INDIAN ECONOMY ON THE EVE OF INDEPENDENCE

IMPORTANT QUESTIONS

1. What is colonialism?
It is the practice of acquiring colonies and making them dependent to
extend power control them and rule over their political and economic
issues of life.

2. Name some leaders who tried to estimate the data of national

income and per capita income in the initial period under British
rule.
Dadabhai Naroji, William Digby, Findlay Shirras, V.Kr.V. Rao, and R.C
Desai.

3. Discuss the essential features of Indian economy on the eve of

Independence.
British has transformed Indian economy into a colonial, underdeveloped,
semi feudal, stagnant, backward, depleted, amputated economy.
a) Colonial Economy: British rule resulted in huge drain of wealth from
India to facilitate the growth of British industries in order to
transform India just a feeder economy.
b) Semi-feudal economy: It implies two aspects of Indian economy:
• Existence of feudalism in Indian agriculture.
• In modern industries also two classes were developed i.e.,
Capitalist and labor class.
c) Stagnant economy: It implies the growth of output and resources
during the first half of 20th century was very low.
d) Backward economy: The low level of productivity, lower per capita
income, traditional methodology of Agriculture etc. were the main
reasons for the backwardness of Indian economy.
e) Depleted economy: It implies the physical assets were overused by
the British for their own purpose and welfare of their own economy.
f) Amputated economy: The British applied divide and rule policy and
promoted discrimination between groups on the basis of religion,
caste, language and culture.

4. Discuss briefly the agricultural status of Indian economy at the time

of Independence.
About 85% of the country’s population derived their livelihood from the
agriculture despite being the main occupation this sector continued to

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INDIAN ECONOMY ON THE EVE OF INDEPENDENCE
experience stagnation. Agricultural productivity was very low. There were
many reasons:
• Semi feudal relationship between cultivators and landlords. It is a
land settlement system where landlords earned most of the profits
and actual cultivators were in great distress due to the lack of
resources.
• Zamindars were free to extract any amount as permanent owners
of the land.
• Commercialization of Agriculture: It implies production of crops for
the market rather than self-consumption. Britishers offered high
prices to the farmers for producing cash crops which were required
as raw material for British industries rather than food crops.
• Low level of technology, lack of irrigation facilities and negligible
use of fertilizers also resulted in low agricultural productivity
• Partition of Indian economy: A sizeable portion of the undivided
economy, highly irrigated and fertile land went to Pakistan.
Particularly the jute industry was affected more as whole of the
jute producing area became a part of East Pakistan (Now in
Bangladesh).

5. Explain the industrial condition of the Indian economy on the eve of

Independence.
India could not develop a sound industrial base. It was mainly because of
systematic de-industrialization policy followed by Britishers. The primary
motive was two-fold:
• To reduce India just as exporter of promotional British industries.
• To turn India into a market of finished goods produced in British
industries.
The steps which were responsible for the industrialization:
• Decline of Indian Handicraft industry: As Britishers followed
discriminatory tariff policy by allowing free export of raw materials
from India and free import of final goods to India, but placed a
heavy duty on the export of Indian Handicrafts. As low-priced final
goods manufactured in modern industries were competing with
Indian handicrafts which resulted in decline of handicraft
industries. It resulted in mass unemployment in Indian economy.
• Slow progress of modern industries: Lopsided and unbalanced
structure during the second half of the 19th century, modern
industries began to take root in India but progress was very slow.
The credit goes to Britishers for the beginning of iron and steel

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INDIAN ECONOMY ON THE EVE OF INDEPENDENCE
industries by Jamshedji Tata and TISCO (Incorporated in 1907) in
Bihar.
• Capital goods industries for lacking: There were hardly any
capital good industry to promote industrialization as Britishers
always wanted Indians to be dependent on their industries for the
supply of capital goods and equipment.
• Lower role of public sector: Public sector remained confined to
the railways, power generation, communication etc. only.
Participation of government did not extend development to those
industries which were strategic for its growth of capital goods,
electronics, machines and equipment etc.

6. State the future of India’s stagnancy in the colonial period.

a) Very low national income, Low per capita income (0.5%) And lower
growth rate of output i.e., less than 2%.
b) The accelerated growth of population made it difficult to maintain
same growth of economy
c) Laissez Faire policy and oppressive foreign trade policy.

7. Explain the state of foreign trade during British rule.

The restrictive policies of commodity production, trade and tariffs
pursued by the colonial government adversely affected the structure,
composition and volume of India’s foreign trade:
• Export and import: India became an exporter of primary products
such as raw material, raw silk, cotton, wool, sugar, indigo, jute etc.
and an importer of finished goods such as cotton, silk and woolen
clothes and capital goods like light machinery produced in the
factories of Britain.
• Monopoly control of Britain over Indian foreign trade: More
than half of India’s foreign trade was restricted to Britain while the
rest was allowed with fewer other countries like China, Ceylon (Sri
Lanka) and Persia (Iran).
• Misuse of export surplus: India’s foreign trade generated large
export surplus but it did not result in any flow of gold or silver into
India first up there was drain of India’s wealth into Britain.
➢ The surplus was used to make payments for the expenses
incurred by the office setup by the colonial government.
➢ It was used to pay expenses on war fought by the British
government who stopped

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INDIAN ECONOMY ON THE EVE OF INDEPENDENCE
➢ It was used to pay for the import of invisible items as shipping
communication etc.

