Indian economy during colonial rule

HS30085 Indian Economy

Indian Economy (M.Sc Econ) © G. S. Hiremath (IIT Kharagpur)

 Indian economy during colonial rule

• Methodological issues

• Ideological differences

Indian Economy (M.Sc Econ) © G. S. Hiremath (IIT Kharagpur)

 Indian economy during colonial rule
1757-1947
• Background

• Notions of economic nationalism

• Laissez-faire

• East Indian company to Crown

• The century before British control

Indian Economy (M.Sc Econ) © G. S. Hiremath (IIT Kharagpur)

 The control of company

• Set up of administrative system

• Property rights on land – no cultivating classes

• Decline of traditional cotton industry 1820-1860

Indian Economy (M.Sc Econ) © G. S. Hiremath (IIT Kharagpur)

 The Central role of Agriculture

• Dominance of agriculture in national income

• Dependence on monsoon and high risk of famine

• High birth rate and some fall in mortality rate

• Commercialization of agriculture

• Expansion of credit transactions

• (Figure follows)

Indian Economy (M.Sc Econ) © G. S. Hiremath (IIT Kharagpur)

Indian Economy (M.Sc Econ) © G. S. Hiremath (IIT Kharagpur)
Indian Economy (M.Sc Econ) © G. S. Hiremath (IIT Kharagpur)
 The Central role of Agriculture

• The differences in growth patterns in Bengal and Southern parts

• Increase in standard of living because of commercialization of agriculture

• Wages increased without improving the lives of labourers

• Increased choices of occupation

Indian Economy (M.Sc Econ) © G. S. Hiremath (IIT Kharagpur)

 Industry

• Significant workforce in Industry

• Coexistence of traditional and modern industry

• Emergency of large scale industries – Textile and Jute

• Rise of new cities – Bombay and Calcutta

• Improvement in infrastructure

Indian Economy (M.Sc Econ) © G. S. Hiremath (IIT Kharagpur)

 Industry

• New form of work – Factory labour

• Greater occupational and income mobility
• Reasons for limited development of industry
– Low cost imports?
– Buy British
– High cost of capital
– Scarcity of skilled labour

• Tensions between traditional and modern industry? – Emergence of new

centres of traditional industry

Indian Economy (M.Sc Econ) © G. S. Hiremath (IIT Kharagpur)

 International Trade and Capital

• India was an open economy

• Indian government borrowed from abroad to invest

• Monetary policy was used to stabilize foreign exchange

• Remittances to factor payments

Indian Economy (M.Sc Econ) © G. S. Hiremath (IIT Kharagpur)

Growth of Indian Economy during British Raj

Indian Economy (M.Sc Econ) © G. S. Hiremath (IIT Kharagpur)

 The changing narrative of India’s economic history

• Thesis

– Leftist-nationalist formulation of totality of colonialism

– Social surplus into wrong hands

– Perilous commercialisation

– Deindustrialization

– Public goods were for exploitation

• Different theses – Roy’s inference – British and Indian economic fortunes

were complementary rather than contradiction

Indian Economy (M.Sc Econ) © G. S. Hiremath (IIT Kharagpur)

Concluding remarks

Indian Economy (M.Sc Econ) © G. S. Hiremath (IIT Kharagpur)