INDIAN ECONOMY ON THE EVE OF INDEPENDENCE
Very short answer questions:
1. What was IMR (Infant Mortality Rate) during British India?
It was 218 per 1000
2. Name some notable economists who estimated India’s per capita income during the colonial period.
The following economists estimated India’s per capita income during the colonial period:
1. Dadabhai Naoroji 2. R.C Desai 3. V.K.R.V. Rao 4. William Digby 5 . Findlay Shirras
3. Which industries were adversely affected during the partition of India?
The Textile and Jute industries
4. What is the export surplus?
The total amount of goods and services that a nation exports that is in excess of the commodities and services its
imports is known as export services.
5. When did the commercialization of agriculture begin in India?
The commercialization of agriculture begins in India during the British Rule
6. Where was the muslin type of cotton textile found in India?
The muslin type of cotton textile had its origin in Bengal, particularly, places in and around Dhaka (known as Dacca
before partition), now the capital city of Bangladesh.
7. What was the state of country’s real output during the first half of the twentieth century?
The country’s growth of aggregate real output was less than 2% during the first half of the twentieth century.
8. Define subsistence agriculture.
Subsistence agriculture refers to growing food for self-consumption and not for sale in the market.
9. Define capital goods.
Capital goods are those goods which are producer’s fixed assets and are used in the production of other goods and
services.
10. Name the countries with which India used to trade during British Rule.
More than 50 percent of India’s trade was confined to Britain. Other countries with which India used to trade were
China, Ceylon (Sri Lanka) and Persia (Iran).
11. Define occupational structure.
Occupational structure is the distribution of the population according to the occupations in different sectors of the
economy.
3/4/6 markers
Q1. What was the focus of economic policies pursued by the colonial govt. in India? What were the impacts of these
policies?
ANS. India was under British rule for almost two centuries before attaining Independence in 1947. The impacts of their
Policies are discussed below
(i) Low Level of Economic Development-During the Colonial rule Indian Economy experienced very low level
of economic development. The reason for this was that the British Government was more concerned with
the economic interests of their home country. British policies ruined small manufacturing industries as
these industries faced a stiff competition from the British machine made products and India was reduced
to a cheap raw material provider. This resulted in low growth of aggregate output which was less than two
per cent. And half percent growth rate of PCI
(ii) Agricultural Backwardness- Under the colonial rule, India was basically an agrarian economy with nearly
85% of its population employed in agriculture sector. Nevertheless, the growth of the agriculture sector
was very poor and productivity was low. This was due to of land settlement, particularly zamindari system.
Commercialization of agriculture not only increased the burden of high costs on the poor peasants but
also led India to face shortage of food grains. Indian agriculture remained backward and primitive due to
lack of Irrigation facilities, obsolete technology and low investment.
(iii) De-industrialization of Indian Economy -The status of industrial sector during the British rule was to make
India an exporter of raw materials and importer of finished goods from Britain leading to the downfall of
India's handicraft industry and the slow growth of modern industry due to lack of investment. The British
Government Imposed heavy tariffs on the export. British products imported to India were also free from
tariffs. The demand for the handicrafts products also fell in the domestic markets due to stiff competition
from the machine made textiles of Britain. There were no capital goods industries to promote
industrialisation in India. As a result, the growth of domestic industries and their contribution to the
economic output remained low.
(iv) Unfavourable Foreign Trade- The British Government used the trade policy to promote the interests of
their home country. India exported cheap raw materials to the British industries while manufactured
goods from Britain were imported for consumption in India. British industries were benefitted in both the
ways. There was a large export surplus generated from foreign trade, but it was not invested in the Indian
Economy, instead it was used in administrative and war purposes by Britain to spread thou colonial power.
Q2. What was the two fold motive behind the systematic de-industrialization effected by the British in pre-
independent period?
Ans.The following are the two-fold motive behind the systematic deindustrialization effected by the British
(i) Making India a Supplier of Raw Materials- The main motive of the British Government was to make India a mere
supplier of cheap raw materials to feed the own rapidly expanding industrial base.
(ii) Making India a Market for Finished Goods- Another important objective of the British Government in de-
industrializing Indian Economy was to use India as a large and growing market to sell the finished goods produced by
the British Industries so that their industries never faced a demand shortage and could keep flourishing.
