Economic Impact of British Rule on India

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.

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.

Textile Industry and Trade

Earlier, Indian hand loom had a big market in Europe. Indian textiles such as cotton, linen, silk and woollen 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. 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 hand loom weaving industry leading to its virtual collapse.

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 18^th century, the main occupation of the Indian people were agriculture. 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.

In 1765, the Mughal emperor appointed the East India Company as the Diwan of Bengal. As Diwan, the Company became the chief financial administrator of the territory under its control. Now, it had to think of administering the land and organizing its revenue resources.

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. Local administration failed to provide relief and natural justice to the rural poor.

Permanent Settlement

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 recognized as hereditary owners of land. This made the zamindar the owner of the land.

Zamindars were asked to collect rent from the peasants and pay revenue to the Company. The amount to be paid was fixed permanently, that is, it was not to be increased ever in future. It was felt that this would ensure a regular flow of revenue into the Company’s coffers and at the same time encourage the zamindars to invest in improving the land. Since the revenue demand of the state would not be increased, the zamindar would benefit from increased production from the land.

Mahalwari Settlement

In 1822, the British (Holt Mackenzie devised the new system) 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.

This demand was to be revised periodically, not permanently fixed. The charge of collecting the revenue and paying it to the Company was given to the village headman, rather than the zamindar.

Ryotwari Settlement (Munro System)

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.

Commercialization of Agriculture

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.

Commercialization 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.

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-lending class.

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.

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.