Tuesday, 19 January 2016


The Industrial revolution has helped the English merchants accumulate a lot of capital from the countries of Asia, Africa and America. They now wanted to invest this wealth in setting up industries and trade with India. The mass production of goods through machines that we witness today was pioneered through the Industrial Revolution which occurred first in England during the late 18th and the early 19th century. This led to a massive increase in the output of finished products.

 The East India Company helped in financing and expanding their industrial base. During this time there was a class of manufacturers in England who benefited more from manufacturing than trading. They were interested in having more raw materials from India as well as sending their finished goods back. Between 1793 and 1813, these British manufacturers launched a campaign against the Company, its trade monopoly and the privileges it enjoyed. Ultimately, they succeeded in abolishing the East India Company’s monopoly of Indian trade. With this India became an economic colony of Industrial England. Let us learn more about the economic impact on various Indian industries
and trade.

Textile Industry and Trade
Earlier, Indian handloom had a big market in Europe. Indian textiles such as cotton, linen, silk and woolen goods already had markets in Asia and Africa. With the coming of industrialisation in England, the textile industry there made important headway. There was now a reverse of the direction of textile trade between Britain and India. There was a massive import of machine made clothes from English factories to Indian markets. 

This import of large amount of products manufactured by mechanical looms in England led to increase threat for the handicraft industries as the British goods were sold at a much cheaper price. The British succeeded in selling their goods at a cheap price as foreign goods were given free entry in India without paying any duty. On the other hand, Indian handicrafts were taxed heavily when they were sent out of the country. Besides, under the pressure of its industrialists, British government often imposed a protective tariff on Indian textiles. 

Therefore, within a few years, India from being an exporter of clothes became an exporter of raw cotton and an importer of British clothes. This reversal made a huge impact on the Indian handloom weaving industry leading to its virtual collapse. It also created unemployment for a large community of weavers. Many of them migrated to rural areas to work on their lands as agricultural laborers. This in turn put increased pressure on the rural economy and livelihood. This process of uneven competition faced by the Indian handloom industry was later dubbed by the Indian nationalist leaders as de-industrialisation. The main aim of the British was to transform India into a consumer of British goods.
As a result, textile, metal work, glass and paper industries were soon out of work. By 1813, the Indian handicrafts lost both their domestic as well as foreign market. Indian goods could not compete with the British factory-made products where machines were used. These markets were now captured and monopolised by Britain by means of war and colonisation. From an exporter India became an importer of these goods. They extracted money from the Indian rulers, merchants, zamindars and
even the common people. Added to this drain were the profit made through trade and also the salaries of the officials. It was evident that their economic policies were meant to serve the interests of the East India Company and later the British Empire.

Land Revenue Policy and Land Settlements
Since ancient times, the main source of livelihood for the people were agriculture. Hence, land tax had formed a principal source of revenue for all the emperors all over the world. In the 18th century, the main occupation of the Indian people were agriculture. During British rule, revenue from land kept on increasing, and the reasons for this were many. 

Earlier the British had come to trade with India. Gradually they wanted to conquer the vast territory of India for which they needed a lot of money. They also needed money for trade, projects of the company as well as for the cost of running the administration. The British carried out a number of land revenue experiments which caused hardship to cultivators. They extracted taxes from the farmers to finance their policies and war efforts. Direct and indirect means were carried out to bring about this collection of revenue for the British. This affected the lives of the people who could not meet their daily needs because they had to provide the landowners and the collectors their share in the produce. 

Lord Cornwallis introduced the Permanent Settlement in Bengal and Bihar in 1793. It made the landlord or zamindar deposit a fixed amount of money in the state treasury. In return they were recognised as hereditary owners of land. This made the zamindar the owner of the land. The amount of revenue to be paid to the Company was fixed for a period of time which made the British financially secured. Now they knew in advance as to how much revenue was coming in form the State. The zamindar also knew how much revenue was to be paid. So to get surplus revenue for themselves they asked the peasants to increase production. But, if the zamindar failed to pay the fixed revenue on time his land was sold off to another zamindar. The British stood to benefit from this settlement as the new class of zamindars that emerged became their political allies. They supported the British in times of need and acted as a buffer between them and the peasants. This class, in fact, supported the British against the freedom movement.

