IMPACT ON INDIAN ECONOMY

DRAIN OF WEALTH The systematic policy of ferring the economic resources of India to Britain i.J erished the country. The officials of the British I government were paid out of the Indian exchequel money went out of India. There was a heavy tax t on the Indian people because large sums had to b annually as interest on loans contracted by the Gove~ of India. UnemploY}llent increased in India. It was first time in India’s history that the balance of trade t unfavourable towards India.

DE-INDUSTRIALISATION The British caused 1 dous harm to the traditional handicraft industry decayed beyond recovery. Heavy customs dutiE imposed on Indian goods. The British officials ! preference for European goods. This provided an. to the demand for European goods and contribute decline of Indian handicrafts. The availability of n made goods in abundance at a comparatively low H greatly contributed to the decline of Indian handicri failure of the British Government to offer any protE indigenous industry also contributed to the de Indian handicrafts because they could not compt machine-made goods produced in bulk, and Consequently cheaper. With the subjugation of Indian princely 51 patronage to the handicraft industry ceased to exist.

RURALISATION Indian economy tended to more and more agricultural with the disintegratio traditional industries. The increase in the number 01 in agriculture. did not mean increase in agricultural tion but impoverishment of the rural masses; then industrial alternative. This accounted for the famines and increasing poverty in the 19th and quarter of the 20th century. India merely became a of raw material for industrial Britain.

CAUSES FOR THE ENGLISH SUCCESS

(I) The English Company was a private enterprise-this created a sense of self-confidence among the people; the French Company was state-owned;

(ii) the English navy was superior to the French navy-it helped to cut off the link between the French possessions in India and France;

(iii) the English held three important places, i.e. Calcutta, Bombay and Madras whereas the French had only Pondicherry;

(iv) the French subordi­nated their commercial interest to territorial ambition, which made the French Company short of funds.

PERIOD OF FOREIGN INVESTMENT AND INTER NATIONAL COMPETITION FOR COLONIES (1858 to 1947)

The third stage of British exploitation of India began in the 186Os. This stage was marked by the entry of big amount of foreign capital in India. It was the result of three major changes in the world economic situation: (i) end of the Britain’s financial supremacy with the industrialisation of other West European and American countries; (ii) occur rence of several technological developments such as rise of steel and chemical industries, giving rise to extensive search for new and secure sources of raw material and food stuffs; and (iii) concentration of capital in banks and corporations and trusts and cartels. However, in India, the foreign capital was used by the colonial administration for fuller exploi tation of Indian resources and not for their development. Thus the third stage of British rule was marked by a renewed upsurge of imperialist control.

Capital investment in India included (1) loans raised in England by the Secretary of State on behalf of the Indian government; (ii) loans raised by semi-public organisations mostly for investment in railways, irrigation, etc.; an foreign business investments.

PERIOD OF INDUSTRIAL CAPITALISM (1813 to 1858)

By 1813, the East India Company had turned into a mere shadow of economic and political power. Now the
. British government wielded the real power in the interests of the British capitalist class as a whole. The interests of the industrialist capitalists, which emerged as a result of industrial revolution in England, were very different from those of the East India Company. The British industrialists needed foreign outlets for their ever-increasing output of manufactured goods. At the same time, the British indus tries needed raw materials and the British people needed food stuff, which had to imported. So, there was a constant pressure on the British government to turn India as a subordinate trading partner, as a market to be exploited, and as a dependent colony to supply raw materials and foodstuffs. The British Indian government set out, after 1813, to transform Indian administration, economy and society to achieve exactly these ends.

British capitalists were given free entry into India. Free trade (only for the British) was introduced, and India’s ports and markets were thrown open to British manufac turers. Tariff rates for the entry of British rule were very nominal. But the free trade imposed on India was one-sided. Indian products, particularly those having potential to give stiff competition to British goods, were subjected to heavy import duties in Britain.

The second phase of British exploitation resulted in a steep rise in the burden of taxation on the Indian peasant. It may be noted that the introduction of the new pattern of economic exploitation did not mean that the earlier forms of exploitation came to an end. In fact, they became more inhumane.

PERIOD OF MERCANTILISM (1757 to 1813)

The first phase of the British rule can be termed as exploitation by merchant capital in the context of mercantilism. The main objective of the East India company was to buy as much Indian goods as possible at the cheapest possible price and sell there goods in Britain and other foreign countries so that substantial profits can be made. The reckless and anarchic attempts to increase the purchases adversely affected the traditional Indian export industry, particularly the cotton industry. The government forced the textile weavers to sell their products below market prices. Many strict regulations were passed which reduced the weavers to the status of indentured labourers and gave them a life of abject poverty. For example, under the 1789 regulation, they were forced to pay a penalty of 35 per cent on the advance (given forcibly) taken if they made any default in supplying goods.