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CHAPTER – 1
India Economy On The Eve Of Independence
INTRODUCTION:
The British had come to the once prosperous Indian economy as traders and eventually became its
rulers
...
Agricultural
output was in abundance
...
Indian handicrafts and spices were in demand all over the
world
...

The British ruled over the India for nearly 200 years after winning the battle of Plassey in 1757
...
The long rule transformed the once prosperous and self
sufficient nation to a colonial, backward, lop-sided, stagnant, depleted and a dependent one
...
The first estimates of national income were
provided by Dadabhai Naoroji (1825-1917) (also known as Grand old man of India) for the year 1867-68
in his book Poverty and Un-British rule in India
...
20 per annum
...
K
...
V
...
C
...
During the first half of 20th century, the country’s national income was not only low, its
growth rate was less than 2% per annum while per capita income grew by 0
...

STATE OF INDIAN AGRICULTURE ON THE EVE OF INDEPENDENCE:
1
...
2
...
Most
of the people who were employed in agriculture sector were underemployed
...
High level of backwardness: Agriculture sector was highly backward because of lack of literacy,
low level of productivity and high level of unemployment
...
Land Revenue System: The British government in India Invented a unique system of land revenue
by setting up the triangular relationship between government, owner of the land and workers
on the land
...

2
...
In British rule farmers were forced to produce commercial or cash crops
like indigo and opium, as a result there was fall in production of food crops
...
Partition of the countries: Partition of India and Pakistan in 1947 also adversely affected India’s
agricultural areas of west Punjab and Sindh went to Pakistan, resulted a food crisis in India
...
Low
level of Productivity: Low level of technology, lack of irrigation facilities, and lack of finance with the
farmers, negligible use of fertilizers caused low level of productivity in India
...
State of industrial sector at the time of Independence is as follows –
1
...

2
...
They neither permitted modernization nor did they encourage the
growth of heavy industries
...
The number of mills increased gradually, which were mainly
established by British capitalists
...
Some other industries like sugar, cement, chemical and paper industries
were set up mainly after Second World War]
3
...
They always wanted
Indians to be dependent on British industries for the supply of capital goods and heavy
equipments
...

4
...
It was confined to Power
generation, communication, ports and some other departments
...
British had monopoly control on foreign
trade: Under
British rule there was a monopoly of
British industries in
foreign trade
...
Except British industries
there were
very few industries who were engaged in foreign trade
...

2
...
and importer of consumer goods like cotton clothes, silk and woollen clothes etc
...

3
...
There was huge export surplus due to excess of exports of raw material
...


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DEMOGRAPHIC CONDITIONS ON EVE OF INDEPENDENCE: Various details about the population of
an economy are known as census
...
The demographic
conditions at the time of independence are as follows:
1
...
Birth rate was 48 per thousand (19
...
3/1000 in 2016)
...
High infant mortality rate: This refers to death rate of children below the age of one year, it was
high during British rule because of lack of medical facilities
...
Low life Expectancy: Life expectancy means the number of years that a new-born child on an
average is expected to live
...
5
years in 2011
...
Mass Illiteracy: Mass Illiteracy indicates the level of poverty and backwardness of Indian economy
during British rule
...
The female illiteracy level was extremely high with 93%
...
During British rule some basic infrastructure was
developed in the form of railways, water & air transport, postal service, roadways etc
...
Railways: British introduce railways in Indian in 1850 and Indian Railways begun its operation on
16 April 1853 from Bombay to Thane
...
Railways affected Indian economy in the following ways: a
...

b
...

c
...

d
...

2
...
Roads were primarily used to mobilize army within India
...
Water and Air Transport: British took various steps for developing water and air transport but

their development was stagnant because of monopoly of British rulers
...
Communication: Modern postal service started in 1838
...


OCCUPATIONAL STRUCTURE ON THE EVE OF INDEPENDENCE: Occupational structure means the
division of work force among different sector of economy
...
Agriculture sector: On the eve of independence, agriculture sector considered as the principal
source of occupation
...

