Indian people during the British period clearly depicts a picture of stagnation and poverty in the Indian economy. The census data of 1818 revealed that about 61 per cent of our population remained totally dependent on agriculture and both in 1921 and also till the end of British regime, about 73 per cent of Indian people were dependent on agriculture. Although British rulers realised the importance of agricultural sector on the Indian economy but they took no tive of their own for any permanent improvement of the agricultural sector. This had resulted in initial failure of crops and famine in India occasionally. During the two hundred years of British rule, exploitation of the economy was continued and this led to total under-development of the economy of the country. At the end of two hundred years of British rule, Indian economy was subjected to the problems of low per capita income, unemployment, shattered structure of cottage and small industries, low capital formation, low level of investment. high birth and death rates and conservative attitudes of Indian people. All these problems had! led t0 the stagnation, poverty and backwardness of the Indian economy. Dr. Bipin Chandra has successfully analysed impact of the colonial rule in attaining development uments of the British economists, the backwardness and modernisation of Indian economy. As per arg! and lack of modernisation of Indian economy were mainly due to the existence of value system, i.e., 1, Bipin Chandra, Colonialism and modenisation, Presidential ‘address, Section II, Indian History Congress (1970), p.6. ‘Scanned with CamScannerea : AO Es he caste system and also due to shyness of ea, . ste the eae rote "I is ahistorical Fallacy 10 assumes f transformation or that it remained as. yy that was brought with penta din the Indian econom: India. But ret ite did not unnlen tish ati was attaine’ “ ii iB iain a8 ye ure oe it was, tettoe oh traditional! WHEE a colonial ECONO aia was integrated into world captialism wig ® ly exception of capitalism, e sam tical Bam at in the industrial revolution, 4° Pe ident 00 king part i Its any 0 mrodernised British rule in In as it historical f the benefits underdeveloped at the i i if systematic exploita dia was a long history of ; ofthe general peo government, The consequences of various form: ploitatiog : i ist i ee mer nian exonomy can be broadly analysed with the folowing pin, oa ‘al country throughout the British period ang rimarily an agricultur throughot | period an totally remained backward with its little bit of commercialisation jus, f Great Britain. .d to modernise the prevail ding to large scale destruct without tal tion of the general people of, country by the the Indian peop! (i) India remained p' agricultural sector serve the interests o! British rulers never permittes the 18th and 19th century lea cottage industries of the country. By following the policy of discrimi over the entire Indian markets. British rulers gradually transformed the Indian economy into a primary producing county exporting only agricultural products and raw materials necessary for industries in Britis and importing only British manufactures. ‘To promote foreign trade and to exploit natural resources of India to their advantage, Britis: rulers built up economic infrastructure which includes roads and railway network, ports ani shipping, irrigation and electricity etc. (vi) The Managing agency system promoted by the British systematically appropriated about 51 per cent of the gross profit of the consumer goods industries developed by the Britishes as their managerial remuneration. (vii) The British rulers thoroughly exploited the Indian economy through economic drain in the form of home charges and huge amount of family remittances. The aforesaid nature of exploitative policies of the British rulers bad resulted in large scale Poverty, stagnation and backwardness of the Indian economy alongwith a huge drain of economi: resources of the country to Great Britain. SELECTED REFERENCES ae Bhatia : Famines in India, Ch. 1. ipin Chandra : Colonialism a isation, Presidenti D.R.Gadgil + The Industrial Evolution in Indi " Jawaharlal Nehru : Discovery of India, Ch. VII. M.G. Ranade : Essays on Indian Economics, . Ramesh Ch. Dutta : The : resh Ch. Dutta : The Economic Hist Famine Commission Report (1989) istory of India, Vol. 1. Industrial Commission Report (1981). Jing industrial structure of India durin, 7 on of world famous handicrafts, (iii) inating protection, Britishers gained complete contr (iv) o) 1. Bipin Chandra, Colonia ‘Scanned with CamScannerCurrent State and Features of Indian Economy 2.1. CURRENT STATE AND BASIC CHARACTERISTICS OF INDIAN ECONOMY India is considered as an underdeveloped economy. In India, there exist chronic poverty as well as tunutilised natural resources. Moreover, most of the features of underdeveloped economy are more or less present in our economy. Thus Indian economy can be treated as one of the underdeveloped but developing economies of the world, It is, therefore, essential to study the current state and basic characteristics of the Indian economy. 