Indian Economic Development Chapter 1 Indian Economy On The Eve Of Independence

Subsistence agriculture means producing crops for self-consumption rather than for marketing.

Commercialization of agriculture means producing crops for the market rather than for self consumption.

Tertiary sector may be defined as that sector which includes trade and commerce, transport, storage, communication, trade, financing etc.

Occupational structure refers to distribution of working population across primary, secondary and tertiary sectors of the country.

Productivity in agriculture means output per hectare of land.

V.K.R.V. Rao, Dada Bhai Naoroji, Findlay shilar, William Digby, R.C. Desai Rao etc.

Infant mortality rate is death rate of children below the age of one year.

Life expectancy means average life of a person.

On the eve of independence, barely 9.0 percent of the working population in India was engaged in manufacturing industries etc. It suffered a systematic destruction during the British rule. It was largely due to discriminatery policy of the government.

On the eve of independence, the tertiary sector was in its infant stage. Only 17.2 percent of the working population in India was engaged in tertiary sector.

Two fold motive behind systematic de-industrialisation effected by British was as follows:

1. To make India exporter of raw material.

2. To turn India into major consumer of finished goods.

India achieved independence on 15th August 1947.

The sole purpose of the British colonial rule in India was to reduce it into a feeder economy for Great Britain's own rapidly expanding industrial base.

The agriculture was the main source of income and livelihood for most of the people.

The main interest of the Zamindars was only to collect rent regardless of the economic condition of the cultivators causing immence misery and social tension.

The stagnation of the agricultural sector was caused mainly because of the various systems of land settlement that were introduced by the colonial government.

Dadabhai Naoroji, William Digby, Findlay Shirras, VKRV Rao and R.C. Desai estimated the National Income and per capita income during the colonial period.

A sizeable portion of the undivided country's highly irrigated and fertile land went to Pakistan.

The intention was to reduce India to the status of a mere exporter of important raw materials for the upcoming modern industries in Britain and to turn India into a market for the finished products.

Cotton and jute mills were set up in the Eastern part of the country which were dominated by the foreigners and textile industry in Maharashtra and Gujarat.

Steel, sugar, cement, paper industries were set up in India after the Second World War.

The first Iron and Steel Company and Tata Iron and Steel Company were established in Jamshedpur. The plant began production in 1912.

Capital goods industries means industries which can produce machine tools used for producing articles for current consumption.

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.

For all practical purposes, Britain maintained a monopolistic control over India's exports and imports. As a result, more than half of India's foreign trade was restricted to Britain.

Throughout the colonial period, there was the generation of a large export surplus.

1921 is considered as the defining year before 1921, India was in the first stage of demographic transition. The second stage of transition started after 1921.

Poverty, malnutrition and poor health facilities were the main causes for slow growth rate of population.

All activities connected with procuring, gathering or producing things from materials provided by nature are called primary occupations.

In a primary sector, occupations like gathering, hunting, fishing, grazing or rearing of animals, agriculture, lumbering, mining etc. are included.

The sector of the economy engaged in the manufacturing, processing, construction, electricity, gas and water supply are known as secondary or manufacturing sector.

The real motive behind the development of roads, railways, ports, water transports, posts and telegraphs etc. was not to provide basic amenities to the people but to serve various colonial interests.

The roads that were built primarily served the interests of mobilising the army within India and drawing out raw materials from the countryside to the nearest railway station or the port.

The practice of acquiring colonies hy conquest or other means and making them dependent was one of the ways to extend power, control or rule by a country over the political and economic life of areas outside its borders.

Invisible items are services like tourism, transports by shipping or by airways, and financial services such as insurance and banking. They also include gifts and interest, profits and dividends.

A tax or duty on imports which can be levied either on physical units, e.g. per tonne or on value. Tariff may be imposed for a variety of reasons including to raise government revenue, to protect domestic industry or low wage imports, to boost domestic employment or to ease a deficit on the balance of payment.

In this stage, birth rate and death rate are high and there is very slow population growth. The death rate is high because of lack of knowledge of disease prevention and cure and food shortages.

The village community was self-sufficient, had fairly developed system of handicrafts, trade relationship with outside world, developed indigenous banking and a favourable balance of trade.

