Mercantilism in British India (1757-1813): Economic Exploitation, Resource Control & Drain of Wealth

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Mercantilism: Adam Smith’s Trade Balance Theory #

Mercantilism in British India is a form of trade practice where the government focuses on maintaining a favorable trade balance by increasing exports and minimizing imports. This theory was given by “Adam Smith”.

Mercantilism in British India (1757-1813): Economic Control and Exploitation #

Following are the characteristics of this phase of the Economic policy of the Mercantilism in British India: 

• This phase was based on two basic objectives i.e:
  • To acquire a monopoly of trade with India.
  • To take control over the revenue of the government by gaining control over state power.
• New revenue-generating settlements were introduced in the existing Indian Agricultural set-up.
• During this phase, the East India Company resorted to direct plunder of the Indian state.
• This period marked the Drain of Indian wealth which amounted to approx 2-3 percent of Britain’s National Income.
• During this phase, exports from India outnumbered imports of finished goods from Britain.
• However, the weavers were exploited by the company by forcing them to produce under uneconomic compulsions.

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Conclusion #

This phase did not see any major changes in administration, judicial functions, society etc. The mercantilist phase only served the economic interest of the East India Company