Mains Marathon

Approach :

• Briefly introduce the flourishing condition of the Indian economy before British intervention
• Explain how the British colonial policies led to the decline of the traditional Indian economy.
• Conclude with the long-lasting impact of these policies.

Introduction:

Before British intervention, India was a flourishing economic power, contributing nearly 25% of the global GDP in the early 18th century. Its traditional economy was rooted in self-sufficient villages, flourishing artisanal industries, and regional trade networks. However, with the advent of British colonial rule and the implementation of exploitative policies in land revenue, trade, and industry, India’s traditional economy suffered a systematic decline.

Body

Land Revenue Settlements and Agrarian Distress

• The land revenue of India under British rule became a source of poverty for the cultivator and affluence for the government. (R.C.Dutt)
  • Permanent Settlement (1793) in Bengal fixed land revenue with zamindars, encouraging them to extract maximum rent from peasants. Failure to pay led to loss of land and increased indebtedness.
  • Ryotwari System (Madras & Bombay) taxed cultivators directly, based on periodic land assessments. High revenue demands led to the forced cultivation of cash crops like indigo.
  • Mahalwari System (North-West Provinces) assessed revenue at the village or community level, often arbitrarily.

Trade Policies and Commercial Decline

• British trade policy transformed India from a manufacturing hub to a raw material supplier and consumer market for British goods:
  • Indian textiles, once globally sought-after, faced high import duties in Britain, while British machine-made goods were imported duty-free into India.
  • The British discouraged internal trade, dismantled local markets, and monopolized exports through the East India Company.

Industrial Impact and Deindustrialization

• Handloom weavers and artisans lost patronage due to the decline of princely states and growing British imports.
• Traditional guilds and craft networks were dismantled, pushing artisans into agrarian labor or urban slums.
• British goods, mass-produced in Manchester, outcompeted Indian products, leading to the collapse of cottage industries.
• Once-thriving centers like Murshidabad, Dhaka, and Surat declined due to British preference for industrial production in Britain.
• Skilled artisans lost their livelihoods as the shipbuilding, metalwork, and textile industries collapsed.

Consequences for the Traditional Indian Economy:

• India's share of the world income went from. 27% in 1700 AD (compared to Europe's share of 23%) to 3% in 1950. (Angus Maddison, The British Economist).
• This exploitative system led to the “Drain of Wealth”, a concept popularized by Dadabhai Naoroji, who argued that Indian wealth was systematically transferred to Britain without adequate economic return. He estimated this drain to be £200–300 million annually by the late 19th century.
• These policies led to the breakdown of the traditional village economy, stagnation in agriculture, and frequent famines, like the Bengal Famine of 1770, which killed nearly 10 million people.

Conclusion:

The British policies in land revenue, trade, and industry were not merely administrative changes—they were structural interventions that dismantled India's traditional economy. As Bipin Chandra rightly stated, “Colonialism created conditions that led to the decline of indigenous industries, agriculture, and trade.” This legacy of colonial underdevelopment laid the foundation for widespread poverty, which the Indian economy struggled to overcome even after independence.