Economic Impact of Imperialism in India Essay

After the fall of the Roman Empire, the Portuguese, the first Europeans, led by Vasco da Gama landed at Calicut in the year. The Portuguese held India under their spell till the nineteenth century that is 1961. This essay examines the economical impact which Imperialism had in India during the 19th century.


All through history, many nations have enforced imperialism to implement
their force over other nations for money, protection and civilization. India was no
exception. Since it’s unearthing, Europeans were attempting to get a piece of India’s
action. England was the major nation for establishing its rule in India. Since India
came under imperialism, many things altered, some for the good, and the majority of them for the bad. Between 1640 and 1949, India came under the rule of two
periods of imperialism and both of the periods affected India in a very philosophical and
lasting manner.

The main motive behind the British who established political control in India was economic and commercial. The only intend of the British government was to institute a colonial market for the British goods. Notwithstanding the British affect on the economical aspects on the life of India was destructive and damaging. Britain applied the most complex methods to abuse India’s vast rich economic reserves. 200 years later of the British control India’s economic set up was completely shattered. India in 1947 was a picture of economic underdevelopment with hunger, poverty; low national income etc. 

 Indian agriculture had been cared for under the east India Company. This was chiefly because the major generators of state income were land revenue. Apart from this the British government wanted to make India as its agricultural base. Since agricultural produces from India could make available cheap raw materials to industrial England. The Company tried a variety of experiments to make the most of the land revenue by falling back to the technique of domination and suppression of the peasants. The system of farming and collecting land revenue became obsolete. Cornwallis introduced the ‘Permanent Settlement’ which is nothing but a system of collecting land Revenue in Bengal, Bihar and Orissa in the year 1793. Following decision makers brought in the Ryotwari system in the Bombay Presidency and it was introduced in most parts of the Madras Presidency. The Mahalwari system showed exceedingly ravaging in the part of Uttar Pradesh. The Zamindary system promoted absentee landlordism. It finally produced a host of mediators between the state and the cultivator. This complex system of land revenue created a group of moneylenders. These money lenders in turn oppressed the poor peasants by lending them at high interests. The poor cultivators could not repay those high interests and finally submitted their lands to those moneylenders. As a result famine was the common feature of the time.

Indian industries bore maximum atrocities under the British domination. The authority and wide-ranging sale of the Indian handicraft in Europe was aimed at the commercial interests of the Company. The Whig governments during the early years of the 18th century enforced heavy duties on Indians textiles imports in Britain. At the end of the Napoleonic wars the Indian markets were opened to the British for free trade. The British government was now allowed for British machine made goods to be poured in India duty free or at minimum cost only. A policy of one-way free trade was also introduced in India which made the Indian handicrafts lose its market. This brought about a great wretchedness to a key section of Indian population.

The effect of British rule made capitalism and bourgeoisie commerce attain a flourishing prosperity. But the capitalist mode of production and middle class trends in the commercial dealings shattered the handicraft industries in the European countries also. The evil impacts of the industrial revolution in England had to be bore by India. India could not start industrial regeneration due to British imperialism. Hence India was subject to an enduring and lasting economic stagnation. 
 The imperial rulers never wanted to plan for the industrial developments in India; instead they wanted to de-industrialize India. Britain’s principal concentration was to constitute India as an agricultural nation supplying raw materials for industrialized Britain. This made the British rulers to carry on with the policy of ruralization and peasantization of the Indian Economy. Due to the growth of heavy industries like iron and steel, metallurgical etc, conventional industries like textile, cement, jute, paper, sugar, pig iron etc suffered a great deal. 
 The sole undertaking of the Europeans in India was to exploit India economically. The British rulers made new economic structure which was made of and by the colonial institutions. The British thus established in India a colonial economy, colonial society and even colonial ideology.

The main trouble of foreign rule was due to the fact that the British raj was an administration of expatriates. Under an Indian administration, income accrued from the government service accrues to the local population and not to foreigners. The distraction of upper-class income went into the hands of foreigners. This subdued the growth of local industry because the purchasing power was now in the hands of people who had a taste for foreign goods. This enhanced imports and was mainly damaging to the luxury handicraft industries.

Another crucial result of foreign rule on the long-run growth prospective of the economy was the fact that large parts of its potential savings were siphoned abroad. This ‘drain’ of funds from India to the UK became a point of key argument between Indian nationalist historians and the defenders of the British raj. But the only real base for argument is statistical. It cannot be denied that there was a considerable outflow which endured for 190 years. If these funds were allowed to be retained in India it could have made a noteworthy input to raise income levels.

The first genesis of the British rulers was predatory. Clive carried quarter of a million pounds for himself along with a jagir worth £27,000 a year. But the British did not loot like

Nadir Shah, who almost certainly took as much from India in one year as the East India Company took in 20 years following the battle of Plassey.

Throughout the period of direct British rule from 1858 to 1947, official carry-overs of funds to the UK by the colonial government went under the guise of “Home Charges”. They mainly constituted debt service, purchases of military items and railway equipment, pension, India Office expenses in the UK, Government procurement of national goods, arms and shipping carried out almost completely in the UK. During the 1930s these home bills was in the range of £40 to £50 million a year. Some government expenses were on imports which an independent government could have purchased from local manufacturers. Of these official payments, we can legally mull over service charges on non-productive debt, pensions and unpaid leave payments as a balance of payment drain due to colonialism.

During the last half century of British rule the yield of factory industry increased by more than six-fold (that is about 4.2 per cent a year) while the productivity of small-scale industry declined. Their joint output increased about two-thirds. Actually the yield in the modern factory sector was zero during 1850. It is assumed that small ventures productivity increased in parallel with population from 1850 to 1900, then total industrial output would have grown by 0.8 per cent a year in this period, or about 0.3 per cent a year per head of population. (Courtesy:

Some increase seems possible in this period with regard to the railways development along with the expansion of the international trade. Thus it is possible that in the last century of British rule, per capita output of industrial goods increased by a third. But in the first century of British rule, i.e. 1757-1857, industrial productivity fell per head of population because (a) the home and domestic market for luxury goods was cut so drastically; (b) the home market for yarn and cheap cloth was invaded by foreign competition. Over the whole period of British rule it therefore seems likely that industrial output per head of the population was not significantly changed. (Courtesy:


There is a great deal of disagreement between statisticians with regard to the rate of growth of income in India during the colonial period. The disagreement is politically colored and the statistics are poor. For the last fifty years of British rule there is sufficient statistical information to make uneven estimates of the growth of national income.

The social pyramid was condensed because the British severed off most of the top three layers of the Moghul hierarchy, i.e. the Mogul court, the Mogul aristocracy and quasi-autonomous prices and the local chieftain. In place of this system the British established a modern bureaucracy which took little share of national income. The British had a simpler life-style than the Moguls, but they also siphoned a large part of their savings out of the country and furnished no markets for India’s luxury handicrafts. The modern factory created by the British could produce only 7.5 per cent of national income at the end of British rule. Very little inducement was given for investment and almost nothing was done to encourage technical change in agriculture.

Thus the main benefits from the British regime other than the British were the supposed ‘middle’ class of Indian capitalists and professionals, and of course the village landed gentry. Most of these were high caste Hindus and the Parsis and Sikhs who did fairly well. The main losers were the Muslims who had formed the major part of the Mogul aristocracy, officer corps, lawyers, and artisans in the luxury handicrafts (Courtesy:


“British Imperialism in India.” 02 Mar 2009