Get complete information on the Indian Economy on eve of British conquest

1. Economic Disruption:

The disintegration of the Mughal Empire in the 18th century inevitably brought about economic fragmentation and disruption. The continuous conflicts and wars disrupted economic activity. New agencies of pillage and plunder sprang up.

Cultivation was adversely affected. Roads became unsafe and excessive demands for customs and other tolls hampered trade and commerce. European trading companies dabbled in politics and profited from the administrative and political confusion.

2. Self-Sufficient Village Communities:

The most outstanding feature of the Indian village economy was the existence of self-sufficient and self- governing village communities.

Indian villages functioned as little worlds of their own, having very little to do with the outside world village economy was self-subsisting, providing the foodstuffs it needed accept perhaps a few necessities like salt and iron.

Another marked feature was the union of agriculture and handicraft industry. The family of the peasant undertook spinning and weaving as a secondary activity and produced the cloth needed for the family. The village communities were self-governing.

The village panchayat administered the village affairs, settled disputes and administered justice. The village Headman was its leader in dealing with the government.

The local chief or the distant subahdar did not interfere in village affairs except claiming a share in the village crops varying from one-sixth to one-half. Political convulsions did not disturb the placid life of village communities.

The urban economy of India presented a better picture. Indian handicrafts enjoyed worldwide renown. The cotton manufactures of Bengal, Gujarat and lasaulipatam, the silk fabrics of Murshidabad, Lahore and Agra, woollen nawls and carpets of Agra, Lahore and Kashmir were in demand both in India and abroad.

Besides, gold and silver jewellery, metal work, fancy ivory items, arms, shields, ships etc. enjoyed a rare reputation of excellence. India had also developed her own banking system with sheriffs and mahajans at the lower level and Jagat Seths, Nagar Seths and Chetties at the top.

India also had a very favourable balance of trade and enjoyed the reputation of being the ‘sir of gold and silver’. It seems that the preconditions for a rapid capitalist growth existed. However, certain socio-economic constraints like the law of escheat and the existence of feudal classes worked as a deterrent. Prof. Raychaudri has attributed India’s economic backwardness in the 18th century to the absence of “any scientific and geographical revolution” and to the inability of society to respond positively to opportunity.

Three Phases of Economic Exploitation: Three periods in the history ₀f imperialist rule in India are:

(i) Period of Merchant Capital-from 1757 to the end of 18th century;

(ii) Period of Industrial Capital-developed during the 19th century; and

(iii) Period of Finance Capital-from the closing decade of 19th century to 1947.

Each stage developed out of the conditions of the earlier stage and the different modes of colonial exploitation overlapped, old forms of colonial exploitation never entirely ceased, but got integrated into new patterns of exploitation.

The impact of British rule on Indian Economy under the East India Company may be viewed under the following heads:-

(a) Impact on Indian Agriculture:

The East India Company’s authorities introduced new land tenures like Permanent Zamindari Settlement, Ryotwari, Mahalwari system etc., the State’s land revenue demand was excessive. Under Ryotwari and Mahalwari systems there was periodical upward revision of land tax.

Emergence of new social classes like landlords, money-lenders and land-speculators in the rural sector, rural indebtedness increased, and Indian- cultivator was driven below the poverty line.

(b) Decline of Indian Cottage Industries:

British rulers used the political power of the state to strangle Indian handicrafts. Machine made products of England flooded the Indian markets and drove unemployment and misery among weavers, artisans etc.

(c) Colonial manipulation of Indian trade and commerce:

A qualitative change came in the character of Indian foreign trade. To suit the interests of industrialised British economy, India’s exports mostly consisted of food-stuff and raw materials and her imports largely of manufactured goods. British Agency Houses exercised great control over India’s internal and foreign trade.

Preferential tariffs upto 1858 provided that imports into India of non-British countries were subjected to double the rate of customs duty as compared to goods imported from Britain, e.g.

In 1852 British cotton cloth, silk piece goods, woollens, metals etc. paid 5% duty as compared to 10% duty charged on these items imported from non-British countries. Similarly, British cotton yam paid 3.5% duty as opposed to 7% livable on non-British imports books imported from Britain were allowed duty-free while non-British goods were charged 3% duty etc.

(d) Drain of Wealth from India: It was a logical corollary of Britain’s discriminatory economic policies.

The Merchant companies aimed at a large profit-margin. This could be possible through three methods:

(a) Monopoly control over trade and elimination of all possible rivals;

(b) Purchase of goods at cheap rates and sale of commodities at very high rates; and

(c) The above objectives could be achieved if they could establish political control over the countries they traded with.

The English East India Company’s struggle with other Merchant companies in India, viz. the Dutch Company and the French Company was aimed at elimination of all European rivals from the Indian trade. The various wars that the East India Company fought against Indian princes-the conquest of Bengal, Anglo-Mysore wars, the Anglo-Maratha wars and wars against other Indian powers were all directed towards control of political power over various parts of India.

The political power that the Company acquired was used to control the economy of India-to control the very sources of Indian wealth and the internal and external trade of India. Indian merchants were prohibited not only from buying commodities directly from the producers, but the agents of the Company forced their goods on the Indian merchants at a price higher than the prevailing market price.