1. Low per capita income. In India, the national income and per capita income is very low and it 1 Consideted-as-one-of the: basic: features"of underdevelopment. As per World Bank estimates, the per capita income of India stood at only $ 720 in 2005.' Keeping aside a very few countries, this per capita income-figure-of India is the lowest in the world and it is even lowerthan China and-Pakistan. In 2005, the per capita income figure in Switzerland was nearly 76 times, in U.S.A. about 61 times, in Germany about 48 times and in Japan about 54 times the per capita income figure in India. THUS developed countries-of the-world. This disparity in the per capita income of India and other developed countries has registered a manifold increase during the last four decades (1960-2005). Although the per capita income at official exchange rates exaggerated this disparities but after making necessary correction through purchasing power parity figures, the per capita GNP of U.S.A. was 12.0 times that of India in 2005 as against 68.0 times that of India at official exchange rates.” Even after making necessary adjustment, the per capita income differences, although narrowed down, yet remain quite significant and huge. Table 2.1 will clarify the position. In order to convert national currency figures to the US dollars, the utilisation of official exchange rates does not allow to measure the relative domestic purchasing power of currencies. In this connection, work of LB. Kravis and others titled “International Comparison of Real Product and 1. World Development Report, 2007 p. 162. 2. World Development Report, 2007. ‘Scanned with CamScanner_ eT bd ine aforesaid work, the Uy easures of real GDP 9, oduced measur ower parities (PPPs) insteyg ® % f as provide purchasing Power 1978) ae Nations Internation’ Compa internationally exchange 1 nati comparable 8 tors for conv 4. Per Capita (in US dot hy ‘Average Annual Grow TABLE 2- Berl Rate (1985-2005) 2008 : Perlty ov Exchange Rate Purchasing Exchange Rate Bas ee is Switzerland nets WS. 43,740 32 USA Japan 38,980 31410 “ a 3 29,210 3 Germany 3 : 32,690 UK 37,600 32,691 - India 720 3,460 73 6,600 . china 1.740 : orld Development Report, 2007- ; ducing. Indian economy is ‘Source : Compiled from N 2, Excessive depen characterised by too much total working population of allied activities, which contribu 50 per cent of the total working populatios Jetvities and was contributing about 21.0 per on countries of Asia, Middle East and Africa, from wor! solely dependent on agriculture. In most of the develope percentage of active population engaged in agriculture ranges bet clarify this position, e Population engaged in agriculture and Industrial TABLE 2.2. Percentage of Activ Origin of GDP in 2004 ‘Active Population engaged Industrial origin of GDP Percentage Distribution Services ulture and primary pro ture and thus it is pri is enga; f our country. In 2018, nearly wn of our country “was engaged in agriculture and allied of the total national income. In most of the hirds to four-fifths of their total population are .d countries like U.K., U.S.A. and Japan, the ween | to 5 per cent. Table 2.2 will mary producing. Out of the dence of agric ed in agriculture and “dependence on agricul pus it 8 our country, a very high proportion of it i ted a large share in the national income Country in Agriculture? Aericulture Industry = 1 1 26 B u 4 1 2 1 oan s 1 31 iland 45 10 a Pakistan 2 2 2 = China a7 ib os 2 India 58 i - al 2 32 “*Figures related to 2004. Coe ate animen meee fable 2.2 reveals that in Indi e 58 per cer it i eee 22 ve tht in nd 58 percent of its tv popula in agri cave cont sent show 21 per cent of the eal dias at eat apace seule poet, lak of modemison and ack of diversi ieee aoe se cls fom wih ou aga ear i ein Te eet oak 'y of our active population is depending eee on agriculture. ‘Scanned with CamScannerCurrent State and Feat i Current State and Features of Indian Economy 2 3. High-rate-of- population growth, Browth, India is maintaining a very high rate of growth o! population since.1950. Thus the pressure of population ! fr y — our country is very heavy. This has resulted om a very high level of birth rates cow el of death. rates pled with a falling | iting it aa . falling leve vail county bn, ae ie of growth of population has been gradually increasing ats 131 per cent peop > per cent annually during 1971-81 to 2.11 per cent annually during 1981 oe viatee {0 1.77 per cent during 2001-2011. The prime eause behind this rapid grow rain 2018. On daa geal in its death rate from 49 per thousand during 1911-20 to 6.2 Fea cclinad rate citer hand, compared to its death rate, the birth rate of our population has gradually dec! ined from 49 per thousand during 1911-20 to 20.0 per thousand in D8 Thus whatever development that has been achieved in the country, it is being swallowed up by the increased population. Moreover, this high rate of growth of population necessitates a higher rate of economic growth just for maintaining the same standard of living. This imposes a greater economic burden on the economy of our country as to maintain such a rapidly growing population we require food, clothing, housing, schooling, health facilities etc. in greater magnitude. Besides, this fast rate of growth of population is also responsible for rapid increase in the labour force in our country. 4-Existence of chronic unemploynient and underemployment. Rapi i ten ‘and under-employment. Rapid-growth-of-population coupled with inadequate growth of secondary and tertiary occupations are=responsible=for=the 4s suc tease oe unemployment in India is the result of deficiency of capital. Indian industries are not getting adequate amount of capital for its necessary expansion so as to absorb the entire surplus labour force into it. Moreover, larger number of labour force is engaged in the agricultural sector of the Indian economy than what is really needed. This has reduced the marginal product of agricultural labourer either to a negligible amount or to zero or even to a negative amount, There-exists-disguised unemployment.in_Indian_agricultural.sector which has resulted from too much dependence of population on land and absence of alternative occupations in the rural areas. Moreover, in the urban areas of our country, the problem of educated unemployment has also taken a serious tur, Thus both the rural and urban area of our country has been suffering from the serious problem of unemployment and under-employment to a large extent. Thus the Third Five Year Plan mentioned, “Urban and Rural unemployment in fact constitute an indivisible problem.”