Chapter-1-Indian economy on the

eve of independence

KWL CHART
(I)Features of Indian Economy
1) Stagnant economy – a stagnant economy is the one which shows little or
no growth in income.
2) Backward economy – an economy is called a backward economy when it
has a very low per capita income.
3) Dominance of agriculture – nearly 72 % of the country’s population was
engaged in agriculture. however the contribution of agriculture to GDP
was only 50%.
4) Bleak(bad) industrialization - industrial sector in India was well known
for handicrafts. but it was destroyed by the British policies.
5) Heavy dependence on imports:- the country was heavily
dependent upon imports, particularly for machinery and
related equipment of production.

6) Limited urbanization – At the time of independence, most of

the population of India lived in villages.

7) Semi feudal economy – On the eve of independence, Indian

economy was neither feudal nor a capitalist economy.
Feudalistic mode of production leads to low productivity, that
leads to backwardness.
(II) Features of Agricultural sector
1) Low production and productivity-
Production refers to total output while
productivity refers to output per hectare of
land.
2) Exploitative land settlement system- The
land settlement system is known as
zamindari system. It set up a triangular
relationship among the govt. , the owner of
the soil and the tiller of the soil.
3) Forced commercialization of Agriculture:-
Commercialization of agriculture refers to a shift from
subsistence cultivation to cultivation of cash crops for the
market.

4) Lack of investment in Agriculture Infrastructure:-

the British government or zamindars took no interest in
promoting investment in agricultural infrastructure.
(III) Demographic Profile
Demographic transition
Demography is the study of population , and its includes size
of population, composition and distribution of population.
In the history of demographic transition, 1921 is regarded
as the ‘Year of Great Divide’
 Demographic transition stages
First stage – High stationary stage (no change in population)
Birth rate and Death rate high . so population is stationary.
Second stage – Early expanding stage
Death rate begins to decline, Birth rate is constant. so rapid population
growth.
Third stage – Late expanding
Death rate declines and Birth rate tends to fall. so slow population growth
Fourth stage – low stationary
Low Birth Rate and Death Rate . So population is stationary
Fifth stage – Declining
Population begins to decline because BR is less compared to DR
(IV)Occupational structure
Occupational structure refers to distribution of
working population across primary, secondary
and tertiary sectors of the economy.
(1) Agriculture-the main source of
occupation
 On the eve of independence , around 70% of
the working population was engaged in
agriculture. ( England -2%,Germany 4% etc)
This shows backwardness of the Indian
economy at the time of independence.
(2) Industry-
On the eve of independence barely 9% of the
working population in india was engaged in
industries.
for instance 32%in the USA,42%in England etc
are engaged in these activities.
so it proves that backwardness of Indian economy
at the time of independence
(3) Insignificant transition from Agriculture
to Industry

Transition of workforce from

agriculture to industry marks the
economic” take-off”. this happened in
some parts of India.
 Home Work

Positive and Negative impact of

railways in India
 (VII) Foreign Trade
India’s foreign trade at the time of independence can be
described as follows:
(1)Net exporter of Raw material and importer of
finished goods:
Due to exploitative colonial policies of tariff and trade,
India became net exporter (export more than its
import) of raw material and primary products like
sugar, jute, indigo etc.
2) Monopoly control of India’s Foreign Trade

More than 50% of India’s foreign trade

was directed towards great Britain. the rest
of the trade was directed to China, Sri
lanka and Persia.
3) Surplus trade but only to benefit the
British

During British period , our exports exceeded our
imports. it implies a surplus balance of trade.
But this surplus was not used for growth and
development of the country.
It was used to meet administrative expenses of the
British government in India.
Positive impact of the British Rule in
India
(1)Commercial outlook of the farmers
(2)New opportunities of employment
(3)Control of famines
(4)Monetary system of exchange
(5)Efficient system of administration
CER