Indian Economy during the British Period

Indian Economy during the British Period

Indian’s sea route trade to Europe started only after the arrival of Vasco da Gama in Calicut, India on May 20, 1498. The Portuguese had traded in Goa as early as 1510. In 1601 the East India Company was chartered, and the English began their first inroads into the Indian Ocean. In 1614 Sir Thomas Roe was successful in getting permission from Jahangir for setting up factories and slowly moved all parts of India.

Hundred years after Battle of Plassey, the rule of the East India Company finally did come to an end. In 1858, British Parliament passed a law through which the power for governance of India was transferred from the East India Company (EIC) to the British crown. Even the transfer of power from the East India Company to the British Crown did not materially alter the situation.

Britain had exploited India over a period of two centuries of its colonial rule. On the basis of the form of colonial exploitation, economic historians have divided the whole period into three phases: namely the period of merchant capital, the period of industrial capital, the period of finance capital.

1. Period of Merchant Capital

·           The period of merchant capital was from 1757 to 1813.

·           The only aim of the East India Company was to earn profit by establishing monopoly trade in the goods with India and the East India’s.

·           During this period, India had been considered as the best hunting ground for capital by the East Indian company to develop industrial capitalism is Britain.

·           When Bengal and South India came under political shake of the East India company in 1750s and 1760s, the objective of monopoly trade was fulfilled.

·           The company administration succeeded in generating huge surpluses which were repatriated to England, and the Indian leaders linked this problem of land revenue with that of the drain.

·           Above all, the officers of the company were unscrupulous and corrupt.

2. Period of Industrial Capital

·           The period of Industrial capital was from 1813 to 1858.

·           During this period, India had become a market for British textiles.

·           India’s raw materials were exported to England at low price and imported finished textile commodities to India at high price. In this way, Indians were exploited.

·           India’s traditional handicrafts were thrown out of gear.

3. Period of Finance Capital

·           The third phase was the period of finance capital starting from the closing years of the 19th century and continuing till independence. During this period, finance imperialism began to entrench itself through the managing agency firms, export – import firms, exchange banks and some export of capital.

·           Britain decided to make massive investments in various fields (rail, road, postal system irrigation, European banking system, and a limited field of education etc) in India by plundering Indian capital.

·           Railway construction policy of the British led to unimaginable as well as uneconomic. The poor Indian taxpayers had been compelled to finance for the construction of railways. The political power was handed over to the British Government by the East India Company in 1858.

4. Decline of Indian Handicrafts

·           The Indian handicrafts products had a worldwide market. Indian exports consisted chiefly of hand weaved cotton and silk fabrics, calicoes, artistic wares, wood carving etc.

·           Through discriminatory tariff policy, the British Government purposefully destroyed the handicrafts.

·           With the disappearance of nawabs and kings, There was no one to protect Indian handicrafts.

·           Indian handicraft products could not compete with machine-made products.

·           The introduction of railways in India increased the domestic market for the British goods.