Origin of British Rule

The British rule over India changed the

course of history in India. The foundation
of British Empire in India was laid by
Battle of Plassey, fought in 1757.

Basic Purpose of British Rule / Aim of Britishers

The main purpose of the British Rule in India
was to use Indian economy as feeder economy
for the development of British. British colonial
rule tempered the Indian economy very badly.
They exploited India’s natural as well as human
resources for the glory of their own country.
 Prosperous Economy
India was an independent, self-reliant
and prosperous economy.

Agrarian Economy
Agriculture was the main source of
Before the advent of British rule, livelihood for most people and it
engaged about two-third of the total
Indian economy was characterized population.
with the following features :
Well-known Handicraft Industries
However, during the British rule, the India was also well known for its
handicraft industries in the fields of
economic policies pursued by the Colonial
cotton and silk textiles, metal and
Government (British Government) in India, precious stone works, etc. handicrafts
were concerned more with the protection products enjoyed a worldwide market
and promotion of their own economic due to its reputation of fine quality of
interests, than with the development of the material used and the high standards of
Indian economy. craftsmanship.
Agricultural Sector
During the pre-British period, the condition of
Indian agriculture was not at all satisfactory.
 India's economy under the British colonial rule
was overwhelmingly rural and agricultural in
character.
 Nearly 85% of the country's population lived
mostly in villages and derived livelihood,
directly or indirectly from agriculture.
 Even with this large proportion of population
engaged in agriculture, the country was not
self-sufficient in food and raw materials for
industry.
Main Reasons for Stagnation in Agricultural Sector

Land Settlement System

Commercialization of Agriculture

Low Level of Productivity

Scarcity of Investment
 Land Settlement System Commercialization of Agriculture
The most important reason for stagnation in Commercialization of agriculture means production of
agricultural sector was the introduction of crops for sale in the market rather than for self
'Zamindari System' by the colonial government. consumption.
 Under this system, profits accruing out of agricultural  During the British rule, farmers were given higher price
for producing cash crops, like cotton or jute. However,
sector went to the Zamindars in the form of ‘Lagaan'.
this did not improve the economic condition of farmers
 The main interest of the Zamindars was only to because instead of producing food crops, they were
collect Lagaan regardless of the economic condition producing cash crops, which were to be ultimately used
of the cultivator. by the British Industries.
 Thus, British rule promoted shifting of crops from food
Low Level of Productivity crops to cash crops.

Low levels of technology, lack of irrigation facilities and

negligible use of fertilizers resulted in low level of
Scarcity of Investment
productivity. India's agriculture was facing scarcity of investment
 The cultivator had neither the means nor any incentive to in terracing, flood-control and drainage. Although
invest in agriculture. some farmers changed their cropping pattern from
 The Zamindars had no roots in the villages, while the British food crops to commercial crops, a large section of
rule spent little on agricultural, technical or mass education. tenants, small farmers and sharecroppers* neither
 All this made it difficult to introduce modern technology, had resources and technology nor had incentive to
which caused a perpetually low level of productivity. invest in agriculture.
Industrial Sector
Although agriculture had dominated
the Indian economy during the pre-
British period, but some Indian
industries, producing certain special
products, enjoyed worldwide
reputation. India was particularly well
known for its handicraft industries.
Like agriculture, India could not
develop a sound industrial base
under the British rule.
 Industrial Sector During the British Rule

De-
Adverse Effects of
industrialization – Low Contribution
Decline of Lack of Capital Limited Role of
Decline of to Gross Domestic
Handicraft Goods Industries the Public Sector
Handicraft Product (GDP)
Industry
Industry
 British Government systematically 1. destroyed Indian handicraft industries and
De- no modern industrial base was allowed to come up.
industrialization The primary motive of British rule behind the de-industrialization was two-fold :
 To get raw materials from India at cheap rates to be used by upcoming
– Decline of modern industries in Britain;
Handicraft  To sell finished products of British industries in Indian market at higher prices.
Industry The two-fold policy of British rule was enforced to ensure the maximum
advantage of their home country.

Decline of handicraft industries adversely affected the Indian economy in

Adverse the following ways :
a) High Level of Unemployment : The decline of Indian handicrafts resulted in
Effects of unemployment on a mass scale. The displaced artisans were forced to take up
agriculture for their livelihood. This increased the burden of population on
Decline of villages and over-crowding in agriculture.
b) Import of Finished Goods : The Indian made goods could not withstand the
Handicraft foreign competition of machine made cheap goods. It resulted in the new
demand in Indian consumer market, which was not fulfilled through locally
Industry made goods. Rather, this demand was profitably met by increasing imports of
manufactured goods from Britain.
 Capital goods industry refer to those industries which can produce machine
Lack of tools, which are, in turn, used for producing articles for current
consumption.
Capital  During the British rule, there was hardly any capital goods industry to promote
Goods further industrialization in India.
 British rulers did not pay any attention for their promotion as they always
Industries wanted Indians to be dependent on Britain, for the supply of capital goods and
heavy equipments.

