INDIA ON THE EVE OF INDEPENDENCE

BEFORE THE ADVENT OF THE BRITISH RULE:

 India had an independent economy.
 Agriculture was the main source of livelihood for most people.
 The country’s economy was also characterised by various kinds of manufacturing activities.
 India was well known for its handicraft industries:
 It was well known for its cotton and silk textiles, metal and precious stone works etc.
 It enjoyed a world wide market because of the reputation of the fine quality of material used
and the high standards of craftsmanship.
THE British foundation was laid by the Battle of Plassey in 1757 with the purpose of making India
a feeder economy.

WHAT DO YOU MEAN BY COLONIALISM:

It refers to a system of political and social relations between two countries of which one is the ruler
and the other is its colony. In tjis case Britain was the ruler and India was the colony.

DURING THE BRITISH RULE:

 India became mere suppliers of raw materials and market for finished goods.
 British government took no step or attempt to estimate the National income or per capita income of
India.
 Although there were some estimates by economists like Dadabhai Naoroji, William Digby, V.K.R.V.
Rao and R.C Desai. But their estimates were conflicting.
 It was V.K.R.V. Rao whose estimates was considered significant among others.
 Country’s growth rate of real GDP during the first half of the twentieth century was only less than 2%
per year and per capita real GDP was about 0.5% per year.

FEATURES OF INDIAN ECONOMY ON THE EVE OF INDEPENDENCE

On the eve of independence, Indian economy had the following characteristics:
(I) Stagnant Economy: On the eve of independence, Indian economy was completely a stagnant
economy. A stagnant economy is the one which shows little or no growth in income. Between 1860-1925,
growth rate of per capita income was as low as 0.5 per cent per annum and between 1925 and 1950 it was
0.1 per cent per annum. On account of this stagnation, bulk of Indian population lived in poverty.
Standard of living of the people remained miserably low. Epidemics and Famines were a recurring
phenomenon.
(2) Backward Economy: Indian economy was a backward economy on the eve of independence.
Backward economy is the one in which per capita income is very low. In 1947-48, per capita income in
India was just 230. The bulk of the population was very poor, without sufficient food, clothing and
shelter. Unemployment was rampant.
(3) Agricultural Backwardness: It is highlighted by the following facts: + Nearly 72 per cent of the
country's working population was engaged in agriculture. But, its contribution to GDP was only 50 per
cent. + Productivity was extremely low. Thus, per hectare output of wheat was only 660 kilograms, and
of rice just 665 kilograms. + Foodgrain production was barely enough for subsistence. In 1947-48, it was
recorded to be just 527 lakh tonnes.
(4) Industrial Backwardness: Here, following facts are of underlined significance: + There was a
virtual lack of the basic and heavy industries in the country. + Production of machines was almost
negligible. + Small-scale and cottage industries were almost ruined. + For the bulk of its capital-goods
requirement, the Indian industry was dependent upon imports from Britain
(5) Rampant Poverty: Bulk of the population was very poor. People were not getting two square meals a
day. They lacked shelter and clothing. This was largely owing to widespread unemployment (caused by
the destruction of handicraft industries).
(6) Poor Infrastructure: Infrastructural development (including means of communication and transport,
generation of power/ energy) was extremely low. In 1948, power generation capacity was merely 2,100
MW, length of railway lines was 53,596 km, pucca roads had a coverage of 155 thousand km only.
(7) Heavy Dependence on imports: The country had to depend on imports for machinery and other
equipment of production. Armed forces of the country also depended heavily on imports for most of the
defence equipment. Besides, several consumer goods like sewing machines, medicines, kerosene oil,
bicycles, etc. used to be imported from abroad.
(8) Limited Urbanisation: At the time of independence, bulk of the population of India lived in villages.
In 1948, only 14 per cent of population lived in urban areas while 86 per cent lived in rural areas. Rural
population lacked opportunities outside agriculture. This compounded their poverty.
(9) Semi-Feudal Economy: On the eve of independence, Indian economy was neither wholly feudal nor
a capitalist economy. It was a mixed economy or a semi-feudal economy. Such an economy had the
mixture of feudalistic and capitalist modes of production. Feudalistic mode of production leads to low
productivity. Low productivity leads to backwardness.
(10) Colonial Economy: Indian economy was a colony of British government. It implied exploitation of
the Indian economy for the benefit of the British economy. Following observations highlight how Indian
economy suffered at the hands of the British rulers: • British government curbed domestic industry by
imposing heavy taxes. This forced the Indians to buy the British goods. • Indian economy was used as a
source of raw material for the British industries. Exports of raw material were almost duty-free. Thus,
natural resources in India were drained for the growth of the British industry. • Atrocities were committed
on the Indian artisans so as to force them to close their cottage industries. This led to destruction of the
Indian handicrafts

