Effect on Economy During British Era

How was the economy affected during the British Era?
Earlier, the British came into India just with the intention to trade but ended up making colonies and grasping the political hold in India. It was from the Battle of Plassey and the annexation of Punjab in 1849 that the British Raj finally came into the scene. The whole of the Indian subcontinent was under the British rule and as days passed by more and more of the Indian subcontinent fell into the clutches of the system. There was a lot of unrest among the people. The British outraged the people
of Indi by laying down policies like Doctrine of Lapse, Subsidiary Alliance, and such other policies which actually brought an unnoticed rage inside the Indian men and women. The different factors which caused a massive change in the economy can be stated as follows:
Introduction of Ryotwari, Zamindari, Mahal Wari system
Drainage of Wealth
Development of Railways
Growth of Landless labour
Degradation in Agriculture

  1. Introduction of Ryotwari, Zamindari and Mahal Wari system: Under 1786-1793, a number of permanent settlement patterns were introduced by British officials. It was Lord Cornwallis who introduces the Zamindari System. This system was initially introduced in the states of Bengal, Bihar, Orissa and Varanasi. This settlement system aimed at transferring the ownership of lands to Zamindars who in return will collect the revenue generated and would hand over the same to the British.
    The permanent settlement systems have said to hamper the settlement system and the lifestyle of the cultivators. This settlement was made between the Zamindars and British. The Zamindars had nothing to lose, but it was the poor peasants who were oppressed and were given the burden to manage the whole thing. The rent accumulated was divided among 11 components and out of them 10 components were solely in the share of British East India Company. The one part was given to the Zamindars. Earlier, in the Zamindari system during the Mughal Period, the hereditary rule was legal, but after the British came into the scene, every system which was previously into effect had been abolished.
    In around 1820, Sir Thomas Munro introduced the Ryotwari system. This settlement pattern was introduced in the province of Madras, Assam and Coorg. In this settlement the land and its rights were under the control of the peasants and cultivators. They could sell, gift the land or even use it for their personal uses. But when it came to giving taxes, it was accumulated via the authorities. The percentage in which the taxes were collected were open to increasing percentage. If the peasants failed to pay the taxes, they used to be evicted from their and by the British government.
    Unlike the Zamindari System, there was no middle man. The peasants had to submit the taxes themselves. Taxes were to be paid only in cash since they were high enough.
    The Mahal Wari System was introduced by Lord William Bentick. This system expanded in regions of North Western Frontier Province, Central Province, Gangetic Valley, Punjab etc. the troublesome aspect was that the feature of Zamindari as well as Ryotwari system existed in Mahal Wari system. The areas were divided into Mahals. The proprietorship was with the labourers and every farmer gave their share. The income was given to the British officials through the Town head. This system was also referred to as the Modified Zamindari System because the village headman
  2. Drainage of Wealth:
    There was a lot of wealth transfer from India to England without representation of any equivalent return terms. Economists refereed this to as economic drain. In almost 1867, Dadabhai Naoroji put forward in his paper very evidently that India was plundered and its wealth was being transferred from India to England. Almost 1/4th of all the revenues earned was said to be transported to England and added to its assets.
    The reasons behind this massive drainage of wealth was that there was a proper external rule and administration which India had been facing. Every bit was under the British control. The funds and labour which was needed by the British was channelled by the Indians. But when it came to funding these immigrants, not a single attention was paid to them. In fact, all the expenses including the military and civil expenses were paid by India. Hence, it could be said that not only India was bearing its own expenses but also the expenses that were beyond the territory.
    When India was opened for free trade, it exploited the wealth of the nation at a great extent. Earlier, a major portion of revenue was generated from the import and export business. But as soon as the free trade started, all the revenues stopped. People who actually were befitting from this system were the foreigners and foreign traders. None of it was applied and invested to business and industries in India, as a result, none of the sectors in the Indian landmass grew. The trade and labour which was done from the behalf of the Indians were deeply undervalued.
    As a result of this issue, there was a deficit in the national revenue. To fulfil this deficit, the tax burden on Indian people exceeded. Whatever deficit was there, it was used to make repayments to the British creditors and were not used for social service and welfare activities of the Indians.
  3. Deindustrialization
    There was a major change in the industrialization process. It can actually be called the process of deindustrialization. The handloom and cotton industries, were wiped off entirely. There was a total wiping off of the historic aristocracy and Mughal charm. Earlier it was all of the handmade goods which was brought to use. But with time, these were replaced by the machine-made goods. So, the people who used to get a major source of income from this, ended p having nothing. Further all this technique which the Indians used, were imposed tariff policy. This actually made the selling of handicraft items as a whole. These policies were introduced by the British. Slowly and steadily, the craftsmanship enterprises and skill also turned out to be futile.
    This deindustrialization was caused mainly due to the crumbling of Mughal empire. The diminishing effect of the Mughal empire gave a way to the British to set up their own rules and policies. Slowly and steadily the British set up their empire and this resulted in deindustrialization of the earlier set industries. Earlier the Indians had their own way of working and had a growing hand in the businesses they promoted. But with the creeping up of British, the habits had been changed.
    There was a growing competition in trade and commerce. As a result, there was emerging decrease in handcrafted works. The mechanism started that, raw materials were transported from India to Britain in low prices and the finished goods were supplied in India at high prices. As a result, there was an economic drain from India at a rapid pace. People also had a change in taste and as a result, the machine-made goods were given more importance than the hand-crafted materials and fabric which had very less choices to choose from.

