Indian Economy on the Eve of Independence NCERT Solution
Indian economy on the eve of independence
Introduction:
The sole purpose of the British colonial rule in India was to reduce the country to being a raw material supplier for Great Britain's own rapidly expanding modern industrial base.
Before the British rule:
The Indian economy was primarily an agricultural economy.
The prominent handicraft industries which gave prime place to India in the world market were cotton and silk textile, metal industries, precious stone works.etc.
During the British Rule:
The main interest was to protect and promotion of economic interests of Britain's rather than the development of the Indian economy
British government changed the whole structure of the Indian economy and transformed it into a supplier of raw materials and consumer of finished product of British industries..
No sincere efforts were made for estimating India's national income and per capita income but some Indian economists made efforts.
It included Dada Bhai Naroji, William Digby, Shindlay Shirras, V.K.R.V Rao and R. C. Desai.
Amongst these economists V.K.R.V Ran's estimates are most reliable.
Most studies claim that Indian economy grew @2% p.a and per capita income increased at a meagre of 0.5% p.a It indicates Indian economy that economy was developing at an extremely low rate.
State of the Indian Economy on the eve of independence:
Agricultural sector-
85% of population directly dependent on agriculture,
The new land tenure system was introduced zamindari System
Agricultural productivity was very low.
Introduction of Commercialization of agriculture.
The partition of the country had also adversely affected the India's agricultural production.
Factors responsible for backwardness and stagnancy in agricultural sector:
1. Land settlement/revenue system:-
Under the Zamindari system the Zamindars exploit the cultivator by imposing lagan irrespective of their Poor economic condition
Zamindars took the land of farmers when they were not able to deposit the Lagan/ rent on fixed dates
Profit accruing out of the agriculture sector went to the Zamindars instead of the cultivators did nothing to improve the condition of agriculture.
2. Force Commercialization of agriculture
British transformed Indian agriculture into a raw material for their industries
They forced the commercialization of agriculture in which they encouraged the production of cash crops instead of food crops
Due to shortage of food crops country had to suffered from frequent famines
3. Low level of Productivity:
Dependence on rain/lack of modem technology
Low levels of technology.
Lack of irrigation facilities
Negligible use of fertilizers
4. Lack of Investment
No investment in terracing, flood-control, drainage and desalinisation of soil.
No means or incentives to invest in agriculture.
5. The partition of the country had also adversely affected the India's agricultural production.
Industrial Sector-
1. Policy of De-industrialization:
Decline of Indian handicraft industries. Two motives:
a. To get raw material from India at cheap rate
b. To sell manufactured goods in India at higher prices to earn maximummaximum profit.
Adverse effects of decline of Indian industries on Indian economy-
a. It creates large unemployment.
b. Fall in demand for Indian handicraft goods resulting increase in demand for manufactured goods.
2. Slow growth of certain industries:
➤ Cotton textile mill by Indians in Maharashtra and Gujarat,
Jute mills dominated by the foreigners in Bengal.
Tata Iron and Steel Company (TISCO) were incorporated in 1907.
A few other industries in the fields of sugar, cement, paper etc, came up after the Second World War
3. Lack of capital goods Industries.
During the British rule, there was hardly any capital goods industry to promote further industrialization process.
4. Low contribution to Gross domestic product
Growth rate of the new modern industrial sector and its contribution to the country's GDP was very small.
5. Limited role of public sector.
Very limited operation of public sector.
Only restricted to the railways, power generation, communication, ports ete
Foreign Trade
1. The restrictive trade policy of the British Govt.
2. Exporter of primary products and Importer of finished goods
India became an exporter of primary products such as raw silk, cotton, and woolen clothes and an importer of finished consumer goods like cotton, silk and woollen clothes and capital goods like light machinery, produced in the British Industries.
3. Monopoly control of India's foreign trade
More than half 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.
4. Generation of large export surplus and Drain of Indian wealth
Generation of large export surplus from foreign trade but did not result in any flow of gold or silver into India.
This Export surplus was used make to payments for expenses incurred on war fought by the British government, on war fought by the them and for the import of invisible items.
Demographic Condition:
1.1 official Census. It was conducted in the year 1881.