AGRICULTURAL SECTOR ON THE EVE OF INDEPENDENCE

On the eve of independence, Indian agricultural sector revealed the following characteristics:
(I) Low Production and Productivity: Production refers to total output, while productivity refers to
output per hectare of land. Both (production as well as productivity) were found to be extremely
low on the eve of independence. If arose on account of lack of means as well as incentive on part
of the cultivator (the peasants).

(II) High Degree of Uncertainty: Agriculture was excessively dependent on rainfall and the
production depended sole upon rainfall. No effects were made to develop means of irrigation.
There was a lack of irrigation facility and fertilizers.

(III) Small and fragmented holdings: there was over crowding in the agricultural sector which
resulted in small holdings. This led to output at high cost.

(IV) Land revenue system (Zamindari System): The zamindars were recognised as the permanent
owners of the soil and had to pay a fixed sum to the Government as the land revenue
‘LAAGAN’. The zamindars were free to extract as much a they wanted from the tillers of the
soil. . The distinct features of this system were as these: (i) The zamindars were recognised as
permanent owners of the soil. (ii) The zamindars were to pay a fixed sum to the government as
land revenue. (iii) The zamindars were free to extract as much from the tillers of the soil as they
could, The implications of the land revenue system were alarming for the farmers and the
farming. Most importantly: + It led to unlimited exploitation of the tillers of the soil by the
zamindars. + Rates of land revenue were frequently raised by the zamindars which led to frequent
eviction of the tillers of the soil. + Tillers were reduced to the status of landless labourers.

(V) Forced Commercialisation of Agriculture: Commercialisation of agriculture refers to a shift

from cultivation for self-consumption to cultivation for the market. Following are some notable
points in this context: Mention need to be made of cash crops such as cotton, jute, sugarcane
which had a high demand in the market were increasingly cultivated. • Farmers were forced to
shift to commercial crops (indigo, in particular) from the conventional subsistence crops (like rice
and wheat). Reason: Indigo was required by the textile industry in Britain for dyeing/bleaching of
the textile. • The farmers were either lured or forced to accept advance payments for the
cultivation of indigo. It exposed the subsistence farmers to uncertainties of the market. • While
earlier they would grow grain for their family consumption, now they needed cash to buy it from
the market. But they would seldom have cash owing to their mounting indebtedness.
Consequence: Perpetual indebtedness of the farmers and perpetual stagnation of farming.
Briefly, on the eve of independence, Indian agriculture was both backward as well as stagnant
(non-vibrant). Backward of agriculture is explained in terms of the following factors.

Stagnation of agriculture is explained in terms of the following factors:

(i) Gulf between the owners of the soil and the tillers of the soil,
(ii) Land Revenue System under the British Raj, and
(iii) Forced commercialisation of agriculture.

