NCERT Class 11 Economics Chapter 1: Indian Economy on the Eve of Independence YouTube Lecture Handouts

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NCERT Class 11 Economics Chapter 1: Indian Economy on Eve of Independence
  • Understand historical backdrop
  • Britishers turned India into raw material supplier for their own industrial development โ€“ exploitative nature of development

Before British Advent

  • Agriculture
  • Handicraft โ€“ cotton & silk, metal & precious stone
  • Had worldwide market โ€“ fine quality & high standards of craftsmanship
  • Muslin (from Dhaka โ€“ now in Bangladesh) โ€“ finest quality as malmal โ€“ known as malmal khas or malmal shahi

British Advent

  • Protect & promote British interest
  • Transform India into supplier of raw materials and consumer of finished industrial products from Britain
  • No sincere effort to measure national & per capita income
  • Some efforts - Dadabhai Naoroji, William Digby, Findlay Shirras, V. K. R. V. Rao (most significant estimates) and R. C. Desai
  • Countryีšs growth of aggregate real output during the first half of 20th century was growth in per capita output per year

Agricultural Sector (British Impact)

  • 85 % agrarian & in villages โ€“ stagnation & deterioration (in contrast to agricultural prosperity in 17th century)
  • Agricultural productivity was low - low levels of technology, lack of irrigation facilities and negligible use of fertilizers
  • Stagnation due to land settlement โ€“ Zamindari system in Bengal (profit went to zamindars)
  • Zamindars collected rent regardless of the economic conditions
  • Revenue settlement โ€“ dates for depositing specified sums of revenue were fixed, if not zamindars were to lose their rights
  • Higher yield of cash crops in some areas (for British industries) โ€“ commercialization of agriculture (small section of farmers)
  • Majority farmers - small farmers and sharecroppers neither had resources and technology nor had incentive to invest

Industrial Sector (British Impact)

Handicrafts declined โ€“ created unemployment & demand for consumer market (as now these are not locally available)

No modern industrial base was coming up

2 fold objective - reduce India to exporter of important raw materials for industries in Britain & turn India into market for the finished products of those industries

Increased import of cheap goods from Britain

2nd half of 19th century โ€“ modern industry started but slowly โ€“ initially as cotton textile (Maharashtra & Gujarat) & jute mills (Bengal)

Early 20th century โ€“ iron & steel industry โ€“ TISCO in 1907

After WW-II: Sugar, cement & paper industry

No Capital Goods Industry (which can make machine tools to make articles for current use) to promote industrialization

Growth rate of new industrial sector & % contribution to GDP was small

Limited operation of public sector only in railways, power generation, communications, ports

Ramesh Chandra Duttีšs Economic History of India (3 volumes)

B. H. Baden-Powellีšs The Land Systems of British India (2 volumes)

Amartya Senีšs book Poverty and Famines

Foreign Trade

  • Affected by restrictive policies of commodity production, trade and tariff pursued by the colonial government
  • Britain maintained a monopoly control over Indiaีšs exports & imports
Foreign Trade
  • More than 50 % of Indiaีšs foreign trade was restricted to Britain while rest was with China, Ceylon (Sri Lanka) and Persia (Iran) โ€“ Opening of Suez Canal (connects Port Said on Mediterranean Sea with the Gulf of Suez, an arm of the Red Sea in 1869) intensified it further
Suez Canal and Indian Ocean
  • Generated large export surplus โ€“ but no inflow of gold or silver to India but as payment for expense of British offices
  • Essentials like food, kerosene & clothes were scarce in India


  • 1st population census in 1881 โ€“ revealed uneven distribution and growth
  • Census conducted every 10 years
  • Before 1921 - 1st stage of demographic transition
  • After 1921 โ€“ 2nd stage of demographic transition
  • Low literacy, high IMR, low life expectancy, rampant water & airborne diseases & extensive poverty
Litercy Rate in India

Occupational Structure

  • Colonial period โ€“ Agriculture at around 70 - 75 % , manufacturing at 10 % & services at 15 - 20 %
  • Regional Variations - then Madras Presidency (includes present-day Tamil Nadu, Andhra Pradesh, Kerala and Karnataka) , Bombay and Bengal โ€“ showed increase in industrial & service sectors
  • Agriculture increased in Orissa, Rajasthan & Punjab


  • Development of railways, ports, water transport, posts & telegraphs (to maintain law & order) under British rule โ€“ subserve colonial interest & give basic facilities to people
  • Roads โ€“ to mobilize army & carry raw material out of nation to railways or ports
  • Acute shortage of all-weather roads to reach out to rural areas during the rainy season โ€“ suffered calamities & famines
  • Railways introduced in 1853 (1st b/w Bombay & Thane) โ€“ enabled people for long distance travel & broke geographical and cultural barriers & fostered commercialization of agriculture which affected self-sufficiency of villages
  • Exports expanded but no real benefit to people
  • Tata Airlines was established in 1932 inaugurating the aviation sector in India
  • Inland waterways were uneconomical (Coastal Canal on Odisha Coast) โ€“ huge cost & parallel to it was railways, so waterways abandoned

Challenges in SUMMARY

  • Agriculture โ€“ low productivity & surplus labour
  • Industries โ€“ needed modernization, diversification, capacity building & public investment (collapse of handicrafts)
  • Foreign trade โ€“ to feed Industrial Revolution in Britain
  • Infrastructure โ€“ required upgradation, expansion and public orientation
  • Rampant poverty & unemployment

โœ Manishika