Modern Indian History

Economic Condition

During British Rule

1

Q. Examine how the decline of traditional artisanal industry in

colonial India crippled the rural economy. (250 words) 2017

Previous Year Question - Mains 2

❑ 1st man to write about the drain of wealth was Dadabhai Naoroji.

❑ He wrote about it in a paper called ‘The English debt to India’.

❑ He also wrote a book ‘Poverty & un-British rule in India’.

❑ Other people who wrote were:

❖ Govind Ranade

❖ R.C. Dutt made drain of wealth the subject of his ‘The

Economic History of India’.

❖ R.P. Dutt

Drain of Wealth… 3

❖ Dinshah Wacha

❖ S.N. Banerjee

❖ Prithwish Chandra Ray

❖ G Subramania Iyer supported the cause of India's freedom

& used his newspaper ‘The Hindu’ to protest British

Imperialism.

❖ Gopal Krishna Gokhale,

❖ GV Joshi

❖ Bholanath Chandra

Drain of Wealth… 4

Q. Who of the following was/were economic critic/critics ofcolonialism in India ? 2015

1. Dadabhai Naoroji

2. G. Subramania Iyer

3. R.C. DuttSelect the correct answer using the code given below:(a) 1 only(b) 1 and 2 only(c) 2 and 3 only(d) 1, 2 and 3

Previous Year Question 5

Q. Who among the following used the phrase ‘Un-British’ to criticise

the English colonial control of India? 2008

a) Anand mohan Bose

b) Badruddin Tayyabji

c) Dadabhai Naoroji

d) Pherozshah Mehta

Previous Year Question 6

❖ The salaries of Secretary of State

❖ Maintenance of the army & funds for waging wars even outside India

❖ Other expenses related to administration.

❖ Profits earned by British capitalists through illegal channels

❖ They used to pay less than the market value while purchasing Indian goods

❖ Support the India office in London.

❖ Salaries & pensions of British personnel engaged in India.

Home charges: 7

Q. With reference to the period of colonial rule in India, "Home Charges" formed an important part of drain of wealth from India. Which of the following funds constituted "Home Charges" ? 2011

1. Funds used to support the India office in London. 2. Funds used to pay salaries and pensions of British

personnel engaged in India. 3. Funds used for waging wars outside India by the British.

Select the correct answer using the code given below:(a) 1 only(b) 1 and 2 only(c) 2 and 3 only(d) 1, 2, and 3

Previous Year Question 8

❑ These charges would be probably found to be:

❖ the dividends on East India Stock,

❖ interest in Home debt, the salaries of the officers,

❑ furlough and retired pay to members of the Indian Military & Civil Services when at Home,

❑ Charges of all descriptions paid in this country connected with the British troops serving in India &

❑ portion of the cost of transporting the British troops to & from India".

Continued… 9

❑ The drain of wealth became a big issue in the Congress session

that followed 1896.

❑ Dadabhai wrote that it was the main reason behind the poverty of

the nation

❑ It checked & retarded capital formation in India while the same

portion of wealth accelerated the growth of British economy.

❑ British claimed that there was no drain of wealth but they were

providing services like roads, railways, health, education etc.

Impact of Drain of Wealth 10

❑ Factors that led to deindustrialization

❖ Industrial revolution in England

❖ Requirement of raw materials from India

❖ Markets in India

❖ High import tax on Indian goods manufactured

❖ The English goods were much cheaper than the Indian goods

& hence penetrated easily into the Indian markets

❖ The English traders started buying most of the raw material at

a relative higher price

Continued… 11

❑ Hence the Indian traders were facing shortage of raw material &

since they had to pay a higher price of raw material, their cost of

production increased

Continued… 12

❑ Import duty on Indian goods in England was 200% to 400%while for the English to sell their goods in India, it was just 2% to10%.

❑ Extinction of ruling class, & Indian ruling families by the British

❑ These ruling classes used to buy a lot of Indian products. But nowthat they had been destroyed, there were no consumers for theIndian products.

❑ Now British were the ruling class, they had different preference &requirements which led to the downfall of Indian industries.

Discriminatory law 13

❑ There were no banks or co-operative societies in India.

❑ On the other hand in London alone, there were more than 600

banks at the turn of 17th & 18th century.

❑ This shows the financial aid which the companies in England were

getting while the Indian traders were not given these facilities by

both Indian rulers & English rulers .