8. Explain the demographic condition of Indian economy during

colonial rule.
The first census to collect the data of population was conducted in 1881
the year 1921 was considered as the year of great divide. Before 1921
India was in the first stage of demographic transition. However, neither
the total population nor the rate of growth of population was very high.
The demographic condition was as follows:
• High infant mortality rate: It refers to death rate of children
below 1 year. It was about 208 per thousand live births in contrast
to present 40 per thousand.
• High birth rate and death rate: Both birth rate and death rate
were very high at 48 and 40 per thousand of persons.
• Low Life expectancy: It means the number of years that a new
born child is expected to live. It was as low as 44 years as
compared to present 70 years.
• Low level of literacy and living standard: The overall literacy
rate was less than 16% out of which female literacy level was very
low at 7% only. People were having inadequate availability of basic
necessities and due to natural epidemics, such as famines etc. the
living standard was very low.

9. Discuss briefly the occupational structure of Indian economy at the

eve of Independence.
Occupational structure implies the distribution of working people among
various sectors of the economy.
• Dominance of primary sector: The agricultural sector accounted
for the largest share of workforce i.e., around 70-75% while
secondary sector (10%) and Tertiary sector (15%) accounted for the
remaining 25%.
• Regional variation: Tamil Nadu, Kerala, Andhra Pradesh and
West Bengal witnessed a decline in the dependence of the
workforce on the agricultural sector whereas the states like
Punjab, Odisha, Rajasthan witnessed an increase in the same.

10. Explain the role of infrastructure in Indian economy on the Eve of

Independence.

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INDIAN ECONOMY ON THE EVE OF INDEPENDENCE
The real motive to develop infrastructure was to subserve the colonial
interest.
• Railways: It was introduced by the Britishers in 1850 which
affected the Indian economy in various ways:
➢ It enabled people to travel long distances and broke
geographical and cultural barriers.
➢ It fostered commercialization of agriculture which adversely
affected self-sufficiency of Indian Economy.
➢ The volume of India’s trade expanded substantially which
didn’t benefitted Indian people.
➢ Industrial development was benefitted with the expansion of
Railways.
• Waterways: The inland waterways, at times also proved
uneconomical as in the coast canal and Odisha coast. It was built
at a huge cost but failed to compete with railways.
• Post and Telegraph: The postal services despite serving a useful
public purpose, remained all though inadequate.

Conclusion:
• Social benefits outweigh by economic losses.
• It was done for effective control and administration of British
Government over the vast Indian Territory.
• India became a depleted economy i.e., huge exploitation of
natural resources especially to meet war time requirements.
India suffered with the depletion of real capital.

11. What is an Amputated economy? Explain the Indian condition on

the eve of Independence.
Amputated economy refers to the divided economy (India got divided into
two parts i.e., India and Pakistan). The final blow came from British
rulers in the form of partition. The country was gradually working
towards economic integration but was shattered away by partition. India
got 77% geographical area and 82% of Population.
State of Indian condition on the eve of Independence:
• India lost its raw jute supplying, east Pakistan and raw cotton
supplying western Punjab. The Jute mills of Calcutta and cotton
textiles of Bombay and Gujarat got severe blows. Indian industries
lost a vast part of market for its industrial goods.

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INDIAN ECONOMY ON THE EVE OF INDEPENDENCE
• The loss of Burma, the main rice producing part of the undivided
economy and wheat producing Punjab gave rise to severe food
crisis after independence.
• Mass migration added to the problems of food shortage, availability
of shelter, civic amenities, problems of poverty and unemployment.
• Trauma of partition left a deep impress in the minds of people
which resulted into social and political tensions.

12. Discuss the positive contributions of British rule over Indian

economy.
The positive contributions were:
• Commercialization of agriculture: It implies a breakthrough in
agriculture even when it challenged self sufficiency in food grains
production.
• Better means of transport: Spread of railways and roadways
opened new opportunities of economic and social growth. It
implied greater cultural affinity across different parts of the
country.
• Check on Natural disasters: Spread of transport worked as a
check on the spread of famines. Food supplies could be rushed to
drought hit areas.
• Shift to monetary system: It was great transition from barter
exchange to monetary exchange system which is facilitated in
division of labour, specialization and large-scale production.
• Effective administrative setup: After Independence, this legacy
served as a ready-reckoner for our politicians and planners.

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