Impact of British rule on Indian Economy

Impact of British rule on Indian Economy

1. D EC L I NE OF I ND I A N I ND U S TR Y D U R I NG BRITISH RU L E

2. The British who came as traders became the masters of India by their policies and strategies including interventions, conquests and alliances. Their constant exploitation followed by suppression and corruption resulted in the accession of power by the Queen in 1858 soon after the mutiny. This phase witnessed the transition from traders and later to masters and then the rule by a foreign power in the country. Also with the industrial revolution, this territorial expansion and imperialistic rule completely shifted India to a source for raw materials and a good market for finished products of British industries. All these had brought changes in the structure of the very basis of Indian economy and are still reflected after many years of independence.

3. Reasons for Coming to India The European and the British traders initially came to India for trading purposes. The Industrial Revolution in Britain led to the increase in demand for raw materials for the factories there. At the same time, they also required a market to sell their finished goods. India provided such a platform to Britain to fulfill all their needs. The 18th century was a period of internal power struggle in India and with the declining power of the Mughal Empire, the British officials were provided with the perfect opportunity to establish their hold over Indian Territory. They did these through numerous wars , forced treaties, annexations of and alliances with the various regional powers all over the country . Their new administrative and economic policies helped them consolidate their control over the country.

4. Their land revenue policies help them keep the poor farmers in check and get huge sums as revenues in return. They forced the commercialization of agriculture with the growing of various cash crops and the raw materials for the industries in the Britain. With the strong political control, the British were able to monopolies the trade with India. They defeated their foreign rivals in trade so that there could be no competition. They monopolized the sale of all kinds of raw materials and bought these at low prices whereas the Indian weavers had to buy them at exorbitant prices. Heavy duties were imposed on Indian goods entering Britain so as to protect their own industry.

5. HENCE The Indian economy under British rule underwent a phase of arrested development. This was so,inspite of the fact that most pre-requisites for economic development were met by India even prior to the British advent. These were; a prosperous agriculture, significant indigenous industry, sizable exports, abundance of minerals and ores, and above all, a surplus which could be invested. Thus, India had the potential for economic growth. With the advent of the British came modern business , technology, capital, and the political institution. The obvious question that follows is that , why did not India experience any significant economic progress. The answer to this lies in the nature of colonial relationship between Britain and India .

6. Before Britishers Several economic historians have argued that real wage decline occurred in the early 19th century, or possibly beginning in the very late 18th century, largely as a result of British imperialism. Economic historian Prasannan Parthasarathi presented earnings data which showed real wages and living standards in 18th century Bengal and Mysore being higher than in Britain, which in turn had the highest living standards in Europe. Mysore's average per-capita income was five times higher than subsistence level, i.e. five times higher than $400 (1990 international dollars),or $2,000 per capita. In comparison, the highest national per-capita incomes in 1820 were $1,838 for the Netherlands and $1,706 for Britain. It has also been argued that India went through a period of deindustrialization in the latter half of the 18th century as an indirect outcome of the collapse of the Mughal Empire

7. Under British rule, India's share of the world economy declined from 24.4% in 1700 down to 4.2% in 1950 . India's GDP (PPP) per capita was stagnant during the Mughal Empire and began to decline prior to the onset of British rule . India's share of global industrial output declined from 25% in 1750 down to 2% in 1900. At the same time, the United Kingdom's share of the world economy rose from 2.9% in 1700 up to 9% in 1870.

8. The British East India Company, following their conquest of Bengal in 1757, had forced open the large Indian market to British goods, which could be sold in India without tariffs or duties, compared to local Indian producers who were heavily taxed, while in Britain protectionist policies such as bans and high tariffs were implemented to restrict Indian textiles from being sold there, whereas raw cotton was imported from India without tariffs to British factories which manufactured textiles from Indian cotton and sold them back to the Indian market. British economic policies gave them a monopoly over India's large market and cotton resources. India served as both a significant supplier of raw goods to British manufacturers and a large captive market for British manufactured goods.

9. Before the British rule, India was self-sufficient in textile and Cotton products but during the British rule, India fell down to the position of importing cloth from England.

10. In the 19th century A.D. British government abolished the tariff protection of Indian goods. The country was reduced to the position of supplier of raw material to British industries. In 1850 Jute mills were established in India but there was no economic development in the country. In the time of 1st World War some goods, acquired by the people were reduced in India. This gave some industrial progress in our country.

11. The economic policies of the British Raj caused a severe decline in the handicrafts and handloom sectors, due to reduced demand and dipping employment . After the removal of international restrictions by the Charter of 1813, Indian trade expanded substantially with steady growth. The result was a significant transfer of capital from India to England, which, due to the colonial policies of the British, led to a massive drain of revenue rather than any systematic effort at modernisation of the domestic economy

12. CRA FT S

13. THE CAUSES OF DECLINE Impact of the industrial revolution Loss of royal patronage Loss of external markets Coercive tactics used by the British Indifference of the British rulers

14. IM P A C T O F I NDU ST R IA L REVOLUTION The same goods produce in industries ,when compared to a craftsman's goods , were very cheap. They were also better in quality and quantity. So these were the major factors in front of industries ,for the slowly dying Indian crafts .

15. LOSS OF ROYAL PATRONAGE After the British ended their conquest in India most of the Indian rulers were on their side .taking advantage of this British promoted the selling of their of goods and under influence they waived of taxes on their goods and increased the taxes of Indian goods . Thus losing the patronage of Indian goods

16. L O S S O F EXTE RN A L MARKETS Due to the high taxes levied on Indian goods, by the British, the sellers and crafters suffered heavy losses . And slowly Indian crafts loss their place in external markets like: Britain ,France ,Dutch and Arabian countries

17. C O E RC IV E T A C TI C S U SE D BY BRITISH The British forced the Indian farmers grow what was profitable to the company not to the farmers .like indigo which was growing good in india.it was of huge demand in births. So it was forced to grow in India. Soon India like this became the largest exporter of raw materials.

18. From the beginning of the 19th century, the British East India Company's gradual expansion and consolidation of power brought a major change in taxation and agricultural policies, which tended to promote commercialisation of agriculture with a focus on trade, resulting in decreased production of food crops, mass impoverishment and destitution of farmers, and in the short term, led to numerous famines.

19. Indigo C o t t on

20. I ND I FFE R E NC E O F T H E BRITISH RULERS They treated the people of their own country carefully while ruling India they did not even try to help them. For example: in Britain when artists got displaced by industrial revolution they provided them with certain benefits but not in India .

21. S O RESU L T E D I N In great loss to the local artisans in India .There was a huge migration of people from cites to villages , for primary activities like farming . This put further pressure on land ,with pieces getting fragmented . So the traditional crafts and products went into trouble during the British times in front of industrial revolution .

22. REVENU E I N T O BR ITI S H Taxes gone in the respective year 1859=361 million rupees (today’s value $ 5,415,000,000 ) 1890=851 million rupees (today’s value $ 12,765,000,000 )