PART-B INDIAN ECONOMIC DEVELOPMENT

Unit 6: Development Experience (1947-90) and Economic Reforms since 1991:

A brief introduction of the state of Indian economy on the eve of independence.

Indian economic system and common goals of Five Year Plans. Main features, problems and policies of
agriculture (institutional aspects and new agricultural strategy), industry (IPR 1956; SSI – role &
importance) and foreign trade.

Economic Reforms since 1991: Features and appraisals of liberalisation, globalisation and privatisation
(LPG policy);

Concepts of demonetization and GST

CH.1 Indian economy on the eve of independence

The sole purpose of the British colonial rule in India was to reduce the country to being a raw material
supplier for Great Britain’s own rapidly expanding modern industrial base.

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
★ Such policies brought a fundamental change in the structure of the Indian economy —
transforming the country into supplier of raw materials and consumer of finished industrial
products from Britain.
Dadabhai Naoroji, William Digby, Findlay Shirras, V.K.R.V. Rao and R.C. Desai estimated India’s per
capita income during the colonial period

Main causes of India’s agricultural stagnation during the colonial period:

★ Stagnation in the agricultural sector was caused due to land settlement system
★ The main interest of the zamindars was only to collect rent
★ Dates for depositing specified sums of revenue were fixed, failing which the zamindars were to
lose their rights.
★ Low levels of technology, lack of irrigation facilities and negligible use of fertilizers
★ India’s agriculture was starved of investment in terracing, flood-control, drainage and
desalinisation of soil
Some modern industries which were in operation in our country at the time of independence:

★ The Tata Iron and Steel Company (TISCO) was incorporated in 1907.
★ A few other industries in the fields of sugar, cement, paper
Traditional handicrafts industries were ruined under the British rule

★ No corresponding modern industrial base was allowed

★ The primary motive of the colonial government behind this policy of systematically
industrialisation India was twofold.
 1. Reduce India to the status of a mere exporter of important raw materials for the upcoming
modern industries in Britain.
2. Turn India into a sprawling market for the finished products of those industries
★ Decline of the indigenous handicraft industries created not only massive unemployment in India
British objectives behind the policies of infrastructure development in India / positive contributions
made by the British in India:

★ Railways fostered commercialisation of Indian agriculture which adversely affected the self-
sufficiency of the village economies in India
★ Roads and Railways were used to mobilise the military to control the country and to exploit the
resources
★ The introduction of the electric telegraph in India served the purpose of maintaining law and
order.
★ The postal services remained inadequate.
Shortfalls of the industrial policy pursued by the British colonial administration

★ No modern industrial base was allowed

★ There was hardly any capital goods industry to help promote further industrialisation in India
★ There was no substitute to the near wholesale displacement of the country’s traditional
handicraft industries
★ The growth rate of the new industrial sector and its contribution to the Gross Domestic Product
(GDP) or Gross Value Added remained very small
★ Very limited area of operation of the public sector
The drain of Indian wealth during the colonial period: The concept given by Dadabhai Naoroji

★ The most important characteristic of India’s foreign trade throughout the colonial period was the
generation of a large export surplus.
★ This export surplus did not result in any flow of gold or silver into India.
★ Rather, this was used to make payments for the expenses incurred by an office set up by the
colonial government in Britain, expenses on war, again fought by the British government, and
the import of invisible items, all of which led to the drain of Indian wealth.
The defining year to mark the demographic transition from its first to the second decisive stage: 1921.

India’s demographic profile during the colonial period:

★ First official census of India was conducted in 1881

★ The overall literacy level was less than 16 per cent. The female literacy level was at a negligible
low of about seven per cent.
★ The overall mortality rate was very high and the infant mortality rate was about 218 per thousand
in contrast to the present infant mortality rate of 33 per thousand.
★ Life expectancy was also very low—32 years in contrast to the present 69 years.
India’s pre-independence occupational structure:

★ The agricultural sector accounted for 70-75 percent while the manufacturing and the services
sectors accounted for only 10 and 15-20 per cent respectively.
India’s most crucial economic challenges at the time of independence:
 ★ The agricultural sector was saddled with surplus labour and extremely low productivity.
★ The industrial sector was crying for modernisation, diversification, capacity building and
increased public investment.
★ Foreign trade was oriented to feed the Industrial Revolution in Britain.
★ Infrastructure facilities, including the famed railway network, needed upgradation, expansion
and public orientation.
★ Prevalence of rampant poverty and unemployment required welfare orientation of public
economic policy.
The volume and direction of trade at the time of independence:

