Economic & Commercial Policy of british in india

Economic & Commercial Policy of British in India

The British conquerors were entirely different from the previous conquerors. Through laws and administrative, economic and fiscal policies, the British government in England and Company’s administration in India used their powers to the advantage of British manufacturers and to the detriment of the Indian socio-political and economic fabric.

 The gradual “development of underdevelopment’ has been traced through the three stages of Britis

Colonialism by R. R Dutta in his classic work “India Today”.

Phases of Economic Policy in India

1600-1757: The East India Company was a purely trading company dealing with import of goods and precious metals into India and export of spices and textiles.

1-1757 - 1813 (The Mercantilist Phase)

1-The East India Company monopolized trade and began direct plunder of India’s wealth.

2-They could impose their own prices that had no relation to the costs of production. This was the phase

of buccaneering capitalism whereby wealth flowed out of the barrel of the trader’s guns.

3-The company used its political power to monopolize trade & dictate terms to the weavers of Bengal

4-The company used revenue of Bengal to finance exports oi Indian goods.

1813-1858 (The Industrial Phase)

1-The commercial policy of the East India Company after 1813 was guided by the needs of the British industry

2-The British mercantile industrial capitalist class exploited India as Industrial Revolution in Britain completely transformed Britain’s economy

3-Charter Act of 1813 allowed one way free trade for British citizens resulting in Indian markets flooded

with cheap & machine made imports. Indians lost not only their foreign markets hut their markets in India too.

4-India was now forced to export raw materials consisting of raw cotton jute and silk, oilseeds, wheal, indigo and lea, and import finished products.

5-Indian products had to compete with British products with heavy import duties on entry into Britain.

3-1860 & After (Finance Colonialism):

 1-The essence of 19th century colonialism lay in the transformation of India into a supplier of foodstuffs and raw materials to the metropolis, a market for metropolitan manufactures and a field for investment of British capital.

2-Started with the emergence of the phase of Finance Capitalism m Britain. The rebellion of KS57 was the

key factor in the change of the nature of the colonialism.

3-The British introduced roads and railways, post and telegraph, banking and other services under the ‘guaranteed interests’ schemes (government paid a minimum dividend even if profits were nonexistent). Various investments by the British capitalists were also made in India.

4- As a result of this, the burden of British public debts kept on increasing and India became, in the real sense, a colony of Britain.

Drain of Wealth Theory

1-R C Dutta & Dadabhai Naoroji first cited the drain of wealth theory.

2-Naoroji brought ii to light in his book titled

“Poverty And Un-British Rule In India”.

3-R C Dutt blamed the British policies for, Indian economic ills in his book ‘Economic History of India’ (1901-03).

4-Drain of wealth refers to a portion of national product of India, which was not available for consumption of its

people.

5-Drain of wealth began in 1757 after Battle e>t Plassey when the company’s servants began to extort fortunes from Indian rulers, zamindars, merchants and common people and send home.

6-In 1765 the company acquired the Diwani of Bengal & began purchase the Indian goods out of the revenue of Bengal and exported them. These purchases were known as Company’s investment.

7-Duty free inland trade provided British merchants a competitive edge over their Indian counterparts.

Constituents of the Drain

1-Home charges: Costs of the Secretary of State’s India Office, East India Company’s military adventures,

cost of suppressing the Mutiny of 1X57 and the compensation to the company’s share holders, pensions lo the British Indian officials and army officers, costs of army training, transport, equipments and campaigns outside India and guaranteed interests on railways.

2-Remittances: To England (a part of their salaries, incomes and savings) by English Civil servants,

Military and railway employee’s lawyers, doctors etc.

3-Foreign trade: The phase of finance imperialism entered India with the introduction of railways .

development of plantations, mines, banking and factories financed through British capital. Much of

4-the burden of the expanding railway network was met by the Indian taxpayer through the guaranteed

interest scheme.

LAND REVENUE SYSTEMS

Permanent Settlement

1-Introduced in Bengal, Bihar, Orissa, and districts of Benaras & Northern districts of Madras by Lord Cornwallis in 1793.

2-John Shore planned the Permanent Settlement.

3-It declared Zamindars as the owners of the land. Hence. they’could keep l/l1th of the revenue collected to themselves while the British got a Fixed share of 10/11th of the revenue collected. The Zamindars were free to fix the rents

4-Assured of their ownership, many zamindars stayed in towns’(absentee landlordism) and exploited their tenants.

Ryotwari System

1-Introduced in Bombay, Madras and Assam. Munro (Viceroy) and Charles Reed recommended it.

2-In this, a direct settlement was made between the government and the ryot (cultivator).

3-The revenue was fixed for a period not exceeding 30 years, on the basis of the quality of the soil and the nature of the crop. It was based on the scientific rent theory of Ricardo.

4-The position of the cultivator became more secure but the rigid system of revenue collecton often

forced him into the clutches of the moneylender.

5-Besides, the government itself became a big zamindar and and retained the right to

enhance revenue at will while the cultivator was left at the mercy of its officers.

Mahalwari System

1-Modified version of Zamindari settlement introduced in the Ganga valley, NWFP. parts of Central

India & Punjab.

2-Revenue settlement was to be made by village or estates with landlords. In western Uttar Pradesh, a settlement was made with the village communities, which maintained a form of common ownership known as Bhaichara, or with Mahals, which were groups of villages.

3-Revenue was periodically revised.

COLONIAL IMPACT OF LAND REVENUE SYSTEMS

1-The land settlements introduced market economy and did away with customary rights. Cash payment of revenue encouraged money-lending activity.

2-It sharpened social differentiation. Rich had access to the courts to defend their properly.

3-Forcible growing of commercial crops proved hazardous for the peasants because they had to buy food

grains at high prices and sell cash crops at low prices.

4-The stability of the Indian Villages was shaken and the setup of the rural society began to break up.