The Britishers adopted different forms of exploitation, such as malpractices in trade, profitable import of British capital and enterprise, economic drain, employment of British nationals as administrators, stores purchase policy, manipulation of exchange rates, preferential tariffs favourable to Britain and exploiting India's resources for war. All these activities reduced India to a supplier of raw materials to British industries and the market for British goods.

With the British acquiring territorial rights in different parts of India, administration of these territories was formulated on the basis of survey of law. It was decided in the intersects of government interms of revenues to be collected from each parcel of land in possession of either ' 'rayot' or a 'mahal' or 'a Zamindar'. Decision in each of these cases was meant for the rights of the latter over lavel for the purposes of either ownership of land on rights to cultivation. This system is known as land/ revenue settlement.

Poverty, malnutrition and poor health.

The agriculture sector accounted for the largest share of workforce during the colonial period and its share was 70-75 percent.

The introduction of railways in India is considered as the most important contribution of the Britishers.

Railways were introduced in 1850.

In 1881.

After every ten years.

In 1921, India was in the first stage of demographic transition.

After 1921.

The various social development indicators are literacy level, public health facilities, life expectapcy, low infant mortality-rate.

The railways affected the structure of the Indian economy in two important ways. Firstly, it enabled people to undertake long distance travel and thereby break geographically and cultural barriers. Secondly, it fostered commercialisation of Indian agriculture.

Tata Airlines was established in 1932 in India.

The three land settlements formulated in India during the colonial period were (i) Zamindari system, (ii) Ryotwari system and (iii) Mahalwari system.

Muslin is a type of cotton textile which had its origin in Bengal particularly places in and around Dhaka (now the capital city of Bangladesh).

The finest variety of muslin was called malmal.

Per capita income is the avarage national Income. It is calculated by dividing national income by population.

Per Capita Income =

Malmal shahi or Malmal khas implies that it is worn by or fit for the royalty.

Rao's estimates of the national income and per capita income during the colonial period were considered very significant.

India's growth of aggregate real output during the first of the 20th century was less than two percent.

85% of India's population lived mostly in villages and derived livelihood directly or indirectly from agriculture.

Collecting rent from the cultivators by the Zamindars regardless of their economic condition caused immense misery and social tension among the cultivators.

One of the terms of the revenue settlement was depositing fixed sums of revenue failling which the Zamindars were to use their right's.

Modern industry began to take root in India during the second half of the 19th century.

Cotton industries were located in the western part of the country namely Maharashtra and Gujarat. Indians dominated these textiles.

Jute mills were mainly concentrated in Bengal. They were dominated by the foreigners.

TISCO was incorporated in 1907.

These are two effects as under:

1. Decline of the indigenous handicrafts created the unemployment in India.

2. It created a new demand in the Indian consumers' market which was now deprived of the supply of the local made goods. This demand was profitably met by the increasing import of cheap manufactured goods from Britain.

1. Agriculture was subsistance occupation and way of living.

2. Farmers concentrated basically on food crops.

The chief industry was the textile handicraft and its more important centres was Dhaka (now in Bangladesh), Lucknow, Ahmedabad, Nagpur and Madurai.

Indian Textiles, handicrafts, embroideries, silk fabrics, metalwares and precious stones were exported from India.

It began on 31st Dec. 1600, when the British East India Company was granted the monopoly of eastern trade by the British Government.

Per capita will increase when the following condition is satisfied.

RY > RP

RY stands for the rate of growth of national income and RP stands for the growth of population.

The year 1921 is the year of Great Divide.

Protection means protecting the local industries by the government against the foreign competiton.

Discrimination protection implies that different rates of import duties are levied on imports of different goods. Those domestic industries benefits more on whose products higher import duties are levied.

Agro-industires are those industries which make use of agricultural products as raw materials like sugar, jute, rubber, cotton, coffee, etc.

Market economy is that economic system in which all goods and services are sold in the market.

1. Introduction of railways.

2. Political unification of the country.

The railways were introduced in India by the Britishers to expliot India's resources and to rush army and other forces to check unrest and opposition or revolution to the British rules.

Population growth in pre-independence India was low due to poverty, mal-nutrition and lack of medical facilities.

Jute mills situated in Bengal were dominated by the foreigners.

Britain had monopoly to control on India's foreign trade.

It was less than two percent.

Two fold objective : 1. To get raw materials from India at cheap rate and thus to reduce India to a mere exporter of raw materials to the British industries.

