Economic impact of British rule in India Upsc

This post is written for the topic “Effect of British rule on socio-economic factors Tnpsc“.

The Social and Cultural impact includes the abolition of evil social practices such as Sati, Child Marriage, Infanticides, Human sacrifices etc. Also, western ideas such as Human rights, Freedom, Equality, and Liberty were the cultural effect that came along with Britishers.

Also, Britishers introduced Railways, telegraphs, and posts for the masses. Also introduced Western Sciences and Western Education in India.

But their economic policy drained the wealth from India.

By William Powell Frith – Scanned from J. Anderson Black and Madge Garland: A History of Fashion, Morrow, 1975. ISBN 0-688-02893-4, Public Domain,

Economic Effect

The English traders accumulated wealth and capital from Africa, Asia and America. This is due to the Industrial Revolution in Europe.

The English used their enormous wealth by setting up trade and industries with India. They invested a lot in India for mass production by setting up factories, and machines that they pioneered during the Industrial Revolution during the late 18th and early 19th centuries.

These produced large finished products and the East India Company financed and expanded its industrial base. During this period, a certain class of Manufactured minted a great profit.

This Manufacturing class has made more profit than the trader. This is because they got raw materials from India at a cheaper price and sold their finished products to the Indians at a higher price.

Example: They purchased raw cotton from India at cheaper prices and sold finished products such as clothes at a higher price in India. Note: The clothes made in Britain are cheaper than the clothes made in India. As clothes were mass-produced by the use of machines in the large factories.

Pressure from other Companies

During 1793 and 1813, the British manufacturers campaigned against the East India Companies’ monopoly in trade with India and the privileges it enjoyed.

These have successfully abolished the monopoly of East India Company with Indian Trade. But now India has become an economic colony of England’s Industries. India is now the biggest market for British manufactured goods.


Textile Industry and Trade

Earlier, Indian handloom had a big market in Europe. Indian textiles such as cotton, linen, silk, and woolen goods already had markets in Asia and Africa.

With the coming of industrialization in England, the textile industry there made important headway.

There was now a reverse of the direction of the textile trade between Britain and India.

There was a massive import of machine-made clothes from English factories to Indian markets. This import of a large number of products manufactured by mechanical looms in England led to an increased threat for the handicraft industries as the British goods were sold at a much cheaper price.

The British succeeded in selling their goods at a cheap price as foreign goods were given free entry in India without paying any duty.

On the other hand, Indian handicrafts were taxed heavily when they were sent out of the country. Besides, under the pressure of its industrialists, the British government often imposed a protective tariff on Indian textiles.

Therefore, within a few years, India from being an exporter of clothes became an exporter of raw cotton and an importer of British clothes.

This reversal made a huge impact on the Indian handloom weaving industry leading to its virtual collapse. It also created unemployment for a large community of weavers.

Many of them migrated to rural areas to work on their lands as agricultural laborers. This in turn put increased pressure on the rural economy and livelihood.

This process of uneven competition faced by the Indian handloom industry was later dubbed by the Indian nationalist leaders as de-industrialization.

The main aim of the British was to transform India into a consumer of British goods. As a result, textile, metalwork, glass, and paper industries were soon out of work.

By 1813, the Indian handicrafts lost both their domestic as well as foreign market.

Indian goods could not compete with the British factory-made products where machines were used. These markets were now captured and monopolized by Britain by means of war and colonization.

From an exporter, India became an importer of these goods. They extracted money from the Indian rulers, merchants, zamindars, and even the common people.

Added to this drain was the profit made through trade and also the salaries of the officials. It was evident that their economic policies were meant to serve the interests of the East India Company and later the British Empire.

Land Revenue Policy and Land Settlements

  • Permanent Settlement
  • Mahalwari Settlement
  • Ryotwar Settlement

Commercialisation of Agriculture

Another major economic impact of the British policies in India was the introduction of a large number of commercial crops such as tea, coffee, indigo, opium, cotton, jute, sugarcane, and oilseed.

Different kinds of commercial crops were introduced with different intentions. Indian opium was used to balance the trade of Chinese tea with Britain in the latter’s favor.

The market for opium was strictly controlled by British traders which did not leave much scope for Indian producers to reap profit.

Indians were forced to produce indigo and sell it on the conditions dictated by the Britishers.

Indigo was sent to England and used as a dyeing agent for cloth produced in British towns.

Indigo was grown under a different system where all farmers were compelled to grow it on the 3/20th part of their land.

Unfortunately, the cultivation of Indigo left the land infertile for some years. This made the farmers reluctant to grow it.

In the tea plantations ownership changed hands quite often. The workers on these plantations worked under a lot of hardships.

Commercialization of agriculture further enhanced the speed of transfer of ownership of land thereby increasing the number of landless laborers.

It also brought in a large number of merchants, traders, and middlemen who further exploited the situation.

The peasant now depended on them to sell their produce during harvest time. Because the peasants now shifted to commercial crops, food grain production went down.

So, less food stock led to famines. It was therefore not surprising that the peasants revolted.

There was an enormous drain of wealth from our country to Britain due to the various economic policies.

