India’s Economy under the British Rule
One of the hotly contested topics among scholars, politicians, and economists is the scale of the effect of British imperialists on India’s economy. The debate mainly pits Indian scholars against their British counterparts, with each side arguing their case form their view of the divide. However, most historians and economists from around the world agree that despite infrastructure development, India’s economy declined on a global scale under British rule (Bayly, 585). Britain was the third colonial power to reign over India, but its effect was the most profound. The United Kingdom ruled over India through the East India Company in collaboration with the English crown. Historians have noted that during the colonial period, India experienced a huge decline in its economy on a global scale as compared to its precolonial state. The effect is attributed to the influence of the British on India’s economic pillars. During the colonial period, India received major infrastructure development from the British through the four pillars of their economy, including agriculture, industry, transport and communication, and foreign trade.
Background
In order to get a perspective of British influence, it is important to first gain an understanding of India’s economy in the precolonial period. India was a thriving economy before the advent of foreign rule from European powers (Iyer, 696). In this era, India’s comprised of individual villages that functioned autonomously and independently of each other for sustainability. These Indian villages were self-sufficient in that they internally consumed all that they produced and traded off the surplus to other villages and foreigners. Therefore, the Indian economy mostly comprised of farmers and craftsmen living in the village communities. The biggest challenge faced by India at this time was that of transport and communication, as the roads were badly built and rarely maintained (Peers). However, India was recognized around the world as one of the top markets for handicraft goods. The handicraft industry was largely centered in the urban areas, and their unique products were enjoyed all over the world (Bayly, 587). The products from Indian craftsmen mainly included textile handicrafts such as the muslin of Dacca, shawls, and carpets of Kashmir and silk sarees of Benaras, among others. Therefore, India’s economy based on agriculture and industry was quite flourishing before the British arrived.
The downfall of the Mughal Empire after the death of Emperor Aurangzeb in 1707 signaled the start of the decline of the Indian economy. The remaining Mughal empire is largely considered to have led to the gradual downfall and disintegration of the central power at Delhi, as it was quite weaker than its predecessor. Firstly, it was the Mughal Empire under Emperor Akbar that introduced the British to India through the East India Trading company. The emperor gave the EIC monopoly rights on all Indian trade with the East Indies (Jha, 126). He also states that the influence of the British was further increased when Akbar’s son, Emperor Jahangir, allowed the EIC to establish a factory at Surat. Furthermore, the EIC gained more power after future emperors exempted the company from paying customs duties in Bengal, thus gaining an advantage over local producers. According to (Jha, 127), the year 1757 marked a turning point in India as the then emperor ceded land to the EIC, giving the British a foothold in the land. What followed was the gradual expansion of the land under British imperialist rule and later the colonization of the whole country.
Four pillars
The imperialist rulers introduced new policies that were largely skewed in promoting the interests of the British crown in England. These policies had a significant impact on the Indian economy as they disrupted the traditional sectors of agriculture and industry (Gupta). The British ruled the country in collaboration with the East Indian Company. The elements of this rule were the de-industrialization of India by the British crown and looting of the countries resources by EIC officials leading to economic drain (Jha,131). The British heavily impacted the foundations of the Indian economy by affecting each of its four pillars. The four pillars of the Indian economy include agriculture, industry, foreign trade, transport, and communication. Major changes were introduced by the British such as the construction of new transport mediums, change of land use policy, the introduction of new manufacturing factories, and change of foreign trade partners and policies.
Agriculture
At the beginning of the British colonial rule of India, agriculture remained relatively unchanged from the precolonial era. No significant innovations in agriculture, such as advanced irrigation techniques, were introduced by the British. Farmers also grew the same crops that had been grown by their predecessors in past centuries (Bayly, 586). These crops included rice, wheat, barley, jawar, cotton, Jutes, and spices. However, the agriculture sector experienced a significant strain, as more people were converting from craftsmanship to farming. The British had significantly destroyed the handicrafts industry leading to the conversion of most craftsmen. The swelling numbers of new farmers led to increased fragmentation and subdivision of agricultural land (Iyer, 700). Therefore, farming was transformed to be largely subsistent and highly unproductive. However, the EIC realized the potential of agricultural exports leading to the commercialization of India agriculture towards the end of the 18th century. The impact of this commercialization was an increase in the growth of cash crops such as tobacco, cotton, jute, oilseeds, and sugarcane. The British also introduced the cultivation of new cash crops, including coffee, tea, potatoes, fruits, and different types of oilseeds (Roy, 111). The net effect of commercialization of agriculture was the widening of foreign markets for Indian cash crops and the disappearance of village self-sufficiency.
