Class 12th Economics: Indian Economy on Eve of Independence Chapter

The chapter titled “Indian Economy on the Eve of Independence” analyses the condition of India’s economy at the time of Independence in 1947. It explores the extent of economic decline under colonial rule and seeks to understand why India adopted specific development policies after Independence. This background is essential because it forms the basis for examining later economic strategies, reforms, and national progress. Studying this chapter allows learners to connect with India’s economic journey and evaluate both the achievements and challenges that shaped the nation’s development. It also enables them to appreciate how the country emerged from a difficult starting point.

Why Study the Past?

Studying India’s economic history helps students understand:

1. Emotional Understanding

It builds a connection with the nation’s long struggle, resilience, and progress.

2. Policy Lessons

It highlights which economic decisions supported growth and which caused long-term challenges, thereby explaining the logic behind present-day policies.

Through this analysis, learners can evaluate India’s progress and the challenges that continue to influence development today.

India Before British Rule

Before colonial domination, India was a prosperous and self-reliant economy. Pre-Independence India included the territories of present-day Pakistan, Bangladesh, and Myanmar (Burma). The country was known as the “Golden Bird” due to its abundant natural resources, flourishing trade, skilled artisanship, and strong agricultural foundation.

Key features of India’s economy before British rule:

• A largely independent and self-sustaining economic system
  
  

• Agriculture as the principal occupation
  
  

• Globally renowned handicrafts including cotton textiles, silk, metalwork, precious stones, and diamond polishing
  
  

This thriving economy changed drastically after colonial policies intervened.

British Arrival and Establishment of Colonial Rule

The British arrived around 1599–1600 and established the East India Company primarily for trade. Over time, economic interests transformed into political control, reinforced by the Battle of Plassey (1757). Their rule can be divided into two phases:

• 1757–1857: East India Company Rule

• 1858–1947: British Government Rule (British Raj)

British presence lasted nearly 190 years, during which India became a supplier of raw materials and a market for British manufactured goods. To enhance trade efficiency, the British supported the construction of the Suez Canal in 1869, reducing travel time and cost between Britain and India.

India’s Economic Structure Before British Impact

Before colonial policies took effect, India had:

• A strong and diverse handloom and handicraft industry

• Productive agriculture

• Stable and self-sufficient rural economies

• Robust domestic and international trade
  
  

British policies disrupted these systems, leading to long-term structural weaknesses across the economy.

Key Sectors Affected by British Policies

The chapter identifies six major sectors that were heavily impacted:

1. Agriculture

2. Industry

3. Occupational Structure

4. Foreign Trade

5. Demographic Profile

6. Infrastructure

In this article, we focus specifically on Agriculture, as discussed in the lecture.

Agriculture on the Eve of Independence

Agriculture was the primary occupation for nearly 75% of India’s population, yet it was in a highly deteriorated state due to colonial exploitation.

1. Low Productivity

Output levels were significantly lower than required. Farmers lacked modern tools, inputs, irrigation, and institutional support.

2. Slow or Stagnant Growth

Agricultural development remained stagnant for decades, with no meaningful improvements in farming techniques or yields.

3. High Dependence on Monsoon

Minimal investment in irrigation systems forced farmers to rely entirely on rainfall. A poor monsoon frequently resulted in food shortages and widespread poverty.

4. Low Technological Development

No technological advancements, such as improved seeds, fertilizers, or scientific farming methods, were introduced for the benefit of Indian farmers.

Overall, agriculture at the time of Independence was backward, unproductive, and highly vulnerable, despite being the backbone of the population.