Impact of British rule on Indian Economy
“Our system acts very much like a sponge, drawing up all the good things from the banks of Ganges, and squeezing them down on the banks of the Thames.” — remarked John Sullivan, the then president of Board of Revenue, Madras.
The East India Company (EIC) which was just a trading body from 1600 to early 1750 s, used to bring goods or precious metals into India, exchanged them for Indian goods- especially textiles and spices- and sold them abroad for large profits. After gaining political power in Bengal by winning the Battle of Plassey in 1757, the pattern of the Company’s commercial relations underwent a qualitative change.
The British disrupted the traditional structure of the Indian economy. Moreover, they always remained foreigners in the land, exploiting the Indian resources and carrying away India’s wealth to develop England.
Image: The British viceroy and governor-general of India, talks with Mr. J. K Biswas, the chairman of the Rotary Club Relief Committee, during a visit to a kitchen for victims of famine.
There was a time in the 17th and 18th centuries when the British manufacturers were jealous of the popularity the Indian textiles enjoyed in Britain. By 1720, several laws have been passed prohibiting the use of printed or dyed cotton cloth from India. In 1760, a lady had to pay a fine of £200 for possessing an imported handkerchief from India!
Through its political power, the company dictated the terms and conditions for Indian trade and transformed the Indian economy into a colonial economy i.e., basically an economy that exports raw materials (have low intrinsic value) and imports manufactured goods (have high intrinsic value)
Factors responsible for the transformation of the Indian economy into a colonial economy:
- Heavy duties were imposed on Indian manufactures to enter into England and other European countries
- The weavers and other artisans were forced to sell their products to the company at a cheaper price, even at a loss
- Often, these artisans were compelled to work for the company at low wages and were forbidden to work for the Indian merchants. Thus, the EIC eliminated its rivals both Indian and foreign
- The Industrial Revolution in Britain led to mass production leading to cheaper prices of goods with which the Indian products could not compete
- The Government of India i.e., the British rule in India followed a policy of free trade or unrestricted entry of British goods into India exposing the Indian handicrafts to the fierce and unequal competition of the machine-made products of Britain which finally faced extinction. Imports of British cotton goods alone increased from £1,10,000 in 1813 to £6,300,000 in 1856
Thus the commercial policy of the EIC was guided by the needs of British Industry. Its main aim was to transform India into a consumer of British goods and a supplier of raw materials for the expanding industries in England.
This led to the de-industrialization of the country and increased the dependence of people on agriculture. This increasing pressure on agriculture was one of the major causes of the extreme poverty in India under British rule. The exorbitant taxes on land and the rigid manner of collection of taxes even during tough times like famines pushed the peasant deeper and deeper into debts until he parted with his land to clear the debt.
At the time when agriculture all over the world was being modernized and revolutionized, Indian agriculture was technologically stagnant. The government didn’t spend on modernizing agriculture while it spent over crores of rupees on railways that were demanded by British business interests.
It should be noted that India was not a backward country historically. Nor were the differences in living standards very wide among the countries of the world. precisely during the period the countries of the west developed and prospered, India was subjected to modern colonialism and was prevented from developing. It is interesting to note that the date of the beginnings of the industrial revolution in Britain and the British conquest of Bengal virtually coincide!
