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The NCERT Class 11 Economics Chapter 1: Indian Economy on the Eve of Independence from Indian Economic Development examines the state of the Indian economy under British colonial rule before independence in 1947. It explores the economic policies, agricultural stagnation, de-industrialisation, trade patterns, demographic conditions, and infrastructure development, highlighting the exploitative nature of colonial rule. These notes summarise key concepts for effective revision. You can also download the free PDF for revision.
Contents
- 1 Introduction
- 2 State of the Indian Economy Before British Rule
- 3 Economic Policies Under Colonial Rule
- 4 Agricultural Sector
- 5 Industrial Sector
- 6 Foreign Trade
- 7 Demographic Condition
- 8 Occupational Structure
- 9 Infrastructure
- 10 Conclusion
- 11 Important Definitions in NCERT Notes Class 11 Indian Economic Development Chapter 1: Indian Economy on the Eve of Independence
- 12 FAQs
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Introduction
This section introduces the state of the Indian economy under British colonial rule, which lasted nearly two centuries until India’s independence on 15 August 1947. The British policies aimed to transform India into a supplier of raw materials for Britain’s industries and a market for British finished goods. Understanding this exploitative relationship is crucial to assessing India’s economic development post-independence.
State of the Indian Economy Before British Rule
Before British rule, India had an independent economy with agriculture as the main livelihood source, supplemented by vibrant handicraft industries.
- India was renowned for high-quality cotton and silk textiles, metalwork, and precious stone crafts, which had a global market.
- These industries showcased fine material quality and superior craftsmanship, contributing significantly to the economy.
Economic Policies Under Colonial Rule
The colonial government’s economic policies prioritised Britain’s interests over India’s development, fundamentally altering the economy’s structure.
- India was reduced to a supplier of raw materials (e.g., cotton, silk, indigo) for British industries and a market for Britain’s finished goods.
- No sincere attempts were made to estimate India’s national or per capita income, though individual efforts by estimators like Dadabhai Naoroji, William Digby, Findlay Shirras, V.K.R.V. Rao, and R.C. Desai provided some insights.
- V.K.R.V. Rao’s estimates were particularly significant, showing less than 2% growth in aggregate real output and 0.5% in per capita output annually during the first half of the 20th century.
Agricultural Sector
The agricultural sector, supporting about 85% of India’s population, remained stagnant and deteriorated under colonial rule. Here are the important points on the agricultural sector of the Indian economy.
- Most people lived in villages, relying directly or indirectly on agriculture, yet productivity was low due to limited technology, irrigation, and fertiliser use.
- The zamindari system in regions like Bengal Presidency prioritised rent collection over agricultural improvement, causing misery for cultivators.
- Fixed revenue payment deadlines forced zamindars to extract rent regardless of cultivators’ economic conditions.
- Commercialisation of agriculture led to some growth in cash crops (e.g., indigo, cotton), but this benefited British industries, not Indian farmers.
- Lack of investment in terracing, flood control, drainage, and soil desalination further hampered agricultural progress.
- Small farmers, tenants, and sharecroppers lacked resources, technology, or incentives to invest in agriculture.
Industrial Sector
The industrial sector failed to develop a modern base under colonial rule, with deliberate de-industrialisation by the British. Understand the industrial sector of the INdian economy below:
- Traditional handicraft industries (e.g., textiles, metalwork) declined due to policies aimed at making India a raw material exporter and a market for British goods.
- The decline of handicrafts caused unemployment and increased demand for imported British-manufactured goods.
- Modern industries, like cotton and jute textile mills, emerged slowly in the late 19th century, with cotton mills in Maharashtra and Gujarat (Indian-dominated) and jute mills in Bengal (foreign-dominated).
- The Tata Iron and Steel Company (TISCO) was established in 1907, followed by industries like sugar, cement, and paper after World War II.
- No significant capital goods industries (e.g., machine tools) were developed, limiting industrialisation.
- The public sector was confined to railways, power, communications, and ports, with minimal contribution to overall industrial growth.
Foreign Trade
Colonial policies reshaped India’s foreign trade to serve British interests, making India an exporter of primary products and an importer of finished goods.