Q3. The traditional handicrafts were ruined under British rule. Do you agree with this view? Give reasons in support
of your answer.
Ans. Yes, we agree with the above statement that the traditional handicrafts industries were ruined under the British
rule. The following are the reasons in favour of the statement.
(i) Discriminatory Tariff Policy- The British rule used India both as a source of cheap raw materials as well as
easy accessible market for their finished products. Thereby, they imposed heavy tariffs (export duties) on
India's export of handicraft products, while allowed free export of India's raw material to Britain and free
import of British finished products into India. This made India's exports costlier and its international demand
loll drastically leading to the collapse of handicraft industries.
(ii) Competition from Machine-made Britain Goods- The demand for the handicrafts products experienced a
downward trend in the domestic markets as well. This was due to stiff competition from the machine made
textiles from Britain. The goods produced mechanically in Britain using cheap raw material from India were
comparatively lower in price and of superior quality than the Indian handicraft goods. This narrowed the
market for Indian handicrafts industries.
(iii) Emergence of Western Lifestyle- The British rule in India popularized Western lifestyle in India. There was an
emergence of a new section of population (consisting mainly of zamindars) in India who liked the British
goods and also promoted their use to please the British Government. This section used to spend lavishly on
the British products that provided impetus for the development of British Industries al the cost of the
domestic Industries. Hence, gradually Indian handicrafts industries perished away.
Q4. What objectives did the British intend to achieve through their policies of infrastructure development in India?
ANS .It is true that under the British rule, there was significant infrastructural development in the country. But the
actual motive of the British behind the infrastructure development was only to serve their own colonial interests.
1. The roads served the purpose of mobilising the army within India and facilitating transportation of raw materials
from different parts of the country to ports, and ports were developed for easy and fast exports to and Imports
from Britain.
2. Similarly, railways were introduced and developed for commercialization of agriculture and for the transportation
of finished goods of British industries to the interiors of India. Railways assisted British industries to widen the
market for their finished products.
3. Posts and telegraphs were developed to enhance the efficiency and effectiveness of the British administration in
maintaining law and order.
Hence, the aim of infrastructural development was not the growth and development of the Indian Economy but to
serve the economic and political interests of Britain.
Q5. Critically appraise some of the shortfalls of the industrial policy pursued by British administration.
ANS . The focus of the industrial policies pursued by the colonial government in India was lo make our country a mere
supplier of Britain's own flourishing industrial base. The policies were concerned mainly with the advancement of the
British economic and political power. The industrial policy pursued by the British colonial administration had the
following shortfall
(i) Neglect of Indian Handicraft Industries -The British followed a discriminatory tariff policy under which
they imposed heavy tariffs (export duties) on India's export of handicraft products while allowed free
export of India's raw material to Britain and free import of finished products from Britain to India. This
made Indian exports costlier and its international demand fell drastically loading to the collapse of
handicrafts industries. Also, Indian handicrafts faced a stiff competition from machine-made textiles of
Britain.
(ii) Lack of Investment in Modern Industries The modern industries in India demanded investments in capital
goods and technology that were beyond the means of Indian investors. British Government was least
interested in investing in Indian industries as they never wanted India to become self reliant. Thus due to
the lack of sufficient investment, the growth of Indian industries, was severely constrained.
Q6. What do you understand by the drain of wealth during the colonial period?
ANS . Dadabhai Naoroji propounded the theory of 'Drain of Wealth' in the 19th century. The colonial period was
characterized by the exploitation of Indian resources.
The primary motive of Britain to conquer India was to own a perennial source of cheap raw materials to feed its own
industrial base in Britain. On the other hand, income of Indians was spent on expensive imports of finished goods from
Britain which made Britain richer on the expense of India.
Further, British Government used India's manpower to spread its colonial base outside India.
Indians served in the British army at lower salaries than their British counterparts.
Also, the expenses of war and administrative expenses that were incurred by the British Government to manage the
colonial rule in India were drawn from the revenue collected from India and the export surplus generated through
foreign trade of India.
Thus, the British rule drained out Indian wealth for the fulfillment of its own interests.
Q7. Give a quantitative appraisal of India’s demographic profile during colonial period.