4.Developement of Railways
Development of railways served as a boon to the people. With the connection existing, people could travel from one part of the city to another and there was no distinction on the basis of caste and creed. This hurt the sentiments of people who were very much for the caste discrimination. The people of the upper caste considered it to be a sin to sit with the people of the lower caste.
The movements which were facilitated by the British helped the Dalits as well as the women to travel without any restrictions. Helping the people in travelling helped in opening of new labour class which assisted the people in trading and agricultural processes. This process however aided the people and helped them in mobilization. There was a rapid change in thoughts and problems which existed because of out dated opinion.
However, this helped the people to connect the Indian intelligentsia with the ordinary parts of India. The methods and motives which the national leaders bore were also properly communicated after the emergence of Railways. For instance, Gandhi helped in spreading of the ideas of Satyagraha and ideas of Swaraj by travelling to different parts of the country. the circulation of newspaper and journals also increased at a rapid pace. People began to understand the concept of freedom and started working and communicating their goals in a collective way.

  1. Deterioration of Agricultural output
    Earlier in India whatever the produce was grown it was mainly aimed to deliver it to the masses to feed them. After the British came, there was a rapid industrialization and commercialization in the growing of crops. They did not pay attention to the agricultural society and as a result there was a poor agrarian society. Absence of latest farming techniques and proper workers did not aid the people and there was a growing disparity among the standards of the society as well.
    When the food crops started getting commercialized it started affecting the people and hunted the rural economy. They actually had to buy the food grains at a high price and absence of proper food resulted in frequent breakouts of famines. The major reason behind the deterioration of agriculture facility in India were:
  2. excessive agricultural activity on land.
  3. Growth of landlordism and zamindari systems
  4. more demand from the land income.
  5. increasing debt of the farmers.
  6. impoverished conditions of the farmers and cultivators.

Well it can be observed that the conditions which changed because of the British rule helped in flourishing the channels of India in some way but deteriorated the society in a major way. The benefits also which were accrued, helped the society to some extent but those seemed to be co-incidental. The measures which were undertaken by the British were enough to plunder the economy as a whole. The intervention of British in every aspect, made the economy hollow. Hence, it can be concluded that these effects which the British introduced had more poorer effects and outweighed the beneficial ones.

Autho- Nidhi Paul,

Content Board,


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