- India exported raw materials (e.g., raw silk, cotton, wool, sugar, indigo, jute) and imported finished consumer goods (e.g., cotton, silk, woollen clothes) and capital goods from Britain.
- Britain maintained monopoly control over India’s trade, with over half directed to Britain and the rest to countries like China, Ceylon (Sri Lanka), and Persia (Iran).
- The Suez Canal’s opening intensified British control over India’s trade.
- A large export surplus was generated, but essential commodities (e.g., food grains, clothes, kerosene) were scarce domestically.
- The export surplus was used to pay for British administrative expenses, war costs, and invisible imports, leading to a drain of Indian wealth.
Also Read: NCERT CBSE Class 10 Chapter 3 Economics Notes
Demographic Condition
Demographic data, first collected through the 1881 census, revealed uneven population growth and poor social development indicators. Here are the pointers on the demographic condition of the INdian economy.
- Before 1921, India was in the first stage of demographic transition; post-1921, it entered the second stage, though population growth remained moderate.
- Overall literacy was below 16%, with female literacy at about 7%.
- Public health facilities were inadequate, leading to rampant water- and air-borne diseases.
- The infant mortality rate was high at 218 per thousand (compared to 28 per thousand today), and life expectancy was low at 32 years (compared to 69 years today).
- Extensive poverty prevailed, worsening the population’s condition, though precise data on poverty is unavailable.
Occupational Structure
The occupational structure showed little change, with agriculture dominating the workforce.
- About 70–75% of the workforce was in agriculture, 10% in manufacturing, and 15–20% in services.
- Regional variations existed: Madras Presidency, Bombay, and Bengal saw a slight shift from agriculture to manufacturing and services, while Orissa, Rajasthan, and Punjab saw increased agricultural dependence.
Infrastructure
Infrastructure development under colonial rule served British interests rather than public welfare.
- Railways, introduced in 1850, facilitated long-distance travel and the commercialisation of agriculture but undermined village self-sufficiency.
- Roads were built to mobilise the army and transport raw materials to railways or ports for export, with a shortage of all-weather roads causing rural distress during famines.
- Inland waterways, like the Coast Canal in Orissa, were uneconomical and abandoned due to competition with railways.
- Electric telegraphs served colonial law and order, while postal services, though useful, remained inadequate.
Conclusion
By 1947, the Indian economy bore the scars of two centuries of British colonial rule.
- Agriculture suffered from surplus labour and low productivity.
- The industrial sector needed modernisation, diversification, and public investment.
- Foreign trade was oriented to benefit Britain, with a wealth drain through export surpluses.
- Infrastructure, like railways, served colonial interests over public needs.
- Widespread poverty, low literacy, high mortality, and unemployment posed significant social and economic challenges for independent India.
Important Definitions in NCERT Notes Class 11 Indian Economic Development Chapter 1: Indian Economy on the Eve of Independence
This section lists key terms for clarity and revision:
- Zamindari System: A land revenue system under British rule where zamindars collected rent from cultivators, often neglecting agricultural improvement.
- Commercialisation of Agriculture: The shift from growing food crops to cash crops (e.g., indigo, cotton) for British industries, reducing food availability.
- De-industrialisation: The systematic decline of India’s handicraft industries made India a supplier of raw materials and a market for British goods.
- Export Surplus: The excess of exports over imports in India’s trade, used to fund British expenses, does not benefit the Indian economy.
- Drain of Wealth: The transfer of India’s wealth to Britain through export surpluses, war expenses, and administrative costs.
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FAQs
The British aimed to make India a supplier of raw materials for their industries and a market for their finished goods, prioritising Britain’s economic interests.
Stagnation resulted from the zamindari system, low technology, lack of irrigation and fertilisers, and a focus on cash crops for British industries.
The British pursued de-industrialisation, causing the decline of handicrafts to turn India into a raw material exporter and a market for British goods.
Railways facilitated trade and travel but promoted the commercialisation of agriculture, undermining village self-sufficiency and benefiting British interests.
Low literacy (16%), high infant mortality (218 per thousand), low life expectancy (32 years), and widespread poverty marked India’s demographic profile.
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