1.2. LOW LEVEL OF ECONOMIC DEVELOPMENT UNDER THE COLONIAL RULE

India had an independent economy before the advent of the British rule. Though agriculture was the main source of livelihood for most people, yet, the country’s economy was characterised by various kinds of manufacturing activities. India was particularly well known for its handicraft industries in the fields of cotton and silk textiles, metal and precious stone works etc.

Before British colonial rule, India had a diverse economy not solely reliant on agriculture. While agriculture was crucial for most people, there was a significant presence of manufacturing activities. Handicrafts, especially in textiles and metalworks, were well-established and internationally recognized. This means India was not just a producer of raw materials but also a vibrant location for quality craftsmanship.

Think of India as a workshop in the past, where not only food was grown, but beautiful clothes and exquisite jewelry were also made and sent to other countries. Just like a local artisan today who makes handmade goods, India was once famous for its unique and high-quality products.

The economic policies pursued by the colonial government in India were concerned more with the protection and promotion of the economic interests of their home country than with the development of the Indian economy. Such policies brought about a fundamental change in the structure of the Indian economy — transforming the country into a supplier of raw materials and consumer of finished industrial products from Britain.

The British colonial government enacted policies primarily aimed at benefiting Britain, rather than fostering economic growth in India. Under their rule, India's economy was changed significantly; it became a major source of raw materials for British industries while being forced to rely on imported goods for finished products. This shift created a structure where India was economically dependent instead of self-sustaining.

Imagine a factory that only produces raw materials for a large company but has to buy back the final products at a higher price, which ultimately doesn’t benefit the workers. Similar to how that factory operates, India under British rule had to supply resources while depending on Britain for colorful fabrics made from those resources.

The colonial government never made any sincere attempt to estimate India’s national and per capita income. Some individual attempts which were made to measure such incomes yielded conflicting and inconsistent results. Among the notable estimators — Dadabhai Naoroji, William Digby, Findlay Shirras, V. K. R. V. Rao and R.C. Desai — it was Rao, whose estimates during the colonial period was considered very significant. However, most studies did find that the country’s growth of aggregate real output during the first half of the twentieth century was less than two per cent coupled with a meagre half per cent growth in per capita output per year.

Accurate measurement of India's economy during the colonial period was neglected by the British rulers, resulting in unreliable economic indicators. Efforts by some economists like V.K.R.V. Rao, who attempted to gauge income levels, showed that economic growth was very slow—less than 2% overall and just half a percent on a per-person basis. This highlights a lack of substantial progress in India’s economic development during this time.

Think about trying to improve a garden without keeping track of how much rain falls or how many plants grow. Similarly, the British left India without accurate data, which shows the negligence in understanding and improving India's economic situation.

The country’s growth of aggregate real output during the first half of the twentieth century was less than two per cent coupled with a meagre half per cent growth in per capita output per year.

During the first half of the twentieth century, India's economy was marked by minimal growth rates. The overall economic activity was low, and individual wealth growth was almost stagnant. This scenario of economic stagnation had dire consequences, as it meant that while the population grew, the economic conditions did not improve, leading to widespread poverty and distress.

Imagine a family where the number of children is increasing but the income isn’t growing at all. This family would struggle to provide basic needs over time. India faced a similar challenge with its economy during the colonial period—more people but not enough economic growth to sustain them.

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