Economic impact of British rule in India

MSMEs – Handicrafts and cottage industry Artisans and Handicraftsmen Unemployment Led to ruralisation – opposite of Urbanisation – decline of cities

Bcoz of merchantlism policy. ( see mrunal ) by Charter Act of 1813 , – it allowed one way free trade
Free import with high tariff for export
Machine made products cud nt compete with hand-made products
Destruction of traditional industry
Unemployment of artisans and Handicraftsmen Another source of unemployment was the loss of traditional patronage – bcoz kingdom and their administration including economy was controlled by British

This broke the age-old relation between agriculture and industry in the countryside and led to the destruction of the self-sufficient Indian village economy. This also resulted in widespread unemployment and overcrowding of the agricultural sector.

Thus Destruction of indeginous traditional industry
Agriculture Peasants Moneylenders Zamindars Commercialisation

Increased pressure on land due to ruralisation leading to fragmentation of land furter..

High revenue rents by British along with role of Zamindars by Permanent settlement , led to exploitation.
With less capital in hand , with a bare minimum profit , there was no incentive to invest in agriculture or in modern technology , thus productivity was stagnant , and led to starvation and deaths during distress periods..

Moneylenders To meet the high revenue demands – The overburdened peasants approached the money lenders to pay dues to Zamindars . The money lender who was also grain merchant , forced the farmer to sell at low prices.. ( that’s why APMC was passed )

Zamindars Emergence of new Zamindars and middlemen due to permanent settlement system – thus increasing the burden on peasant
The absentee Zamindars used to lease or let their lands to ijaradars and pattidars.In turn the latter gave the land on rent to others. Thus a large number of intermediaries came into being between the government and the peasants. 

Thus – subsistence farming Thus , productivity fell that led to subsistence farming leading to frequent femines during distress perios and deaths and mass starvation – –
To help a few , Commercialisation of Agriculture took place

Certain specialised crops began to be grown for sale in international markets ( local market was nt developed due to low PPP ) like cotton ,jute , etc. and plantation sector i.e coffee , rubber , tea

Thus Fluctuations in international market esp during 1866 led to indebtness and femine and agrarian riots in Deccan in 1870s


Capital Rush of foreign capital bcoz of diminishing investments at home…. While Indian industrialists faced credit problems
Labour Indians were cheap labour than England workers There was a rush of foreign capital due to prospects of high profits , cheap labour , cheap and readily available raw maerials , ready market at home , administration support , diminishing investments at home
Govt role Favourable govtpolicies like one way free trade + no tariff prottection + govt administration support for British investments Indian industriesin 19th century suffered from – credit problems , no tariff protection , unequal competition from foreign companies and stiff opposition from british capitalist interests who were backed by fiannce and technical infra at home.
Infra British introduced railways and the post and the telegraph network , for free movement of goods and communication.. Which was not possible for Indians
Raw material Aplenty of Raw material in India . Esp. raw cotton to be used in British industries
Technology Access to modern technology unlike Indian counterparts…
Market Ready made export market for raw materials and Indian market for finished prodcuts like British cloths .

Thus unequal competition throlled Indian industries and gave huge profits to British counter-parts..

Thus From being a net exporter . India became a net importer

Overall impact
Economy core industries were neglected –
India became a dependent economy for finished goods and supplier of raw materials
Poverty increased – leading to femines , deaths , riots…

Geography Regional disparities in terms of development

Sociology – HRD Lack of technical education , led to shortage of sufficient technical manpower .. Japan rose.. India didn’t bcoz of lack of education
Rise of industrialist capitalist class and working class

Polity Rise of middle class intelligentsia.. Which will lay the stone for INC and Indian clerks ( pub-ad )

Nationalist Critique of Colonial Economy Dadabhai Naroji – Economic Drain theory – Poverty and Unbritish rule in India R C Dutt – Economic history of India

In the first half of 19th cetury , they were under the impression that it wud modernise the country based on latest technology and capital based on capitalist economic organisation . Just like nowadays , FDI and technology transfers is emphasises now . But then , tech transfer didnt take place.. and neither capital in core industries… 😛

This drain of wealth began in the decades following the battle of Plassey in 1757.


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