Economic Impact of Colonial Rule in India

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The basic reason for the British to come to India was for trading purposes. In that period, Britain faced the Industrial Revolution. For that reason, they needed so many raw materials for their factories, which mainly came from India as well as they also needed a proper market for selling their finished goods. India can give them these two, a huge source of raw materials and a perfect market for selling those finished products. Therefore, the foremost economic impact of British rule in India was that the country became the centre of British trade. This further impacted the overall economic structure of the country. The Industrial Revolution in England created a serious impact on Indian economy as it reversed the character and composition of India's foreign trade. This led to destruction of Indian handicrafts although there was no substantial growth of modern factory industry. The factors which were responsible for the gradual decay of Indian handicrafts were-disappearance of princely courts and their patronage, aggressive trade policy of the East India Company and the British Government, increasing competition of British machine-made goods and increasing demand for Western commodities as a result of foreign influence. The destruction of Indian handicrafts created a vacuum in Indian markets which was subsequently fed by British manufactured goods. The author examines the major British economic forces which have shaped the history of the subcontinent.

Azad Paruchuri is a former Visiting Professor of the Department of Economics, Mandya University. He holds a DPhil in Economic History from Oxford University. With extensive research experience spanning several decades, Azad Paruchuri has made significant contributions to the field of economic history. His work encompasses both primary research and comprehensive analyses of existing historical records, aiming to uncover the nuanced economic transformations that occurred during the colonial period. Several of his articles have been published in refereed journals and edited books in addition to over 100 partly and unpublished papers read in conferences, seminars, and workshops. His publications include Colonial Legacy in India, State Politics in India, Indian Political System, Indian Political Thought.

The basic reason for the British to come to India was for trading purposes. In that period, Britain faced the Industrial Revolution. For that reason, they needed so many raw materials for their factories, which mainly came from India as well as they also needed a proper market for selling their finished goods. India can give them these two, a huge source of raw materials and a perfect market for selling those finished products. Therefore, the foremost economic impact of British rule in India was that the country became the centre of British trade. This further impacted the overall economic structure of the country. The Industrial Revolution in England created a serious impact on Indian economy as it reversed the character and composition of India's foreign trade. This led to destruction of Indian handicrafts although there was no substantial growth of modern factory industry. The factors which were responsible for the gradual decay of Indian handicrafts were disappearance of princely courts and their patronage, aggressive trade policy of the East India Company and the British Government, increasing competition of British machine-made goods and increasing demand for Western commodities as a result of foreign influence. The destruction of Indian handicrafts created a vacuum in Indian markets which was subsequently fed by British manufactured goods. The destruction of Indian handicrafts led to serious unemployment problem and the weavers were most seriously affected. Moreover, this unemployed craftsmen and artisans could not find any alternative occupation open to them and thus they had to return to agricultural sector leading to 'progressive ruralisation of India' Thus, this dependence of population on agriculture gradually increased from 55 per cent in 1901 to 72 per cent in 1931 and this led to progressive sub-division and fragmentation of agricultural holdings. New land system of the British ruler also created a serious impact on the Indian economy. During the East India Company rule, the company administrators imposed land revenue at exorbitant rates and thereby realised larger returns from land.

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