The additional financial burden was placed on India due to expenditures on salaries, pensions, and training of military and civilian staff employed by the British to rule India.

If this wealth was invested in India it could have helped enormously improve the economy in this country.

The economic policies implemented by the British changed the social structure of Indian society.

Rise of the New Money-lending Class

Time-bound and excessive demand of revenue by the British government forced the peasants to take loans from the moneylenders.

These moneylenders often exploited the peasants by charging high-interest rates. They often used unfair means like false accounting, forged signatures, and thumb impressions.

The new legal system and the policy introduced by the British only helped the moneylenders who were either local merchants or landlords. In most cases, the peasants failed to pay back the loan with full interest.

Thus, their lands gradually passed into the hands of the money-lending class.

Rise of the New Middle Class

A major impact of the British rule in India was the beginning of a new middle class.

With the rise of the British commercial interests, new opportunities opened to a small section of the Indian people.

They often acted as the agents and intermediaries of the British traders and thus made huge fortunes. The new landed aristocracy, which came into being after the introduction of Permanent Settlement, also formed a part of this new class.

A major section of the old landowning aristocracy lost ownership of their land and in many cases were replaced by a new class of landowners.

These people got some English education and became the new elite. With the spread of British power, new job opportunities were also created.

Indian society witnessed the introduction of new law courts, government officials, and commercial agencies.

The English educated people naturally got the necessary patronage from their colonial rulers. Thus, a new professional and service-holding middle class were also created by the British, apart from those with landed interests.

Transport and Communication

The means of transport in India at that time were bullock carts, camels, and pack animals.

England on the other hand needed railways that connected the raw material producing areas with the exporting ports and to facilitate the movement of British goods to different parts of the country as well as bring raw materials to the ports.

The vast network of railways that you witness today was pioneered during the latter half of the 19th century.

This opened an avenue for British bankers and investors to invest surplus wealth and material in the construction of railways.

Railways benefited the British capitalists in two important ways. First, it made trading in commodities much easier and profitable by connecting the internal markets with the ports.

Secondly, the rail engines, coaches, and the capital input for the building of rail lines came from Britain.

The British capitalists who invested in railways were also guaranteed a minimum profit of 5% by the government.

These companies were also given free land with a lease of 99 years.

Although the railways were set up for the advantage of British trade, they also played an important role in the national awakening of the country.

Though the British had never anticipated, the extensive transport network and improved education brought people and ideas closer.

During British rule, India took ideas of liberty, equality, human rights, science, and technology from the West.

Educational and Social Reforms

Language and Education Policy

Initially, the East India Company did not evince any particular interest in matters of education. Although the British had captured Bengal in 1757, yet the responsibility of imparting education remained only in Indian hands.

The study of ancient texts written in Arabic, Persian, and Sanskrit still continued. In 1781, Warren Hastings established a Madrasa in Calcutta to encourage the study of Muslim laws along with Arabic and Persian languages.

A decade later in 1791 due to the sincere efforts of the British resident, Jonathan Duncan, a Sanskrit College was established to promote the study of Hindu laws and philosophy in Banaras.

Therefore, it must be contended that during the first three decades of the 19th century, the development of education took place only through traditional institutions.

It is apparent from the government and Church records that the state of oriental learning at the time of the establishment of the Company’s rule in Bengal, there were about 80,000 traditional institutions of learning in Bengal alone, which means that there was at least one institution for every four hundred people in that province.

Different educational surveys of Madras, Bombay, and Punjab also demonstrate similar facts. There was at least one school in every village of India at that time.

The East India Company began to adopt a dual policy in the sphere of education. It discouraged the prevalent system of oriental education and gave importance to western education and the English language.

The Charter Act of 1813 adopted a provision to spend one lakh rupees per annum for the spread of education in India.

Although there was a prolonged debate pertaining to education during the course of a general discussion on the Act of 1813 in the British Parliament, yet the matter continued to generate debate for the next 20 years.

Consequently, not even a single penny out of the allocated funds could be spent on education.

The contemporary British scholars were divided into two groups on the issue of the development of education in India.

One group, called the Orientalists, advocated the promotion of oriental subjects through Indian languages.

The other group, called the Anglicists, argued the cause of western sciences and literature in the medium of the English language.

In 1828, after assuming the office of the Governor-General of India, Lord William Bentinck, emphasized the medium of the English language in Indian education.

At the beginning of 1835, the 10 members of the General Committee of Public Instruction were clearly divided into two equal groups.

Five members including the Chairman of the committee Lord Macaulay were in favor of adopting

English as a medium of public instruction whereas the other five were in favor of oriental languages.

The stalemate continued till 2 February 1835 when the Chairman of the committee, Lord Macaulay announced his famous Minute advocating the Anglicist point of view.

Consequently, despite fierce opposition from all quarters, Bentinck got the resolution passed on 7 March 1835 which declared that henceforth, government funds would be utilized for the promotion of western literature and science through the medium of the English language.

In 1854, Sir Charles Wood sent a comprehensive dispatch as a grand plan on education.