Lack of Financial & Technical support 14

❑ No technological progress made by Indians.

❑ There was no sense of entrepreneurship.

❑ Indian traders did not search for new markets after losing a big

market in the west

Continued… 15

❑ Indian goods were charged higher than the English goods for

transportation through railways.

❑ It was prevalent everywhere, not only in railways.

Discrimination in Freight Rates 16

❑ Indian economy, which was a balanced economy earlier, became

a purely agricultural based economy.

❑ Large scale unemployment.

❑ The small cottage industries which were destroyed were not

replaced which led to severe unemployment.

Impact of Deindustrialization 17

❑ Industries were established only in few places like Bombay,

Ahmedabad etc. due to pressure from certain Indian traders.

❑ Most of the Indian traders went back to agriculture, leading to

fragmentation of land holding size.

❑ This resulted in stagnation in agricultural production & disguised

unemployment.

Continued… 18

❑ India was very famous for crafts like brass work, Malmal of

Dhaka, etc. , but on establishment of industrial products from

England, these craft industries lost their markets which ultimately

resulted in loss of culture & history.

Loss of Craft Industries 19

• By the early 18th century, worried by the popularity of Indiantextiles, wool & silk makers in England began protesting againstthe import of Indian cotton textiles.

• 1720:British government enacted a legislation banning the use ofprinted cotton textiles– chintz – in England. This Act was knownas the Calico Act.

• Printed design on fine cloth (chintz) produced in Masulipatnamduring the 19th century.

• This is a fine example of the type of chintz produced for export toIran & Europe.

Chintz 20

• European traders first encountered fine cotton cloth from Indiacarried by Arab merchants in Mosul in present-day Iraq.

• So they began referring to all finely woven textiles as “muslin” –a word that acquired wide currency.

• When the Portuguese first came in search of spices they landed inCalicut.

• The cotton textiles which they took back to Europe, along withthe spices, came to be called “calico” (derived from Calicut), &subsequently calico became the general name for all cottontextiles.

Calico 21

Q. Economically one of the results of the British rule in India in the

19th Century was the

(a) Increase in the export of Indian handicrafts

(b) Growth in the number of Indian owned factories

(c) Commercialization of Indian agriculture

(d) Rapid increase in the urban population

Previous Year Question 22

❑ Commercialization of agriculture was the result of British rule in

India in the 19th century.

❑ Farmers were forced to grow cash crops which were exported to

Britain as raw materials of the English factories.

❑ The period also saw decline in urban population & destroyed

domestic factories. Indians started producing crops for

commercial use & on a large scale basis. 19th century agriculture

became commercial due to the use of modern agricultural

equipment.

Explanation 23

❑ British rulers forced farmers to grow Indigo & other cash crops

which can be used as a raw material for British

manufacturers. As a result urban population reduced & domestic

industries were destroyed.

Continued… 24

Positive:

❖ Indian markets linked with international markets

❖ More profits due to export of cash crops by rich peasants

❖ Improved agricultural infrastructure (Too a certain extent )

Negative:

❖ Shortage of food crops

❖ Exploitation of peasants

❖ Rural indebtedness

❖ Got loans with heavy interests

Impact of commercialization 25

❖ Negative impact due to linking with international markets: If the

harvest is good in some other markets, the Indian peasants were

ignored. For instance, the cotton of the 1860s pushed up prices

but this mostly benefited the intermediaries, & when the slump in

prices came in 1866, it hit the cultivators the most, bringing in its

turn heavy indebtedness, famine & agrarian riots in the Deccan in

the 1870s.

❖ Impact on land

❖ For the Indian peasant, commercialization was a forced process.

Continued… 26

❑ Only in the 2nd half of the 19th century modern machine-based

industries came up in India.

❖ 1st cotton textile mill was set up in 1853 in Bombay by Cowasjee

Nanabhoy

❖ The first jute mill came up in 1855 in Rishra.

❑ But most of modern industries were foreign-owned.

❑ Indian-owned industries came up in cotton textiles & jute in the 19th

century & in sugar, cement etc. in the 20th century.

Development of Modern Industry 27

❑ Prospects of high profits,

❑ Availability of cheap labor,

❑ Cheap & readily available raw material,

❑ Ready market in India & the neighbours,

❑ Diminishing avenues for investments at home,

❑ Willingness of the administration to provide all help,

❑ Ready markets abroad for some Indian exports such as tea, jute &

manganese.

