Economic Backwardness Of India On Independence

India's agricultural and industrial development were hampered by colonialism. Agriculture stagnated and even deteriorated in most parts of the country over time, resulting in extremely low yields per acre, sometimes even zero. Between 1901 and 1941, agricultural production per capita decreased by 14%. The drop in per capita food grains was even more dramatic, at over 24%. 

 

•    Landlords, moneylenders, merchants, and the colonial state dominated the agrarian structure that developed over time. Both the zamindari and ryotwari areas were increasingly dominated by subinfeudation, tenancy, and share-cropping. 

 

•    By the 1940s, landlords owned over 70% of the land and, together with moneylenders and the colonial government, controlled more than half of the total agricultural output.

 

•    The colonial government's interest in agriculture was primarily for the purpose of collecting land revenue, and it spent very little money on improving it. 

 

•    Landlords and moneylenders found rack-renting of tenants and sharecroppers, as well as usury, to be far more profitable and secure than making productive investments in the land they owned or controlled. All of this did not bode well for agricultural development. 

 

•    Commercialization and tenancy legislation created a class of wealthy peasants in many areas, but most of them preferred to buy land and become landlords or turn to money lending. As a result, except in a few pockets, capitalist farming took a long time to develop. 

 

•    The poor cultivators, on the other hand, most of whom were small peasants, tenants-at-will, and sharecroppers, lacked the resources and incentives to invest in agriculture by using better cattle and seeds, more manure and fertilizers, and improved production techniques. 

 

•    For the majority of the colonial period, landlessness was on the rise, with landless agricultural laborers accounting for 28% of the agricultural population in 1951, up from 13% in 1871. The rise in tenant farming and sharecropping, as well as agriculture's overcrowding, was accompanied by a massive subdivision of land into small holdings and fragmentation. Furthermore, these holdings were dispersed across non-contiguous parcels, making cultivation unprofitable and incapable of supporting the cultivator even at a subsistence level.

 

•    Of course, the development of roads and railways, as well as the linkage to the global market, resulted in a large portion of rural produce being sold in urban and global markets, as well as the production of commercial crops. Agriculture's commercialization, on the other hand, did not result in capitalist farming or improved technology. Its main effect was to divert better soil, available water, and other resources away from food crops and toward commercial crops. 

•    There was almost no change in the technological or production base of Indian agriculture at a time when agriculture in developed countries was being modernized and revised. Peasants in India continued to use the same primitive tools they had for centuries. 

 

•    Agricultural education has been largely ignored. There were only 9 agricultural colleges in 1946, with a total of 3,110 students. There was very little money spent on terracing, flood control, drainage, and soil desalination. Irrigation was the only field in which progress was made, with nearly 27% of the total cultivated area irrigated by the 1940s. 

 

•    However, India had always been a leader in irrigation agriculture. The state of India's industry was another important aspect of the country's economic backwardness. The collapse of Indian handicraft and artisanal industries in the nineteenth century was largely due to competition from cheaper imported British manufactures, as well as the policy of free trade imposed on India, and the ruined artisans were unable to find alternative employment. Their only option was to work as tenants, sharecroppers, or agricultural laborers in agriculture. 

 

•    India's modern industries began to emerge in the second half of the nineteenth century. However, in comparison to developed countries, the level of industrial development was stunted and paltry in terms of both production and employment. 

 

•    Even the handicraft industries that were displaced were not compensated. Cotton, jute, and tea were the mainstays of industrial development in the nineteenth century, and sugar, cement, and paper in the 1930s. Although the iron and steel industry grew after 1907, cotton and jute textiles accounted for nearly 30% of all factory workers and more than 55% of total manufacturing value added as late as 1946. 

 

•    At the end of British rule, modern industries accounted for only 7.5 percent of national income. India also lags behind in terms of electric power development. Modern banking and insurance were also woefully underdeveloped. The virtual absence of capital goods and machine industries was a key indicator of India's industrial backwardness and economic dependence on the metropolis. 

 

•    In 1950, India imported approximately 90% of its machine tool requirements. Comparing certain economic statistics from 1950 and 1984 reveals the underdeveloped nature of this modern sector of the economy (the figures for 1984 are given within brackets). 

 

•    The high rural-urban ratio of India's population, owing to the country's growing reliance on agriculture, was another indicator of economic backwardness. In 1951, nearly 82.3% of the population lived in rural areas. In 1901, 63.7 percent of Indians relied on agriculture; by 1941, that number had risen to 70 percent. 

 

•    However, despite a population increase of nearly 40%, the number of people employed in processing and manufacturing fell from 10.3 million in 1901 to 8.8 million in 1951. Foreign capital dominated the industrial and financial fields until the late 1930s, and it also controlled foreign trade as part of the internal trade that fed into exports. Coal mining, the jute industry, shipping, banking and insurance, and tea and coffee plantations were all dominated by British companies. 

 

•    Furthermore, the British capitalists controlled many of the Indian-owned businesses through their managing agencies. Many of the negative effects of foreign capital can also be attributed to the fact that state power is under alien control. Another notable feature was the lopsided industrial development. Only a few regions and cities in the country were home to industries. This not only resulted in wide regional income disparities, but it also had an impact on regional integration.

