Subject: Modern History

Answer:

The British economic policies in India from mid-18th century till independence were characterized by systematic exploitation and transformation of India's traditional economy to serve Britain's industrial and commercial interests. These policies underwent several phases, each marked by distinct features and implications for the Indian economy.

Phase I: Mercantile Phase (1757-1813)

• East India Company exercised monopoly over Indian trade through systematic drain of wealth and exploitation of Indian resources.
• Implementation of Dual Government System in Bengal (1765) led to revenue exploitation and agricultural decline.
• Permanent Settlement (1793) created a new class of zamindars while turning peasants into mere tenants.
• The Battle of Plassey (1757) and Battle of Buxar (1764) established British commercial supremacy in Bengal.

Phase II: Free Trade Phase (1813-1858)

• Charter Act of 1813 ended EIC's monopoly, opening India to British industrial goods.
• De-industrialization of India through destruction of traditional handicrafts and textile industry.
• One-way free trade policy forced India to become a supplier of raw materials and market for British goods.
• Introduction of railways (1853) primarily served British commercial interests rather than Indian development.

Phase III: Financial Imperialism (1858-1947)

• Investment of British capital in railways, plantations, and mining served imperial interests.
• Managing Agency System helped British firms control Indian industries.
• Imperial Preference System discriminated against Indian goods in international markets.
• Exchange Rate Policy maintained artificial high value of rupee, benefiting British imports.

Impact on Indian Economy

• Commercialization of agriculture led to food crop to cash crop conversion.
• Rural indebtedness increased due to high revenue demands and ryotwari system.
• Indigenous banking system declined with introduction of modern banking.
• Drain of Wealth theory by Dadabhai Naoroji highlighted systematic exploitation.

Nationalist Response

• Swadeshi Movement (1905) promoted indigenous industries and boycott of British goods.
• Formation of Federation of Indian Chambers of Commerce and Industry (FICCI) in 1927.
• Indian Industrial Commission (1916-18) highlighted need for industrial development.

The British economic policies transformed India from a self-sufficient economy to a colonial market, leading to the emergence of economic nationalism. This period witnessed the birth of modern Indian industrialization, though primarily serving colonial interests. The legacy of these policies continued to influence India's economic planning post-independence through the adoption of mixed economy and emphasis on self-reliance.