Chapter 1- Indian Economy on the Eve of Independence NCERT SOLUTION CLASS 11TH ECONOMICS | EDUGROWN NOTES

Q.1 What was the focus of the economic policies pursued by the colonial government in India? What were the impacts of these policies?

ANSWER: The main aim of the economic policies adopted by the colonial government was to make India just a supplier to Britain’s flourishing industries. The policies were made to benefit and strengthen their own country. They completely ignored the interests of the Indian economy. These discriminatory policies made the Indian economy a supplier to British economy and consumer of finished goods of British economy. The effects of these policies are given below:

1. Low Economic Development

During British rule, there was a very little economic development. This was because the British government was more focused on the promotion of their own economic interest. Consequently, the colonial rule converted India’s agriculture sector into a supplier of raw materials for the British industrial base. This affected the production of the agricultural sector of India. It also destroyed the small manufacturing industries such as handicrafts and cotton industries. These manufacturing units suffered a cut throat competition from the British machine made textiles and handlooms.

2. Backwardness of Indian Agriculture

India was basically an agricultural economy employing almost of its population in the colonial rule. There was a meagre growth in agriculture sector. It was caused by the presence of various land settlement systems, particularly the Zamindari system. In this system, the zamindars (landowners) had to pay very high revenue (lagaan) to the British government, which they collected from the peasants (landless labourers). The zamindars were focused on extracting high revenues from the peasants but never took any interest in the improvement of the productivity of the land using cheap raw materials. As a result, Indian peasants grew cash crops (e.g., indigo and cotton) in order to feed British industries at the expense of food crops instead of food crops (such as, rice and wheat). This commercialisation of agriculture increased the burden of high revenues on the poor peasants. It also led Indians face shortage of food grains. Hence, Indian agriculture remained backward and primitive.

3. Deindustrialisation of Indian Economy

India, during colonial era, was not able to develop a sound and strong industries. The term ‘systematic` deindustrialisation’ can be used to define the status of industrial sector during the colonial rule. The downfall of India’s handicraft industry led to deindustrialisation and the cause of meager growth of modern industry was the lack of investment. Indian handicraft products were taxed heavily by the British government, which permitted free exports to Britain of raw materials and free imports of British products from India. Because of these, the Indian exports became dearer and its demand in the international market fell miserably that led to the decline of Indian handicrafts industries. Simultaneously, the demand for the Indian products fell in the domestic markets as machine made textiles were cheaper than Indian handicrafts. Hence, the domestic industries lacked investment and growth initiatives.

4. Regression in Foreign Trade

In the colonial era, the British government had the monopoly over India’s foreign trade. According to the British government, the trade policies were based on the government’s interests. Until the end of the 19th century, exports and imports were restricted to India and Britain. India’s exports provided cheap raw materials for the British industries, and Britain’s imports from India provided a untouched market for British goods. In every way, British industries were benefitted. The surplus money generated from the foreign trade was not even invested in the Indian economy. It was used for administrative and war activities by Britain.

Q.2 Name some notable economists who estimated India’s per capita income during the colonial period.

ANSWER:   The British government was never interested in upliftment of people of our country. They didn’t take any initiative to measure India’s national and per capita income. There were some attempts by economists of that time to estimate India’s per capita income and national income during the colonial rule, but the figures were contradictory. The following are the names of some of the notable economists who were engaged in estimation of national income and per capita income:

a. Dadabhai Naroji

b. William Digbay

c. Findlay Shirras

d. V.K.R.V Rao

e. R.C. Desai

As part of the development process, an essential measurement during the colonial period was made by V.K.R.V Rao. According to these studies, the Indian economy had an average annual growth rate of half a percent in the period 1900-50.

Q.3 Name some modern industries which were in operation in our country at the time of independence.

ANSWER: In the mid-19th century, modern industries began emerging. At theinitial stage, development was confined to setting up of cotton and jute textile mills. Cotton textile mills were located in Maharashtra and Gujarat in the western part of the country, mainly controlled by Indians, while jute industries were majority British controlled and concentrated in Bengal. Iron and steel industries began to emerge gradually at the beginning of the 20^th century. In 1907, India’s Tata Iron and Steel Company (TISCO) was formed. In the British era, small businesses also operated in the sugar, cement, and paper industries.

Q.4 What was the two-fold motive behind the systematic deindustrialisation affected by the British in pre – independent India?

ANSWER: There are two major factors contributing to systematic deindustrialisation affected by theBritish:

1. Making India a source of raw materials: The main purpose of the British government was to make India a source of inexpensive raw materials so that its own industrial base could flourish.

