Chapter 1: Indian Economy on the Eve of Independence

The demographic profile of India during the colonial period is as follows:

1. The Birth Rate was high at 48 per thousand and the Death Rate at 40 per thousand, respectively.

2. Infant Mortality Rate was 218 per thousand, which is very high.

3. Life Expectancy rate was 32 years on average.

4. The literacy rate was below 16 per cent, which shows the backwardness of the society.

From the above data, it can be inferred that India was undergoing a phase of poverty, low standard of living and low survival rate. This situation was aggravated by the absence of healthcare facilities and a lack of health-related awareness among the Indian population.

It refers to the distribution of the workforce among the different sectors of the economy. The following points define India’s occupational structure at the time of pre-independence:

1. India was primarily an agrarian economy, which consisted of more than 75 % of the population involved in agriculture as a source of sustenance, while the rest was divided among the manufacturing and service sectors. The number of people in the manufacturing and industrial sectors was less due to the tough competition they got from cheap goods from Britain, which were machine-made. Britain imposed a high tariff on export, thereby restricting the growth of industries. Hence, industries did not contribute well to the GDP of India.

2. India witnessed regional variation in occupational structure; it was seen that states like Andhra Pradesh, Tamil Nadu, West Bengal and cities like Bombay had experienced more concentration of work in production and manufacturing while states like Punjab, Orissa and Rajasthan had more population that was shifting towards agriculture.

Crucial challenges at the time of independence are as follows:

1. Low Agricultural Output was one factor which was due to the colonial impact on the country. Only items that were of monetary importance to the government were grown

2. Low level of industrialisation and decline in handmade products

3. Low levels of national income and per capita income

4. A low standard of living, low expectancy and high infant mortality rate

5. High level of unemployment and gross underemployment

It was completed in the year 1881 under British Viceroy Lord Mayo.

India was a country with ample resources during the colonial period. Various products were produced in India, like sugar, silk, jute, etc. The British government’s restrictive policies on foreign trade and the export of products affected the structure, composition and volume of foreign trade in India. The state of foreign trade during independence was as follows:

1. India became a market for exporting primary products such as sugar, raw silk, indigo, jute, etc. India also started importing finished goods like cotton, silk and woollen clothes along with machinery produced in Britain. Britain served as the major market for imports for India, with food grains being the most imported item.

2. Britain established a monopoly on foreign trade when the Suez Canal was opened in 1869. It helped establish a direct connection between India and Britain. This reduced the time necessary for transportation, and so the result was more exploitation of the Indian market. All of India’s trade was maintained by the British, with more than half being traded to Britain and the remaining to China, Persia and Ceylon.

The following are the contributions made by the British in India:

1. The commercialisation of Agriculture was an important point in Indian agriculture history. It helped achieve self-sufficiency in food grain production. Production happened as per market requirements, and this helped India in creating a sustainable economy from agriculture.

2. India was forced to follow free trade during colonial rule, which helped gain a foothold to compete with industries in Britain and also increased the volume of exports.

3. The establishment of railways helped to connect people to distant places and also increased the business of the people due to the expansion of the geographical horizons.

4. The promotion of the English language helped connect with the outside world and allowed India to become a part of the global diaspora.

5. There was a marked improvement in the monetary system and production due to the division of labour.

• Introduction
• Low level of economic development under the colonial rule
• Agricultural sector
• Industrial sector
• Foreign trade
• Demographic condition
• Occupational structure
• Infrastructure
• Conclusion