Or
Give a brief account of state of various social development indicators on the eve of Independence.
ANS . India's demographic conditions during the British rule depict our economy as stagnant and backward.
Due to high birth rate and high death rate the population growth was stagnant before 1921.
The Infant Mortality Rate was also very high of about 218 per thousand which today stands at 40 per thousand.
The life expectancy rate was a low as 32 years while presently, it is around 68 years.
The literacy rate was lower than 16% with female literacy rate of just 7% which denotes social backwardness and
gender bias in the economy.
We can infer from the above figures that India was featured with massive poverty, low standard and quality of living
and low survival rate in the country.
The lack of health care facilities and lack of health awareness were the main causes behind such demographic
conditions of India.
Q8. Highlight the salient features of India’s pre-independence occupational structure.
ANS . The occupational structure, which refers to the distribution of population working in different sectors.
The following are the salient features of India's pre-independence occupational structure
(i) Predominance of Agriculture- Under the colonial rule, India was basically an agrarian economy, with nearly
70.75% of its workforce engaged directly or indirectly in agriculture, due to massive poverty and widespread
illiteracy, a large proportion of the population was engaged in farming and related activities to earn their
subsistence.
(ii) Lack of Opportunities in Industry -Only a small proportion of population was employed in manufacturing
sector. Nearly 10% of the total workforce was engaged in manufacturing and industrial sector. This was due to
the stiff competition that the Indian industries faced from the machine made cheap goods from Britain Thus,
the Indian industrial sector failed to provide significant employment opportunities.
(iii) 15-20% of the workforce was engaged in service sector.
(iv) This shows Unequal Distribution among Sectors The three sectors of Indian Economy, i.e., agricultural,
industrial and service sector were unequal in terms of occupational structure.
(v) There was regional variation in the occupational structure of India. While on the one hand, the then Madras
Presidency (comprising of present day States of Tamil Nadu, Andhra Pradesh, Kerala and Karnataka), Bombay
and Bengal experienced a fall in the agricultural work force and increase in occupational share of
manufacturing and services, on the other hand states like Odisha, Rajasthan and Punjab experienced a rise in
the agricultural workforce.
Q 9. Underscore some of the India’s most crucial economic challenges at the time of independence.
Ans. The exploitative colonial rule created a damaging effect on almost every sphere of Indian Economy.
As a result, India faced major economic challenges at the time of independence such as
(i) Low Agricultural Productivity- Indian agricultural sector experienced stagnation, low level of productivity
and lack of investment in technology, fertilizers and irrigation facilities. This resulted in poor condition of
landless farmers and peasants. Commercialization of agriculture created shortage of food grains in India.
Thus, the immediate concern for India was to develop its agricultural sector and its productivity to become
self reliant and ensure food security for people.
(ii) Under-developed Industrial Sector- India failed to develop a sound industrial base during the colonial
rule. There was a need of huge capital investments, infrastructure, human skills, technical know how and
modern technology for industrialization.
Further, due to stiff competition from the British industries, India's domestic industries had failed to
sustain.
Thus, development of small scale and large scale industries simultaneously while facing capital shortage
was a matter of concern for India. The need to increase the share of industrial sector to India's GDP was
one of the important Economic challenges for India.
(iii) Inadequate Infrastructure -Although, the British brought about significant infrastructural development in
the country, but it was done only for serving their interests and was not sufficient to improve the
performance of agricultural and industrial sector in the country.
Also, there was a need to upgrade and to modernize the existing Infrastructure to enhance its efficiency
and effectiveness.
(iv) Poverty and inequalities- India was trapped in the vicious circle of poverty and inequality. The colonial
rule drained out a significant portion of India's wealth to Britain Consequently, majority of India's
population was living in abject poverty.
Economic inequalities were present across the country due to the different economic classes that had
emerged due to British policies like zamindari system.
Q10. Indicate the volume and direction of trade at the time of independence.
ANS. During the colonial rule, the British followed a discriminatory tariff policy under which they imposed heavy tariffs
(export duties) on India's export of handicraft products while allowing free export of India's raw material to Britain and
free import of British products to India.