In 1822, the British introduced the Mahalwari Settlement in the North Western Provinces, Punjab, the Ganga Valley and parts of Central India. Here the basis of assessment was the product of a mahal or estate, which may be a village or a group of villages. Here all the proprietors of mahal were jointly responsible for paying the sum of revenue assessed by the government. Unfortunately it brought no benefit to the peasants as the British demands were very high.

The Ryotwari Settlement was introduced in the beginning of the 19th century in many parts of Bombay and Madras Presidencies. Here the land revenue was imposed directly on the ryots, the individual cultivators, who actually worked on the land. The peasant was recognized as the owner of the land as long as he was able to pay the revenue but the exploitation continued with the high revenue demands.

 Commercialisation of Agriculture
Another major economic impact of the British policies in India was the introduction of a large number of commercial crops such as tea, coffee, indigo, opium, cotton, jute, sugarcane and oilseed. Different kinds of commercial crops were introduced with different intentions. Indian opium was used to balance the trade of Chinese tea with Britain in the latter’s favor. The market for opium was strictly controlled by British traders which did not leave much scope for Indian producers to reap profit. Indians were forced to produce indigo and sell it on the conditions dictated by the Britishers.
Indigo was sent to England and used as a dyeing agent for cloth produced in British towns. Indigo was grown under a different system where all farmers were compelled to grow it on 3/20th part of their land. Unfortunately cultivation of Indigo left the land infertile for some years. This made the farmers reluctant to grow it. In the tea plantations ownership changed hands quite often. The workers on these plantations worked under a lot of hardships.

 Commercialisation of agriculture further enhanced the speed of transfer of ownership of land thereby increasing the number of landless laborers. It also brought in a large number of merchants, traders and middlemen who further exploited the situation. The peasant now depended on them to sell their produce during harvest time. Because the peasants now shifted to commercial crops, food grain production went down. So, less food stock led to famines. It was therefore not surprising that the peasants revolted. You would read about it in detail in the coming chapters. There was an enormous drain of wealth from our country to Britain due to the various economic policies. Additional financial burden was placed on India due to expenditures on salaries, pensions and training of military and civilian staffs employed by the British to rule India. If this wealth was invested in India it could have helped enormously improved the economy in this country. Let us learn how the economic policies
implemented by the British changed the social structure of Indian society.

 Rise of the New Money-lending Class
Time bound and excessive demand of revenue by the British government forced the peasants to take loans from the moneylenders. These moneylenders often exploited the peasants by charging high interest rates. They often used unfair means like false accounting, forged signatures and thumb impressions. The new legal system and the policy introduced by the British only helped the moneylenders who were either local merchants or landlords. In most cases, the peasants failed to pay back the loan with full interest. Thus, their lands gradually passed into the hands of the money- ending class.
 Rise of the New Middle Class
A major impact of the British rule in India was the beginning of a new middle class. With the rise of the British commercial interests, new opportunities opened to a small section of the Indian people. They often acted as the agents and intermediaries of the British traders and thus made huge fortunes. The new landed aristocracy, which came into being after the introduction of Permanent Settlement, also formed a part of this new class. A major section of the old landowning aristocracy lost ownership of their land and in many cases were replaced by a new class of land owners. These
people got some English education and became the new elite. With the spread of British power, new job opportunities were also created. Indian society witnessed the introduction of new law courts, government officials and commercial agencies. The English educated people naturally got the necessary patronage from their colonial rulers. Thus, a new professional and service-holding middle class was also created by the British, apart from those with landed interests.
Transport and Communication
The means of transport in India at that time were bullock carts, camels and pack animals. England on the other hand needed railways that connected the raw material producing areas with the exporting ports and to facilitate the movement of British goods to different parts of the country as well as bring raw materials to the ports. The vast network of railways that you witness today was pioneered during the latter half of the 19th century. This opened avenue for British bankers and investors to invest
surplus wealth and material in the construction of railways. Railways benefited the British capitalists in two important ways. First, it made trading in commodities much easier and profitable by connecting the internal markets with the ports. Secondly, the rail engines, coaches and the capital input for building of rail lines came from Britain. The British capitalists who invested in railways were also guaranteed a minimum profit of 5% by the government. These companies were also given free land with a lease of 99 years.

Although the railways were set up for the advantage of British trade, they also played an important role in the national awakening of the country. Though the British had never anticipated, the extensive transport network and improved education brought people and ideas closer.

During British rule, India took ideas of liberty, equality, human rights, science and technology from the West. This accelerated the process of modernisation. Now we will read about the impact of modern idea on Indian society.

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