Low The growth rate of the new industrial sector

Contribution to
Gross Domestic
and its contribution to the GDP or Gross
Product (GDP) Value Added (GVA) remained very small.

Limited Role Due to lack of public investment, India could not develop a sound
industrial base under the colonial rule. The Public sector remained
of the Public confined only to the railways, power generation, communications,
Sector ports and some other departmental undertakings.
India has been an important trading nation since
ancient times. However, the restrictive policies
adopted by the colonial government adversely
affected the structure, composition and volume
of India’s foreign trade.

Foreign Trade
1) Exporter of Primary Products and Importer of Finished Goods : India became an
exporter of primary products such as raw silk, cotton, wool, sugar, indigo, jute, etc. and
an importer of finished consumer goods like cotton, silk and woollen clothes and capital
goods like light machinery, produced in the British Industries.
2) Monopoly Control of British Rule : British Government maintained a monopoly control
over India’s exports and imports.
 More than ½ of India’s foreign trade was restricted to Britain while the rest was
allowed with few other countries like China, Ceylon (Sri Lanka) and Persia (Iran).
 The opening of the Suez Canal in 1869 served as a direct route for the ships operating
between India and Britain.
3) Drain of Indian Wealth during British Rule : Under the British rule, India became an
exporter of primary products (raw material) and an importer of finished goods. There
was huge export surplus due to excess exports. However, export surplus was used :
 To make payments for expenses incurred by an office set up by the colonial
government in Britain.
 To meet expenses on war fought by the British Government.
 To import invisible items.
Demographic 1st Official Census : The first official census was
conducted in the year 1881. though suffering
conditions during from certain limitations, the census revealed
the British rule unevenness in India’s population growth. From
1881 onwards, census operations were carried
exhibited all out every ten years.
features of a 1921 : Year of the great divide : Before 1921,
stagnant and India was in the first stage of a demographic
transition. The second stage began after 1921.
backward Indian So, the year 1921 is described as the ‘Year of the
Economy : Great Divide’.
 The Demographic Condition during the
Colonial Rule is described in the following
points :
High Birth Rate & Death Rate High Infant Mortality Rate

Demographic
Condition
Extremely Low Literacy Rate Low Life Expectancy
during
Colonial Rule

Poor Health Facilities Widespread Poverty

 High Birth Rate and Death Extremely Low Literacy Poor Health Facilitates :
Rate : Rate : Public health facilities were
Birth rate refers to the number of Literacy rate refers to total
children born per thousand in a either unavailable to large mass
number of literate persons,
year. Death rate refers to the of population or, when
expressed as a percentage of the
number of people dying per available, were highly
total population. The overall
thousand persons in a year. Both inadequate. As a result, water
literacy level was less than 16 per
the birth rate and death rate cent. Out of this, the female and air-borne diseases were
were very high at nearly 48 and literacy level was at a negligible widespread and took a huge toll
40 per thousand respectively. low of about 7 per cent. on life.

High Infant Mortality Rate : Low Life Expectancy : Widespread Poverty :

Infant mortality rate refers to
Life expectancy refers to There was no reliable data about
number of infants dying before
the extent of poverty. But, there is
reaching one year of age per 1,000 the average number of no doubt that extensive poverty
live births in a year. the infant
mortality rate was quite alarming –
years for which people are prevailed in India during the
about 218 per thousand, in contrast expected to live. Life colonial period. The overall
to the infant mortality rate of 33 expectancy was also very standard of living of common
per thousand in 2017, 32 per people in India was very low and
thousand in 2018 and 27 (approx.)
low - 32 years, in contrast there was widespread poverty in
per thousand in 2022. to the present 69 years. the country.
Occupational Structure
Occupational structure Primary Sector
It includes production units exploiting natural
refers to distribution of resources like land, water, subsoil assets, etc.
working persons across For example, farming, fishing, mining.

primary, secondary Secondary Sector

It includes production units which are engaged in transforming
and tertiary (service) one good into another good. These units convert raw materials
into finished goods. For example, firms engaged in converting

sectors of the economy. sugarcane into sugar, construction companies, power generation,
etc. it is called secondary because it depends on primary sector for
raw materials.
So, all the production
units of an economy Tertiary Sector
It includes production units engaged in providing services.
are grouped into three For example, transport, education, finance, government
administration, etc. This sector finds third place Indian
broad sectors : Economy on the Eve of Independence because its growth
is primarily dependent on primary and secondary sectors
During the colonial period, the
occupational structure of India showed
little sign of change. The state of
occupational structure during the British
rule can be summarized as under :

