Modern Indian History

British Rule in India

Compiled by-Pratik
Nayak
British Rule in India

Economic Policy

Stages of Colonialism
Background English are
Haahaa...How here for our
foolish good

Indian intellectuals of the first half of the 19th century had adopted a
positive attitude towards British rule

The hope that Britain, the most advanced nation of the time, would help
modernize India
Background
In the economic realm, Britain, the emerging industrial giant of the
world, was expected to develop India’s productive forces through the
introduction of modern sciences and technology and capitalist economic
organization
The process of disillusionment set in gradually after 1860 as the reality
of social development in India failed to conform to their hopes
Aila...Dhoka
They began to notice that while progress in Diya Angrezo
new directions was slow and halting ne
Background
Their image of British rule began to take on darker hues; and they began
to probe deeper into the reality of British rule and its impact on India

British rule in India caused a

transformation of India's economy, into
a colonial economy

The structure and operation of Indian economy were determined by the

interests of the British economy
Impact of colonialism on Economy
1.Deindustrialisation—ruin of
artisans and handicraftsmen

2.Impoverishment of peasantry

3.Emergence of new land relations,

ruin of old zamindars

4.Stagnation and deterioration of

agriculture

5.Commercialisation of Indian
agriculture
Background
6.Development of modern
industry

7.Rise of Indian bourgeoisie

8.Famine and poverty

Change in structure of India’s trade

9.Economic drain
Economic critique of colonialism
Deindustrialisation—ruin of artisans and
handicraftsmen
Background Indian Industry in 17th Century
Agriculture+ Industry Developed
Almost everything that used to be made of wool or silk, relating either
to dress of the women or the furniture of our houses, was supplied by
Indian trade
As a result, the European mercantilists & manufacturers complained to
English government

1700English government passed an act

Banned all kind of cloth, silk, muslin, calicos from India, Persia, China
1720 Act Penalty of £5 who wore Indian Silk, £20 who sold it
Deindustrialisation—ruin of artisans and
handicraftsmen
Q. How did Deindustrialisation took place?
Industries Commerce

Domestic Market International Market

Indian traditional Industries Handicrafts etc.

Deindustrialisation—ruin of artisans and
handicraftsmen
Q. How did Deindustrialisation took place?
Cheap and machine-made imports flooded the Indian market after the
Charter Act of 1813
One-way free trade for the British
goods Unilateral free trade policy

Resources
+ Market
Deindustrialisation—ruin of artisans and
handicraftsmen
Q. How did Deindustrialisation took place?
After 1820, European markets were virtually closed to Indian exports
Newly introduced Rail network helped the European products to reach
the remotest corners of the country

Indian products found it more and more

difficult to penetrate the European
markets

loss of traditional livelihood was not accompanied by a process of

industrialisation in India
Deindustrialisation—ruin of artisans and
handicraftsmen

As a result, deindustrialisation of India took

place

Indian artisans and handicraftsmen were already feeling the crunch due
to loss of patronage by princes and the nobility, who were now under
the influence of new western tastes and values
Deindustrialisation—ruin of artisans and
handicraftsmen
Deindustrialisation Process
Deindustrialisation
Deurbanisation
Ruralisation
Peasantisation

Landless Labourers
Agriculture + Industry

Loss of traditional art & craftmanship Cultural loss

Q. Why Deindustrialisation?
Deindustrialisation—ruin of artisans and
handicraftsmen
Q. Why Deindustrialisation?

Decline of traditional ruling class

New Middle class fond of English goods
Industrial revolution influx of machine goods

Unilateral free trade policy

All this was done without compensating development of machine

industry
From being a net exporter, India became a net importer
Deindustrialisation—ruin of artisans and
handicraftsmen
Q. Why Deindustrialisation?
Internal Weakness also responsible
Indian manufacturers failed to find new markets
Did not explored other countries & continents
Missing “Adventurist trader”
Indian rulers failed to make any effort for any trade policy
Focus only on land revenue & income
Though, Tipu sultan tried developing trade

No priority of developing Navy by Indian rulers

Indian coastal trade monopolised by the Europeans
If coastal trade under Indian control, than difficult for Europeans
Impoverishment of peasantry
Q. How? Doogna lagan dena
padega
Government, only interested in maximisation of rents
Enforced the permanent settlement system
Transferability of land caused great insecurity to the
tenants, lost all their traditional rights in land

