What was the focus of the economic policies pursued by the colonial government in India? What were the impacts of these policies?

India was under British rule for almost two centuries before attaining Independence in 1947. The main focus of the economic policies pursued by the colonial government was to make India a mere supplier of raw materials for Britain’s own industrial base which was undergoing rapid expansion. The Indian Economy was exploited in order to promote British industries. Such exploitative policies created a lopsided structure in the Indian Economy by reducing it to a supplier of raw materials and consumer of finished industrial products imported from Britain. The impacts of these policies are discussed below:-

(i) Low Level of Economic Development:- During the colonial rule, Indian Economy experienced very low level of economic development. The reason for this was that the British Government was more concerned with the economic interests of their home country. Before the colonial rule, Indian Economy was predominantly agriculture based but manufacturing activities of various kinds were also present.

The handicrafts industries of India were well known for their quality of material as well as craftsmanship. British policies ruined these small manufacturing industries as these industries faced a stiff competition from the British machine made products and India was reduced to a cheap raw material provider. This resulted in low growth of aggregate output which was less than two per cent according to studies along with a half per cent growth in per capita output per year.

(ii) Agricultural Backwardness:- Under the colonial rule India was basically an agrarian economy with nearly 85% of its population employed in agriculture sector. Nevertheless, the growth of the agriculture sector was very poor and productivity was low. This was due to the prevalence of various systems of land settlement, particularly zamindari system.

Under this system, the zamindars (owners of land) got the profit from land cultivation who collected rent from the cultivators regardless of the economic condition of the cultivators. They never took any steps to improve the productivity of the land. The revenue settlement system was responsible for this attitude of zamindars.

Zamindars were required to pay very high revenue to the British Government on specified rates otherwise they would lose their rights on land. Besides, in order to feed British industries with cheap raw materials, the Indian peasants were forced to grow cash crops (such as, indigo, cotton, etc) to serve as raw material for British industries instead of food crops (such as, rice and wheat).

This commercialisation of agriculture not only increased the burden of high costs on the poor peasants but also led India to face shortage of foodgrains. Indian agriculture remained backward and primitive due to lack of irrigation facilities, obsolete technology and low investment.

(iii) Deindustrialisation of Indian Economy:-  The status of industrial sector during the British rule can be well defined by the term ‘systematic deindustrialisation’ to make India an exporter of raw materials and importer of finished goods from Britain. The deindustrialisation can be attributed to the downfall of India’s handicraft industry and the slow growth of modern industry due to lack of invesproducts while exports of Indian raw materials to Britaintment.

The British Government imposed heavy tariffs on the export of Indian handicraft remained free. British products imported to India were also free from tariffs. As a result of the heavy tariffs, the Indian exports became costlier and its demand in the international market fell drastically. The demand for the handicrafts products also fell in the domestic markets due to stiff competition from the machine made textiles of Britain. There were no capital goods industries to promote industrialisation in India. As a result, the growth of domestic industries and their contribution to the economic output remained low.

(iv) Unfavourable Foreign Trade:-  The British Government used the trade policy to promote the interests of their home country. There was British monopoly over exports and imports of India. India exported cheap raw materials to the British industries while manufactured goods from Britain were imported for consumption in India. British industries were benefitted in both the ways. There was a large export surplus generated from foreign trade, but it was not invested in the Indian Economy; instead it was used in administrative and war purposes by Britain to spread their colonial power.