Economic Impacts of British Rule | Indian Modern History | UPSC | Lecture 39 | Aadesh Singh

TLDR;

This video discusses the economic impact of British rule in India, explaining how British policies transformed the Indian economy into a colonial one, designed to serve British interests. It divides the colonial rule into three phases: Mercantilism, Industrial Capitalism, and Financial Capitalism, each having distinct exploitative characteristics. The video also covers the adverse effects on Indian agriculture and industries, the drain of wealth from India, and the lasting legacy of British rule on independent India.

• British policies transformed India into a colonial economy.
• Colonial rule is divided into three phases: Mercantilism, Industrial Capitalism, and Financial Capitalism.
• Indian agriculture and industries suffered greatly.
• Wealth was systematically drained from India to England.
• Independent India inherited economic backwardness due to colonial exploitation.

Introduction: The Transformation of the Indian Economy [0:00]

The British transformed the Indian economy into a colonial structure to serve their own economic needs, dismantling the traditional Indian economic structure. Unlike previous rulers, the British remained foreign exploiters, draining India's resources and wealth as tribute. This exploitation subordinated the Indian economy to British trade and industrial interests. The nature of this exploitation evolved over time, leading to a division of colonial rule into three distinct phases.

Three Phases of Colonial Rule [1:11]

Indian scholar R.P. Dutt divided the colonial rule into three phases based on the changing economic character. The first phase, from 1757 to 1813, is known as Mercantilism or Commercial Capitalism, focused on establishing trade monopolies and solving the bullion problem. The second phase, from 1813 to 1860, is the era of Industrial Capitalism, marked by the industrial revolution in England, which turned India into a market for British goods and a supplier of raw materials. The third phase, from 1860 to 1947, is termed Financial Capitalism, during which the British invested capital in India to exploit resources, driven by increased global competition and the need to reduce production costs.

Impact on Indian Agriculture [5:14]

The British introduced new land revenue systems like the Permanent Settlement, Ryotwari, and Mahalwari, which imposed high revenue rates and were regularly increased. These systems led to the emergence of new social classes like landlords and money lenders, increasing landlessness and impoverishing Indian cultivators. The colonial policies also led to the commercialization of Indian agriculture, especially during the Industrial Capitalism phase, where farmers were forced to grow commercial crops like cotton, jute, and indigo, leading to food shortages and frequent famines.

Decline of Indian Handicraft Industries [6:56]

British rule had a devastating impact on Indian handicraft industries. Before the British, India was an exporting country, but the influx of cheap, machine-made products from England reduced the demand for Indian goods. One-sided free trade policies imposed heavy duties on Indian goods in foreign markets, further decreasing demand. The export of raw materials like cotton from India deprived Indian artisans of resources, leading to the decline of traditional industries and increased unemployment. The development of railways also facilitated the spread of British goods to remote areas, exacerbating the decline.

Drain of Wealth from India [9:20]

Indian nationalist leaders and economists described the constant flow of wealth from India to England without any economic, commercial, or material return as the "drain of wealth." Before the Battle of Plassey, the East India Company imported bullion to trade in India, but afterward, they used India's revenue to finance their exports, draining the country's resources. After 1813, the drain continued through exports and "home charges," which included expenses incurred by the Secretary of State in England on behalf of India, dividends to East India Company shareholders, interest on public debt, and civil and military charges. Foreign capital investment also contributed to the drain through interest payments.

Legacy on Independent India [13:56]

The 200 years of British rule left independent India with extreme poverty and economic backwardness in both agriculture and industry. In 1947, India inherited complex land problems, insecure land tenures, primitive cultivation techniques, low yields, fragmented agricultural holdings, and the grip of money lenders. The industrial sector was characterized by lopsided development, outdated production techniques, poor conditions for industrial workers, and the dominance of British finance capital. British rule left India as a poor country with low per capita income.

Conclusion [16:01]

The British colonial rule significantly impacted the Indian economy, leading to economic nationalism and efforts to expose colonial exploitation through the drain of wealth theory. Colonial policies were responsible for the lack of industrial revolution and the backwardness of Indian agriculture and industries. The economic impact of British rule was profound and long-lasting, shaping the economic landscape of independent India.