February 26, 2019

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Indian Economy on the Eve of Independence

Indian Economy on the Eve of Independence


  • Characteristics of Indian Economy before Colonial rule


  1. India had an independent Economy.
  2. Agriculture was the main source of livelihood of most of the people.
  3. Known for its handicraft industries in the fields of Cotton and silk textiles, metal and precious stone works etc.
  4. Reputation in the market for fine quality of material produced.
  5. Standard of craftsmanship seen in all imports from India.


  • Concerns of Policies introduced in India during Colonial rule


  1. Protection and promotion of the economic interests of their home country.
  2. Transforming India into net supplier of raw material.
  3. Making India a consumer of finished industrial products from Britain.


  • State of different economic sectors
Agricultural Sector Industrial Sector Foreign Trade
85% of people deepen on it directly or indirectly


Could not develop sound industrial base during colonial rule More than half of India’s foreign trade was restricted to Britain
Deterioration and Stagnation in agricultural sector Handicraft industry declined Little trade was done with China, Ceylon and Persia.
Low agricultural productivity No modern industry base was allowed to come Opening of Suez Canal intensified the British control over India
Land Settlement and

Revenue Settlement

There was hardly any Capital market Generation of large export surplus at huge cost
Commercialisation of agriculture in some areas    




  • Motives of de-industrialising India


  1. Make India exporter of raw material.
  2. To make India a market of finished goods.


  • Demographic Conditions


  1. First census was done in 1881.
  2. India was in the first stage of demographic transition before 1921.
  3. The second demographic transition stage started after 1921.
  4. Very high population growth.
  5. Social Indicators were not encouraging.
  6. Literacy level was less than 16%.
  7. Female literacy was negligible.
  8. Bad State of Public Health Services.
  9. High Mortality Rate.
  10. Infant mortality was high – 218 per thousand.
  11. Low Life Expectancy – 32 years.
  12. High level of poverty.


  • Occupational Structure during colonial rule


                         Share of workforce in different sectors (in %)

Primary Sector 70 – 75
Secondary Sector 10
Tertiary Sector 15 – 20



  • Infrastructure


  1. Railways
  2. Roads
  3. Electric telegraph
  4. Postal services






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