(i) Volume of Trade -The British policies made Indian handicrafts exports costlier and its international
demand fell drastically. Consequently, India's export basket during the colonial rule comprised mainly of
primary product s like sugar, jute, raw silk, indigo, wool, etc and the imports comprised of finished
consumer goods like cotton silk and woolen clothes and capital goods like light machinery from Britain.
India registered large export surplus during the colonial period.
(ii) Direction of Trade- As the monopoly power of India's export and import rested with Britain, so, more
than half of India's trade was restricted to Britain and the remaining imports were directed towards China,
Persia (Iran), and Ceylon (Sri Lanka) The opening up of Suez Canal further intensified the monopoly power
of the British over India's foreign trade It led to the last movement of goods from India to Britain and vice-
versa.
(iii) The surplus generated from India's foreign trade was not invested in Indian Economy, rather it was used
for administrative and war purposes. This led to the drain of Indian wealth to Britain.
Q 11. Were there any positive contributions made by the British in India? Discuss.
ANS. Yes, there were various positive contributions that were made by the British in India though these contributions
were not made with the objective of welfare for Indians but for the British interests. Some of the positive
contributions made by British are
(i) Introduction of Railways -The introduction of railways by the British was a breakthrough in the development
process of Indian Economy. It opened up the cultural and geographical barriers and facilitated
commercialization of Indian agriculture.
(ii) Introduction of Commercialization of Agriculture- The introduction of commercial agriculture is an
important breakthrough in the history of Indian agriculture. Prior to the advent of the British, Indian
agriculture was of subsistence nature. But with the commercialization of agriculture the agricultural
production was named out as per the market requirements leading to higher agricultural incomes.
(iii) Introduction of Free Trade- British forced India to follow free trade pattern during the colonial rule. This is
the key concept of globalisation today. The free trade provided domestic industry with a platform to compete
with the British industries. The introduction of free trade led to an increase in the volume of India's exports.
(iv) Development of Infrastructure -The infrastructure developed in India by the British proved to be useful for
Indian people. The telegram and postal services served Indian public and the roads built by British provided
connectivity to interior regions.
(v) Introduction of English education system.
12. Where was the zamindari system implemented by British in India? Discuss its features.
The zamindari system was implemented in the then Bengal Presidency, comprising parts of India’s present-day eastern
states.
Following were the features of zamindari system implemented by British in India:
(i) The zamindars were the permanent owners of the land.
(ii) The profit accruing out of the agriculture sector went to the zamindars instead of the cultivators.
(iii) The main interest of the zamindars was only to collect rent and they did nothing to improve the condition of
agriculture or cultivators.
13. Write a short note on commercialisation of agriculture during British rule?
Generally, commercialisation of agriculture implies production of crops for sale in the market rather than for self-
consumption. However, during British rule, it acquired a different meaning. Commercialisation of agriculture took
place only in a few productive areas and it basically became commercialisation of crops.
The British used to offer higher prices to farmers for producing cash crops rather than for food crops. British
government used these cash crops as raw materials for industries in Britain. In other words, British government
exploited Indian agriculture to serve the base of their modern industries.
14. What happens in the first stage of demographic transition?
The first stage of demographic transition is associated with pre-modern times and is characterised by a balance
between birth rates and death rates. During this stage, both birth and death rates are very high, which result in very
slow population growth. This stage is also known as the ‘High Stationary Stage’ of population growth.
The death/birth rates are high in the first stage of demographic transition due to lack of knowledge of disease
prevention and cure. Occasional food shortage is also a reason for the high death rates in this stage.
15. How can you say that there were growing regional variations in the occupational structure of India during British
rule?
Growing regional variations in the occupational structure of India during British rule are evident from the facts given
below:
(i) Parts of the Madras Presidency, Bombay and Bengal witnessed a decline in the share of workforce dependent on
agricultural sector and increase in the share of workforce in the manufacturing and the services sectors.
(ii) On the other hand, in states such as Orissa, Rajasthan and Punjab, there had been an increase in the share of
workforce dependent on agriculture during the same period.
16. Why is 1921 called as the ‘Year of Great divide’?
1921 is called as the ‘Year of Great Divide’ because In the year 1921, the population showed a decline and after 1921,
the population of India showed a consistent rise. Before 1921, the population of India kept on fluctuating.
