Page 19 - DECO502_INDIAN_ECONOMIC_POLICY_ENGLISH

Unit 1: Characteristics of Indian Economy on the Eve of Independence

• Indian business did not possess any experience of the organisation of modern industry by Notes
setting up joint stock companies. The British merchants who had earlier set up trading firms
acted as pioneers and promoters in several industries like jute, tea and coal. These persons
were called as managing agents.
• The British employed a large number of British officers for the military and civil administration
of the country. The British officers in the army were given a separate cadre and were paid much
higher salaries and allowances than their Indian counterparts. All the top ranking positions
were monopolised by the British officers.
• During the two World Wars, India exported more to Britain than it imported. Against this
positive balance of trade, Britain authorised the Government of India to issue more currency on
the backing of the Sterling Balance held in England. India exported more and imported less.
• Dadabhai Naoroji, a distinguished Indian economist, in his classic paper on the ‘Poverty of
India’(1876), emphasized that the drain of wealth and capital from the country which started
after 1757 was responsible for absence of development of India.
• The British economists have always upheld that the backwardness of the Indian economy and
its failure to modernize itself was largely due to the value system, i.e.. spiritualism, asceticism,
the caste system, joint family, etc.
• The British rule was a long story of the systematic exploitation by an imperialistic government
of a people whom they had enslaved by their policy of divide and rule. The benefits of British
rule were only incidental, if any. The main motive of all British policies was to serve the interests
of England. Thus, in 1947 when the British transferred power to India, we inherited a crippled
economy with a stagnant agriculture and a peasantry steeped in poverty.
1.9 Key-Words

1. Colonised : Come to settle among and establish political control over (the indigenous people
of an area).
2. Monopolised : (of an organization or group) Obtain exclusive possession or control of (a trade,
commodity, or service).
1.10 Review Questions

1. What are the characteristics of Indian Economy? Discuss.
2. Write a short note on industries and handicrafts in pre-British India.
3. What are the causes of the decline of Indian Handicrafts? Explain.
4. Discuss the commercialization of agriculture.
5. Explain the process to Industrial transition in India.
Answers: Self-Assessment
1. (i)(a) (ii)(c) (iii)(a) (iv)(c) (v)(a)
1.11 Further Readings

1. The Indian Economy; S.K. Ray; Prentic, Hall of India Private Limited
New Delhi - 110001.
2. Indian Economy ; Gaurav Datt and Aswani Mahajan; S. Chand and Company
LTD. Ram Nagar, New Delhi-110055.

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