! On the basis of NSS data, the planning commission has estimated that the total backlog of unemployed at the end of Seventh Plan, i. i 1990 would be around 28 million. During the 5 year period of 1990-95, new entrants to the labour force are estimated to be around 37 million. To put it in another way we can guess that total burden of unemployment during this Eighth Plan would be around 65 million which is a matter of serious concern for the economy of our country. The incidence of unemployment on CDS basis increased from 7.31 per cent of labour force in 1999-2000 to 5.6 per cent of labour force in 2011-12. 5 . Capital deficiency is-one of ihe characterise fears of pital available per head and the present rate of capital i Both the amount of c formation in India is very low. Consumption of crude steel and energy are the two important under-developed countries like India. In 1987, the per capita consumption of steel in India was only 20 kg as against 582 kg for Japan, 417 kg for U.S.A., 259 kg for U.K. and 64 kg for China Similarly, the per capita consumption of electricity in 2003 was only 594 for India as against 14,057 for U.S.A., 5,943 for U.K., 8,212 for Japan and 1,440 for China. indicators of low capital per head in the 1. Third Five Year Plan, p. 154. 2. CMIE, World Economy and India’s place in it, October, 1993 3. Human Development Indicators. 2015. ‘Scanned with CamScannerey » evel of capita formation in India is a0 ie comeaness ote ~ Morcovet ths ow 18 propensity and capacity 10 save, As per Cl’ etn a of invest and also die Td of living, India requires at least fet cent level of Boe SA to maintain the Sane re per rate of economic growth and to improve the Standard of tinh, : formation, To achieve a Nig! ion is very much required in India, In India the rate of saving ag i ad higher ate of capi (aed from 14.2 per cent in 1965-66 10 30.1 per cent in rigs, WN of GDP bas eran ‘on to that of 30 per cent in Japan, 23 per cent in Germany, yy) Sane is moderately Me i ey USA.! But considering the heavy population pressure and the hat or Se ee oh, te present rate of saving is inadequate and thas the enhancement ot _ sf capital formation is badly needed. we inequality. in.the.distribution_of Wealth. Another important characteristic of the Ine, tev ne s the maldistribution of wealth, The report of the Reserve Bank of India reveals tha’ i th of assets possess only 0.7 per M: 2 t of the households owing less than % 1000 wort 0 cox pet aise Woncaver's1 perloeat Of the auseholds owing less than % 5000 worth ofl possessed barely 8 per cent ofthe total assets. Lastly the top four per cent households poses. assets worth more than % 50,000 held more than 31 per cent of the total assets. Maldistribution in income is the result of inequality in the distribution of assets in the ng, areas. On the other hand in respect of industrial front there occurs high degree of concentas, ‘ of assets in the hands of very few big business houses. This shows high degree of assets concentra, in the hands of very few powerful business houses of our country. 7. Low-level-of-technology. Prevalence of low level of technology is one of the imponas characteristics of an underdeveloped economy like India. The economy of our country is tt, suffering from technological backwardness. Obsolete techniques of production are largely ben: applied in both the agricultural and industrial sectors of our country. Sophisticated modern technolos is being applied in productive units at a very limited scale as it is very much expensive. Moreovs itis very much difficult to adopt modern technology in Indian productive system with its untraine: illiterate and unskilled labour. Thus due to the application of poor technology and lower skills te productivity in both the agricultural and industrial sectors of our country is very low. This has resulte in inefficient and insufficient production leading towards general poverty in our economy. 8. Under-utilisation of natural resources. In respect of natural endowments India is consideret as a very rich country. Various types of natural resources Fesources are available in sufficient quantity in the various parts of the country. But due to its varios inherent problems like inaccessi » Primitive-techniques, shortage-of capital and small extet of the market such huge resources remained largely under-uwtilised, A huge quantity of mineral ani forest resources of India still remains largely unexplored. Until recently, India w: develop even 5 per cent of total hydropower potential of the country. 