The establishment of departments of public instructions in five provinces and the introduction of the pattern of grants in aid to encourage private participation in the field of education were recommended.

Besides, the dispatch also laid emphasis on the establishment of schools for technical education, teacher and women education.

Over and above all these, the dispatch recommended the establishment of one University each in Calcutta, Bombay, and Madras, on the model of the London University. Consequently, within the next few years, Indian education became rapidly westernized.

Social Policies and Legislation

In the beginning, the British interest was limited to trade and earning profits from economic exploitation. Therefore, they did not evince any interest in taking the issue of social or religious reforms.

They were apprehensive of interfering with the social and religious customs and institutions of the Indians because of the fear that they might lose trade advantage.

Thus, they adopted the policy of extreme precaution and indifference towards social issues in India. The one reason why they indulged in criticizing the customs and traditions of India was to generate a feeling of inferiority complex among the Indians.

However, in the mid-19th century the social and religious movements, launched in India, attracted the attention of the Company’s administration towards the country’s social evils.

The propaganda carried out by the Christian missionaries also stirred the minds of the educated Indians. Western thought and education and views expressed in different newspapers and magazines had their own impact.

Some of the British administrators like Lord William Bentinck had evinced personal interest in the matter.

There were primarily two areas in which laws were enacted, laws pertaining to women’s emancipation and the caste system.

Social Laws Concerning Women

The condition of women, by the time the British established their rule, was not encouraging. Several evil practices such as the practice of Sati, the Purdah system, child marriage, female infanticide, bride price, and polygamy had made their life quite miserable.

The place of women had come to be confined to the four walls of her home. The doors of education had been shut for them.

From an economic point of view also her status was miserable. There was no social and economic equality between a man and a woman.

A Hindu woman was not entitled to inherit any property. Thus, by and large, she was completely dependent on men.

During the 19th and 20th centuries, some laws were enacted with the sincere efforts of social reformers, humanists, and some British administrators to improve the condition of women in Indian society.

The first effort in this direction was the enactment of a law against the practice of Sati during the administration of Lord William Bentinck.

Female Infanticide

Female infanticide was another inhuman practice afflicting 19th-century Indian society. It was particularly in vogue in Rajputana, Punjab, and the North-Western Provinces.

Colonel Todd, Johnson Duncan, Malcolm, and other British administrators have discussed this evil custom in detail.

Factors such as family pride, the fear of not finding a suitable match for the girl child, and the hesitation to bend before the prospective in-laws were some of the major reasons responsible for this practice.

Therefore, immediately after birth, the female infants were being killed either by feeding them with opium or by strangulating, or by purposely neglecting them.

Some laws were enacted against this practice in 1795, 1802, and 1804 and then in 1870. However, the practice could not be completely eradicated only through legal measures.

Gradually, this evil practice came to be done away with through education and public opinion.

Widow Remarriage

There is much historical evidence to suggest that widow remarriage enjoyed social sanction during the ancient period in India.

In course of time, the practice ceased to prevail increasing the number of widows to lakhs during the 19th century.

Therefore, it became incumbent on the part of the social reformers to make sincere efforts to popularize widow remarriage by writing in newspapers and contemporary journals.

Prominent among these reformers were Raja Rammohan Roy and Iswar Chandra Vidyasagar.

They carried out large-scale campaigns in this regard mainly through books, pamphlets, and petitions with scores of signatures.

In July 1856, J.P. Grant, a member of the Governor-General’s Council finally tabled a bill in support of the widow remarriage, which was passed on 13 July 1856 and came to be called the Widow Remarriage Act, 1856.

Child Marriage

The practice of child marriage was another social stigma for women. In November 1870, the Indian Reforms Association was started with the efforts of Keshav Chandra Sen.

A journal called Mahapap Bal Vivah (Child marriage: The Cardinal Sin) was also launched with the efforts of B.M. Malabari to fight against child marriage.

In 1846, the minimum marriageable age for a girl was only 10 years.

In 1891, through the enactment of the Age of Consent Act, this was raised to 12 years. In 1930, through the Sharda Act, the minimum age was raised to 14 years. After independence, the limit was raised to 18 years in 1978.

Purdah System

Similarly, voices were raised against the practice of Purdah during the 19th and 20th centuries.

The condition of women among the peasantry was relatively better in this respect.

Purdah was not so much prevalent in Southern India.

Through the large-scale participation of women in the national freedom movement, the system disappeared without any specific legislative measure taken against it.

Struggle against the Caste System and the related Legislation

Next to the issue of women’s emancipation, the caste system became the second most important issue of social reforms.

In fact, the system of caste had become the bane of Indian society.

The caste system was primarily based on the fourfold division of society viz. Brahmins, Kshatriya, Vaishyas, and Shudras. On account of their degradation in their social status, the Shudras were subjected to all kinds of social discrimination.

At the beginning of the 19th century, the castes of India had been split into innumerable sub-castes on the basis of birth.

* * All the Notes in this blog, are referred from Tamil Nadu State Board Books and Samacheer Kalvi Books. Kindly check with the original Tamil Nadu state board books and Ncert Books.