1) Predominance of Primary Occupation : The agricultural sector accounted for the

largest share of workforce with 70-75%. The manufacturing and service sectors
accounted for 10%and 15-20% respectively.
2) Regional Variation : Another striking aspect was the growing regional variation.
 The states of Tamil Nadu, Andhra Pradesh, Kerala, Karnataka, Maharashtra and
West Bengal witnessed a decline in dependence of workforce on the agricultural
sector with a commensurate increase in the manufacturing and service sector.
 However, during the same time, there had been an increase in the share of
workforce in agriculture in states such as Orissa, Rajasthan and Punjab.
Infrastructure
Infrastructure refers to all such activities, services and
facilities, which are needed to provide different kinds
of services in an economy. It includes infrastructure
associated with means of transport, communication,
energy and banking (i.e. Economic Infrastructure)
and infrastructure associated with facilities of health,
education and housing (i.e. Social Infrastructure).The
infrastructure facilities during British rule were very
poor. Some efforts were made to develop basic
infrastructure like roads, railways, ports, water
transport, posts and telegraphs.
 The colonial administration could not accomplish much
Roads on construction of roads due to scarcity of funds.

The most important contribution of the British rule was to introduce railways in India in
1850. The railways affected the structure of the Indian economy in two important ways :

Railways  Railways enabled people to undertake long distance travel. It broke geographical and
cultural barriers and promoted national integration.
 It enhanced commercialization of Indian agriculture, which adversely affected the
comparative self-sufficiency of the village economies in India.

Air & Water British government took measures for developing water & air
Transport transport, however, their development was far from satisfactory.

Posts and telegraphs were the most popular means of communication.

 The introduction of the expensive system of the electric telegraph in India
Communication served the purpose of maintaining law and order.
 The postal services., despite serving a useful public purpose, remained all
through inadequate.
Reasons for Infrastructural Development
The basic objective of British Government to develop
infrastructure was not to provide basic amenities to the
people, but to serve their own colonial interest.

Roads Railways Electric Telegraph

The Roads were built for Railways were developed by
the Britishers mainly for three
The system of
mobilizing the army
within India and for reasons : Electric Telegraph
 To have effective control and
drawing out raw materials administration over the vast was introduced at
from the countryside to Indian territory;
the nearest railway  To earn profits through a high cost to
station or port and to send foreign trade by linking
railways with major ports;
serve the purpose
these to England or other
lucrative foreign
 To make profitable of maintaining
investment of British funds in
destinations. India. law and order.
The constant per capita income over a long period.

Increasing dependence of population on agriculture.

The Zamindari System.

Traditional methods of cultivation.

High-frequency of Famines.

Destruction of Indian Handicrafts.

Inadequate industrialization.
 Positive Contribution of British
Rule on the Indian Economy
Growth in Agricultural Sector : Although agricultural
productivity was very low during the British Rule, but in
absolute terms, there was growth in agricultural sector due to
expansion of aggregate area under cultivation.
Better Means of Transportation : Development of roads and railways
provided cheap and rapid transport system and opened up new
opportunities of economic and social growth.
Check on Famines : Roads and railways worked as a great check on the
occurrence and impact of famines as food supplies could be transported to the
affected areas in case of droughts
Shift to Monetary Economy : British rule helped Indian economy to shift from barter
system of exchange (exchange of goods for goods) to monetary system of exchange.

Effective Administrative Setup : The British Government had an efficient administration system,
which served as a ready reckoner for Indian politicians.
 State of Indian Economy on the Eve of Independence
Colonial Economy :
In India, colonial exploitation has a long history, spread over nearly 200 years. British rule resulted in
huge drain of wealth from India, in order to facilitate growing British industry with the supply of raw
materials from India. They also encouraged commercialization of India agriculture to transform Indian
economy into a British colony.

Semi-feudal Economy :
By the close of the British period, there were two aspects of the Indian economy.
Introduction of a Feudal System : The land settlement system gave birth to feudal relations
(landlord-tenant relations). The landlords used to charge very high rate of ‘Lagaan’ and were
very cruel to the cultivators.

Stagnant Economy :
A stagnant economy in one which is growing at a very low rate. On the eve of
Independence, Indian economy was a stagnant economy as country’s growth of
aggregate real output during the first half of 20th century was less than 2% and growth in
per capita output was only 0.5%.
Backward Economy :
At the end of British rule, Indian economy was backward and underdeveloped. The
Indian economy was backward and underdeveloped due to :
A. Low level of productivity.
B. Low per capita income.
C. Traditional methods of agriculture.
D. High birth and death rate.
E. Mass illiteracy.

Depleted (Depreciated Economy) :

At the time of independence, Indian economy was a ‘Depleted Economy’. Depleted
Economy refers to an economy, where no arrangements have been made to replace
the physical assets, depreciated due to excessive use.

Amputated Economy :
The British policy of 'divide and rule' always promoted discrimination
between various groups on the basis of religion, caste, language and
culture.