Q: What were the main causes of India’s agricultural stagnation during the colonial period?
 At least 85% of the total population in India lived in villages and were involved in Agriculture but the
output was very low mainly because of the following reasons:
i. LAND REVENUE SYSTEM/LAND SETTLEMENT SYSTEM: Zamindari system was
introduced by the colonial government were the zamindars were recognised as permanent
owners of the land. Taxes or LAGAAN were to be paid in the form of a fixed sum to the
government as land revenue and they were free to extract as much from the tiller of the soil as
they could. Te profit accruing out of the agriculture sector went to the zamindars instead of the
cultivators.
ii. COMMERCIALIZATION OF AGRICULTURE: Farmers were forced to cultivate cash
crops or commercial crops like cotton, coffee, indigo etc and less of food crops or subsistence
crops like rice and wheat. The cash crops were ultimately being used by the British as raw
materials in their country. While the poor farmers in India had to now buy their grains which
they used to earlier cultivate themselves. This also led to frequent famines in India.
iii. LACKING RESOURCES: low level of technology, lack of irrigation facilities and
negligible use of fertilizers all added up to the bad condition of the farmers. There were no
investment done by the British Government to improve the condition of agriculture in India.
This led to low level of productivity.
iv. ADVERSE EFFECT OF PARTITION: At the time of independence, the agricultural sector
in India received a major setback because of the following reasons:
a. Due to partition, irrigated and fertile soil went to Pakistan.
b. Jute producing area became part to East Pakistan (Bangladesh)
c. Because of this, India’s jute producing industry suffered a lot of loss.
Differentiate between food crops and cash crops
Food crops Cash crops
1. Cultivation of crops for own Cultivation of crops mainly for sale in the
consumption or survival of the market to earn cash.
cultivator.
2. These are grown in subsistence These are grown in Commercial farming.
farming.
3. Eg:Wheat, Rice etc Eg: Sugarcane, cotton etc

INDUSTRIAL SECTOR DURING BRITISH COLONIAL RULE:

 India enjoyed a world-wide reputation in the production of certain special products particularly
handicrafts. But there was a visible decline in the industrial sector in the British period.
 The reason behind the decline in the industrial sector of India are discussed below:
1. De- industrialisation: British Government systematically destroyed Indian Handicraft Industry
neither did it allow any new industry to come up. The two fold motive behind this was:
 Making India a supplier of raw material: India became the supplier of raw materials
at a cheap rate to be used by the rapidly expanding British industrial base.
  Making India a Market for finished goods: India was used as a large and growing
market to sell the finished goods produced by the British industries. This ensured a
constant demand for the Britain made goods helping it to flourish more.
2. Adverse effects of decline of handicraft in India: Prior to British rule, handicraft in India
enjoyed the world-wide reputation of excellence and quality. But the discriminatory tariff policy
imposed by the British resulted in the decline of the handicraft industry.
 Effects of decline of the country’s handicraft industries:
 It created massive unemployment in India: This led to many artisans to move from the
urban areas to rural areas and join agriculture sector bringing about more burden to the
agricultural sector.
 It also created a new demand in the Indian consumer market: There was a tough
competition to the handicraft goods from the foreign machine-made goods which were
cheaper which encouraged the import of British manufactured goods.
3. Lack of Capital goods Industry: Capital goods are the goods which are used for further
production of goods eg machineries and tools. The British Government did not allow the capital
good industry to set up in India. British did not pay any attention to Indian capital good industry
as they wanted India to be always dependent on them for capital goods.
4. Low contribution to GDP: The GDP of the country was as it is very low during the British
period and the contribution to GDP from the industrial sector was remarkably small.
5. Limited role of public sector: The public sector was operating in a limited area during the
British period, like Railways, power generation, ports. This public sector did nothing to uphold
the industrial sector of the country. On the other hand the private sector was not very strong
financially to contribute to the industrial sector. There were very few industries in India. TISCO
was set up in the year 1907 by TATA industries. Other than that paper, cement, sugar industries
were also came up after the 2nd World War.

Critically appraise some of the shortfall of the industrial policy pursued by the British Colonial
administration.
The British Colonial Administration focused on making India a mere supplier of Britain’s own
flourishing industrial base. The industrial policy pursued by the British had the following shortfalls.
1. Neglect Indian handicraft industry: this was done by following a discriminatory tariff policy
under which they imposed heavy tariffs (export duties) on India’s export of handicrafts while
allowed free export of India’s raw material to Britain and allowed duty free import of British
finished goods to India. This made Indian products costlier to export and killed its foreign demand
internationally. This led to fall of handicraft industry.
2. Lack of investment in Indian industries: To set up modern industries capital goods were needed,
but the British did not allow capital goods industries to set up by not investing in those industries.
Thus, due to lack of investment, Indian industries was hampered.
Q: Explain the state of secondary sector on the eve of independence.
 Decline of handicraft industry during British rule.
 Public sector’s role was restricted only to railways, ports, power generation and communication.
 Lack of capital goods industries to promote industrialisation.
  The industrial sector did not generate much employment opportunities as the production process
was largely capital intensive.