9. Lack of infrastructure. Lack of infrastructural facil which the Indian economy has been suffering till today. The: facilities, electricit land, water, minerals, forest and pow: not in position is one of the serious problems fron se infrastructural facilities includ: ‘Scanned with CamScannerCurrent State and Features of Indian Economy at 10. Low level of living, The standard of living of Indian people in general is considered as very low. Nearly 25 (0 40 per cent of the population in India suffers from malnutrition. The average protein content in the Indian diet is about 49 grams only per day in comparison to that of more than double the level in the developed countries of the world, Moreover, the low calorie intake in Indian diet is another characteristic of low level of living. In 1996 the daily average calorie intake of food in India was only 2.415 in comparison to that of 3.400 calories per day in various developed countries of the world. The present calorie level in India is just above the minimum calorie level required for sustaining life which is estimated at 2100 calories. Moreover, a small percentage of Indian population have access to safe drinking water and proper housing facilites. As per the estimate of National Building Organisation (NBO), in total there was a shortage of 31 million housing units at the end of March, 1991 and by the turn of the century, total backlog of housing shortage in the country is around 41 million units. suffering from its poor quality of human ime is retarding the : AAs per 2011 census, 74.04 per cent ofthe total population of India is literate and the rest 25.96 per cent still remains illiterate. In most of the developed countries like U.S.A., U.K., Canada, Australia etc, the level of illiteracy is even below 3 per cent. Moreover, the problem of illiteracy in India makes way for conservatism and this is going against the economy of the country. Besides, low level of living is also repsonsible for poor health condition of the general masses. All these have resulted the problem of poor quality of human capital in the country. 12. Demographic characteristics. The demographic characteristics of India are not at all satisfactory rather these are associated with high density of population. a smaller proportion of the population in working age group of 15-60 years and a comparatively larger proportion of population in the minor age group of 0-15 years, As per 2011 census, the density of population in India was 382 persq km, as compared with world density of population of 41 per sq km. Even in China, the density is nearly 123 per sq km. Again, as per 2001 census, 35.6 per cent of the total population is in the age group of 0-14 years, 58.2 per cent is in the working age group of 15-60 years and about 6.3 per cent in the age group of 60 and above. Alll these shows that the dependency burden of our population is very high. Moreover, lower income level, low level of living including absence of balanced diet and proper housing and medical facilities are responsible for low life expectancy of 63.9 years in India in comparison to that of 75 years in most of the developed countries of the world and high rate of infant mortality in India, i.e., about 53 per 1000 children as against only 5 to 7 per 1000 in developed countries, 13, Inadequate development of economic organisation. Poor economic organisation is another important characteristic of the Indian economy. For attaining economic development at a satisfactory rate certain institutions are very much essential. As for example, for mobilisation of savings and to meet other financial needs, more particularly in the rural (areas, development of certain financial institutions are very much essential. In India the development of financial institutions is till inadequate in the rural areas, There is the urgent need to develop certain credit agencies for advancing loan to small farmers on easy terms as well as to provide long term and medium term Ioan to industries. For protecting poor tenants from the clutches of landlords, proper enforcement of tenancy legislation is very much necessary. All these require maintenance of honest and etficient administrative machinery which India is lacking very much, ‘Scanned with CamScannerna 20 —Ing the Indian econon underdevelg 22. NOU ‘canned with CamScanner Current State of Indian Economy—A Dualistic Economic Structure a AL present, th econo MIC structure Dualism is. get Primitive traditional economy. tw nuerdeveloped economy. Thus under dualism, we seston! private ditional or backward sector exist and operate side dy sige Tadeper be broadly of two types, i. technological dualism and — cial du. nin Higgins mentions it in his book “Economic Developa’s inter ‘ons of different production functions in the advanced Sector as wel ne cael sector, Und n, advanced sector is capital-intensive and backward seca icy ABain Social Dualism, as mentioned by J.H. Boeke in his book “Economies a4, are Economic Policy of Dual Society’, indicates two different strats :e. upper strata and lover yn in te society, Bocke's social dualism indicates presence and eonflic¢ of alien social system yig, fre Of the country itself. In India, social dualism and such sonseguey 19 ; ee e demand, but because of resources and technological restraints in the two sectors." 1 Erowih rate of population and slow growth of employment Spportunities in the industrial sector due to its fixed technical co-efficients Dee to this low rate of absorption of labourers in the industrial sector, agricultural sector due to its variable technical co- force in the agricultu g disguised unemployment in the agricultural sector. Due to this excess labour supply, labour Productivity, levels of technology, Pace of mechanisation remain low in agricultural sector. Another peculi 'y of technological dualism exists in the Indian labour market where ax igh wage rates prevail among the organised industrial labourers due to increasing track niervention by the government in the labour market. Simultaneously, th level of wages in the unorganised rural sector remained low. Thus considering all these pec 's, Indian economy can be considered as a dualist economy. a 1 Gerald M. Meier (ed.), “Technological Duatism—A Note”—Leading Issues in Economic Development, p. !