Zamindars,, resorted to summary evictions, demanded illegal dues and

'begar' to maximise their share in the produce

Overburdened peasants had to approach the

money-lenders
Peasant turned out to be the ultimate sufferer
Government, zamindar and moneylender
Impoverishment of peasantry
Q. How? Paise to milenge
24 hr kaam karna Ab mein kya
Doogna lekin 50% interest
padega
lagan dena karoon
charge hoga
padega

Overburdened peasants had to approach the money-lenders

Peasant turned out to be the ultimate sufferer
Emergence of new land relations, ruin of
old zamindars
Land in Bengal had passed into new hands

New zamindars resorted to land grabbing and sub-infeudation

Rise To absentee landlordism

Stagnation and deterioration of agriculture
Q. How it happened?
Cultivator had neither the means nor any incentive to invest in
Agriculture
Zamindar had no roots in the villages, paid little interest in agriculture

Government spent little on agricultural

Sheeshe se Kheti karni hai
Majja ni Sheesha lekin paisa nahi
life ;) takraye....! hai
Stagnation and deterioration of agriculture
Sheeshe se Kheti karni hai
Q. How it happened?
Majja ni Sheesha lekin paisa nahi
life ;) takraye....! hai

All this, together with fragmentation of land

Thus, Stagnation & deterioration of agriculture
Commercialisation of Indian agriculture
Emergence of the commercialisation of agriculture

Agriculture' had been a way of life rather than a business enterprise

Now agriculture began to be influenced by commercial considerations

Specialised crops began to be grown not

for consumption in the village but for sale
in the national and even international
markets
Commercialisation of Indian agriculture
Humein nahin
ugana indigo !!!
Commercial crops like cotton, jute,
groundnut, oilseeds, sugarcane, tobacco, etc
were more remunerative than foodgrains

Development in the plantation sector-

tea, coffee, rubber, indigo

For the Indian peasant, commercialisation seemed a forced process

Development of modern industry
Second half of the nineteenth century that modern machine-based
industries Started coming up in India
First cotton textile mill was set up in 1853 in Bombay by Cowasjee
Nanabhoy

There was a rush of foreign capital in India at this time due to

prospects of high profits, availability of cheap labour, cheap and
readily available raw material, ready market in India
Q. Reality?
Industrial development lopsided pattern—core and heavy industries
and power generation were neglected
Some regions were favoured more than the others causing regional
disparities
Rise of Indian bourgeoisie
Indian traders, moneylenders and bankers

Their role fitted in the British scheme of colonial exploitation

Sells imported Mein in dono ko
Paise to milenge paisa dunga !!
products to end
lekin 50% interest
users
charge hoga
Rise of Indian bourgeoisie
Indian traders, moneylenders and bankers

Their role fitted in the British scheme of colonial exploitation

Indian moneylender provided loans to hard pressed agriculturists and

thus facilitated the state collection of revenue

Indian trader carried imported British products to the remotest corners

Indigenous bankers helped both in the process of distribution and

collection
Famine and poverty
Regular recurrence of famines became a common feature of daily
existence in India
Change in structure of India’s trade also contributed to food insecurity

Famines were not just food grain scarcity-based phenomena, but were
a direct result of poverty

Between 1850 and 1900, about 2.8

crore people died in famines
Economic drain
Q. What is it?
Refers to a portion Of national product of India which was not available
for consumption of its people
But was being drained away to Britain for political reasons and India was
not getting adequate economic or material returns for it

The drain theory was put forward by Dadabhai Naoroji

2 May 1867, Meeting of Indian Association @ London
PaperEnglish Debt to India
The Wants and Means of India (1870)
On the Commerce of India (1871)

BookPoverty and Unbritish Rule in India

Economic drain India se sab
Paisa England
Dadabhai Naoroji Jaa raha hai !!!

