Indian Economy - On The Eve Of Independence

Before 1947, when India was likely to be closed economy and ruled by the British government peoples of the country faces a lot of problems like poverty, unemployment, starvation, etc. The Britishers ruled over all the sectors of the economy and they always doing cheat and fraud with the Indian economy.

Colonial Exploitation Of The Indian Economy Under The British Rule :-

Indian Economy under the British rule or before the date of independence was subjected to colonial exploitation. It implied a targeted or we can say that strategy exploitation of all the sectors of the economy by the British government.

Let us discuss how Britishers exploited the different sectors of the economy in different ways :-

• Colonial Exploitation Of The Agricultural Sector In Indian Economy Before Independence :-  In India, before the independence agricultural sector was fully exploited through zamindari system of land revenue.

Generally, zamindars are hired by the British government and they were declared as the owners of the land. They were to pay a fixed sum amount to the British government by the way of land revenue or income from land because after that they were free to extract soil from their land as much as they wished.

The actual cultivators of the soil which are known as tillers of the soil got minimum compensation as wages for their survival. Zamindars generally spent their all land revenue in their luxuries of life. No such amount to be made for the growth and development of the agriculture sector. That's why, after some years Indian economy got no growth and development in the agricultural sector.

Owners of the Soil vs. Tillers of the Soil

Owners of the soil were the zamindars and tillers of the soil were peasants and labourers who worked on the farms of zamindars.

• Colonial Exploitation Of Industrial Sector In The Indian Economy Before Independence :-  Systematic de-industrialisation is the term that describes the status of industrial sector during the British rule. It implied two things:

1. Decay of world famous traditional handicraft industry owing to discriminatory policies of the British government, and
2. Bleak growth of modern industry owing to lack of investment opportunities.

As we all know that in ancient times, Indian handicrafts are well known famous in the world. Indian handicrafts enjoyed a great reputation for their better variety and good quality, India also known for the exporters of the world's best handmade handicrafts in the international market. 

In British rule, the Indian handicrafts reputation were destroyed in two ways :- 

1. British government applied heavy duty and taxes in their exports.
2. Britishers imports duty-free British goods from Britain which is likely to be cheaper than Indian handicrafts.

After that in industrial sector of the Indian economy, industries suffered from huge losses and many of the industries shut down their production work because whatever they want to do good Britishers locked their work and punished strictly.

• Colonial Exploitation Of International Trade In The Indian Economy Under British rule :-  In ancient times, India is the larger exporter of the agricultural products and handmade handicrafts. But British government with the help of discriminatory tariff policies destroyed the international market for the Indians.

Let's discuss about the discriminatory tariff policies :-

1. Britishers export duty-free Indian raw material to fulfill the industrial needs in the Britain.
2. Britishers import duty-free Britain goods to capture the whole Indian markets with the British goods.

With the help of this discriminatory policies India became importer of the finished goods from Britain and exporter of the raw material to Britain.

State of India's foreign trade at the time of independence can be described in terms of the following observations:

1. Net Exporter of Primary Products and Importer of Finished Goods: Owing to colonial exploitation of the Indian economy, India became net exporter of raw materials and primary products (like raw silk, cotton, wool, jute, indigo, sugar, etc.). On the other hand, India became net importer of  the finished goods produced by the British industry in Britain. Our imports included cotton, silk and woolen clothes, besides several types of capital goods produced in England.
2. Monopoly Control of India;s Foreign Trade: During the British rule, exports and imports of the country came under monopoly control of the British government. In this context, two observations are of critical significance: (a) More than 50 per cent of India's foreign trade was directed towards Great Britain. (b) While exports of the primary products (raw material) from India supplied inputs to the British industry, imports of finished goods from Britain provided a huge market to the British industry.
3. Surplus Trade but only to Benefit the British: Surprisingly, during the British regime, our exports exceeded our imports. It implied a surplus of balance of trade. But, note these points carefully:

• This surplus was owing largely to the export of primary goods (not the industrial goods) which is a sign of economic backwardness.
• The trade surplus was not used for growth and development of the country. Instead, it was used to meet: (a) Administrative expenses of the British government in India, and (b) Expenses of wars fought by the British government.
• Administrative and war expenses led to a huge drain of wealth from India. It compounded the backwardness of the Indian economy.

Important points:

• At the time of independence, surplus generated as balance of trade was only spent to meet administrative and war expenses by the British government in India.
• These expenses led to a huge drain of wealth as it was not used for investment.
• Consequently, poverty and backwardness were elevated.

Drain of India's Wealth

• Huge administrative expenses were incurred by the British government to manage their colonial rule in India.
• Also, huge expenses were incurred by the Britishers or British government to fight wars in pursuit of their policy of imperialism.
• At that time, all these expenses and extra cost were borne by the Indian Exchequer.
• This implied a drain of India's wealth.

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