INDIAN ECONOMIC DEVELOPMENT

Chapter: Indian Economy on the eve of independence

Origin of British Rule: Main Purpose Before British Rule: During British Rule: Colonialism:
Battle of Plassey, 1757 To use Indian Economy as  Prosperous Economy Transformed India into: A system of political and social
FEEDER Economy for  Agrarian Economy  Supplier of Raw Material relations b/w two countries,
After 200 years, India gained Development of British  Well Known Handicraft  Consumer of Finished Product one is Ruler and other is its
Independence from Economy. Industries Colony.
15-8-1947 Exploited India’s Natural + Britain: Ruler, India: Colony
Human Resource
Low level of N.I. and P.C.I.: AGRICULTURAL SECTOR INDUSTRIAL SECTOR: FOREIGN TRADE: DEMOGRAPHIC CONDITION:
British Govt.: No attempt Pre- British: Not satisfactory Well known for Handicraft - Exporter of Primary Product Stagnant and Backward
Experts: Dadabhai Naroji, During British Rule: Indian Industries. and Importer of Finished Goods 1st Official Census: 1881
William Digby, Findlay Shirras, Eco. Rural and Agricultural. Poor State of Industrial - Monopoly Control of British Year of the Great Divide: 1921
V.K.R.V. Rao & R.C. Desai. Village Population: nearly Sector: Rule - High Birth Rate: 48 per 1000
st th
1 Half of 20 Century: Growth 85% - De- industrialisation: Decline - Drain of Indian wealth during - High Death Rate: 40 per
Aggregate Real O/P: > 2% Livelihood: Agriculture of Handicraft Industries. British Rule 1000
Per Capita O/P: only 0.5% Not Self-sufficient in Food & - Adverse effects of decline - Low Literacy Rate: overall
POSITIVE CONTRIBUTION Raw Material for Industries. - Lack of Capital Goods INFRASTRUCTURE: Very Poor >16%
- Self-sufficiency in Food grain Reasons for Stagnation: Industries Only for colonial interests. Female: 7%
Production - Land Settlement System - Low contribution to GDP - Roads: For Army & Shifting Raw - Poor Health Facilities
- Better means of - Commercialization of - Limited role of Public Sector Material - High Infant Mortality Rate:
transportation Agriculture - Railways: Introduce in 1850 218 per 1000
- Check on Famines - Low level of Productivity - Air and Water Transport - Low Life Expectancy: 44
- Shift to Monetary Economy - Scarcity of Investment - Communication: Electric years
- Effective administrative setup Telegraph: High Cost - Widespread Poverty
INDIAN ECONOMY ON THE EVE OF INDEPENDENCE
Colonial Economy: 200 years Semi-Feudal Economy: Stagnant Economy:
- Drain of Wealth - Feudal System: High Rate of Lagaan. An Economy which is growing at very low rate.
- Commercialisation of Agriculture - Capitalist System: creation of Two classes: Growth Aggregate Real O/P: > 2%
- Impact on India was deep Capitalist & Labourers Growth Per Capita O/P: only 0.5%
Backward & Underdeveloped Economy: Depleted Economy: Amputated Economy:
Productivity & P.C.I.: LOW No arrangement to replace the physical assets due ‘Divide and Rule’:
Agriculture: Traditional Method to excessive use. Discrimination on basis of Religion, Case, Language, Culture.
Birth & Death Rate: HIGH During war time, work beyond their capacities. On the Independence divided to two parts India & Pakistan.
Illiteracy: HIGH
 INDIAN ECONOMIC DEVELOPMENT
Chapter: Indian Economy on the eve of independence

Important Definition
Agrarian Economy: Agriculture was the main source of income for most Zamindari Profits out of agricultural went to Zamindars in the form of
people. System: ‘Lagaan’.
Commercialization Production of crops for sale in the market rather than for Sharecropping: Landowner allows a tenant to use the land in return for a share of
of Agriculture: self- consumption. Eg. cotton, jute, groundnut, sugarcane the crops produced on their portion of land.
etc.
Adverse Effect of  Highly irrigated and fertile land went to Pakistan. Discriminatory This policy allowed free export of raw materials from India and
Partition:  Whole of Jute producing area became part of East Tariff Policy: Free import of final goods of British industry to India. Heavy duty
Pakistan (Bangladesh). India’s Jute Industries suffered was imposed on the export of Indian handicrafts.
heavily for lack of raw material.
Modern Industries: Cotton and Textile: Western Parts (Gujarat and Suez Canal: Artificial waterway running from north to south across the
Maharashtra) dominated by Indians. Isthmus of Suez in north-eastern Egypt. Reduction in
Jute Mills: In Bengal dominated by Foreigners. transportation cost and easier access to the Indian Market. Direct
Other Industries: Sugar, Cement, Paper etc. after 2nd Trade route for ships for ships operating b/w Britain and India
world war. and avoided the need to sail around Africa. Strategically &
Economically, it is the most important waterways in the world.
Birth Rate: Number of children born per thousand in a year. Death Rate: Number of people dying per thousand in a year.
Infant Mortality Number of infants dying before reaching one year of age Life The average No. of years for which people are expected to live.
Rate: per 1000 live birth in a year. expectancy:
Occupational Distribution of working persons across different industries
Structure: and sectors.
Agricultural: 75%; Remaining: 25%
Important Dates
Battle of Plassey 23th June, 1757 TISCO, Jamshedpur 1907 Opening Suez Canal 1869 1st Census 1881
Year of the Great Divide 1921 Introduction of Railways 1850 First Railway Bridge Bombay to Thane 1854