India’s Economic Challenges from Colonialism to Independence

The structure of India’s current economy is not a recent creation, it has deep historical roots, particularly during the period when India was under British colonial rule, which endured for nearly two centuries before India ultimately achieved independence on August 15, 1947. The primary objective of British colonial rule in India was to transform the nation into a supplier of raw materials for the rapidly expanding modern industrial base of Great Britain and to reduce economic challenges. 

It is crucial to comprehend the exploitative nature of this colonial rule to evaluate the level of development managed by the Indian economy on eve of independence in the past seven and a half decades.

Low Level of Economic Development During Colonial Rule: Assessing the Indian Economy on Eve of Independence

India’s Vibrant Past: Flourishing Economy and Artisanal Excellence

•  A Self-Sustaining Agrarian Economy: Before the advent of British colonial rule, India boasted a self-sustaining economy, with agriculture as the primary livelihood source for the majority. 
  • The economic fabric was also rich with diverse manufacturing activities, particularly flourishing in the handicraft industries. 
• India’s Global Artisanal Excellence: The country was globally recognised for its exquisite cotton and silk textiles, metalwork, and precious stone craftsmanship.
  • These high-quality goods were finding markets worldwide due to their exceptional craftsmanship, contributing to the resilience of the Indian economy on eve of independence

Colonial Economic Policies in the Context of the Indian Economy on Eve of Independence

• Prioritizing Imperial Interests: The economic policies of the British administration were primarily aimed at bolstering the economic interests of Britain, rather than nurturing the growth of the Indian economy. 
• Colonial Trade Imbalance: It transformed India into a supplier of raw materials while becoming a consumer of finished industrial products from Britain. This skewed trade dynamic continued to influence the Indian economy on eve of independence, emphasizing the enduring impact of colonial economic policies.

The Neglected Assessment of Income during Colonial Rule

• The Neglect of Income Assessment in Colonial India: One glaring oversight of the colonial government was its lack of genuine effort to evaluate India’s national or per capita income, which remained largely unassessed. 
  • Although there were individual attempts to gauge these incomes, the results were often conflicting and inconclusive.

Noteworthy Attempts and Consensus on Income Estimates

• Key Contributors to Colonial Economic Analysis: Among the notable figures who endeavoured to estimate India’s income during this period were Dadabhai Naoroji, William Digby, Findlay Shirras, V.K.R.V. Rao, and R.C. Desai.
  •  V.K.R.V. Rao’s estimates were particularly significant during the colonial era. On the eve of independence, these assessments played a crucial role in understanding the state of the Indian economy as it transitioned from colonial rule.
• Consensus on Economic Growth: Despite the varying estimates, a common consensus among most studies was that India’s overall real output growth during the first half of the twentieth century was below two per cent. 
  • Furthermore, there was a scant half-percent annual increase in per capita output, painting a picture of economic challenges of stagnation during the colonial period. and setting the stage for the challenges faced by the Indian economy on eve of independence.

An Overview of India’s Agricultural Sector and Allied Industries

Agriculture and Allied Industries: It is a sector of the economy which includes crop and animal production, as well as agricultural engineering and production of agricultural machinery, fertilizers and other kinds of products supporting farming. 

Colonial India’s Agrarian Economy and Struggles

• Colonial India’s Agrarian Landscape: Under British colonial rule, India’s economy was predominantly agrarian, with about 85 percent of the population residing in villages and depending on agriculture for their sustenance. 
• Agrarian Struggles: Despite engaging a substantial portion of the population, the agricultural sector was riddled with numerous challenges.

Understanding the contadiction of Agricultural Productivity in Colonial India

• Definition: Agricultural productivity is the ratio of agricultural outputs to inputs. 
• Paradox of Expansion: Agricultural productivity witnessed a decline in colonial India, even though there was some expansion in the total cultivated land area. 
• Agricultural Stagnation: This stagnation was chiefly attributed to the various land settlement systems introduced by the colonial government.

Zamindari System and its Detrimental Impact on the Indian Economy on eve of Independence

• The Zamindari System: This system granted large tracts of land to intermediaries known as zamindars, and they used to collect land revenue from the peasants who were working in those land tracts.
• Diversion of Agricultural Profits: This system was implemented in the Bengal Presidency (encompassing parts of present-day eastern states), channelled agricultural profits away from the cultivators and towards the zamindars. 
• Zamindars’ Apathy: But a significant number of zamindars, akin to the colonial government, showed little interest in enhancing agricultural conditions. 
• Rent Over Prosperity: Their primary focus remained on rent collection, unmindful of the economic challenges endured by the cultivators, shaping the landscape of the Indian economy on  eve of independence.

Agricultural Challenges: Examining Technological and Infrastructural Shortcomings

• Resource Deficiency and Technological Lag: The agricultural sector was further marred by low technological advancement, inadequate irrigation facilities, and minimal use of fertilizers. 
• These factors exacerbated the challenges faced by farmers, contributing to the dismal state of agricultural productivity.

Misguided Commercialization and Economic Impacts on the Indian Economy on eve of Independence

• Commercialization Challenges: The commercialization of agriculture, especially the emphasis on cash crops, did little to ameliorate the economic challenges of farmers. 
  • Instead of cultivating food crops, the focus shifted to cash crops destined for British industries. 
• Gaps in Colonial Agricultural Infrastructure: Despite some advancements in irrigation, investment in vital agricultural aspects like terracing, flood control, drainage, and soil desalinization was conspicuously absent. 
• Disparities in Agricultural Adaptation: A minority of farmers adapted their cropping patterns to prioritise commercial crops.
  • A significant portion of tenants, small-scale farmers, and sharecroppers lacked the resources, technology, and incentives to invest in agriculture, further deepening the agricultural crisis.