Industry
British colonial rule had a profound effect on the Indian industry of handicraft goods. Before the arrival of the British, India had a thriving market for her industrial products. This fame was especially related to the products of the textile industry (Peers). The products include Dacca muslin, Kashmir shawls, cotton textiles, dupattas, and dhotis of Ahmedabad, sarees of Madurai, chintzes of Lucknow, and silk fabrics from Poona and Bengal. Other industries included stone carving, marble work, glass bangle making, enameled jewelry, leather tanning, sandal woodwork, and gold and silver thread work. The British takeover of India destroyed most of the handicraft industries in favor of British imports. The British introduced factory-made products, which posed great competition for the local industry. The one-sided free trade policy placed by the British also had a significant role in killing the local industry (Iyer, 702). In turn, most craftsmen switched to subsistence farming to provide food for their families. The British were only concerned with supporting industries that they could not set up elsewhere in Europe. Consequently, the colonial masters transformed India’s economy from that of exporting finished products to one of exporting raw materials for factories in England.
Transport and communication
The biggest contribution of British colonial rule on the Indian economy was the improvement of the transport and communication infrastructure. Many historians consider the development of transport and communication to be of significant importance to the British crown from a political, strategic, socio-economic, and administrative point of view (Roy). When the British arrived in India, the transport infrastructure was in complete disarray. Roy notes that roads were extremely underdeveloped, and the few existing trunk roads were hardly maintained. Therefore, the villages and urban centers remained disconnected and isolated in the monsoon season due to the lack of all-weather roads. Road construction was favored by the establishment of the public works department during the regime of Lord Dalhousie.
Apart from road construction, the English rulers also embarked on railway construction, which proved to be pivotal in the development of the Indian economy. The establishment of a railway system was aimed at connecting the interior of the country where raw materials were produced to the inland and coastal ports (Gupta). The railway transport system facilitated the access of agricultural raw materials for export and distribution of imported finished products. Accordingly, the waterways in India were also improved to facilitate the transportation of goods. The development of internal waterways involved improving the navigation of India’s major rivers such as the Ganges and Jamuna while the coastal ports were also upgraded to boost foreign trade (Roy, 116). Other developments to infrastructure included the establishment of postal communication and air transport. All in all, the development of transport and communication in India proved to be vital in the commercialization of the Indian economy.
Foreign trade
The British colonization of India changes their balance of trade ad overall foreign trade. Before the arrival of the British, India was self-sufficient and enjoyed a favorable balance of trade. The agricultural products were locally consumed while the industrial products from the handicrafts trade were exported to other countries (Jha, 133). India’s imports consisted of silver, gold, and woolen goods while the exports comprised of cotton, silk, spices, sugar, and indigo. However, the balanced composition and volume of trade were disrupted by the arrival of the British and the establishment of new trade policies. The EIC introduced new factory products from England to compete with locally manufactured handicraft goods (Roy, 118). They also started exporting India’s cash crops as raw materials for their companies in Europe. The net effect of this change was a shift in the balance of trade, which impacted India’s foreign trade. The increased production of cash crops and other raw materials opened up new foreign markets for India’s products. Despite the increased revenue from the improved export trade, the local population realized few advantages as most of the profits went to the British (Roy). Therefore, the boost in foreign trade benefited the colonial masters more than it did the Indian people.
It is evident that the British colonization of India had a significant impact on the country’s economy. While English scholars argue that Britain’s influence improved India’s economy, local historians remain skeptical and pose a contrary argument. The Indian economy is seen to have experienced a significant decline despite the infrastructural developments done by the British. British rule had a considerable impact on all four pillars of the Indian economy, consisting of agriculture, industry, transport, and foreign trade. However, the British crown and the EIC accrued most of the revenue from the improved trade leaving the local community with little to show for their hard work. For this reason, the net result of the British occupation of India is seen to be of detrimental effect to the local community and the economy in general.
Works cited
Bayly, Christopher A. “State and economy in India over seven hundred years.” The Economic History Review, vol. 38, no. 4, 1985, 583-596.
Gupta, Bishnupriya. “The Fall and Rise of the Indian Economy.” ANU College of Business and Economics, August 15, 2019, www.cbe.anu.edu.au/about/content/news/2019/the-fall-and-rise-of-the-indian-economy/ Accessed April 10, 2020
Iyer, Lakshmi. “Direct versus indirect colonial rule in India: Long-term consequences.” The Review of Economics and Statistics, vol. 92, no. 4, 2010, 693-713.
Jha, Raghbendra. “India’s Economy Under the Rule of the East India Company and the British Crown.” Facets of India’s Economy and Her Society, vol. 1, 2018, 125-159.
Peers, Douglas M., and Nandini Gooptu, eds. India and the British Empire. Oxford University Press, 2012.
Roy, Tirthankar. “Economic history and modern India: redefining the link.” Journal of Economic Perspectives, vol. 16, no. 3, 2002, 109-130.
Roy, Tirthankar. How British Rule Changed India’s Economy: The Paradox of the Raj. Springer International Publishing, 2019.