2. To sell British manufactured goods in Indian market at high prices.

1. Fall of Indian handicrafts led to mass-employment.

2. Indian market was deprived of local products.

After the Second World War.

Capital goods industry means industries which can produce machine, tools etc. which are, in turn, used for producing articles for current consumption.

Operation of public sector was limited. It was confined to railways, power generation, communication etc.

1. Railways.

2. Power Generation.

3. Communication,

4. Ports etc.

Suez Canal.

In India roads were built by the British Government.

1. To mobilise the army within India.

2. To draw out raw material from countryside to the nearest railway station.

3. To have control over administration.

At the time of independence, there were cotton and jute textile mills in India. The cotton textile mills were located in the western parts of India namely Maharashtra and Gujarat, while the jute mills were mainly concentrated in Bengal. The iron and steel industry began coming up in the beginning of 20th century. There were few other industries like sugar, cement, paper etc. at the time of independence.

Before independence India's industries were very famous throughout the world. Under the colonial rule, the country's world famous handicraft industries declined. The primary motive of the colonial government behind the policy of systematically de-industrialising India was two-fold:

(i) The intention was first to reduce India to the status of a mere exporter of important raw materials for the industries in Britain.

(ii) To turn India into a market of finished products of those industries which were established in Britain.

At the time of independence, there were a few industries in India. The systematic de-industrialisation created unemployment in India.

During the British rule, country's world famous handicraft industries declined. These handicrafts were very famous throughout the world. These traditional handicrafts got setback during the colonial rule. The Britishers wanted to make India a mere exporter of important raw materials for the upcoming modern industries in Britain. They wanted to turn India into a sprawling market for the finished products of those same industries to ensure their continued expansion to the maximum advantage of their native home country.

Before independence, India had extensive trade relations with other countries of Asia and Europe. India's exports were cotton textiles, raw silk and silk fabrics, indigo, rice, wheat, sugar, paper and spices, precious stones, lac, mica, opium and drugs. Imports consisted of pearls, wool, dates, dry fruits, glass, Ivory, steel, copper, lead, tin, horses, paper, perfumes etc?. The cotton textile of India enjoyed a worldwide reputation and the demand for cotton textiles was all over the world.

India exported more than it imported. It had a favourable balance of trade. Large quantities of gold and silver flowed into India. India enjoyed a very important and unique position in world trade.

Main causes of India's agricultural stagnation:

1. Land tenure systems : The stagnation in the agricultural sector was caused mainly because of the various systems of land-settlement that were introduced by the colonial government. Particularly under the Zamindari system, the profit accruing out of the agriculture sector went to Zamindars instead of the cultivators. The Zamindars did nothing to improve the condition of agriculture. Their main interest was only of collect rent regardless of the economic conditions of the cultivators. This caused immense misery and social tension among the latter. Under Zamindari system, intermediaries (Zamindari) benefitted at the cost of both actual cultivator and the state.

2. Low level of technology etc. : Low level of technology, lack of irrigation facilities and negligible use of fertilizers etc. lowered down the productivity of land.

3. Commercialisation of agriculture : Commercialisation of agriculture means producing crops for sale in the market rather than for self consumption. Farmers were forced to cultivate commercial crops like indigo which was required by the textile industry in Britain for dyeing of the textile. It led to fall in the production of food-crops leading to frequence occurrence of famine. Indian agriculture was transferred into a raw material exporting sector for England.

4. Partition of country : Partition of the country in 1947 adversely affected India's agricultural production. The rich food production areas of west Punjab and Sindh went to Pakistan. It created scarcity of food in India. The jute production area went to East Pakistan (now Bangladesh). The just industry was most adversely affected due to partition of the country.

India's agricultural production received a setback due to the country's partition at the time of independence. A sizeable portion of the undivided country's highly irrigated and fertile land went to Pakistan, which impacted inversely upon agricultural production. The whole of the jute-producing area became part of the East Pakistan (Now Bangladesh). India's jute industry suffered heavily for lack of raw materials.

Features of India's pre-independence occupational structure : Following were the features of India's pre-independence occupational structure:

1. Pre-dominance of agricultural sector: During pre-independence period, agriculture was pre-dominant. About 85% population of the country lived mostly in villages and derived their livelihood directly or indirectly from agriculture.