★ More than half of India’s foreign trade was restricted to Britain while the rest was allowed with
a few other countries like China, Ceylon (Sri Lanka) and Persia (Iran).
★ India became an exporter of primary products such as raw silk, cotton, wool, sugar, indigo, jute
etc. and an importer of finished consumer goods like cotton, silk and woollen clothes and capital
goods like light machinery produced in the factories of Britain.
Competency based questions

Read the given Article carefully and answer the following answers carefully

The British East India Company whose political power gradually expanded in India from 1757 onwards,
used huge revenue generated by the provinces under its rule for purchasing Indian raw materials, spices
and goods. Thus, the continuous inflow of bullion that used to come into India on account of foreign
trade stopped altogether. The Colonial government used land revenue for waging wars in India and
Europe leaving little for development of India. In short span of 80 years (1780-1860 AD) under colonial
rule, India changed from being an exporter of processed goods for which it received payment in bullion,
to being an exporter of raw materials and a buyer of manufactured goods. More specifically, in the
1750s, mostly fine cotton and silk was exported from India to markets in Europe, Asia, and Africa; by
1850s raw materials, which chiefly consisted of raw cotton, opium, and indigo, accounted for most of
India's exports. The ruthless exploitation under British colonial rule completely devastated India’s
economy. India’s population was subject to frequent famines, had one of the world's lowest life
expectancies, suffered from pervasive malnutrition and was largely illiterate. As per British economist,
Angus Maddison India's share of the world income went from 27% in 1700 AD (compared to Europe's
share of 23%) to 3% in 1950

Q.1Name the fine cotton imported from India which gained worldwide fame due to its fine
quality.
Ans-Malmal or Malmal shahi
Q.2 What was the two-fold motive behind the systematic deindustrialisation
effected by the British in pre-independent India?
The two-fold motive behind systematic deindustrialisation was-
(a) to an exporter of raw materials
(b) a buyer of manufactured goods.
Q.3 What was literacy rate and life expectancy during the British period in India?

Ans-16% and 32 years

Q.4 What led to drain of Indian wealth?

The Colonial government used land revenue for waging wars in India and Europe leaving little for
development of India. This led to drain of Indian wealth. The drain of wealth theory has been described
as the constant flow of national wealth from India to England for which India did not get
adequate economic, commercial or material return.

Q.1 What are the two water bodies connected by Suez Canal?

Ans-Red Sea and Mediterranean Sea

Q.2 When did Suez Canal start working?

Ans-1869

Q.3 what was strategic importance of opening of Suez Canal?

Strategically and economically, it is one of the most important waterways in the world. Its opening in
1869 reduced the cost of transportation

Q.4 how did opening of Suez canal benefit British in India?

Ans- The opening of the Suez Canal made access easy and cheap to the Indian market further intensified
British control over India’s foreign trade.
 Reason -assertion based questions
Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives
given below:

Q1. Assertion (A): India became an exporter of primary products and an importer of finished
consumer and capital goods produced in Britain.

Reason (R): Restrictive policies of commodity production, trade, and tariff pursued by the
colonial government adversely affected the structure, composition, and volume of India’s foreign
trade.

Alternatives:

a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is true.

Answer: a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).

Q2. Assertion (A): India became an exporter of primary products and an importer of finished
consumer and capital goods produced in Britain.

Reason (R): Restrictive policies of commodity production, trade, and tariff pursued by the
colonial government adversely affected the structure, composition, and volume of India’s foreign
trade.

Alternatives:

a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is true.

Answer-(A) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
Q3. Assertion (A): The economic condition of farmers under British rule improved a lot.
Reason (R): Commercialization of agriculture took place under British rule.
Alternatives:
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is true.
Answer-(D) Assertion (A) is False but Reason (R) is true
Q4. Assertion (A): Britishers destroyed the indigenous handicraft market in India.

Reason (R): India was made market for British manufactured products.

Alternatives:

a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is true.

Answer - a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).

Q5. Assertion (A): During British rule, the production of cash crops improved the economic
condition of farmers.

Reason (R): Farmers were given higher prices to produce cash crops.

Alternatives:

a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is true.

Answer - D Assertion (A) is False but Reason (R) is true

Q6. Assertion (A): During British rule, India saw a huge drain of wealth.

Reason (R): India generated a large export surplus during the period.

Alternatives:

a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is true.

Answer – B) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct
explanation
Q7. Assertion (A): Indian was an export deficit country under British rule.

Reason (R): India’s foreign exchange earning was used by Britishers.

Alternatives:

a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is true.

Answer -D) Assertion (A) is False but Reason (R) is true.

Q8. Assertion (A): During the British colonial rule in India, Britishers built roads extensively to
cover the nation.

