Indian economy on the eve of Independence.
In this post you will learn about the state of the Indian economy on the eve of Independence. We will discuss the Indian economy as we inherited from the British in 1947. The focus will be on two questions:
- Was a stagnant or a vibrant economy?
- Was a backward or developing economy?
We will answer these questions and attempt a detailed answer after analysing the performance of different sectors of the Indian economy, including:
- Agricultural sector
- Industrial sector
- Foreign trade sector
Each of the sector mentioned above will be discussed separately but as for this post we will be focusing mainly on agriculture sector on the eve of Independence
Agricultural Sector on the Eve of Independence
There are four principal characteristics exhibited by India’s agricultural sector on the eve of Independence.
- Low level of productivity: level of productivity is defined as the output per hectare of land and on the eve of Independence, despite having large area under cultivation, the level of productivity was extremely low.
- High degree of vulnerability: The Agricultural sector showed a high degree of vulnerability because it was excessively dependent upon rainfall. Good rainfall resulted in a good output, while poor rainfall caused bad output. No effort was ever made under the British rule to develop permanent means of irrigation.
- A wedge between owners of the soil and tillers of the soil: During the British rule, the owners were seldom the people who actually worked on the land. While the owners shared the output, they hardly ever shared the cost of output. Owners, as crop shares and not the cost sharers, were never committed to prosperity of agriculture. They were only interested in maximizing there rental income. The tillers of the soil were given barely enough for sustenance.
- Uneconomic and fragmented landholdings: On the eve of Independence, Indian farmlands were fragmented and scattered in pieces. Accordingly, most landholdings were uneconomic, yielding low surplus.
All of these characteristics show the backwardness and stagnation of Indian Agriculture during the British Rule. Backward economy is characterized by the predominance of farming as a source of sustenance. It is driven more by the subsistence motive rather than the motive of profit maximization. Quality of life is extremely low and absolute poverty is widespread. Whereas stagnant economy is characterized by a prolonged period of slow economic growth.
Factors causing backwardness and stagnation of Indian Agriculture during the British rule.
Two main factors that contributed to the backwardness and stagnation of Indian agriculture during the British rule are:L
- Land revenue system under the British rule : The British government in India invented a unique system of land revenue by setting up a triangular relationship among the government, the owner of the soil and the tiller of the soil. It was popularly known as zamindari system of land revenue. According to the system:
- zamindars was recognised as permanent owners of the soil.
- zamindars were to pay a fixed sum to the government as land revenue
- the zamindars were absolutely free to extract as much from the tillers of the soil as they could.
The direct implication of the system of land revenue was that the zamindars resorted to unlimited exploitation of the tillers of the soil. They frequently raised the land revenue and ejected the existing tillers in case object to the raise.
- Forced commercialisation of agriculture: Commercialization of agriculture refers to a shift from cultivation for self consumption to cultivation for the market. Farmers were forced to shift to commercial crops, such as Indigo, from the conventional subsistence crops, such as rice, wheat, etc. Reason being that Indigo was required by the textile industry in Britain for dyeing/bleaching of the textile. Briefly agriculture under the British rule was exploited as a source of unearned income by the landowners. Unfortunately this income was never invested in agriculture. It was spent, rather wasted by, the zamindars on their luxurious lifestyle. Consequently on the eve of Independence agriculture sector of the economy was absolutely backward and stagnant.
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