2. Regional variation : There was growing regional variation. The cotton textile mills, mainly dominated by Indians were located in the western parts of the country namely Maharashtra and Gujarat. The jute mills dominated by foreigners were mainly concentrated in Bengal.

3. Unbalanced growth : There was unbalanced growth in the economy. All the sectors of the economy were not growing equally. During the second half of the 19th century, modern industry began to take root in India, but its progress ramained very slow. There was hardly any capital goods industry to help and promote further industrialisation in India. The growth rate of the new industrial sector and its contribution to Gross Domestic Product remained very small. The growth of service sector was negligible.

There were small production units, in which machines and equipments were of old style. These production units produced goods in small quantities.

There was simple division of labour. Division of work was restricted on the basis of caste. There were very limited chances of discoveries, inventions and innovations. This simple and cheap technique deprived us of the industrial developments.

India had extensive trade relations with countries of Asia and Europe. The principal exports were cotton textiles, silk and silk fabrics, indigo, rice, wheat, sugar, paper, spices, stones, mica, opium and drugs. The main imports were pearls, wood, dates, dryfruits, steel, copper, lead, tin, horses, perfumes etc.

The disappearance of the Mughal Courts led to a decline in the demand for handicrafts, lack of development of means of transport and communication limited the extent of the market.
India exported more than what it imported from other countries of the world. It had a favourable balance of payment position. Large quantities of gold and silver flowed into the country.

When India became free in 1947, the impact of the two century long British colonial rule was already showing on all aspects of Indian economy. The agriculture sector was facing the problems of low productivity and surplus labour force. The industrial sector was facing the problems of modernisation and diversification. Foreign trade was oriented to feed industrial revolution in Britain. The railways n&eded upgradation, expansion and orientation. Poverty and unemployment were the main problems before the country. There were many social and economic problems before the country.

The Britishers followed the policy of encouraging the cultivation of cash crops like cotton, jute, indigo, sugarcane, tabacco, oilseeds etc. The prupose of cash crop cultivation was to produce it largely for sale. The traditional village communities used to produce for self-consumption. But now it was changed. The basis of commercial agriculture was production for the market. Now the food grains were produced for sale in the market. The commercial agriculture was found in tea, coffee and rubber plantations, where the entire production was for sale in the market. The consumer goods industries were also encouraged to produce for the market.

The drain of Indian wealth during colonial period : The drain of Indian wealth during colonial period means using export surplus as payments for expense incurred by an office set up by the colonial government in Britain, expenses on war fought by the British Government and the import of invisible items.

Quantitative appraisal of India's demographic profile during the colonial period : Following were the quantitative appraisal of India demographic profile during the colonial period:

1. Birth Rate : Birth rate was very high. It was about 48 per thousand.

2. Death Rate : It was also very high. It was about 40 per thousand.

3. Infant mortality rate: Imfant mortality rate refers to death rate of children below the age of one year. It was about 218 per thousand.

4. Life expectancy: It was very low. It was 32 years.

5. Literacy rate : Literacy rate was about 17%. It means that 83 percent of population was illiterate.

6. Unevenness in population growth : During pre-independence period, there was unevenness in the population growth. Upto 1921, there was slow growth of population. After 1921, there was high population growth.

India's most crucial economic challenges at the time of independence were : 1. Accelerating the pace of industrialisation and through its modernisation, diversification and capacity building. 2. Development of infrastructure facilities. 3. Eradication of poverty and unemployment. 4. Improving the public health facilities. 5. Developing agriculture based industries. 6. Becoming self-reliant.

Suez Canal : It is an artificial waterway running from north to south across the Isthmus of Suez in north-eastern Egypt. It connects Port said on the Mediterranean sea with Gulf of Suez-an arm of the Red sea. Strategically and economically it is one of the most important waterways in the world. Its opening in 1869 reduoed the cost of transportation and made access to the Indian market easier.

Features : 1. India was the exporter of primary products such as raw silk, cotton, wool, sugar, indigo, jute, etc.

2. It was the importer of finished consumer goods like cotton, silk and woollen clothes and capital goods, light machinery produced in the factories of Britain.

