Page 14 - DECO502_INDIAN_ECONOMIC_POLICY_ENGLISH

Indian Economic Policy

Notes 1. Exploitation of cultivators to boost indigo-export : East India Company wanted to
encourage indigo export. Some (500 to 1000) European planters were settled in Bengal.
They were given land at a very nominal price. They forced the cultivators on their land to
cultivate and sell the indigo plant at a very low price. Even other zamindars were compelled
to allocate a portion of their land for indigo cultivation. Once an agreement was signed
with a zamindar or aryot accepted the advance for cultivation he had to suffer the ruthless
exploitation of the indigo planters who made fabulous profits from its export.
2. Exploitation of artisans through Company agents to deliver cotton and silk fabrics much
below the market price : During the 18th century, the East India Company wanted to
benefit from the export of Indian cotton and silk fabrics which enjoyed a world-wide
reputation. For this purpose, the Company made use of agents called as Gomastas. The
gomastas who were Indians in the employment of the Company, would go to the village
and force the artisans to sign a bond to deliver a certain quantity of goods at a price to be
fixed by the gomasta. The price fixed was at least 15 per cent and in extreme cases, even 40
per cent lower than the market price. In case, an artisan refused to accept the advance
offered by the Company’s gomasta, he was punished by flogging and in certain cases, by
imprisonment. In this way, through the Company’s gomastas, the East India company
was able to procure cotton and silk fabrics at very low prices. Thus, the poor artisan was
squeezed so that the East India Company made huge profits through the export of these
fabrics. The ruthlessness of the Company was so inhuman that the artisans worked like
bonded labour and this explains their growing pauperisation.
3. Exploitation through the manipulation of import and export duties : Though Great Britain
professed to be a follower of free trade, but her trade policies towards Indian goods only
revealed that she never followed the policy of free trade. During the 18th century. Indian
goods, specially cotton and silk fabrics, enjoyed a lead over the British goods. The aim of
British trade policies was to destroy the supremacy of the Indian goods, protect the interests
of British industries and ultimately succeed in penetrating the Indian market by the
machine-made goods.
(b) Exploitation through export of British Capital to India
In the early phase of colonialism, the chief instrument of exploitation was trade but later the
British thought of encouraging investment in India. There were three principal purposes of
these investments. Firstly after the first war of Indian Independence (1857), which, the British
described, as the Mutiny, it was realised by the Government that for the effective control and
administration of the country, it was essential that an efficient system of transport and
communication should be developed. Secondly, in order to effectively exploit the natural
resources of India, it was essential to develop public utilities like generation of electricity and
water works. Thirdly, to promote foreign trade so that food and raw materials collected in
various mandis are quickly transported abroad and the manufactures imported in India are
quickly distributed in various markets, the British thought it necessary to link railways with
major ports on the one hand and the marketing centres (mandis) on the other. This explains why
railway development in India was planned in such a manner that it served the colonial interests.
Thus, the major fields of direct foreign investments were as under :
Fields of direct foreign investments
(1) Economic overheads and infrastructure like railways, ports, shipping, generation of electric
energy, water works, roads and communications; (2) for promoting mining of coal, gold and
petroleum and metal-lurgical industries; (3) for promoting commercial agriculture, investments
in tea, coffee and rubber plantations; (4) to undertake investments in consumer goods industries
like cotton and jute textiles, matches, woollen textiles, paper, tobacco, sugar, etc; (5) investments
in banking, insurance and trade; and (6) some investments were made in machine building,
engineering industries and chemicals.
All these investments were undertaken by the British multi-nationals operating through their
subsidiaries. Some of these investments took the form of loans to the British Government in
India in the form of sterling debts.

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