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Pre-British India — A Prosperous Economy

Before the advent of British rule, India was an independent, self-reliant and prosperous economy. Agriculture was the main source of livelihood, and India was renowned worldwide for its handicraft industries. The country was often called the “Golden Sparrow”.

Prosperous Economy

India was an independent, self-reliant and prosperous economy before the advent of British rule.

Agrarian Economy

Agriculture was the main source of livelihood, engaging about two-third of the total population.

The Onset of Colonial Rule

Key dates that frame the colonial period. Click any event for details.

Starred events (1757, 1947)

Colonialism — Meaning and Impact

Colonialism

A system of political and social relations between two countries, of which one is the ruler and the other is its colony. The ruling country not only has political control over the colony, but it also determines the economic policies of the dominated country.

The British purpose of colonial rule was not development of India — it was to use the Indian economy as a feeder for British economic growth. Every policy served Britain, not India.

Cause → Effect Chain

British Colonial Rule

The main purpose was to use Indian economy as a feeder economy for the development of the British economy. British colonial rule tempered the Indian economy very badly.

Two-Fold Strategy

Economic policies protected and promoted British interests, not Indian development. Strategy: (i) Get raw materials from India at cheap rates; (ii) Sell British finished products in Indian market at higher prices.

Structural Transformation

India was transformed into a supplier of raw materials and consumer of finished industrial products from Britain.

Underdevelopment of India

The unequal relationship between the colony (India) and the ruling country (Britain) resulted in the underdevelopment of India.

Low Level of National Income

No sincere attempt was made by the British Government to estimate India's national and per capita income. All estimates were individual attempts by experts.

Aggregate Real Output Growth

< 2%

First half of 20th century

Per year

Per Capita Output Growth

0.5%

First half of 20th century

Per year — extremely low

Agricultural Workforce

~85%

During colonial rule

Of population lived in villages, dependent on agriculture

Economists who attempted national income estimates:

Key Takeaways

Before British rule, India was a prosperous, self-reliant, agrarian economy with world-renowned handicraft industries like Daccai Muslin.
The Battle of Plassey (1757) laid the foundation of the British Empire in India, leading to 200 years of colonial rule.
Colonialism created an unequal relationship: India became a supplier of raw materials and a consumer of British finished goods.
The British Government made no sincere attempt to estimate national income; individual estimates by Dadabhai Naoroji, V.K.R.V. Rao and others produced conflicting results.
Aggregate real output grew at less than 2% per year, and per capita output at only 0.5% during the first half of the 20th century. ⭐

Introduction & Colonial Context

Notes