3. More than half of India's foreign trade was restricted to Britain while rest was allowed with a few other countries.

4. There was the generation of a large export surplus.

The French traveller Bernier described 17th century Bengal in the following way:

'The knowledge I have acquired of Bengal in two visits inclines me to believe that it is richer than Egypt. It exports, in abundance, cotton and silk, rice, sugar and butter. It produces amply for its own consumption- wheat, vegetables, grains, foods, alcohol and grains fowls ducks and geese. It has immense herds of pigs and fish, sheep and goats. Fish of every kind it has in profusion.

Objective to be achieved through the policies of infrastructure development: Under the colonial regime, basic infrastructure such as railways, ports, water transport, posts and telegraph develop. The main objectives of development of these structures were as follows: 1. Mobilising the army : Roads were built for mobilising the army within India.

2. Drawing out raw materials: The roads were built for drawing out raw materials from the countryside to the nearest railway station or the port to send these to far away England.

3. Earning profits : For earning profits through foreign trade, railways were linked with major ports and marketing centres.

4. Effective control on administration : Important administrative and military centres were linked through railway lines for having effective control and administration over the vast Indian territory.

The contribution of the British rule can be studied as follows:

1. Development of means of transport, especially railways and communciation.

2. Political and economic unification of the country.

3. Evolution of banking and monetary system.

4. Introduction of the modern techniques of production and management.

5. Evolution of new social order based on progressive ideas.

6. Stability, peace and order.

7. Emergence of market economy and capital enterprise.

8. Introduction of new system of education.

9. Establishment of civil laws and courts.

The first official census operation was undertaken in 1881 under the British rule in India.

Before 1921, India was in the first stage of demographic transition. The second stage of transition began after 1921.

Main features :

1. Neither the total population of India nor the rate of population growth was very high.

2. During the period 1911-21, the population actually declined due to outbreak of the influenza epidemic. The compound annual growth rate was 0.9% during this period.

3. The population has been constantly increasing since 1921. The main reason for this increase in growth rate was a sharp decline in death rate.

4. The birth rate was 49.2 percent in 1901-1910 but it declined to 39.9% in 1941-1950.

5. The growth rate was 6.6 percent in 1901-1910. It increased to 14.0% in 1941-1950.

Poverty, malnutrition and poor health facilities were responsible for slow population growth during the British rule.

The important features of Indian agriculture during the British rule in India were as follows:

(i) Agriculture was the main source of livelihood in India. Most of the Indian people were engaged in agricultural activities. There was extensive cultivation. The surplus over the family requirements was exchanged with other commodities of requirements.

(ii) There was the absence of organised market for agricultural product. Production for the market was not the idea behind farming.

(iii) Methods and techniques of production in agriculture were old and backward. It involved more physical work of men and animals.

(iv) The people were economically sound, simple, self-sufficient and dependent on cultivation.

Following were some of the short falls of industrial policy pursued by the British colonial administration:

1. De-industrialisation : India could not develop a sound industrial base under the colonial rule. Even the country's world famous handicraft industries declined. No corresponding modern industrial base was allowed to come up to take pride place so long enjoyed by the former.

2. Low grade modern industrial structure : The progress of modern industry remained very slow. British rulers neither permitted modernisation of industries nor they encouraged the growth of heavy industries in India.

3. Lacking of capital goods industries : Capital goods were lacking. There was hardly any capital goods industry to help or promote in further industrialisation in India. There were a few manufacturing units here and there, but they were no substitute to the near wholesale displacement of the country's traditional handicraft industries.

4. Limited operation of the public sector: Another significant drawback of the new industrial sector was the very limited area of operation of the public sector. This sector remained confined only to the railways, power generation, communication, ports and some other departmental undertakings.

(i) In mid-eighteenth century, agriculture was the main source of livelihood. Land was in abundance and the population was limited. So most of the people were engaged in agriculture. The surplus over the family requirements was exchanged with other commodities of requirements.

(ii) The farmers mainly produced food grains for their survival. The production of cash crops such as Jute, Cotton, Sugarcane etc. was limited.

(iii) Production for the market was not the idea behind farming.

(iv) Methods and techniques of production were old and backward. It involved more physical work for people and animals.

(v) Agricultural society was predominantly feudal in character. The cultivators used to pay land revenue to the rulers. There was heavy rate of land revenuue. Very little was left with the peasants after their hard labour.

Before the arrival of Britishers in India, we had prosperous small, cottage and handicraft industries. The industries may be classified as rural and urban industries.