2. Use of India as a market to export finished goods: Another objective of the British government was to export British manufactured goods to Indian markets.

Q.5 The traditional handicrafts industries were ruined under the British rule. Do you agree with this view? Give reasons in support of your answer.

ANSWER:  Yes, we agree that the traditional handicrafts industries under British rule were destroyed. The above sentence can be proved by the following points.

1. Discrimination in Tariffs: India’s industrialization correlated with the British rule. The British used India as both a source of cheap raw materials as well as an easy market to sell their finished products. Consequently, they imposed high tariffs (export duties) on India’s handicraft exports, while allowing free exports of India’s raw materials to Britain and free imports of British goods into India. As a result, Indian exports became more expensive. Handicrafts industries collapsed when the international demand for handicrafts collapsed drastically.

2. Competition from British manufactured products: Handicrafts products also suffered a downward trend on the domestic market. This was due to tough competition from the machine made textiles that were manufactured by Britain. It was due to the fact that Britain’s mechanically produced goods were comparatively less expensive and of better quality than Indian handicrafts. Indian industries were thus confined to a smaller market.

3. An emerging class in India: The British rulers popularized western lifestyles in the country. There was an emergence of a new class of zamindars (majority of who liked British goods) in India. Spending extravagantly on British products provided an impetus for the development of British industries at the cost of destruction of Indian industries. Eventually, Indian industries were extinguished.

4. Abolition of the princely state: Prior to the arrival of the British, India was ruled by princely states. As a result, Indian handicrafts gained reputation on the international market due to their patronage of handicraft industries. As a result, their handicrafts industries were destroyed under the British rule. Hence, Indian handicrafts started to lose its reputation and its importance also got deteriorated.

Q.6 What objectives did the British intend to achieve through their policies of infrastructure development in India?

ANSWER: Under the British rule, infrastructure development in the country was significant. The British, however, had no other motive than colonial interests in mind when they were developing the infrastructure. Transportation and communication infrastructures were developed. In addition to roads, ports were also constructed for the ease and fast transportation of goods to and from Britain, as well as to facilitate transport of raw materials. Similarly, railways were introduced and developed to transport finished goods from British industries to India’s interior. Railways facilitated the expansion of the market for British industries. British administration was made more efficient and effective by post and telegraph. Therefore, infrastructural development was not aimed at the growth and development of the Indian economy, but at serving its own interests. British rulers developed infrastructure in India to have effective control and administration of Indian Territory, to make money through foreign trade, to take advantage of profitable investment and to mobilise the Indian army.

Q.7Critically appraise some of the shortfalls of the industrial policy pursued by the British colonial administration.

ANSWER: The goal of Britain’s industrial policies in India was to make our country a mere supplier of Britain’s own thriving industry. The policies were primarily concerned with strengthening and developing their own country. Under British colonial rule, the industrial policy had the following shortcomings:

1. Neglect of Indian Handicraft Sector: The British adopted a discriminatory tariff policy in which they imposed hefty taxes (export duties) on Indian handicraft goods while permitted free export of Indian raw materials to Britain and free import of British finished products from India. This made Indian exports dearer and its international demand fell dramatically that led to the collapse of handicrafts industries. In addition, Indian handicrafts faced a very harsh competition from machine made textiles manufactured in Britain. The emergence of a new section of people who liked the British goods more rather than domestic goods boosted British industries at the cost of destruction of Indian industries. This led to the decline in demand for Indian products and encouraged foreign products.

2. A lack of foreign direct investment in Indian industries: Indian investors lacked the capital necessary to modernize their industries. On the other hand, British government was not interested and never bothered in investing in Indian industries. British government mainly focused on establishing cotton, jute and coal industries that would benefit their interest. Consequently, due to insufficient investments in the other sectors, Indianindustries was acutely constrained.

3. Limited operation of the public sector: Public industries were restricted to railways, power generation, post, ports and some other departmental undertakings.

Q.8 What do you understand by the drain of Indian wealth during the colonial period?

ANSWER:   The nineteenth century was the century of Dadabhai Naroji’s ‘Drain of Wealth’. Resources from the native peoples were exploited during the colonial era. As a means of sustaining its industrial base in Britain, Britain needed a source of cheap raw materials to conquer India. Moreover, the British government used Indian manpower to spread its colonial influence outside of India. As a result, the British drained Indian wealth to further their own interests.