2. 1921: Year of Great Divide: Before 1921, India was in the first stage of demographic transition.
The second stage of transition began after 1921. So, the year 1921 is described as the 'year of the Great Divide
3. Social Development Indicators:
Literacy level: Literacy rate was as low as which reflects the social and economic backwardness of the country. The average literacy rate was less than 16% and female literacy rate was only 7%.
Lack of Public health facilities Health facilities were either unavailable to large portion of population or, when available, were highly insufficient.
➤ Mortality Rate and Infant Mortality Rate (IMR):- Mortality Rate was very high and IMR was about 218 per thousand in contrast to the present 63 per thousand.
➤ Life expectancy was as low as 44 years which shows the lack of health care facilities water and air-borne diseases, as well as lack of means for health care.
Poverty Widespread poverty prevailed in India during the colonial period worsening profile of India's population of the time.
Occupational Structure:
1. Pre dominance of agricultural sector.
➤ The agriculture sector accounted largest share of workforce at a high of 70-75% while the manufacturing and service sector accounted for only 10% and 15-20%.
2. Regional variation.
Decrease in the share of workforce in the agriculture sector in Tamil Nadu, Andhra Pradesh, Kerala, Karnataka, Maharashtra and West Bengal.
Increase in the share of workforce in the agriculture sector in Orissa, Rajasthan and Punjab.
Infrastructure:
Basic infrastructure such as railways, ports, water transport, posts and telegraph did develop during British period
However, the real motive behind this development was not to provide basic amenities to the people but to subserve various colonial interests.
1. Roads-
➤ Roads were not fit for modem transport.
The roads were built to-
Mobilizing the army
Drawing and shifting raw materials.
➤ There was shortage of roads to reach out to rural areas during the rainy season.
2. Railways -
British introduced the railways in India in 1850 and it is considered as one of their most important contributions.
Affected the structure of the Indian economy two important ways
Helped them take long distance travel and thus break geographical and cultural barriers.
It improved commercialization of Indian agriculture that adversely affected the
self-sufficiency of village economics of India.
3. Air and Water Transport:
Construction of the inland trade and sea lanes was not satisfactory and was costly.
Indian waterways proved to be uneconomical, as in the case of the Coast Canal on the Orissa coast.
This canal was built at a huge cost, but it failed to compete with the railways, and finally, canal had to be abandoned
4. Communication:
The introduction of the expensive system of electric telegraph in India served the purpose of maintaining law and order.
The postal services, on the other hand, despite serving a useful public purpose, remained all through inadequate.
Positive Impact of British Rule in India:
Introduction of railways: British introduced the railways in India in 1850. The railways
enabled people to undertake long distance travel and thereby break geographical and cultural barriers.
Administration system: Indian economy got the system of efficient administration from Britishers who bring all the independent states into common frame
Increasing Commercialization of agriculture: Promote commercialization of Indian agriculture and volume of the India's export trade undoubtedly expanded.
Barter system to monetary system: Barter transactions was replaced by monetary
exchange system which increase the size of trade.
Development of post and telegraph services for maintaining law and order.
Glossary:
Commercialization of agriculture: It implies production of crops for the market rather than self consumption
Infant Mortality rate: It is the number of deaths of infants before reaching the age of one, in a particular year, per 1000 live births during that year,
Life expectancy: It refers to the average numbers of years a newly born child is expected to live, Land settlement: It refers to the act of arranging the terms and incidence of the land tax in specific areas
Capital goods industries: Those industries which produce such product which are used in further. production.
Gross Domestic Product: It is value of all final goods and services produced within the domestic
territories of an economy in a financial year.
Agricultural productivity: It refers to the average output in agriculture.
National Income: It refers to total value of all final goods and services produced in an economy in financial year.
Occupational structure: The distribution of workforce of a country amongst different sectors of the economy.
Per capita Income: It refers to per head income earned by the resident of an economy
Important Questions: (1 Mark Questions)
1. What was the infant mortality rate of India during British rule?
2. State the life expectancy in India during British rule.
3. What do you mean by infant mortality rate?
4. Give the name of one economist who estimated India's per capital income during colonial period.
5. What is meant by commercialization of agriculture?
6. What was the motive behind the de-industrialization by the colonial Govt. in India?
7. Which industries were adversely affected due to partition?
8. What does the export surplus mean?
9. What percentage of India's working population was engaged in secondary and tertiary sector
during British rule?