Reason (R): Roads were built by Britishers primarily to mobilise army.

Alternatives:

a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is true.

Answer -D) Assertion (A) is False but Reason (R) is true.

Q9. Assertion (A): Decline of Handicraft Industry led to increase in import of manufactured
goods to India.

Reason (R): The Indian-made goods could not withstand the foreign competition of machine-
made cheap goods.

Alternatives:

a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is true.

Answer – A) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct
explanation of Assertion (A).

Q10. Assertion (A): The infrastructure facilities during British rule were highly developed.

Reason (R): The main aim motive behind infrastructural development was to serve various
colonial interests.

Alternatives

a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is true.
Answer - d) Assertion (A) is False but Reason (R) is true

Q11. Assertion (A): Nearly 85 percent of the workforce was engaged in the agriculture sector
under British rule.

Reason (R): Bombay and Bengal witnessed a decline in the workforce dependent on agriculture.

Alternatives:

a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is true.

Answer -B) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct
explanation of Assertion (A).

Q12. Assertion (A): The commercialization of agriculture helped farmers in improving their
economic condition.

Reason (R): Instead of producing food crops, now they were producing cash crops which were to
be ultimately used by British industries back home.

Alternatives:

a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is true.

Answer -D) Assertion (A) is False but Reason (R) is true

Q13. Assertion (A): The agricultural sector accounted for the largest share of the workforce with
approximately 85%.

Reason (R): All the states witnessed an increase in the dependence of the workforce on the
agricultural sector.

Alternatives:

a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is true.

Answer – C) Assertion (A) is true but Reason (R) is False

Q14. Assertion (A): India developed a sound industrial base under colonial rule.
Reason (R): The country’s world-famous handicraft industries declined.

Alternatives:

a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is true.

Answer -D) Assertion (A) is False but Reason (R) is true.

Q15. Assertion (A): Per capita income is national income divided by the total population of the
country

Reason (R): India’s per capita income was very low at the time of independence.

Alternatives:

a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is true.

Answer -B) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct
explanation
of Assertion (A).

Q16. Assertion (A): During the second half of the 19th century, the modern industry began to take
root in India.

Reason (R): Initially, this development was confined to the setting up of cotton and jute textile
mills. Subsequently, the iron and steel industries began coming up at the beginning of the 20th
century. A few other industries in the fields of sugar, cement, paper, etc. came up after the Second
World War.

Alternatives:

a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is true.

Answer -a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
Q17. Assertion (A): The opening of the Suez Canal in 1869 reduced the cost of transportation.

Reason (R): Suez Canal provided a direct trade route for ships operating between Britain and
India.
Alternatives

a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is true.

Answer - a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
Q 18. Assertion (A): The restrictive policies of commodity production, trade, and tariff pursued
by the colonial government adversely affected the structure and composition of India’s foreign
trade.

Reason (R): India became an exporter of primary products such as raw silk, cotton, wool, sugar,
indigo, jute, etc, and an importer of finished consumer goods like cotton, silk, and woollen clothes
and capital goods like light machinery produced in the factories of Britain.

Alternatives

a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is true.

Answer -a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
Q19. Assertion (A): Dadabhai Naroji was the first who, estimated national income under British
rule.

Reason (R): Per capita output increases meagre half percent per year.

Alternatives

a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is true.

Answer - B) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct
explanation of Assertion (A).
Q 20. Assertion (A): India’s foreign trade during the colonial period generated a large export
surplus. But it came at a huge cost to the country’s economy.

Reason (R): The essential commodities like food grains, clothes, kerosene, etc. were scarcely
available in the domestic market. Secondly, the export surplus did not result in any flow of gold or
silver into India. Rather, this was used to meet war expenses, payment for imports of invisible
items, etc. by the British Government (leading to the drain of India’s wealth)
 Alternatives

a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is true.

