The economic impact of the British Rule

Disruption of the traditional economy

1.The British Rule in India disrupted the traditional structure of the Indian Economy. The economic policies pursued by the Britishers converted the Indian economy into a colonial economy which was to be guided by the needs of the British economy. Thus, the Indian economy was subordinated to the British trade and industry. The concept of self-sufficient village economy was torn asunder.  In its 200 years rule, the Britishers looted the wealth of India. According to one estimate made by an American historian, about $44 trillion were taken away by the Britishers. Thus, when the British left India, the GDP of Britain was 8% of the world GDP. While the GDP of India was reduced to 2-3% of the world GDP in 1947. It should be noted that in 1700 AD, the share of GDP of India was 23% of the world GDP. Thus, through the policy of mercantilism, free trade and financial capitalism, the Britishers destroyed handicraft industries of India and flooded the Indian market with British manufactured goods. Indian goods made with primitive techniques could not compete with goods produced on a mass scale by powerful steam operated machines. The railways enabled British manufacturers to reach and uproot the traditional industries in the remotest village of the country. The cotton weaving, spinning, silk, woollen textiles, iron, pottery, glass, paper, guns, shipping, tanning and dyeing industries were hard hit.

2.Servants of East India company  forced Indian artisans and craftsmen to sell their goods below the market price and to hire their services below the prevailing wage.

3.High import duties on Indian goods into Britain and Europe during the 18th and 19th century led to the virtual closing of Indian manufactured goods into the British and European market after 1820 A.D. 

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Ruin of towns and cities. 

1.Because of the decline of handicrafts and domestic industries, several cities like Dhaka, Patna,  Murshidabad, Surat also declined. Artisans and craftsmen left cities and overcrowded agriculture for their livelihood. Thus, between 1901 to 1941, the percentage of population dependent upon agriculture increased from 63.7% to 70%. This situation led to the extreme poverty of people in rural areas. 

Impoverishment of peasantry - 

1.The condition of peasants became miserable. In permanently settled Zamindari areas, peasants were left at the mercy of zamindars and intermediaries. Similarly, in Ryotwari and Mahalwari areas, excessive land revenue further alienated peasants from their lands.

2.Government spent very little for improving agriculture.

3.In case of default, lands of peasants were sold to money lenders and merchants.

4.In 1911, total rural debt was estimated at Rs.300 crores. By 1937, it amounted to Rs.1800 crores.

5.The growing commercialisation of agriculture also helped money lenders and merchants to exploit the cultivators. Peasants were forced to sell their products below market prices 

Ruin of old zamindars and rise of new zamindars-

1.On account of the Izaredari system, invented by Warren Hastings, most of the old zamindars fell into arrears and their zamindari were snatched away by the company government. Under this settlement, agricultural lands were auctioned to the highest bidders. 

2.Zamindari rights were given to capitalists, money lenders, merchants who could bid the highest auction. This led to the rise of new Zamindars who had no interest in land upgradation and these new zamindars lived in cities, lent their zamindari to intermediaries. Sometimes, the number of intermediaries went up to 50. 

3.In the Ryotwari and Mahalwari areas also, landlord-tenant relations spread gradually. Thus, in British India, landlordism became the main feature of agrarian relations throughout the length and breadth of the country.

Stagnation and deterioration of agriculture - Agricultural production failed by 14% between 1901 and 1939. Government refused to improve and modernise agriculture. By 1905, the government spent less than Rs.50 crore on irrigation while on railways it spent Rs.360 crores. Indian agriculture was primitive. The use of inorganic fertilisers was virtually unknown. 

Development of modern industries - 

1.In the later half of the 19th century British Capitalists installed industries in India because of the cheap labour and cheap raw materials available. 

2.The British Capitalists monopolised the plantation of tea, rubber, coffee, indigo and cornered all profits and sent them to England.

3.However, Indians developed cotton and jute industries.

4.TATAs developed Iron industries in 1907.

Extreme poverty of Indians- 

1. 94% of people were on the verge of starvation on the eve of our Independence 1947. 

2.Occurrence of a series of famines starting from 1770 to 1943. 

3.It is calculated that from 1854 to 1901, 28 million people died during famines.

4.In 1943, 3 million people died in Bengal.

5.In 1930, the average life expectancy of an Indian came down to 32 years against the average of 60 years for Europeans.

6.Britain subordinated the Indian economy to its own economy and determined the basic social trends in India according to its needs. This resulted in stagnation of agriculture and Industries, exploitation of its peasants and workers by the Zamindars, Land lords , Princes , Merchants, Money lenders, government officials.

7.The British rule spread poverty, disease and semi-starvation to the majority of people of India.

To conclude, the British rule wrought havoc in the traditional economy of India. India was converted from an exporter of handicrafts to the world to importer of machine made goods and exporter of raw materials. During the 200 years of British rule, while Indians became poorer, the loot from India helped in the growth of Industrial revolution of Britain and it became the most powerful country of the world in the 18th, 19th and 1st half of the 20th century.