2
...
On the eve of
independence only 10% of work force was engaged in this sector
...
Service sector: At the time of independence, 18% of the working population was engaged in this
sector
...

POSITIVE IMPACT OF BRITISH RULE IN INDIA:
1
...

2
...

3
...
It helped to shift from Barter system to monetary
system of exchange
...
British rule left a legacy of an efficient administrative setup: British government had an efficient
administrative system, which served as default administrative setup for the independent India’s
policy makers and politicians
...
Increase in the employment through industrialization: Though industrialization was not upto the
mark, but it increased the level of employment because it absorbed the hidden unemployment
in the agriculture sector
...
Educational system & The English language: British introduced compulsory English in the
educational system throughout the country with the aim of having a common language for
communication and getting clerical staff among Indians for strong administration
...
What was the infant mortality rate of India during British rule?
Ans
...

2
...

Ans
...
What do you mean by infant mortality rate?
Ans
...

4
...

Ans
...
K
...
V
...

5
...
Commercialisation of agriculture means production of crops for sale in the market rather
than for self-consumption
...
What was the motive behind the deindustrialization by the colonial Govt
...
(i) To get raw materials from India at cheap rate
...

7
...
Food crops, Jute and textile industries
...
What does the export surplus mean?
Ans
...

9
...
10% in secondary sector and 18% in tertiary sector
TRUE OR FALSE:
State with reason whether the following statements are True or False
1
...
2
...
3
...

4
...

5
...

6
...
7
...
8
...
9
...
10
...

11
...
12
...
13
...
14
...

15
...

16
...

FILL IN THE BLANKS
Complete the following statements with appropriate answer(s) in the blank space(s) – 1
...
(British, Indian) 2
...
(big; small/fragmented) 3
...
(1757-1947 ;
1857-1947)
4
...
(zamindari
system; cooperative system)
5
...
(commercialisation; industrialisation)
6
...
(Jute; Handicraft)
7
...
(Jute; Sugar) 8
...
(1850; 1860)
9
...

(1881;1891)
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10
...

(Railways; Road transport)
11
...
(1911; 1921)
12
...

(British; USA)
13
...
(16%; 20%) 14
...
(Imports of finished
goods; Exports of finished goods)
MULTIPLE CHOICE QUESTIONS
Select the correct option out of the four possible options given after the statement of the
question 1
...

b) To develop basic industries in India
...

d) To develop infrastructure in India
...
(a)
2
...

a) Raw silk
b) Sugar
c) Cotton
d) Capital goods
Ans
...
Which industry was ruined under the British rule?
a) Cotton textile
b) Handicraft
c) Iron and Steel
d) Jute
Ans
...
When was India's first official census operation undertaken?
a) 1861
b) 1871
c) 1881

d) 1891
Ans
...
What was India's growth of real output during the first half of the 20th century?
a) <15
b) <2%
c) <3%
d) <4%
Ans
...
When did British introduced the railways in India?
a) 1750
b) 1800
c) 1850
d) 1900
Ans
...
During British rule, more than half of India's foreign trade was restricted to
E C O N O M I C S B Y : U T K A R S H B H A R G A V A ( P H : 9 7 1 1 - 787 - 1 9 9 ) Page 6
a) Britain
b) China
c) Japan
d) USA
Ans
...
Which of the following is false in the context of agricultural sector during colonial period ?
a) Nearly 85% of the country's population was dependent on agriculture, b) India was
self-sufficient in food and raw materials
...

d) The British government promoted the production of cash crops
...
(b)
9
...

b) The British government promoted capital goods industries
...