Answer –a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
Multiple choice questions
Q.1 Identify the correct sequence of alternatives given in Column II by matching them with
respective terms in Column I
Column – I Column – II
i) Motive of the British de-industrialization a) To serve various colonial interests, like
mobilizing the army shifting raw materials
ii) Motive of British behind infrastructural b) To use export surplus to make payments for
development expenses incurred by an office set up by the
colonial government in Britain, to meet expenses on
war fought by the British government and to import
invisible items.
iii) Motive of the British behind monopoly c) To get raw materials from India at cheap rates
control over India’s exports and imports and to sell finished British products in India at
higher prices.
a) i) – a), ii) – b), iii) – c) b) i) – b), ii) – a), iii) – c)
c) i) – c), ii) – c), iii) – b) d) i) – c), ii) – a), iii) – b
answer-d
Q,2 Identify the correct sequence of alternatives given in Column II by matching them with
respective terms in Column i.
Column – I Column – II
a) Opening of Suez Canal i) 1757
b) First Railway Bridge linking Bombay with Thane ii) 1869
c) Battle of Plassey iii) 1907
d) Setting up of TISCO iv) 1853
Options
a) i), ii), iii), iv) b) ii), iv), i), iii)
c) ii), iii), iv), i) d) i), iv), ii), iii)
Ans – b)
Q.3 Identify the correct pair from Column I and Column II and choose the correct alternative:
Column (A) Column (B)
A – Tata Iron and Steel Industry i) Established in 1907
B – Land settlements ii) Introduced by the money lenders
C – Suez Canal iii) Artificial waterway running from south to north
D – Introduction of railways in India iv) 1850
Options
a) A – i) b) B – (ii)
c) C – (iii) d) D – (iv)
Ans-d
Q.4 Identify the correct pair from Column I and Column II and choose the correct alternative:
Column – I Column – II
A – British rule in India i) Almost one and a half century
B – Growth was low under British rule ii) Only half percent increase in GDP
C – First to estimate GDP under British rule iii) Dadabhai Naoroji
D – French traveller describe about iv) Punjab
Options
a) A – i) b) B – ii)
c) C – iii) d) D – iv)
Answer-c
Q.5 Identify the correct pair from Column I and Column II and choose the correct alternative:
Column – I Column – II
A – Some progress in the agriculture sector i) Under irrigation
B – Low productivity ii) Commercialization of agriculture
C – Sound base under colonial rule iii) Industrial sector
D – Suez Canal UK to India iv) Through Bay of Bengal
Options
a) A – (i) b) B – (ii)
c) C – (iii) D) d – (iv)
Ans – a
Q.6 Identify the correct pair from Column I and Column II and choose the correct alternative:
Column – I Column – II
A – Infant mortality rate under British rule i) 175 per thousand
B – Public sector role under British rule in the
ii) Limited
industrial sector
C – Public health facilities iii) Sufficient
D – Overall mortality rate iv) Higher than infant mortality rate
Options
a) A – (i) b) B – (ii)
c) C – (iii) d) D – (iv)
Ans – b)
Q.7 identify the correct pair from Column I and Column II and choose the correct alternative:
Column – I Column – II
A – Backward i) Having all the resources
B – Depleted ii) Devoid of resources
C – Stagnant iii) Increase in per capita income
D – Mortality Rate iv) Death of infants per thousand
Options
a) A – (i) b) B – (ii)
c) C – (iii) d) D – (iv)
Ans – b)
Q.8 What was the growth rate of per capita income in India on the eve of Independence?
(A) 0.9%
(B) 0.5%
(C) 1.2%
(D) 3%
Ans- B
Q.9 Where was the first iron and steel company established?
(A) Kolkata
(B) Jamshedpur
(C) Patna
(D) Ranchi
Ans-b
Fill in the blanks: -
Q,1 The country’s growth of aggregate real output was less than ______ during the first half of
the twentieth century.
Ans-2%
Q.2 The Indian economy was a/an _______ economy at the time of independence
Ans-Agrarian
Q.3 ______ of agriculture increased the burden of revenue on farmers
Ans-commercialisation
Q. 4 The distribution of the working population in different sectors of the economy offers a
glimpse of ______ structure.
Answer: occupational
Q.5 The second stage of demographic transition began after ________ in India.
Ans-1921
Q.6 ______ were developed by the British raj as a means to enlarge the size of the market for the
British goods.
Ans Railways
Q.7 The British introduced the railways in India in ________
Ans-1850
Q.8 The ________ sector accounted for 17.2 percent of the working population on the eve of
Independence.
Ans-services sector
Q.9 India’s first official census was undertaken in ________
Ans-1881
True /false
State whether the following statements are true or false.
Q.1 India was a prosperous and wealthy economy prior to the advent of British rule
Ans-true
Q.2.The colonial rule destroyed India’s traditional handicraft industry.
Ans- true
Q.3.The economic policies pursued by the colonial government in India were concerned more with
the protection and promotion of the economic interests of India.
Ans-false
Q. 4. India was reduced to an importer of primary products.
Ans-true
Q.5.Land settlement introduced by the colonial government resulted in stagnation in the
agricultural sector.
Ans-true
Q.6.The contribution of the new industrial sector to the Gross Domestic Product (GDP) expanded
significantly during British rule
False
Q.7.The secondary sector accounted for only 10.1 percent of the working population on the eve of
independence.
Ans-true
Q.8.British colonial rule positively affected the structure, composition, and volume of India’s
foreign trade.
Ans-false
Q.9.Before 1921, India was in the second stage of demographic transition.
false
Q.10.The aim of developing postal and telegraph was to enhance the efficiency of British
administration
Ans-true
Long type question answer
Answer the following questions
Q.1 What was the basic objective of developing various infrastructure facilities by British
government in India?
Under the colonial regime, basic infrastructure such as railways, ports, water transport, posts and
telegraphs did develop. However, the real motive behind this development was not to provide basic
amenities to the people but to subserve various colonial interests.
Q.2 Explain some of the infrastructural developments by British government in India and how did
it affect Indian people and economy?
Following infrastructural development were done by British in India: -
(1) Roads constructed in India prior to the advent of the British rule were not fit for modern transport.
The roads that were built primarily served the purposes of mobilising the army within India and drawing
out raw materials from the countryside to the nearest railway station or the port
(2) There always remained an acute shortage of all-weather roads to reach out to the rural areas during
the rainy season. Naturally, therefore, people mostly living in these areas suffered grievously during
natural calamities and famines.
(3) The British introduced the railways in India in 1850 and it is considered as one of their most
important contributions.it affected India in two ways: -
(a). On the one hand it enabled people to undertake long distance travel and thereby break geographical
and cultural barriers
(b)On the other hand, it fostered commercialisation of Indian agriculture which adversely affected the
self-sufficiency of the village economies in India.The volume of India’s exports undoubtedly expanded
but its benefits rarely accrued to the Indian people. The social benefits, which the Indian people gained
owing to the introduction of the railways, were thus outweighed by the country’s huge economic loss.