Q: State the reason for change in demand pattern during the British rule.
 Owing to the impact of British culture a new class emerged in India which was keen to adopt the
western lifestyle. This changed the pattern of demand against the Indian products and in favour of
the British products.
 Secondly, due to the discriminatory tariff policy the Indian products became expensive compared
to the British made products which changed the demand pattern. The handicraft items were hand
made and thus were expensive whereas the machine-made British products were cheap.

INDIA’S FOREIGN TRADE UNDER THE BRITISH RULE

Before the British came to India, India was a well-known exporter of finished goods such as fine
cotton, silk textiles, metal goods, wooden goods, ivory work and precious stones. But the
restrictive policy adopted by the British Government changed the structure, composition, and
volume of India’s trade in an adverse way.

1. Net Exporter of Primary Products and Importer of Finished Goods: Owing to colonial
exploitation of the Indian economy, India became an exporter of raw materials and primary
products such as raw silk, cotton, wool, jute, sugar, indigo etc.
On the other hand, it became importer of finished goods like cotton, silk and woollen clothes
and several capital goods produced in England.

2. Monopoly control on trade by the British: During colonial period the British government
maintained a monopoly control over Indian trade policies.
 Majority of trade was restricted to Britain (more than 1/2) while the rest was allowed with
some other countries only (such as China, Sri Lanka (Ceylon) and Iran (Persia))
 Opening of Suez Canal in 1869 provides a direct trade route for ships operating
between Britain and India.

3. Economic exploitation: Due to the exporter of raw material, India had a huge export surplus.
But the amount of export surplus did not give any push to Indian economy as the amount of
surplus was used by the government in non- developing activities, such as:
 To meet expenses of war fought by the British government.
 To make payment of office setup of colonial government.
 To make trade of invisible items (services).
 DEMOGRAPHIC PROFILE

Demography refers to the study of various aspects of population, such as age, sex, education level,
income level, marital status, birth rate, death rate etc.
 Demographic condition during British time revealed all features of stagnant and backward Indian
economy.
 The first official census was conducted in the year 1881 which revealed the unevenness in India’s
population growth.
 From 1881 onwards census operation were carried out after every 10 years.
The demographic condition during the colonial rule is described in the following points:
1. High birth rate and death rate: Both birth rate and death rate were very high at nearly 48 and 40 per
thousand respectively. Such high rate indicates backwardness of a country and led to massive
poverty prevailing all over the country.
2. Extremely low literacy rate: The overall literacy rate was less than 16%. Out of this, the female
literacy rate was at a negligible low of about 7%.
3. Poor public facility: Public health facilities were either unavailable to large mass of population or
highly inadequate. As a result, water and air-borne diseases were widespread.
4. High infant mortality rate: Infant mortality rate refers to number of infants dying before reaching
one year of age per 1000 live births in a year. It was quite alarming about 218 per thousand in
contrast to present infant mortality rate of 63 per thousand.
5. Low life Expectancy: Life expectancy refers to the average number of years for which people are
expected to like. It was also very low- 32years in contrast to the present 63years.
6. Widespread poverty: there was no reliable data about the extent of poverty. But the overall
standard of living of common people in India was very low and there was widespread poverty in the
country.
It can be concluded that British rule was the main reason to worsen the profile of India’s population.

DURING THE BRITISH RULE

1. High birth rate and death rate:
Birth rate refers to the number of children born per thousand individuals in a year.
Death rate refers to the number of people dying per thousand persons in a year. During colonial
period both birth rate and death rate were very high (nearly 48 and 40) which means India was at
the First stage of demographic transition (before 1921). Year 1921, is regarded as the year of
Great Divide as thereupon India started its entry into the second stage of demographic transition.