Ans
...
Which of the following is not a feature of India's foreign trade during British rule
a) India was exporter of primary products
...

c) Less than 1/4 of India's foreign trade was confined to Britain,
d) There was huge export surplus
...
(c)
11
...
(b)
12
...
(c)
13
...
(c)
14
...

b) Better means of transportation
...

d) All of the above
...
(d)
15
...
(d)
16
...
(a)
17
...
(b)
18
...
(c)
19
...
(d)
20
...

b) To facilitate movement of goods and people
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d) All of the above
...
Indian economy on the eve of Independence was
a) developed
b) developing
c) underdeveloped
d) underdeveloped and stagnant
Ans
...
Decay of handicraft industry was caused by
a) competition from machine-made goods
b) change in taste
c) British tariff policy
d) All of the above
...
On the eve of Independence, India was exporter ofcapital goods
a) agricultural goods
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b) primary products
c) industrial products
d) primary products
Ans (d)
24
...
(d)
NCERT Exercise:
Q1
...
The economic policies pursued by the colonial government in India were concerned more with the
protection and promotion of the economic interests of their home country rather than with the
development of the Indian economy
...
At that time, agriculture was in a poor condition and mineral resources were
not fully used
...
Millions of people were unemployed, not because they were unwilling to
work but because there were no jobs to be found
...
For instance, the staple food of average Indian consisted of rice, wheat and
millets (like jowar and bajra)
...
The vast
majority of people in India led a miserable life
...
Name some notable economists who estimated India’s per capita income during the colonial
period
...
Dadabhai Naoroji, V
...
R
...
Rao, Wiliam Digby, Findlay Shirras and R
...
Desai
...
What were the main causes of India’s agricultural stagnation during the colonial period? Ans
...
The main causes of stagnation of agriculture sector were
as follows:
1
...
These were:
(a) Zamindari system
(b)Mahalwarisystem
(c)Ryotwarisystem
In the Zamindari system, Zamindars or landlords were the owners of land
...
Zamindari system
led to multiplication of middlemen between cultivators and Government, absentee landlordism,
exploitation of peasants by unsympathetic agents and enmity between landlords and tenants
...

2
...
Farmers were forced to cultivate commercial
crops like Indigo
...
As
a result, there was fall in the production of food crops
...
Indian agriculture was transformed into a raw material
exporting sector for England
...
Partition of the Country: Partition of the country in 1947 also adversely affected India’s agricultural
production
...
It created
food crisis in the country
...
The jute industry was most severely affected due to partition
...
Indian Economy on the Eve of
Independence
...
Name some modern industries which were in operation in our country at the time of
independence
...
The Tata Iron and Steel Company (TISCO) was incorporated in August 1907 in India
...
Some other industries which had their modest beginning after Second
World War were: sugar, cement, chemical and paper industries
...
What was the two-fold motive behind the systematic de-industrialization effected by the British
in pre-independent India?
Ans
...
Britishers followed the policy of
systematically de-industrializing India
...
To get raw materials from India at cheap rates in order to reduce India to a mere exporter of raw
materials to the British industries
...
To sell British manufactured goods in Indian market at higher prices
...

Q6
...
Do you agree with this
view? Give reasons in support of your answer
...
The main cause of exploitation of traditional handicraft industries was de-industrialisation

introduced by British rulers in India
...
They sold British manufactured goods in
Indian market at higher prices
...
Britishers followed discriminatory tariff
policy
...
In this way, Indian markets were full of
manufactured goods from Britain which were low priced
...
Ultimately, the handicraft industry declined
...
What objectives did the British intend to achieve through their policies of infrastructure
development in India?
Ans
...
However, the real intention behind these developments 1 was
to serve their own colonial interest
...
To have effective control and administration over the vast Indian territory
...

2
...
For this they linked railways with major ports and the
marketing centers
...
To create an opportunity for profitable investment of British funds in India
...
To mobilise army within India and carrying out raw materials through roads to the nearest railway
station or to the port to send it to Britain
...
Critically appraise some of the shortfalls of the industrial policy pursued by the British Colonial
administration
...
The state of Indian industrial sector on the eve of independence was as follows:
1
...
The primary motive behind the de-industrialization by the
British government was two-fold
...

(b) To sell British manufactured goods in Indian market at higher prices
...
It resulted in decline
of world famous traditional handicrafts
...
It allowed
free export of raw materials from India and free import of British final goods to India, but placed
heavy duty on the export of Indian handicrafts
...
Indian handicrafts started losing both
domestic market and export market
...

