Economic Impact of British Rule

• India’s economy into a colonial economy.
• Beginning of the eighteenth, India has 23% of the world economy but Only 3% when India got independence.

Economic Impact

Deindustrialisation—ruin of artisans and handicraftsmen

One-Way Free Trade

• Cheap and machine-made imports after Charter Act of 1813.
• Indian products found it more and more difficult to penetrate the European markets.
• After 1820, European markets were virtually closed to Indian exports.
• India became a net importer.

No Steps towards Modern Industrialisation.

• deindustrialisation of India at a time when Europe was witnessing a reintensified Industrial Revolution.
• Indian artisans and handicraftsmen were already feeling the crunch due to loss of patronage.

Ruralisation

• Artisans, faced with diminishing returns and repressive policies.
• professions, moved to villages and took to agriculture.
• Resulted in increased pressure on land. An overburdened agriculture sector was a major cause of poverty.

Impoverishment of Peasantry

• Tenants who lost all their traditional rights in land.
• Little spending by Government on improvement of land productivity.
• No incentive to invest for improvement of agriculture.
• Peasant turned out to be the ultimate sufferer under the triple burden of the Government, zamindar and money lender.
• Permanent Settlement
• Permanent Settlement was introduced by Governor-General Lord Cornwallis in 1793. Permanent Settlement which is also known as Permanent Settlement of Bengal was an agreement between the British East India Company and the Landlords of Bengal to fix the land revenue. Land revenue was the major source of income for the British in India. Permanent Settlement was one such fand revenue system. It was first introduced in Bengal and Bihar and later it was introduced in Madras and Varanasi. This system was also known as the Zamindan system.
• Ryotwari systems
• The Ryotwari System was a land revenue system in British India mainly introduced in the southern part of the country to replace permanent settlements.
• The Ryotwari settlement permitted the government to collect direct revenue from the cultivators, who were also called the 'ryot'. Introduced by Thomas Munro.
• Mahalwari systems
• The Mahalwari settlement included features of both the Zamindari and the Ryotwari system. 
• Holt Mackenzie introduced the Mahalwari system in 1822, which was reviewed under Lord William Bentinck in 1833. It was first introduced in Agra, North-West Frontier, Punjab, Central Province and Gangetic Valley.

Emergence of Intermediaries, Absentee Landlordism, Ruin of Old Zamindars

• 1815, half of the total land in Bengal had passed into new hands—merchants, moneylenders and other moneyed classes.
• Increase in number of intermediaries to be paid gave rise to absentee landlordism and increased the burden on the peasant.
• Interests of the zamindars lay only in the perpetuation of British rule and in opposing the national movement.

Stagnation and Deterioration of Agriculture

• Government spent little on agricultural, technical or mass education

Famine and Poverty

• Not just because of foodgrain scarcity, but were a direct result of poverty.
• Between 1850 and 1900, about 2.8 crore people died in famines.

Commercialisation of Indian Agriculture

• Latter half of the nineteenth century, agriculture had been a way of life rather than a business enterprise.
• Grow cotton, jute, groundnut, oilseeds, sugarcane, tobacco, etc.,
• Condiments, spices, fruits and vegetables could cater to a wider market.
• commercialisation trend reached the highest level of development in the plantation sector.
• Spread of money economy, replacement of custom and tradition by competition and contract, emergence of a unified national market, growth of internal trade, improvement in communications through rail and roads and boost to international trade given by entry of British finance capital, etc.
• commercialisation linked Indian agriculture with international market trends and their fluctuations.

Destruction of Industry and Late Development of Modern Industry

• Indian industry was steadily destroyed.
• British stopped paying for Indian textiles in pounds, choosing instead to pay from the revenue gained from Bengal and at very low rates.
• ship-building industry was crushed. Surat, Malabar in west coast & Bengal, Masulipatnam in east coast.
• British Ship monopoly over trade routes.
• 1813, prohibited ships below 350 tonnes from sailing between India to Britain.
• 1814, British-registered vessels, could trade with America and the European continent.
• Not allow the Indian steel industry to grow.
• Restrictions were placed by Britain on Indian steel imports, this steel could only be used in India.
• Indian trader carried imported British products to the remotest corners and helped in the movement of Indian agricultural products for exports.
• Second half of the nineteenth century that modern machine-based industries started coming up in India.
• 1853, first cotton textile mill in Bombay & first jute mill in 1855 in Rishra (Bengal).
• Industries were foreign-owned and controlled by British managing agencies.
• Ready markets abroad for some Indian exports such as tea, jute and manganese.
• Indian-owned industries suffered from many handicaps—credit problems, no tariff protection by Government, unequal competition from foreign companies, and stiff opposition from British capitalist.
• Caused certain structural and institutional changes, lopsided pattern - ore and heavy industries and power generation were neglected.
• Causing regional disparities. Hampered the process of nation building.
• Rise of an industrial capitalist class and the working class.