The British engaged in a deliberate de-industrialisation of India to benefit British exports, which wreaked havoc on India's traditional and robust manufacturing economy and led to widespread catastrophe in terms of food shortages and famines. The rise of the East India Company in India coincided with a political decline which enabled them to quickly gain political control over the entire subcontinent and establish a monopoly over Indian trade. Prior to this, Britain bought goods such as textiles and other products from Indian producers, mostly with silver, the same method they used with any other country. Subsequent to the control established by the East India Company, the British collected taxes from India and used a portion of these revenues to fund the purchase of Indian goods for British use. Thus, the British traders bought from peasants and weavers, using the money taken from them. Substantial parts of the goods brought from India were re-exported to finance imports of strategic materials such as iron, tar and timber, which were essential to Britain’s rapid industrialisation.
After the formal takeover of India by the British Crown in 1858, Indian producers were allowed to export their goods directly to other countries. However, goods from India could be bought only through the special Council Bills– a unique paper currency issued by the British government. These bills could be bought only with gold or silver. This meant that while the traders would pay the British government in London in gold to get those bills, the Indian producers could encash those bills at local offices in India, where they were paid in Rupees out of tax revenues collected in India. Further, the gold and silver that should have gone to the Indians in exchange for their exports ended up in London. It also meant that even while India was running a profitable trade surplus with the rest of the world, it displayed a deficit in the national accounts because the actual profits from India’s exports went to Britain. While it has been established how the British cleverly toppled India's sturdy economy, it is also necessary to look at some of the factors used by them to do so.
Upsetting the Traditional Economy
The policies formulated by the British led to the swift transition of India’s impregnable economy into a colonial economy whose structure was laid down according to the requirements of the Imperial Empire. Though the conquerors prior to the British power such as the Mughals, overthrew the local Indian rulers, they incorporated culturally, politically and economically into India. They did not disturb the existing structure of a self-sufficient rural economy and ensured the consolidation of this structure by preventing the exploitation of resources. However, this was different from the system introduced by the British, which was meant to disrupt the traditional economy. They never really became a part of India, always referred to as foreigners sucking all the wealth out of the economy to finance their own nation.
Development of Modern Industries
The industrialisation of India began with the setting up of cotton, jute and coal mining industries in the 1850s. Other industries established in the second half of the 19th and the beginning of the 20th centuries were cotton gins and presses, sugar mills, iron and steel works, leather tanneries, flour and timber mills, and mineral industries such as salt. Some industries emerged in the 1930s, such as cement, paper, matches etc. But these industries showed little growth. Most of these industries were owned or controlled by the British. However, there were a number of inherent reasons favouring the growth of Indian industries, such as cheap labour, cheap availability of raw materials and a vast market comprising India and its neighbouring countries. For products such as tea and jute, the demand was worldwide. However, the British policies ensured that the benefits accrued only to the British capitalists and government. Indians found it difficult to avail credits from banks due to the influence of British financiers.
. Even if they could avail credit, they were charged with higher interest rates as compared to their foreign counterparts, who could borrow on much easier terms. The introduction of the railways also contributed to the stunted growth of the indian industries. The ulterior motive of the British in introducing the railways in India was to invigorate foreign imported goods and make domestic goods uncompetitive in the market by levying high freight charges, which was hidden behind a façade of improving communication and transportation throughout the country. The reason why some of the Indian industries were able to grow was on account of inadvertent factors, such as the world wars. Two such enterprises were the iron and steel and cotton industries. Before the first world war, the cotton industry in India faced many issues such as tough competition with the cheap imported cloth produced by the mechanised industries of Britain. Unlike most of the countries that provided protection to infant industries, the colonial government refused to provide any protection to the emerging industries. However, during the First World War, as textile imports declined from Britain, Indian factories were called upon to produce cloth for the British military. The Tata Iron and Steel company was also set up during the time of the First World War, which provided them with an excellent opportunity to grow as they were approached by the Indian Railways to produce rails, because of the diversion of steel imports from Britain due to their demand in Europe. Later they also manufactured bomb shells and carriage wheels, as the war dragged on. It again made a major contribution to the second World War such as manufacturing a wheel, tyre and axle plant to meet the requirements of the railways, a mill to manufacture 1,000 tonnes per month of armour plates for defence carriers and a benzol recovery plant for producing toluene, needed for the manufacture of explosives. Apart from these exceptions, most of the industries faced a stunted growth due to the lack of interest by the British government in promoting them. This underdevelopment of industries led to mass unemployment among the Indians. The scenario that emerged thereafter was that famines and epidemics were common, leading to large casualties. A case in point is the Bengal Famine of the 40s, which could have been prevented had the British not diverted the vast food supplies to their war effort. To conclude, it can be stated that the British policies led to huge impoverishment of the Indian population, stunting its industrial growth and causing a massive economic deprivation for its population.
Saumya Sah
References:
Economic Impact of the British Rule in India | Indian History. (2016, August 24). History Discussion - Discuss Anything About History. Retrieved October 17, 2022, from https://www.historydiscussion.net/british-india/economic-impact-of-the-british-rule-in-india-indian-history/6317
Tata Steel | 102nd Annual Report 2008 - 2009. (n.d.). Retrieved October 17, 2022, from https://www.tatasteel.com/investors/annual-report-2008-09/html/world_war_II_1939_1945.html
Hickel, J. (2018, December 19). How Britain stole $45 trillion from India. Conflict | Al Jazeera. Retrieved October 17, 2022, from https://www.aljazeera.com/opinions/2018/12/19/how-britain-stole-45-trillion-from-india