Economic History

of India

By:
Dr. Ram Singh
Professor & Head
Indian Institute of Foreign Trade
New Delhi
Email: ramsingh@iift.edu
 Syllabus:

Introduction to the
economic history of
India
 Syllabus

 1. Ancient Economic History of India

 European economic interests in India and colonial
economy
a) Mercantilist phase
b) Free trade phase
c) Financial
imperialism phase
 2. Agrarian settlements
a) Permanent settlement
b) Ryotwari system
c) Mahalwari
system d)
Commercialization of agriculture and its effects
 3. Industry
a) De-industrialization
b) Development
of modern industry: Textile,
Mining, Iron and Steel, Shipping

c) Railways
d) Labour Issues and Factory
Acts 1894- 1942
 4. Trade: internal and foreign
 5. Fiscal System
 6. Banking
 Ancient
Economic History of
India
India as a Trading Society:
Mohan Jo- Daro to Silk Routes
Trade by Vessels, not by
Ships
 Ancient Markets:
Patronage by Kings
 Medival
Economic History of
India
India’s Economic Engagements
in Medieval Time: Mughal’s
Frequency of Economic
Exchanges Increased
 Medieval Times: Transitions
Phase to British Empire
 Economic Conditions Pre 18th Century

 Political Instability

 Economic Crisis

 Regional States or

 Chaos??
 Mirza Rafi Sauda(1713-81)

“The Income from jagirs is all but cut off now.

For years the country has been at the pleasure of outlaws and
renegades.
He who was once sole lord of twenty two subas
Can‟t even retain the faujdari of Kol.
Those in the country are strong and seditious, what amirs there are
feeble,
And those who detain us on the road are in cahoots with them,
Their masters cannot collect even a quarter of the harvest.”
Mir Taki Mir (1724-1810)

“You would not know this age as you did the one before,
Mir,
It is not that age now, nor that earth or sky”
 Medieval Times: British Empire

 Economic Conditions Pre 18th Century

 Political Instability

 Economic Crisis

 Regional States or

 Chaos??
European Interest

 Trade

 European Condition

 Power

 18th century condition

Rich Country & Poor People
Mercantilism

 Set of Doctrine advocating the accumulation

of gold and silver
 Favourable foreign trade balance
 Prosperity of nation

 ‘Mercantile System’ by Adam Smith

 Cameralism- Germany
 Colbertism- France
 Mercantilism- Emgland
Factors

 Market oriented Economy

 Political Philosophers-

o Machievelli – importance of nation

state
o Jeam Bodin- Benevolent anarchy
 Reformation
 New Discoveries
Mercantilist Phase In
India: 1757-1813
India
 Securing EIC’s commercial interest

 Monopoly on trade

 Dictate new rules to Indian traders

 Changes in balance of trade

Economy under Mercantile
Phase
 ‘The Plassey Plunder’

 ‘Nabob Clive’

 Annual Drain of Wealth

Dada Bhai Naraoji
“That rent must necessarily be in proportional to the
quantity and value of the produce, and both the one
and other must depend upon the extend of the
market…. It seems, incapable of considering
themselves as sovereigns, even after they have
become such. Trade or buying in order to sell again,
they still consider as their principle business…. The
monopoly of the company can tend only to stunt the
growth of the part of the surplus produced, which, in
the case of free trade, would be exported to
Europe.” { Adam Smith, an inquiry into the nature and
causes of the wealth of nation.}
 Revenue collected in Bengal
and Bihar

Source: Dutt. R. C., economic history of India under early British

Year Land Revenue Revenue other than

Land

1772-73 22,98,441 5,68,527

1773-74 24,38,405 7,21,786

1774-75 27,77,870 7,87,043

1775-76 28,18,071 13,79,946

1776-77 27,55,043 12,16,397

William Bolts, Merchant 1772

 “The oppression and monopolies in trade

which have been introduced of a late year,
but particularly within the last seven have
been the principle cause of such decrease in
the real revenues of Bengal, as very shortly will
be most severely felt by the company.”
Wheat Prices in Delhi
(Rs per 1000 seers)
Roy,Indian Economic and social history review,vol. IX, 1972

Years Price Years Price

1763-64 42.5 1790-94 45.2

1765-69 24.6 1795-99 13.6

1770-74 46.1 1800-04 36.6

1775-79 28.0 1805-09 34.6

1780-84 79.6 1810-14 34.0

1785-89 23.4 1815-19 34.6

 W.H.Wilson “British manufacturer employed the arm of
political injustice to keep down and ultimately strangle
a competitor with whom he could not have
contended on equal terms”
Free Trade Phase
1813-1860
Why Free Trade?
Features

 Needs of British Industry

 Forced to import raw material
 Taking a raw material and giving cheap
machine made cloths
 Indian products had to compete with British
products
 One way free trade
 Impact on India

 ‘Manjar-Pat’

 Commercialization of Agriculture

 Destruction of Indian textile industry

 Development of Transport
Free Trade Phase:
1813-1860
Why Free Trade?
Features
 Needs of British Industry

 Forced to import raw material

 Taking a raw material and giving cheap

machine made cloths

 Indian products had to compete with British

products
 Impact on India

 ‘Manjar-Pat’

 Commercialization of Agriculture

 One way free trade

 Destruction of Indian textile industry

 Development of Transport
 Finance
Imperialism:1858-
1947
Imperialism

 State policy, practice, or advocacy of extending power

and dominion, especially by direct territorial acquisition
or by gaining political and economic control of other
areas.
 Imperialism is the expansion of a nation’s authority over
other nations through the acquisition of land and/or the
imposition of economic and political domination.
 Economic Imperialism
 Economic Interpretation by John Hobson
 He pointed to the role of such drives as patriotism,
philanthropy, and the spirit of adventure in advancing the
imperialist cause.
 the economic benefits derived were far less than the costs of
wars and armaments; and needed social reforms were shunted
aside in the excitement of imperial adventure. But it was
rational, indeed, in the eyes of the minority of financial interest
groups.
Economic Imperialism in
British India
 Investment of ‘British Capital’

 Finance capital become new mode of exploitation

 Investment was in form of loans by British government

on behalf of Indian government. e.g. railways, ports,
irrigation project
Tax Collection in First Phase

 Retained The Mughal revenue system with some

changes

 5 year Settlement

 Role of Zamindar
 Asof-ud-daula to company (1779)

“From the great increase of expense, thew revenues were

necessarily farmed out at a very high rate, and the
deficiencies followed yearly. The country and cultivation is
abandoned”
 Thank You

धनयवाद
Merci

Gracias Danke
Schon

Thank You 谢谢