Rural Industries : Most of the rural industries were based on agriculture. For example, a certain amount of coarse weaving, grinding of grain, rice milling and sugarcane pressing, carpentary, blacksmithy, pottery etc. were also prominent in the village.

Urban Industries : The Indian handicraft industries were famous all over the world. Cotton textiles, muslin cloth, silk fabrics, silk embroideries, woollen fabrics and shawls were also famous. Besides textile industry, some of the prominent industries, handicrafts industries which were developed in these days were jewellery, gold and silver, thread, metal work, artware of wood, copper, brass and bronze, ivory, marble, precious stones, pearls, sandlewood work, leather work, ship-building etc:

Following are the main weapons of colonial exploitation:

1. Enforcing farmers to cultivate cash crops instead of food grains.

2. Torturing farmers to sell cash crops to English merchant for exports to Britain.

3. Systematic elimination of Indian industries.

4. Free trade policy in which import duty was not paid on imports from England.

5. Encouragement and subsidy for exporting raw materials to Britain and manufactured goods from them.

State of agriculture, industry, etc. by the time India won the independence:

1. Agriculture : The agriculture sector suffered from low productivity and stagnation. It was saddled with surplus labour. It contributed more than 50% of the national product.

2. Industry : India was in a neglected state. Only a few organised large scale industries existed in 1947. The industrial sector was dominated by small scale industries. The industrial sector was dying for modernisation, diversification capacity building and increased public investment.

3. Foreign Trade : On the eve of independence in 1947, Great Britain accounted for a large share of India's foreign trade. Foreign trade was oriented to feed the industrial revolution in Britain.

4. Poverty : Indian economy was shattered economy on the eve of independence. Poverty was all prevailing and wide-spread. Per capita income was very low.

5. Unemployment: There was prevalence of unemployment which required welfare orientation of public economic policy.

6. Infrastructure : Infrastructure refers to those structural elements of an economy which facilitate the flow of goods and services between buyers and sellers. It is of two types : (i) economic structure and (ii) social infrastructure. The state of economic infrastructure in India at the eve of independenc can be studied with reference to roads, railways, etc.

7. Roads : The British Government built roads for mobilsing the army within India and allowing out raw-materials from the country side to the nearest railway station or the part to send them to for away England or other lucrative, foreign destinations. There always remained an acute shortage of all weather roads to reach out to the rural areas during the rainy season. People mostly living in rural areas suffered grievously during natural calamities and famines.

8. Railways : The Britishers introduced the railways in India in 1850. Railways made a great contribution to the growth process.

Social Infrastructure : We will study the case of social infrastructure in India with reference to education and health facilities.

(i) Education : In 1951, the All India percentage of literacy in India was about 16. Out of this the female literacy level was about seven percent.

(ii) Health facilities : At the eve of independence of India, health facilities were very poor and inadequate. Public health facilities were either unavailable to large chunks of population or when available were highly inadequate. Consequently water and air-borne diseases were rampant and took a huge toll of life. The mortality-rate was very high and infant mortality rate was quite alarming—about 218 per thousand life expectancy was also very low-32 years.

Positive aspects of British Rule:

There is no doubt that during the British rule India suffered a lot. There was the large scale open exploitation of India's resources. The exploitation was on such a large that it came to be known as drain of the national wealth. The British rule was responsible for the wide-spread poverty in India. The per capita income was very low. Agriculture sector became stagnant. The agricultural productivity became very low. Systematic policies pursued by the British-India Government led to the collapse of India's world famous handicraft industries without contributing to any significant manner to its replacement by a modern industrial base. Inspite of this, there are many positive aspects of British rule. Some of them have been discussed below:

1. Introduction of Railway : The Britishers introduced railway system in India. The railway system became the fore runner of the industrial development in India. The railways affected the structure of the Indian economy. It enabled people to undertake long distance travel thereby break geographical and cultural barriers. It expanded the volume of India's export trade.

2. Development of the most modern and efficient system of communication : The Britishers developed the most modern and efficient communication. The first telegraph line was operated in 1812. Adequate improvement were made in the postal services.

3. Political unification of the country : The introduction of the railways and western education by the British Government brought political unification of India.

4. Introuduction of anglicised education : The British Government introduced anglicised education which opened the avenues to the great stream of English democratic and popular inspiration. It laid the foundation of Indian nationalism.