Q.9 Which is regarded as the defining year to mark the demographic transition from its first to the second decisive stage?

ANSWER: It is considered the defining year or the ‘Year of Great Divide’ because prior to 1921, India’s population growth was erratic. India was in the first phase of demographic transition till 1921 that was characterised by high birth rate and high death rate.The period before 1921 was characterized by low survival rates (or low life expectancy), which were nearly 8 per thousand annually. Therefore, the rate of population growth was stagnant. After 1921, population of Indian growth never declined and showed a consistent increment.

Q.10 Give a quantitative appraisal of India’s demographic profile during the colonial period.

ANSWER: During the British rule, India’s demographic conditions depict our economy as stagnant and backward. There was a high birth rate of 48 per thousand and a high death rate of 40 per thousand. Population growth was stagnant due to high birth and death rates. A very high infant mortality rate of 218 per thousand was also recorded. Approximately 32 years ago, the life expectancy rate was 32, and since then it has increased to 63.5 years. Literacy rates were below 16 percent, which indicates social backwardness and gender discrimination in the economy. According to the above figures, we can infer that India had a low standard of living, a low standard of living and a low rate of survival. India’s demographic situation was primarily caused by a lack of health care facilities and a lack of health awareness. The Indian’s standard of living was so lowthat people were not getting basic amenities like food, clothes and shelter. Moreover, some parts of India came under severe famine conditions. The famines were so severe that millions died.

Q.11 What was the focus of the economic policies pursued by the colonial government in India? What were the impacts of these policies?
ANSWER: 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.
Thus, at the time of independence in 1947, India was a poor and underdeveloped country. At that time, agriculture was in a poor condition and mineral resources were not fully used. There were only a few industries and many of the cottage and small-scale industries had declined under the British rule. Millions of people were unemployed, not because they were unwilling to work but because there were no jobs to be found. The per capita income of Indians was one of the lowest in the world, indicating that the average Indian was extremly poor and could not afford even the basic necessities of life. For instance, the staple food of average Indian consisted of rice, wheat and millets (like jowar and bajra). Most Indians could not afford to buy nutritious and balanced diet. The vast majority of people in India led a miserable life.

Q.12 What were the main causes of India’s agricultural stagnation during the colonial period?
ANSWER:   Indian agriculture was primitive and stagnant. The main causes of stagnation of agriculture sector were as follows:

1.  Land Tenure System. There were three forms of Land tenure system introduced by the British rulers in India. These were:
   (a) Zamindari system
   (b) Mahalwari system
   (c) Ryotwari system
   In the Zamindari system, Zamindars or landlords were the owners of land. The actual collections by Zamindars was much higher than what they had to pay to the Government. 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. Under the system, intermediaries benefited at the cost of both actual cultivators and the state.
2.  Commercialisation of Agriculture. Commercialisation of agriculture means production of crops for sale in the market rather than for self consumption. Farmers were forced to cultivate commercial crops like Indigo. Indigo was required by the textile industry in Britain for dyeing of the textile. As a result, there was fall in the production of food crops. The farmers had to suffer from frequent occurence of famine. Indian agriculture was transformed into a raw material exporting sector for England.
3. Partition of the Country. Partition of the country in 1947 also adversely affected India’s agricultural production. The rich food producing areas of West Punjab and Sindh went to Pakistan. It created food crisis in the country. Also, the whole of fertile land under jute production went to East Pakistan. The jute industry was most severely affected due to partition.
   Thus, Indian agriculture became backward, stagnant and non-vibrant under the British rule. Indian Economy on the Eve of Independence .

Q.13Name some modem industries which were in operation in our country at the time of independence.
ANSWER:   The Tata Iron and Steel company (TISCO) was incorporated in August 1907 in India. It established
its first plant in Jamshedpur (Bihar). Some other industries which had their modest beginning after Second World War were: sugar, cement, chemical and paper industries.

Q.14 What was the two-fold motive behind the systematic de-industrialisation effected by the British in pre-independent India?
ANSWER:   De-industrialisation-Decline of India Handicraft Industry. Britishers followed the policy of systematically de-industrialising India. The primary motive behind the de-industrialisation by , the British government was two-fold:

1.  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.
2.  to sell British manufactured goods in Indian market at higher prices.In this way, they exploited India through the device of double exploitation.

