British India - Economy

At the time the British entered India, the economy was flourishing and India was exporting its goods across the world. Indian goods, especially textiles were doing so well in Europe that European manufacturers had to put pressure on their respective governments to regulate the flow of Indian goods into their countries. The entire country was completely self-sufficient right down to the villages. They were able to manufacture what they needed, and what they could not was easily available within the country at reasonable prices.

The British changed all that, they turned the entire economy into an import dependent, non self-sustaining one. When the British were ordinary traders, they were simply another buyer or seller in the market, and hence the forces of demand and supply would dictate the price levels. By the close of the eighteenth Century the industrial revolution was in full swing in Europe. The manufacturing industry was booming, and there was tremendous demand for raw materials. The price levels of goods in India was fairly low, and the English East India Company and its employees were able to make handsome profits. One they became the rulers of India, the situation began to change drastically. They were now able to dictate price levels, and hence substantially increase their profits. They would often use the money they obtained from taxes to

fund such activities. This money which should have been spent on the welfare of the people was instead used to increase the profits.

Export duties were fixed such that Indian exporters could not compete with British traders. They fixed internal duties at levels where it was cheaper for people to buy goods imported by the British then to buy locally made goods. The British had set up a one sided free trade, while the Indian economy was thrown open to the entire world, India did not have similar access to foreign markets. Hence Indian industry suffered, they had no markets to sell their products in, either at home or abroad, and this eventually led to a complete collapse of local industry. India, which was a rich exporting country, was reduced to a poor raw material exporting economy. The British would use their political might to buy the raw materials cheap and they would send it to Britain where they would make the finished goods. These would be shipped back to India and sold at a massive profit. These goods easily competed with locally made goods, as local goods were more expensive. This was not only because of the abnormal duties but also due to the fact that local goods were largely hand made as compared to the machine made British goods which were cheaper to produce. As the British gained territory ,slowly the entire country became dependent on the English East India Company for their basic necessities.

The British began to also reorganize the agricultural system. Once they were in control of the land, they were able to dictate to the farmers which crops they wished them to cultivate. Since they were solely concerned with making profits, their policies did not take into account the needs of the Indian people. Their land revenue reforms placed unrealistically high demands on the land lords, which could only be met by producing cash crops, which the British preferred as they were more profitable. This produced disastrous consequences, soon there were massive famines as the amount of food being cultivated fell. The British, more concerned with making their profits, did little to help. The economic condition of the people, particularly of the peasants, declined and the nation slipped into poverty.

A unique feature of the British economic exploitation of India was that for the first time, massive amounts of wealth was being drained out of the Indian economy into that of a foreign country. Although in the past India had experienced many foreign invasions, none of them consistently drained the wealth of India for such a long period as the British did. Even wasteful Indian kings, who did little welfare work with the taxes they collected, still inevitably spent the money within the Indian economy. While some historians hold that after the British crown took over the rule of the country, from the English East India Company , the economic plunder of India lessened, this was hardly so. Right until the point of independence, the economic policy of the British was guided not by the interests of India, but by the needs of the British Industry. While many would say that the British did spend a lot of the money it earned in infrastructural facilities like railways and communication facilities, the truth is, such expenditure was done so as to improve the movement of goods in the country, hence increasing the profits of the British. Under the British system, where India became a major importer of foreign goods, a tremendous amount of wealth was drained out. The British would also remit a considerable amount of the money that they earned from the collection of taxes to Britain, where the money played an important part in the development of the British economy. As John Sullivan, who was the President of the Board of revenue for Madras said "Our system acts very much like a sponge, drawing up all the good things from the banks of the Ganges, and squeezing them down on to the banks of the Thames".

of the peasants, declined and the nation slipped into poverty.

A unique feature of the British economic exploitation of India was that for the first time, massive amounts of wealth was being drained out of the Indian economy into that of a foreign country. Although in the past India had experienced many foreign invasions, none of them consistently drained the wealth of India for such a long period as the British did. Even wasteful Indian kings, who did little welfare work with the taxes they collected, still inevitably spent the money within the Indian economy. While some historians hold that after the British crown took over the rule of the country, from the English East India Company , the economic plunder of India lessened, this was hardly so. Right until the point of independence, the economic policy of the British was guided not by the interests of India, but by the needs of the British Industry. While many would say that the British did spend a lot of the money it earned in infrastructural facilities like railways and communication facilities, the truth is, such expenditure was done so as to improve the movement of goods in the country, hence increasing the profits of the British. Under the British system, where India became a major importer of foreign goods, a tremendous amount of wealth was drained out. The British would also remit a considerable amount of the money that they earned from the collection of taxes to Britain, where the money played an important part in the development of the British economy. As John Sullivan, who was the President of the Board of revenue for Madras said "Our system acts very much like a sponge, drawing up all the good things from the banks of the Ganges, and squeezing them down on to the banks of the Thames".