CH-1- INDIAN ECONOMY ON THE EVE OF INDEPENDENCE
Economic
Reforms
Before 1950 to 1991 to
1947 1990 onwards
❖ Introduction
- Basic features of Indian Economy
- Various phases of development
- Pre-independence condition of Indian Economy
• Sence 1757 (Plassey battle) to 15th August 1947
- Around 200 years
- India was rule by British as colonial rule
- The use Indian Economy as Feeder economy
- Exploited India’s nature and human resources
• Low level of Economic Development Under Colonial Rule
- Before British rule(Indian Economy)
1) Prosperous – (rich and successful)
2) Agrarian – (Main source is agriculture)
3) Handicraft – cotton, silk as textiles, Metal and stone work
- After Advent of British rule
1) No sincere attempt to estimate national and per capita income
2) Individually attempt by Dadabhai navaroji, William Digby, Findlay Shirras, V.K.R.V.
Rao, R.C. Desai but inconsistent Result
3) Country growth during first half of the twentieth century less then 2%, Per capital is
only 0.5%.
❖ Agricultural Sector
- Overwhelmingly rural and agricultural Economy
- 85% people lived in villages and directly or indirectly work in Agriculture.
- But, Food is not suffusion for country
• Main reasons for stagnation in Agricultural sector:
1) Land settlement system:
- Zamindari system
British
Government
Lagan
Zamindars
Lagan
Cultivator
2) Commercialization of Agriculture
- Farmer farming food crop before British come in rule
- After starting British rule farmer start to make cash crops (Cortan, jute)
- Decline food crop production
- British used cash crop for British industry so, Farmer condition is not improved
3) Low level Productivity
- Zamindar are not interested in farming activity because they had no roots as farmer
- No any incentive to invest
- Negligible use of fertilizers
- Lake of technology and irrigation
- Difficult to introduce new technology
4) Scarcity of Investment
• Industrial Sector
1) De-industrialization (Handcraft Industry)
- Primary motive of British rule is applying two-fold Economy:
1) Get row material at cheap rate from India
2) Sell Finished Product at Higher price to India
- Adverse effects of decline Handicraft Industry
1) High level of Unemployment
2) Import of Finish Goods
- Lack of Capital Goods industry
1) Machine tools, ext…
2) India Supply from British
3) British Government did not promotion of Capital goods industry
- Low contribution to Gross Domestic Product (GDP)
- Limited role of public sector
Confined only to the Railways, Power generation, Communications Ports and some
other...
• Foreign Trade
- Important trading nation in ancient times.
- Restrictive policy adopted by British
1) Export primary product, Import Finish good
2) Monopoly Control of British Rule
½ trade done in British restricted
Only do some trade with china, Ceylon (sri lanka), Persia (Iran)
3) Drain of Indian Wealth during British rule
• Demographic Condition
- 1st Official Census in 1881
- 1921 year of the great divide
1) Higher Birth Rate and Death Rate
Birth Rate- Born per thousand in year = 48%
Death Rate- Dying per thousand in year = 40%
2) Extremely Low Literacy Rate
Overall literacy lower then 16%
Female Literacy lower than 7%
3) Poor health facilities
Mostly unavailable
If available were highly inadequate
Water and air borne diseases were widespread
4) High Infant Mortality Rate
Dying before reaching one year age per 1000 live British in a year
218 per 1000
In 2011- 44 per 1000
5) Low life expectancy
Only 44 years
In present time it is 68
6) Widespread poverty
No reliable data
Standard of living was very law
Widespread poverty
• Occupational Structure
- Predominance of Primary Occupation
- Refire to different industry and sectors
1) Predomination of primary occupation
75% - Agricultural sector
25% - Remaining sector
2) Regional variation
Agriculture sector is decline and increase in manufacture (Tamil Nadu, Andhra
parades, Kerela, Karnataka, Maharashtra and west Bengal)
Increases in Agriculture sector (Orissa, Rajasthan, Panjab)
• Infrastructure
- Road
Mobilizing army and shifting raw materials
Acute shortage of all-weather roads
People suffered badly during natural calamities
- Railway
Introduce railway in 1850 by British to India
Broke geographical and cultural barriers and promoted national integration
People undertake long distance travel
Enhanced commercialization of agriculture and village economy
- Air and Water Transportation
Took measures for development but far from satisfactory
- Communication
Introduce system of electric telegraph (For law and order)
Postal services
✓ Roads use for British army and raw material, not for people
✓ Railways - effective control over the vast India
Link ports by railway to gain more profit by foreign trade
Profitable investment for British
✓ Electric telegraph use for Law and order
• Conclusion
- Constant per capita income
- Dependence on agriculture
- Zamindari system
- Traditional method for cultivation
- High frequency of famines
- Destruction of Indian handicraft
- Inadequate industrialization
• Positive contribution of British Rule
- Self-sufficiency in food grain production
- Better means of transportation
- Check on famines
- Shift to monetary economy
- Effective administrative setup
