Indian Economy on the Eve of Independence

• Introduction

  • Focus: State of Indian economy on the eve of independence (1947).
  • Legacy: Two centuries of British colonial rule.
  • Goal: Exploitation of India's resources for Britain's economic interests.

• Low Level of Agricultural Development

  • Stagnation in agriculture.
  • Causes of Backwardness:
    • Land Settlement Systems:
      • Zamindari system introduced in Bengal.
      • High revenue demand by colonial government.
      • Exploitation and misery of cultivators/tillers.
    • Commercialization of Agriculture:
      • Shift from food crops to cash crops (e.g., indigo, cotton).
      • Purpose: Supply British industries.
      • Result: Frequent food shortages and famines.
    • Lack of Technological Support:
      • Scarcity of irrigation facilities.
      • Absence of fertilizers and modern equipment.
      • Very low productivity.

• Deindustrialization and Decline of Handicrafts

  • Purpose of British Policy:
    • Reduce India to an exporter of raw materials.
    • Turn India into a consumer of manufactured goods from Britain.
  • Impact on Handicrafts:
    • Systematic destruction of world-famous Indian handicraft industries.
    • Massive unemployment.
    • High dependence on agriculture.
  • Rise of Modern Industry:
    • Slow and partial growth.
    • Early industries: Cotton textile mills (Western India) and Jute mills (Bengal).
    • Lack of capital goods industries (heavy industries to produce machine tools).

• Foreign Trade

  • Structure of Trade:
    • Net exporter of primary products (raw silk, cotton, wool, jute, indigo, sugar).
    • Net importer of finished consumer goods (cotton, silk, woolen clothes) and capital goods from Britain.
  • Monopoly Control:
    • Restriction of India's export-import trade primarily to Britain (more than 50%).
  • Drain of Indian Wealth:
    • Export surplus was used to meet colonial administrative expenses and war expenses, draining India's wealth.

• Demographic Profile

  • Census Data (from 1881 onwards):
    • High birth rate and high death rate (indicators of massive poverty).
  • Key Indicators:
    • Overall Literacy Rate: Less than 16%.
    • Female Literacy Rate: Abysmal, about 7%.
    • Life Expectancy: Very low at 44 years.
    • Infant Mortality Rate: Extremely high (approx. 218 per thousand).
    • Public health facilities: Either unavailable or highly inadequate leading to frequent water and air-borne epidemics.

• Occupational Structure

  • Distribution of Working Persons:
    • Agriculture: Primary occupation, engaging 70-75% of the workforce.
    • Manufacturing/Industry: Secondary sector, engaging only 10%.
    • Services: Tertiary sector, engaging 15-20%.
  • Regional Variation:
    • Growth of the secondary and tertiary sectors in states like Tamil Nadu, Andhra Pradesh, Kerala, Maharashtra, and West Bengal, alongside a decline in agricultural workforce dependence.

• Infrastructure

  • State of Infrastructure under British Rule:
    • Motive: Subserve colonial interests, not public welfare.
    • Railways:
      • Introduced in 1850.
      • Enabled commercialization of agriculture.
      • Caused massive economic loss to Indian economy.
    • Roads: Built primarily to mobilize the army and draw raw materials to railway stations/ports.
    • Communication: Expensive introduction of the electric telegraph system for law and order maintenance.
    • Ports & Waterways: Developed mainly to handle export of raw materials and import of British goods.

• Conclusion / Summary

  • Summary of Colonial Legacy:
    • Stagnant agriculture.
    • Deindustrialized economy.
    • Foreign trade drained wealth.
    • Rampant poverty, illiteracy, and poor infrastructure.
    • Laid foundation for a backward economy at independence.