2
...
British rulers neither permitted modernization of
industries nor did they encourage the growth of heavy industries in India
...
By the end of 19th
century, there were 194 cotton mills and 36 jute mills
...
Jute mills in Bengal were

established mainly by British capitalists
...
Some other
industries which had their modest beginning after Second World War were: sugar, cement,
chemical and paper industries
...
Capital Goods Industries were Lacking: The policy of Britishers was simply to develop those
industries which would never be competitive to the British industry
...
Thus, the
development of a few consumer goods industries was witnessed during the British rule
...
This resulted in an unbalanced
and lopsided growth of industries in India
...
Limited Operation of the Public Sector: Public sector was confined to railways, power generation,
communication, ports and some other departmental under-takings
...
What do you understand by the drain of Indian wealth during the colonial period? Ans
...
India’s foreign trade generated large export surplus
...
There was drain of India’s wealth into
Britain
...
The surplus was used to pay expenses on war fought by the British government
...
Surplus was used to pay for the import of invisible items
...
Which is regarded as the defining year to mark the demographic transition from its first to the
second decisive stage?
Ans
...
It is called ‘Year of Great Divide’
...
Give a quantitative appraisal of India’s demographic profile during the colonial period
...
The
demographic condition on the eve of independence was as follows:
1
...
Both birth rate and death rate were very high at 48 and 40 per
thousand of persons respectively
...
High Infant Mortality Rate: If refers to death rate of children below the age of one year
...

3
...
It was as low as 32 years
...
Mass Illiteracy: Mass illiteracy among the people of a country is taken as an indicator of its poverty
and backwardness
...
This means that 83 per cent of the total
population was illiterate
...
Low Standard of Living: At the time of independence, people used to spend between 80 to 90
percent of their income on basic necessities that is on food, clothing and housing
...
Moreover, some parts of India came under
severe famine conditions
...
One of the worst
famines in India was the Bengal famine of 1943, when three million people died
...
Highlight the salient features of India’s pre-independence occupational structure
...

Occupational structure means the distribution of work-force among different sectors of an economy
...
Pre-dominance of Agriculture Sector: The agricultural sector accounted for the largest share of
work-force, which was 72 per cent
...

2
...
In the states of Tamil Nadu,
Andhra Pradesh, Kerala, Karnataka, Maharashtra and West Bengal, the dependence of the
workforce on the agricultural sector declined
...

Thus, India’s occupational structure was static and imbalanced
...
Underscore some of India’s most crucial economic challenges at the time of independence
...

Most crucial economic challenges at the time of independence were:
1
...

2
...

3
...

4
...
’
5
...

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6
...

Q14
...
First official census was undertaken in the year 1881
...
Indicate the volume and direction of trade at the time of independence
...
India has been an
important trading nation since ancient times
...
The state of India’s foreign trade on the eve of independence was as follows:
1
...
and an importer of finished
consumer goods like cotton, silk and woolen clothes and capital goods like light machinery
produced in the factories of Britain
...
The principal item of import was food grains
and by 1947 food grain imports had touched the level of 3 million tones
...
Britain had Monopoly Control on Foreign Trade
...
The canal connected Port Said on the
Mediterranean Sea with the Gulf of Suez
...

It reduced the cost of transportation and made access to the Indian market easier
...
British maintained monopoly control
over India’s foreign trade
...
British allowed
trade with few other countries like China, Ceylon (Sri Lanka) and Persia (Iran)
...
Were there any positive contributions made by the British in India? Discuss
...
British rule

exploited India in many ways
...

Their exploitative programmes and policies resulted in some positive impact on India
...
Commercialization of Agriculture: Commercialization of agriculture initiated by British
government resulted in self-sufficiency in the production of food grains
...
Spread of Railways and Roadways: Construction of Roadways and Railways by British
government provided cheap and rapid transportation system and opened up new opportunities
for economic and social growth
...
Transition from Barter system to monetary system of change: British government introduced a
complete monetary exchange system in India
...

4
...

5
...


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6
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