Reasons for rush of foreign capital28

❑ Indian-owned industries suffered from many handicaps:

❑ Credit problems,

❑ No tariff protection by Government,

❑ Unequal competition from foreign companies,

❑ Stiff opposition from British capitalist interests who were backed by

financial & technical infrastructure at home.

Continued…29

❑ The colonial factor also caused certain structural & institutional changes.

❑ The industrial development was lopsided —core & heavy industries &

power generation were neglected & some regions were favored more

than the others causing regional disparities.

❑ These regional disparities hampered the process of nation building.

❑ Absence of technical education, the industry lacked sufficient technical

manpower.

❑ Socially, the rise of an industrial capitalist class & the working class was

an important feature of this phase.

Continued… 30

Famine Policy 31

❑ “An Acute shortage of food in a given area due to natural or

manmade reasons is called famine”

❑ Causes:

❖ Poverty causes famine or famine cause poverty?

❖ British scholars: Famines cause Poverty

❖ Indian Scholars: Poverty cause Famine

❖ Colonial economic policy

Famines32

● There were 10 severe famines besides a large number of scarcities.

● 1860-61: Famine in Delhi-Agra region

○ It was the 1st time when the authorities looked into the causes, area & intensity of the famine & took some measures to cope with the distress.

○ Colonel Baird Smith Report on famine but it did not result into any formulation of general principles of relief.

● 1866- The Orissa Famine covered Orissa, Madras, Bihar & Northern Bengal. 13 lakh died in Orissa alone. No steps taken by the government.

● 1868- Famine in Northern and Central India.

Under Crown Administration 33

● 1876-78: Period of Lytton The Great Famine affected Madras, Bombay, U P & Punjab.

● Many villages were depopulated & large tracts of land went out of cultivation.

● R.C. Dutt estimated 5 million people were perished in a single year.

● Between 1850 & 1900, about 2.8 crore people died in famines.

● The government efforts were half-hearted & there was a lack of policy.

Under Crown Administration 34

● Government of Lytton appointed a commission to formulate general principles & suggest preventive measures.

● Recommendations:

○ Employment on works must be offered before the physical efficiency of applicants had been impaired by privation. Wages should be adjusted from time to time to provide sufficient food for laborer’s support.

○ It should be the duty of the state to provide gratuitous relief to the impotent poor & listed the category of persons entitled to receive it.

○ The relief could take the form of supply of raw grains or money or cooked food.

Strachey Commission-1880 35

○ Supply of food in distressed areas should be carefully watched. However government must trust private trade in supply & distribution of food &prohibit export of grains necessary.

○ It made suggestions regarding suspensions & remissions of land revenue & rents.

○ The cost of famine relief should be borne by the provincial governments. However, central assistance to be made wherever necessary.

○ During excessive drought, facilities should be provided for migration of cattle to grassy forest areas.

● Government accepted in general the Commission's recommendations & steps were taken to find new resources for the creation of a Famine Fund.

Strachey Commission-1880 36

● 1883- provisional Famine Code was formulated which formed a guide &basis for the various Provincial Famine Codes which were subsequently formulated.

● It prescribed the necessary precautions in ordinary times, gave instructions to be followed when a relief campaign seemed imminent.

● It also prescribed the duties of all concerned when famine actually began.

● 1896-97: The great famine affected almost every province. ● Lyall Commission was set up & its views were similar to its predecessors.● 1899-1900: The famine affected 28 million. ● The authorities refused to open relief works during the early stages &

when they opened, the system broke down completely.

Strachey Commission-1880 37

● Lord Curzon appointed the commission under Sir Anthony MacDonnell.

● Recommendations:

○ The commission emphasized the benefits of a policy of “moral strategy”, early distribution of advances for purchase of seed & cattle & sinking of temporary wells.

○ Appointment of Famine Commissioner in a province where relief operation were expected to be extensive.

Recommendations of MacDonnell Commission 38

○ Enlistment of non-official assistance on a large scale & preference in particular circumstances of village works to the large public works.

○ Better transport facilities, opening of agricultural banks, improvement of irrigation facilities & vigorous measures to foster improved methods of agriculture.

● Most of the recommendations of the Commission were accepted & Curzon took measures to prevent & combat famine.

Recommendations Continued.. 39