Q.15The traditional handicraft industries were mined under the British mle. Do you agree with this view? Give reasons in support of your answer.
ANSWER:   The main cause of exploitation of traditional handicraft industries was de-industrialisation introduced by British rulers in India. They got raw materials from India at cheap rates and reduced India to a mere exporter of raw materials to the British industries. They sold British manufactured goods in Indian market at higher prices.
It resulted in decline of world famous traditional handicrafts. Britishers followed discriminatort tariff policy. 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. In this way, Indian . markets were full of manufactured goods from Britain which were low priced. Indian handicrafts 1 started losing both domestic market and export market. Ultimately, the handicraft industry declined.

Q.16 What objectives did the British intend to achieve through their policies of infrastructure development in India?
ANSWER:   During the British rule, some basic infrastructure was developed in the form of railways, water transport, ports, post and telegraph, etc. However, the real intention behind these developments 1 was to serve their own colonial interest.
The main motives of British rulers behind the development of infrastructure in India were:

1.  To have effective control and administration over the vast Indian territory. For this, Britishers linked important administrative and military centres through railway lines.
2.  To earn profits through foreign trade. For this they linked railways with major ports and the marketing centres (or Mandies).
3.  To create an opportunity for profitable investment of British funds in India.
4. 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.

Q.17 What do you understand by the drain of Indian wealth during the colonial period?
ANSWER:   Drain of wealth means that economic policies of the British in India were primarily motivated to snatch maximum benefits from India’s trade. India’s foreign trade generated large export surplus. This export surplus did not result in any flow of gold or silver into India. There was drain of India’s wealth into Britain. It is clear from the following facts :

1. The surplus was used to make payments for the expenses incurred by the office set up by the colonial government in Britain.
2.  The surplus was used to pay expenses on war fought by the British government.
3.  Surplus was used to pay for the import of invisible items.

Q.18 Which is regarded as the defining year to mark the demographic transition from its first to the second decisive stage?
 1921 is the defining year. It is called ‘Year of Great Divide’.

Q.19 Give a quantitative appraisal of India’s demographic profile during the colonial period.
ANSWER:  The demographic condition on the eve of independence was as follows:

1.  High Birth Rate and Death Rate. High birth rate and high death rate are treated as indices of backwardness of a country. Both birth rate and death rate were very high at 48 and 40 per thousand of persons res-pectively.
2.  High Infant Mortality Rate. If refers to death rate of children below the age of one year. It was about 18 per thousand live births.
3.  Low Life Expectancy. Life expectancy means the number of years that a new bom child on an average is expected to live. It was as low as 32 years.
4.  Mass Illiteracy. Mass illiteracy among the people of a country is taken as an indicator of its poverty and backwardness. The population census of 1941 (which was the last census under the British rule) estimated the literacy rate at 17 per cent. This means that 83 per cent of the total population was illiterate.
5.  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. Even then, people did not get adequate quantity of food or clothing or housing and millions of people starved, went naked and lived in huts or in the open. Moreover, some parts of India came under severe famine conditions. The famines were so severe that millions died. One of the worst famines in India was the Bengal famine of 1943, when three million people died.

Q.20 Highlight the salient features of India’s pre-independence occupational structure.
ANSWER:  Occupational structure means the distribution of work-force among different sectors of an economy. The state of occupational structure on the eve of independence was as follows:

1.  Pre-dominance of Agriculture Sector. The agricultural sector accounted for the largest share of work-force, which was 72 per cent. The manufacturing and service sectors accounted for 10 per cent and 18 per cent respectively.
2.  Growing Regional Variations. There was growing regional variation. In the states of Tamil Nadu, Andhra Pradesh, Kerala, Karnataka, Maharashtra and West Bengal, the dependence of the workforce on the agricultural sector declined. On the other hand, there was increase in the share of work force in the agriculture sector in the states of Orissa, Rajasthan and Punjab.
   Thus, India’s occupational structure was static and imbalanced.

Q.21 Were there any positive contributions made by the British in India? Discuss.
ANSWER:   British rule exploited India in many ways. But, the ways to achieve the motives sometimes yield positive effects. Their exploitative programmes and policies resulted in some positive impact on India. Some of these positive effects were:

1.  Commercialisation of agriculture implied a good breakthrough in agriculture and resulted in self-sufficiency in fiSodgrain production.
2.  The development of infrastructure, railways and roadways generated new opportunities for economic and social growth and broke cultural and geographical barriers.
3.  Railways promoted commercialisation of agriculture through long distance movement of goods and it enabled people to move from one place to another easily.
4.  The supply of food and essentials could be made available to drought affected areas through transportation.
5. Indian economy witnessed a huge expansion of monetary system and growth in production through division of labour and specialisation.