What was the impact of the colonial economy on the economy of India?


What was the impact of the colonial economy on the economy of India? Mention two revenue settlements introduced by the British in India. What do you understand by the term ‘commercialization of agriculture’?

a. Impact of the Colonial Economy:

The colonial economy impacted all aspect of the prevailing Indian economy.


First, private property in land came into being in India. Land became a private property which could be purchased or sold.

Second, the British introduced the system of paying land-revenue in cash.

This system forced the peasants to be in the clutches of the greedy money­lenders.

Third, the new economic policy of the British converted India into a country that supplied raw materials to the industrial establishments of Britain.


Fourth, while there was deindustrialization of the country the finished products of Britain hooded the markets of India.

Fifth, as a result of the new economic policy there was the breakdown of the traditional economy of India. Thus the unity of village agriculture and industry was disrupted.

b. Two Settlements: Of the many types of land-revenue settlements introduced by the British in India the most important were: (1) Permanent Settlement (2) Ryotwari Settlement.

c. Commercialization of Agriculture:


Indeed, one of the consequences of the system of new land-revenue and revenue payment was a total change in the prevailing concept of agriculture in India.

Peasants henceforth produced mainly for the market, and got cash from the sale of the products. Naturally in course of time the peasants did not necessarily produce food crops.

There was the tendency to grow specialized crops that would fetch better returns.

If the peasants found the production of cotton, jute, sugarcane, etc. sold at a higher price then surely they would produce these instead of food grains.


This new phenomenon came to be known as the ‘commercialization of agriculture’.

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