5. Establishment of Courts of Justice : The Britishers framed a system of laws and established courts of justice.

6. Peace : The Britishers conferred peace on the people of India.

Various forms of colonial exploitation of the Indian economy during the British Raj:

(i) Colonial exploitation of agriculture sector : Agriculture was exploited through Zamindari system of land revenue. Zamindars were declared as owners of soil. They were to pay a fixed sum to the government hy way of land-revenue but were free to extract as much as they wished from tillers of the soil.

(ii) Colonial exploitation of industrial sector: Handicrafts dominated in Indian economy before British rule. They were systematically destroyed by allowing tariff-free import of machine made goods from Britain.

(iii) Colonial exploitation of international trade : India's international trade was exploited through discriminatory tariff policy. Duty free export of Indian raw material and duty free import of British goods were encouraged for the benefit of British rule.

Causes of decay of handicrafts : Following were the causes of decay of handicrafts:

1. Discriminatory Tariff Policy : Through discriminatory tariff policy, the British Government successfully destroyed the demand of handicraft goods. Under discriminatory tariff policy, there was no duty on the export of goods from India and import of British finished goods to India. But heavy duty was placed on the export of handicrafts. So Indian handicrafts stalled looking both domestic and export market. It led to the decay of Indian handicrafts.

2. Disappearance of princely states : Indian handicrafts were enjoying protection from nawabs, kings and emperors. With the British rule, nawab, kings etc. disappeared. With their disappearance there was no one to protect these handicrafts. So Indian handicrafts declined.

3. Competition from machine-made products : Machine-made products are cheap and durable. Indian handicraft products could not compete them. So they decayed.

4. New pattern of demand : A new class of Indian society was affected by the culture of Britain. It adopted western style of living. So demand for British goods increased and demand for handicraft goods decreased.

5. Introduction of Railway in India : Introduction of Railways in India became responsible for the decay of handicrafts. It increased the domestic market for the British goods in India. Consequently the market for Indian goods began to contract. It led to the fall of handicraft goods.

(i) Wheat, (ii) Rice, (iii) Jawar, (iv)Bajara.

(i) Cotton (ii) Jute and (iii) Sugarcane.

Because indigo was required by the textile industry in Britain for dyeing / bleaching of the textile.

(i) Low level of productivity .

(ii) High degree of vulnerability.

(iii) A wedge between owners of the soil and tillers.

Indian economy under the British rule was subjected to colonial exploitation by adopting following ways:
(i) Colonial exploitation of agriculture sector.

(ii) Colonial exploitation of industrial sector.

(iii) Colonial exploitation of international trade.

Agriculture sector was exploited through zamindari system and forced commercialisation of agriculture.

Industrial sector was exploited systematically by allowing tariff free import of machine made goods from Britain.

(i) Incuring huge administrative expenses by the British government to manage their colonial rule in India.

(ii) Incuring huge expenditure by the British government to fight wars in pursuit of their policy of imperialism.

Surplus generated on account of foreign trade during the British rule was used only to enhance colonial pursuits of the British government.

Railways applied a check on the occurrence of famine during colonial period by rushing food supplies from surplus areas to drought hit areas.

B.

Indian economy at the time of independence was an industrial economy.

D.

1850

B.

32 years

B.

1869

B.

218 per thousand

C.

16%

B.

1881

D.

Both mining and agriculture

A.

It is a natural water way running from north to south.

C.

Meeting administrative expenses of the British government in India.

Focus of the economic policies persuaded by the colonial government in India : The focus of the economic policies persuaded by the colonial government was the protection and promotion of economic interests of her home country. These policies intended to transfer India into supplier of raw materials and consumer of finished industrial products from India Impacts of policies : The impacts of these policies were as under:
1. India became supplier of raw materials and consumer of finished goods produced in Britain.

2. The agriculture sector continued to experience stagnation and deterioration during British rule.

3. The vast majority of people in India led a miserable life.

4. Many of the cottage and small scale industries declined under the British rule.

5. More than half of India's foreign trade was restricted to Britain.

6. The country's growth of aggregate real output during the first half of the 20th century was less than this percent.

7. There was hardly any capital goods industry to promote further industrialisation in India.

8. The contribution of new industrial sector to the Gross Domestic Product remained very small.

9. The industrial sector cried for moaernisation and diversification.

10. There was rampant poverty and unemployment.