This chapter provides an overview of the Indian economy during the British colonial rule, specifically on the eve of independence. It details the low level of economic development, characterized by stagnation in the agricultural sector due to the Zamindari system and dependence on monsoon. The industrial sector suffered from discriminatory policies, competition from British machine-made goods, and changing demand patterns. Foreign trade was structured to benefit Britain, with India exporting raw materials and importing finished goods. The demographic profile showed high birth and death rates, low life expectancy, and poor literacy. The occupational structure was heavily reliant on agriculture, with limited engagement in manufacturing and services, indicating an unbalanced economy. While some infrastructure like railways was developed, it primarily served British interests. These notes are crucial for understanding the historical economic conditions and preparing for exams.
Last optimized 10 Aug 2026
1 Introduction
2 Low level of economic development under the colonial rule
3 Agricultural Sectors
4 Industrial sectors
5 Foreign sectors
6 Demographic conditions
7 Occupational Structures
8 Infrastructures
9 State of Indian economy on the eve of independence
10 Positive contribution of British rule
1. What was the condition of agriculture sector at the time of Independence?
Ans : 1) Low level of agricultural productivity :
Agricultural productivity became very low and this stagnation in agriculture sector was mainly
due to systems of land settlement that were introduced by the British Government. The
Zamindari system, the profit accuring out of the agriculture sector went to Zamindaris instead of
the cultivators. This lead to discouragement amongst the cultivators to produce less.
2. High dependence on Monsoon :-Agriculture sector was mainly dependent on monsoon. No effort was ever made under the
British rule to develop permanent me Ans of irrigation.
3. Lack of Proper Input:
Low level of technology, lack of irrigation facility and negligible use of fertilizers, added
to aggravate the plight of the farmers and contributed to the dismal level of agricultural
productivity.
Q.2 What was the condition of Industrial sector at the time of Independence?
Ans : - 1) Discriminatory Tariff Policy :
The British Government allowed tariff free export of raw materials from India and tariff
free import of British industrial products into India. But a heavy duty on the export of
Indian handicrafts products. It leads to decay of handicrafts industry in India.
(ii) Competition from machine :
Industrial revolution in Britain gave a stiff competition to the handicraft industries in India.
Due to low cost and better quality product produced by machine forced the Indian
craftsmen to shut down the handicraft Industry in India.
(iii) New Patterns of Demand :-
Owing to British rule in India, a new class of people emerged in India. This changed the
pattern of demand in India against the Indian products and in favour of British products. As
a result, the Indian Industry tended to Perish
(iv) More market for British Goods :-
An introduction of railways facilitated the trAnsportation of the British products to different
parts of the country. As a result, the size of the market for the low cost British product
expanded while it started shrinking for the high cost Indian products. This lead to decay of
Industry in India.
Q3. What was the condition of foreign trade under the British rule ?
Ans 1) Due to discriminative tariff policy adopted by the British Government, India became net exporter of raw materials and primary products.
On the other hand, it became net importer of finished goods reproduced by the British Industry.
(ii) Composition of exports and imports showed the backwardness of Indian economy. Exports
and imports were largely restricted to Britain only due to monopoly control of India’s foreign
trade.
(iii) Surplus profit made and account of foreign trade during the British rule was distributed on
administrative and as well as on war expenses. It was only used to increase the pursuits of the
British Government.
Q 4 Mention the demographic profile during the British rule.
Ans : 1) High birth and High death rate implied low survival rate, which was nearly 8 per
thousand per annum.
2) Life expectancy was as low as 32 years which shows the lack of health care facilities, lack of
awareness as well as lack of me Ans for health care.
3) Literacy rate was as low as 16 percent, which reflects the social and economic backwardness
of the country.
Q5. Mention the condition of occupation structure at the time Independence.
Ans : - (i) Agriculture was the principal source of occupation and about 72.7 percent of working
population was engaged in agriculture.
(ii) Only 10.1% of the working population were engaged in the manufacturing sector, which
showed the backwardness of Indian Industry at the time of Independence.
(iii)only 17.2 percent of the working population were engaged in the service sector, which also
proved the slow growth of tertiary sector at the time of Independence.
(iv) There was an unbalanced growth of Indian economy at the time of Independence
Q6 What was the condition of Infrastructure at the time of Independence.
Ans : 1) There was some infrastructural development during the British in the area of tr Ans port
and communication.
2) Introduction of railways, was a major break through followed by the development of some ports and the construction of some roads.
3) But the main motive of the British government was to foster the interest of the British
Government rather than to accelerate the growth of Indian economy.
4) There was tr Ansition from barter system of exchange to monetary system of exchange, which
facilitated division of labour & large scale production.
Agriculture had low productivity due to the Zamindari system, high dependence on monsoon, and lack of proper inputs like technology and irrigation.
Discriminatory tariff policies, competition from machine-made goods, changing demand patterns, and the expansion of the market for British goods led to the decay of Indian industries.
India became a net exporter of raw materials and a net importer of finished goods, with trade largely restricted to Britain. Profits were used for British administrative and war expenses.
There were high birth and death rates, a low life expectancy of around 32 years, and a literacy rate of only 16 percent, indicating social and economic backwardness.
About 72.7% of the working population was engaged in agriculture, 10.1% in manufacturing, and 17.2% in the service sector, showing an unbalanced economic structure.
Infrastructure like railways, ports, and roads was developed, but primarily to facilitate British economic and administrative interests rather than to boost the Indian economy.
It covers the economic conditions of India under British rule, including agriculture, industry, trade, demographics, occupation, and infrastructure on the eve of independence.
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