10. Whose estimate of national income was considered very significant?
11. Major contribution to the GDP of the country on the eve of independence was from:
12. Tertiary sector (b) Primary Sector (c) Secondary sector
(d) both Primary and secondary sector.
13. The main interest of the Zamindar was:
(a) To collect rent
(b) To improve the condition of agriculture
(c) To produce food crops (d) To produce cash crops
15. Details about the population of British India were first collectedin:
(a) 1871 (B) 1881 (C) 1891 (D) 1901.
16. Initially, the industrial development was confined to the setting up
(a) Cotton textile mills (b) Jute textile mills (c) Cotton and jute textile mills (d)Capital goods industry.
17. In the history of demographic transition, which year is regarded as the year of great divide?
(a) 1901 (b) 1902 (C) 1921 (d) 1923.
18. What are capital goods industries?
19. Mention the most important infrastructure developed during British period.
20. Give the meaning of life expectancy at birth.
21. Which airlines inaugurated the aviation sector in India?
22. When did British introduce Railways in India?
23. Give the meaning of Gross Domestic product (GDP).
(3/4 marks Question):
24. What was the effect of the systematic de-industrialization policy followed by the British?
25. How did the construction of railways affect the structure of the Indian economy?
26. Explain the objectives of British government for promoting the railways in India.
27. Explain any three positive contributions made by the British in India.
28. What do you understand by the drain of Indian wealth during the colonial period?
29. What was the two fold motive behind the Systematic De-industrialization affected by the
British in pre-independent India?
Q1 . What was the focus of the economic policies pursued by the colonial government in India? What were the impacts of these policies?
Ans. The economic policies pursued by the colonial government in India were concerned more with the protection and promotion of the economic interests of their home country than with the development of the Indian Economy.
Impact of these policies
(i) British rule ruined the agriculture sector and handicrafts and transformed India into a supplier of raw materials.
(ii) Indian agriculture was affected by colonial rule when the farmers were forced to grow commercial crops instead of food grains.
(iii) The British programmed systematic deindustrialization leading to the downfall of the handicraft industry, and with the lack of investment, other industries also failed to develop.
(iv) The money that Indian goods earned from foreign trade were not invested in the Indian economy; it was used for serving the British army and expanding their colonial reach across Asia.
2. Name some notable economists who estimated India’s per capita income during the colonial period.
Ans. The following economists estimated India’s per capita income during the colonial period:
Dadabhai Naoroji,R.C Desai,V.K.R.V. Rao,William Digby and Findlay Shirras
3. What were the main causes of India’s agricultural stagnation during the colonial period?
Ans. The agricultural stagnation during the colonial period was caused because of the following reasons:
Land settlement system: The various systems of land settlement that were introduced by the colonial government were the major cause of agricultural stagnation during colonial rule in India.
2. Revenue settlement: The terms of the revenue settlement were also responsible for the zamindars to adopt aggressive attitude towards farmers. The British fixed the dates to deposit specified sum of revenue, failing which the zamindars were to lose their rights.
low levels of technology, lack of irrigation facilities and negligible use of fertilizers etc., were also responsible for stagnation of agricultural sector during colonial rule.
4. Name some modern industries which were in operation in our country at the time of independence.
Ans. Tata Iron and Steel Company (TISCO) was set up in 1907. some other industries like sugar, cement, chemical and paper industries came up after the second world war.
5. What was the two-fold motive behind the systematic deindustrialisation affected by the British in pre-independent India?
Ans. De-industrilisation refers to the process of social and economic change caused by the removal or reduction of industrial capacity or activity in a country or region. The two-fold motive behind the systematic deindustrialisation affected by the British in pre-independent India -
(i) to buy raw materials from India at cheap rate and thus to reduce India to the status of a mere exporter of raw materials to the British modern industries.
(ii) to sell British manufactured goods in Indian market at higher prices
6. The traditional handicrafts industries were ruined under British rule. Do you agree with this view? Give reasons in support of your answer.
