Plus One Economics Notes Chapter 1 Indian Economy on the Eve of Independence

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Kerala Plus One Economics Notes Chapter 1 Indian Economy on the Eve of Independence

Low level of economic development under the colonial rule:
The British rule started in India in 1757 and came to an end in 1947. The Indian economy underwent rapid changes under British rule. The economic policies pursued by the colonial government in India were concerned more with the protection and promotion of the economic interests of their home country than the development of the Indian economy. The twin objectives of British rule in India were

  1. To use India as a supplier of raw materials for British Industries.
  2. To convert India into a market for the finished products produced in Britain.

Agricultural Sector:
Agricultural Sector was the backbone of the Indian economy.
During the British colonial rule India remained fundamentally an agrarian economy. Around eighty percent of India’s population lived in villages. Agriculture was stagnant and it was the main source of livelihood of the population. People depended directly or indirectly on agriculture and its productivity was very slow. The agricultural sector stagnated during British rule.
Major reasons for agricultural stagnation were:

  1. The exploitative land settlement system followed by British rulers
  2. Use of low level of technology
  3. Rural indebtedness
  4. Low agricultural productivity
  5. Use of limited chemical fertilizer
  6. Inadequate irrigation facilities

Industrial Sector:
India’s industrial sector could not make progress during British rule. Their aim was to collect raw materials from India and sell their final products in India.

By the second half of the nineteenth century, modem industry began to take root in India. Initially, cotton industries in Maharashtra and Gujarat (Bombay presidency) and the jute industry in Bengal were established. Then industries of fertilizers, rayon, rubber, cement, sugar, pepper, etc., were established in some regions of the country. The setting up of Tata Iron and Steel Company (TISCO) in 1907 was a landmark in the industrialization of India. Jemshedji Tata established TISCO in Jamshedpur in Bihar. During the British rule hardly any capital goods industries were established in the country.

Foreign Trade:
Though India exported value-added products before the British period, we started exporting primary products during their rule. Consequently, India became an exporter of primary products such as raw silk, cotton, wool, sugar, indigo, jute, etc. and an importer of finished consumer goods like cotton, silk and woollen clothes and capital goods like light machinery produced in the factories of Britain.
The most important characteristic of India’s foreign trade, throughout the colonial period was the generation of a large export surplus.

Demographic Condition:
Various details about the population of British India were first collected through a census in 1881. Through Suffering from certain limitations, it revealed the unevenness in India’s population growth. Subsequently, every ten years such census operations were carried out. Before 1921, India was in the first stage of demographic transition. The second stage of transition began after 1921.

Occupational Structure:
Occupational structure refers to the distribution of working persons across different industries and sectors. Broadly we divide occupations into three types. Agriculture, animal husbandry, forestry, fisheries, etc., are collectively known as ‘primary’ activities. Manufacturing industries, both small and large scale, are known as ‘secondary’ activities. Transport, communication, banking, financial services, etc., are ‘tertiary’ activities.

Infrastructural facilities developed in India during the British period. Infrastructure means some kind of permanent installation, which are used over a long period of time for the supply of basic inputs like railway lines, roads, dams, canal systems, power stations, pipelines, hospitals, educational institutions like schools, colleges, etc. Basic infrastructure facilities such as railways, ports, water transport, and telegraph did develop during the British rule. The real intention behind such a development was to serve the various colonial interests of Britain.

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