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Study Guide · Chapter 6

Colonial Economic Policies and Their Impact

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  • De-industrialisation: British policy favoured the import of raw materials from India (especially raw cotton) and the export of finished British manufactured goods (especially machine-made textiles from Lancashire) back to India, systematically undermining traditional Indian handicraft industries, especially handloom weaving — this process is central to nationalist economic critiques of colonial rule.
  • Drain of Wealth theory: Articulated most influentially by Dadabhai Naoroji in his book Poverty and Un-British Rule in India (1901), arguing that a substantial portion of India's wealth was being systematically transferred to Britain without adequate economic return, through mechanisms like Home Charges (pensions, interest on debt, salaries of British officials repatriated to Britain), unequal trade terms, and the cost of wars fought partly to serve British imperial interests.
  • Land revenue systems:
  • Permanent Settlement (Zamindari system, 1793): Introduced by Cornwallis in Bengal, Bihar, and Odisha — created a hereditary landlord (Zamindar) class responsible for a fixed revenue payment to the state, encouraging the exploitation of tenant cultivators (ryots).
  • Ryotwari system: Introduced by Thomas Munro and Alexander Read in Madras and Bombay presidencies — direct settlement between the state and individual cultivators (ryots), with periodically revised (rather than permanently fixed) revenue demands.
  • Mahalwari system: Introduced mainly in the North-Western Provinces and Punjab — revenue settlement was made with the village community (mahal) as a whole, rather than with individual cultivators or zamindars.
  • Famines: Recurrent and devastating famines occurred under colonial rule (Bengal 1770, Great Famine of 1876–78, Bengal Famine of 1943), often exacerbated by rigid revenue demands, export-oriented agricultural policy, and inadequate/delayed relief measures, prompting the eventual establishment of Famine Commissions (1880, 1901) and famine codes.
  • Railways and infrastructure: The British built an extensive railway network (starting 1853) and telegraph system, primarily to serve administrative, military, and export-trade interests (moving raw materials to ports) rather than balanced indigenous industrial development, though the railways did have significant long-term developmental spillover effects.

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