 

•    India had 65,000 miles of paved roads and nearly 42,000 miles of railway track in the 1940s. Roads and railways unified the country and allowed for the rapid movement of goods and people. In the absence of a concurrent industrial revolution, only a commercial revolution resulted, further colonizing the Indian economy. 

 

•    The railway lines were also built primarily to connect India's inland raw material-producing areas with export ports, as well as to promote the spread of imported goods from the ports to the interior. No steps were taken to encourage traffic between inland centers, ignoring the needs of Indian industries in terms of markets and raw material sources.

 

•    The railway freight rates were also set in such a way that they favored imports and exports while discriminating against internal goods movement. Moreover, unlike in the United Kingdom and the United States, India's steel and machine industries were not started by railways. Instead, the British steel and machine industries reaped the benefits of India's railway development. 

 

•    The Indian government also established a modern and efficient postal and telegraph system, though the telephone network was still underdeveloped. 

 

•    Cotton and jute textiles, sugar, soap, paper, and matches were among the consumer industries represented. 

 

•    Iron and steel, cement, basic chemicals, metallurgy, and engineering were among the intermediate capital goods industries that had begun to emerge, but on a small scale. 

 

•    India already had a core of scientific and technical manpower by 1947, despite the fact that technical education facilities were woefully inadequate in 1939, with only 7 engineering colleges and 2,217 students in the country. In addition, non-Indians made up the majority of management and technical positions in industry. 

 

•    After 1914, there was also the emergence of a powerful indigenous capitalist class with its own economic and financial base. The Indian capitalists were, for the most part, self-sufficient. They were not intermediaries or middlemen between foreign capital and the Indian market, as they were in many other colonial countries, nor were they junior partners in foreign-controlled enterprises. They were also possibly more enterprising than foreign capitalists in India, resulting in Indian capital investment growing at a much faster rate than British and other foreign capital investment. 

 

•    Indian capital controlled 60% of large industrial units by the end of World War II. The small-scale industrial sector, which contributed more to national income than the large-scale sector, relied almost entirely on Indian capital.

 

•    Indian capital had also made significant progress in banking and life insurance by 1947. Joint-stock banks in India held 64 percent of all bank deposits, and Indian-owned life insurance companies accounted for nearly 75 percent of the country's life insurance business. 

 

•    The majority of domestic trade and a portion of international trade was controlled by India. However, these positive aspects of the Indian economy must be viewed in a broader historical context. To begin with, Indian industry and capitalism were still in their infancy and severely hampered. Then, within the context of a colonial economy, this industrialization occurred without India experiencing an industrial revolution in the same way that Britain did. 

 

•    The economy was not able to take off. Whatever progress was made was not as a result of colonialism, but rather in opposition to colonial policies. It was the result of a protracted economic and political struggle against colonialism, set against the backdrop of Britain's declining global economic position, two world wars, and the Great Depression of the 1930s. 

 

•    The people, particularly the peasantry and artisans, became impoverished as a result of colonial underdevelopment. Ordinary people suffered from extreme and visible poverty, disease, hunger, and starvation. This culminated in a series of major famines that ravaged India in the second half of the nineteenth century; throughout British rule, there were regular scarcities and minor famines in one or more parts of the country. 

 

•    In 1943, the last of the major famines in Bengal displaced nearly 3 million people. There were numerous other indicators of India's economic illiteracy and poverty. Per capita income remained stable, if not declining, throughout the twentieth century. 

 

•    Between 1941 and 1950, the annual death rate was 25 per 1,000 people, with infant mortality rates ranging from 175 to 190 per 1,000 live births. Between 1940 and 1951, an average Indian could expect to live for only 32 years. 

 

•    Every year, epidemics such as smallpox, plague, and cholera, as well as diseases such as dysentery, diarrhea, malaria, and other fevers, kill millions of people. One-fourth of the population was infected with malaria. 

 

•    The vast majority of towns lacked modern sanitation, and even those that did were kept out of the system, with modern sanitation restricted to areas populated by Europeans and wealthy Indians. Villages lacked a modern water supply system, and many towns lacked it entirely. Electricity was unavailable in the vast majority of towns, and it was unthinkable in rural areas.

 

•    Even though it was well understood by the end of the nineteenth century that education was a critical input for economic development, the vast majority of Indians had almost no access to any kind of education and, in 1951, nearly 84 percent of the population was illiterate, with a rate of illiteracy among women of 92 percent.

 

•    Only 13,590 middle schools and 7,288 high schools existed. These figures do not accurately reflect the situation of the vast majority of Indians because they ignore the widespread existence of extreme income, resource, and opportunity disparities. 

 

•    As a result, a vast amount of human potential was left untapped in societal development, as only a small percentage of the poorer sections of society were able to rise to the middle and upper levels. It's also worth noting that the poverty and impoverishment were not caused by a high rate of population growth, which was only about 0.6 percent per year between 1871 and 1941. 

 

As colonialism came to an end, the economic legacy of colonialism was stagnating per capita income, abysmal living standards, stunted industrial development, and stagnating, low-productivity; semi-feudal agriculture.