1867 8 Million Pounds

1870 12 Million Pounds

1905 51.34 Crore ( 34 Million Sterling) Annually

GV Joshi (1888) 25 Crores/year

DE Wacha 30 to 40 Crores/year

Q. Components of Drain?
Economic drain
Major components of this drain Sab paisa
lekr
Visible jaunga...!
Direct Plunder (Post Plassey & Buxar) forms of
Profit Earned through trade Drain

Invisible forms of Drain

Salaries and pensions of civil and military officials

Stores purchased in Britain for civil and military departments

 Invest in India..get
Economic drain assured returns

Major components of this drain

Interests on loans taken by the Indian

government from abroad

Profits on foreign investment in India

Payments to be made for shipping, banking and

insurance services which stunted the growth of
Indian enterprise in these sectors

Surplus from British economy re-entered India as finance capital

Question UPSC Pre 2008
Q. Who among the following used the phrase ‘Un-British’ to criticise the
English colonial control of India?

(a) Anandmohan Bose (c) Dadabhai Naoroji

(b) Badruddin Tayyabji (d) Pherozshah Mehta

Question UPSC Pre 2015
Q. Who among the following was/were economic critic/critics of
colonialism in India?
1. Dadabhai Naoroji
2. G. Subramaniya Iyer
2. RC Dutt

Which of the statements given above is/are correct ?

(a) 1 only (c) Both 1 and 2
(b) 2 and 3 (d) 1,2 and 3
Nationalist critique of colonial economy
Dadabhai Naoroji, the 'Grand Old Man of India'
put forward the theory of economic drain
BookPoverty and unbritish Rule in India
Established Indian Association
First Indian to be elected as member of the
House of Commons on Liberal Party ticket
Newspaper Rast Goftar
Congress President 1893,1906

Justice Mahadeo Govind Ranade

Romesh Chandra Dutt
The Economic History of India
Nationalist critique of colonial economy
Q. Other leaders?

Gopal Krishna Gokhale,

G. Subramaniya Ayer and
Prithwishchandra Ray
GV Joshi
Surendranath Banerje
Bholanath Chandra
Nationalist critique of colonial economy
Where foreign capital has been sunk in a
country. the administration of
that country becomes at once the concern
of the bondholders. (The Hindu 1889)

It is not the pitiless operations of economic laws, but it is the

thoughtless and pitiless action of the British policy; it is the
pitiless eating of India's substance in India, and the further pitiless
drain to England; in short, it is the pitiless perversion of economic
laws by the sad bleeding to which India is subjected, that is destroying
India.
Effects of the Drain
Economic Effect
Real cause of backwardness Drain
Not only loss of wealth, but loss of capital
Drain loss of employment & income
How?
Loss of Capital This would have used for employment generation &
income generation
Slow growth of modern Industry
De-industrialisation in India

Peasants were also affected, as high rate of revenue

Effects of the Drain
Political Effect
Nationalist leaders highlighted the drain theory
Through papers, book, news papers etc
Drain Theory Highlighted the political conflict between India &
England
Drain Requires Political Solution

Therefore, it created awareness among common the people

Question UPSC Pre 2012
Q. Consider the following statements
The most effective contribution made by Dadabhai Naoroji to the cause
of Indian Nationalism was that he
1. Exposed the economic exploitation of India by the British
2. Interpreted the ancient Indian texts and restored the self-confidence
of Indians
3. Stressed the need for eradication of all the social evils before anything
else
Which of the statements given above is/are correct ?
(a) 1 only (c) Both 1 and 3
(b) 2 and 3 (d) 1,2 and 3
Question UPSC Pre 2012
Q. Consider the following statements
The most effective contribution made by Dadabhai Naoroji to the cause
of Indian Nationalism was that he
1. Exposed the economic exploitation of India by the British
2. Interpreted the ancient Indian texts and restored the self-confidence
of Indians
3. Stressed the need for eradication of all the social evils before anything
else
Which of the statements given above is/are correct ?
(a) 1 only (c) Both 1 and 3
(b) 2 and 3 (d) 1,2 and 3
Answer: A
Question UPSC Pre 2011
With reference to the period of colonial rule in India, “Home Charge”
formed an important part of drain of wealth. Which of the following
funds constituted “Home Charges”?
1. Funds used to support the India office in London
2. Funds used to pay salaries and pensions of British personnel engaged
in India
3. Funds used for waging wars outside India by the British

Which of the statements given above is/are correct ?

(a) 1 only (c) Both 1 and 3
(b) 2 and 3 (d) 1,2 and 3
Answer: D
Thank You