2. Low literacy rate: Literacy rate refers to the number of persons who are 7 or above, who have
the ability to read, write and understand any one language. During colonial period the overall
 literacy rate of the economy was less than 16 per cent. Moreover, the female literacy rate was
about 7 per cent.

3. High Infant Mortality Rate: Infant mortality rate refers to the number of infant dying before the
age of 1 year per thousand live births annually. The IMR during colonial period was about 218 per
thousand (before 1921).

4. Poor Health Facilities: Public health facilities were either unavailable or when available, were
highly inadequate; due to which water and air-borne disease were widespread and took a huge toll
on life.

5. Low Life Expectancy: It refers to the average number of years for which a person is expected to
live. Due to poor health facilities, the life expectancy during colonial rule was as low as 44 years,
whereas as per the latest WHO data published in 2018, the current overall life expectancy of India
is 68.8 years.

6. High level of poverty: During colonial period, India faced the condition of extensive poverty. Per
capita consumption was very low. The overall standard of living of common people of India was
very low.

OCCUPATIONAL STRUCTURE
It refers to the distribution of working persons across different industries and sectors.
1. Predominance of Agriculture: As colonial government aimed at making India an exporter
of raw material, consequently, about 72.7% of working population was engaged in agriculture. As
the income generation rate of agriculture sector was very low, this predominance reflected
backwardness of the economy.
2. Unbalanced Growth: Growth of an economy is said to be balanced when all the 3 sectors are
equally developed. But in case of Indian economy only primary sector was the main source of
employment, whereas secondary and tertiary sector were in their infant stage of growth.

INFRASTRUCTURE
 The infrastructure facilities during British rule were very poor yet steps had been taken to
develop basic infrastructures like roads, railways, ports etc.
 But the main objective behind such development was not to provide basic facilities to the people
of India but to subserve various colonial interests.
The state of infrastructure as inherited from the British rule is discussed below:
1. Roads: Better roads could not be constructed due to scarcity of funds. It primarily served in shifting
raw material and mobilizing the army. There always remained shortage of all weather roads to reach
out rural areas during rainy season because of which people badly suffered badly during natural
calamities and famines.
 2. Railways: The most important contribution of the British was to introduce railways in India in 1850.
It affected the structure of Indian economy in two important ways:
i. It enabled people to undertake long distances travel and broke all the barriers and promoted
national integration.
ii. It enhanced commercialization of Indian agriculture, which adversely affected the comparative self-
sufficiency of the village economies.
iii. It promoted the foreign trade but it benefited the Britishers more than the Indians. It resulted in
huge economic losses to the Indian economy.
3. Air and water Transport: British Government took measures for developing the water and air
transport. However there development was far from satisfactory.
4. Communication: Posts and Telegraphs were the most popular means of communication. The
introduction of the expensive system of electric telegraph in India served the purpose of maintaining
law and order.

REASONS FOR INFRASTRUCTURAL DEVELOPMENT

The basic objective was not to provide basic facilities to the people but to serve their own colonial
interest.
ROADS:
I. For mobilizing the army
II. For drawing out raw materials from countryside to nearby railways and ports.
RAILWAYS
I. To have effective control and administration over the vast Indian territory.
II. To earn profit through foreign trade by linking railways with major ports.
III. To make profitable investment of British funds in India.
ELECTRIC TELEGRAPH was introduced at a high cost to serve the purpose of maintaining law and
order.

POSITIVE CONTRIBUTIONS OF BRITISH RULE

1) Commercialization of agriculture initiated by British Government resulted in self-sufficiency in food
grain production.
2) Development of roads and railways provided cheap and rapid transport system and opened up new
opportunities of economic and social growth.
3) Roads and railways worked as a great check on famines as food supplies could be transported to the
affected areas in case of drought.
4) British rule helped Indian economy to shift from barter system of exchange to monetary system of
exchange.
5) The British Government had an efficient administration system, which served as a ready reckoned
for Indian politicians.