INDIAN ECONOMY ON EVE OF INDEPENDENCE Introduction A framework within which all economic activities of a country take place is called economy. These economic activities relate to those activities of people that determine what goods will be produced in country. On the basis of the economic activities, the economy is classified into three broad categories: Primary sector Secondary sector Tertiary sector Generally, in underdeveloped countries, the primary sector is the largest contributor to national income as industry and trade are not developed but, in developed countries, relative contribution of the primary sector is small. Meaning of colonialism The word colonialism means foreign domination. It indicates that the country is a colony of a ruling foreign country. The economy of such a colony is regulated and controlled by the ruling country in such a way that it broadly serves the interest of the ruling foreign country. Agricultural sector Agriculture stagnated over the years, especially during the first half of 20th century when the full impact of colonialism began to be felt. The stagnation in the agriculture sector was mainly because of various land settlement systems introduced by the British government. Low per capita income, widespread poverty and famines characterised Indian agriculture. The Zamindari system, The Ryotwari system and The Mahalwari system are the land settlement systems introduced by the British government. Commercialisation of agriculture It means the process of orienting agriculture production for sale in market rather than merely for subsistence or self consumption. The improvement of roads and railways boosted the process of commercialisation of Indian agriculture. The productivity of cash crops was relatively high in certain areas. This helped in generating a marketed surplus. But it benefited only a few farmers. The majority of the farmers did not get any benefit from the commercialisation rather it created a shortage of food. Reasons for low yield in agriculture Lack of irrigation. Lack of fertilizers. Low investment in agriculture. Lack of agricultural skills Land reform systems. Industrial sector India could not develop a sound industrial base during British rule. Indian handicraft industry could not face competition and started declining. The industrilasation introduced by the British serve only their interests. There were two basic motives of the colonial government behind the policy of deindustrialising India. The first motive was to reduce India’s role to that of an exporter of raw materials and the second motive was to turn India into a market for British products of the benefit of their own nation. Decline of handicraft During British rule, Indian handicraft could not compete and started declining. India was converted into a nation serving the interest of Great Britain. The Rise of Modern Industries The major industries develop at that time are of jute, cotton, iron and steel, sugar, cement and paper. The major drawback of Indian industries structure is the absence of capital goods industry. These industries produce machine and tools necessary to produce articles for current consumption. Thus, India lacked the ability to expand and reproduce its existing productive capacity. Foreign trade Foreign trade constitutes the exports and imports of a country. During the British rule, India was self-sufficient in food and maintained a favorable balance of trade. But due to restrictive trade policies during the 20th century, the composition of India’s foreign trade shows heavy bias of exports towards foodstuffs and raw materials while that of imports towards manufactured goods. Occupational Structure Occupational structure refers to the distribution of country’s workforce among various sectors of economic activities. During the colonial period, 70-75 per cent workforce was engaged in primary sector. The secondary and tertiary sector accounted for only 10 and 15-20 per cent workforce. 7) Infrastructure 1) The state of infrastructure facilities especially in the field of transport, communication and energy was very poor in India during the British rule in India. However some efforts were made to develop basic infrastructure like roads, railways, ports, water transport, and post by the British government. 2) The British rulers introduced railways in 1850 and Indian railways begun operations in 1853. 3) The development and the construction of railways by the British rulers had affected the Indian economy in the following ways:- I) It provided cheap and rapid transport system especially for distant travel. ii)It broke geographical barriers and thus promoted national unity and understanding iii)It created new employment opportunities iv)It helped in controlling famines v)It promoted foreign trade but benefited British more than Indians vi)It encouraged the process of industrialisation BY: JINENDRA JAIN MOB: 9782779056 E-MAIL: email@example.com
"economics notes by jinendra jain"