a.The Export of Raw-materials:

The English traders exported from India huge quantity of raw materials to Britain to cater the needs of the British industrialists.

b. Policy in the Beginning:

The British continuously had changed their economic policy in India. Colonial rule in India may be said to have begun after the battle of Plassey.


Prior to this the British trading company used to bring goods or precious metals which were exchanged for Indian goods to be sold abroad.

In fact, the Company used to net huge profit by selling Indian goods in the foreign markets. But under the impact of the colonial rule the Indian artisan industries were ruined.

The Industrial Revolution in Britain in the mid-eighteenth century compelled the Company to change its economic policy.

India now was transformed into a country that produced raw materials to be purchased at a cheap price by the British.


At the same time the finished articles from Britain were dumped to the Indian markets.

c. Impact of the Colonial Economy:

The colonial economy impacted all aspects 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 establishment of Britain.

Fourth, there was deindustrialization in the country. The finished products of Britain were dumped in 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.