Ans. Yes, the traditional handicraft industry was ruined under British rule. The following points are in agreement with this statement:
1. The British had introduced a discriminatory tariff policy. This led to a high export tariff on Indian-made goods, which made the price of products high in international markets, leading to less demand for Indian-made goods. Consequently, this ended up ruining the handicraft industry.
2. As Britain began importing duty-free goods from Britain to India, the demand for locally made goods started decreasing as the mechanically produced goods were much cheaper. This resulted in ruining the market for handicrafts.
3. The princely states of India used to provide patronage to local art and handicraft, but during British rule, the princely states were ruined by the East India Company, which thus resulted in a decrease in demand for Indian-made goods. Indian handicrafts gradually lost their market and diminished.
7. What objectives did the British intend to achieve through their policies of infrastructure development in India?
Ans. During the British rule the basic infrastructure which developed were railways, water, transport, ports, post and telegraph etc. However the main motive of British rulers to develop infrastructure in India were
(i) To protect their colonial interests
(ii) To earn profits through foreign trade by linking railways with majors ports and the marketing centres.
(iii) To invest British funds in India to make profits
(iv) To buy raw materials from India and sell finished goods in India
8. Critically appraise some of the shortfalls of the industrial policy pursued by the British colonial administration.
Ans. The industrial policy followed by the British government suffered from the following shortfalls
(i) Decay of handicraft industry
(ii) Bleak growth of modern industry
(iii) Lack of capital goods industries
(iv) Limited area of operation of public sector
9. What do you understand by the drain of Indian wealth during the colonial period?
Ans - Drain of wealth refers to the use of large export surplus of India for Britain. it is clear from the following
(i) The surplus was used to make payments towards the expenditure incurred by the office set up by the colonial government in Britain
(ii) The surplus was used to pay war expenditure fought by the British government
(iii) The surplus was spent to import invisible items.
10. Which is regarded as the defining year to mark the demographic transition from its first to the second decisive stage?
The year 1921 is regarded as the defining year. After 1921, India’s population growth was consistent.
11. Give a quantitative appraisal of India’s demographic profile during the colonial period.
The demographic profile of India during the colonial period is as follows:
1. The Birth Rate was high at 48 per thousand and the Death Rate at 40 per thousand, respectively.
2. Infant Mortality Rate was 218 per thousand, which is very high.
3. Life Expectancy rate was 32 years on average.
4. The literacy rate was below 16 per cent, which shows the backwardness of the society.
12. Highlight the salient features of India’s pre-independence occupational structure.
13. Underscore some of India’s most crucial economic challenges at the time of independence.
Ans. Crucial challenges at the time of independence are as follows:
1. Low Agricultural Output was one factor which was due to the colonial impact on the country. Only items that were of monetary importance to the government were grown
2. Low level of industrialisation and decline in handmade products
3. Low levels of national income and per capita income
4. A low standard of living, low expectancy and high infant mortality rate
5. High level of unemployment and gross underemployment
14. When was India’s first official census operation undertaken?
Ans. It was completed in the year 1881 under British Viceroy Lord Mayo.
15. Indicate the volume and direction of trade at the time of independence.
Ans. Prior to independence, India had exclusive trade relations with other countries of Asia and Europe. its exports were cotton textile, silk, wheat, rice, precious stones, spices, indigo etc. Imports consisted of pearls, wool, dates, dry fruits, glass, steel, copper, perfumes etc. Its exports were more than imports. it had a large export surplus. however British maintained monoply control over India's foreign trade. more than half of India's foreign trade was with Britain.
16. Were there any positive contributions made by the British in India? Discuss.
Ans. The following are the contributions made by the British in India:
(i) The commercialisation of Agriculture was an important point in Indian agriculture history. It helped achieve self-sufficiency in food grain production.
(ii) Development of infrastructure
(iii) The establishment of railways helped to connect people to distant places and also increased the business of the people due to the expansion of the geographical horizons.
(iv) The promotion of the English language helped connect with the outside world and allowed India to become a part of the global diaspora.
(v) There was a marked improvement in the monetary system and production due to the division of labour.
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