(3) The inland waterways, at times, also proved uneconomical as in the case of the Coast Canal on the
Orissa coast. Though the canal was built at a huge cost to the government exchequer, yet, it failed to
compete with the railways, and had to be ultimately abandoned.

(4) The introduction of the expensive system of electric telegraph in India, similarly, served the purpose
of maintaining law and order.

(5) The postal services, on the other hand, despite serving a useful public purpose, remained all through
inadequate.

Q.3 what was the state of Indian agriculture during the British period? How did various land
settlement systems affect agriculture?
Despite being the occupation of a large population (about 85 per cent), the agricultural sector continued
to experience stagnation. This stagnation in the agricultural sector was caused mainly because of the
various systems of land settlement that were introduced by the colonial government. These land
settlement systems affected Indian agriculture in following ways: -

(1) the profit accruing out of the agriculture sector went to the zamindars instead of the cultivators.
However, the colonial government, did nothing to improve the condition of agriculture.
(2) The main interest of the zamindars was only to collect rent regardless of the economic condition of
the cultivators; this caused immense misery and social tension among the latter.
(3) the terms of the revenue settlement were also responsible for the zamindars adopting such an
attitude; dates for depositing specified sums of revenue were fixed, failing which the zamindars were
to lose their rights.
Q.5 What do you mean by export surplus? how was it generated during British period? what was
its effect on Indian economy?

Ans- When exports of a country are more than its imports it is known as Export Surplus. During the
British period this surplus came at a huge cost to the country’s economy. Several essential
commodities—food grains, clothes, kerosene etc were scarcely available in the domestic market.
this export surplus did not result in any flow of gold or silver into India. it was used to make payments
for: -
(a)the expenses incurred by an office set up by the colonial government in Britain
(b)expenses on war fought by the British government
(c) the import of invisible items, all of which led to the drain of Indian wealth.
Q.6 What do you mean by commercialisation of agriculture? did it really benefit Indian farmers
during the colonial rule?
Ans growing of cash crops is known as instead of food crops is known as commercialisation of
agriculture. But it didn’t really benefit Indian farmers because: -
(1) this could hardly help farmers in improving their economic condition as, instead of producing food
crops, they started producing cash crops which were ultimately used by British industries.
(2) Despite some progress made in irrigation, India’s agriculture was starved of investment in terracing,
flood-control, drainage and desalinisation of soil.
(3) though a small section of farmers changed their cropping pattern from food crops to commercial
crops, a large section of tenants, small farmers and sharecroppers neither had resources and technology
nor had incentive to invest in agriculture.
Q.6 Mention some of the regional variations on account of structural composition of Indian
economy?
Ans- The largest share of workforce, which usually remained at a high of 70-75 per cent while the
manufacturing and the services sectors accounted for only 10 and 15-20 per cent respectively.
(1) There was growing regional variation in some parts of India as there had been an increase in the
share of workforce in agriculture in states such as Orissa, Rajasthan and Punjab.
(2) On the other hand, the then Madras Presidency, Bombay and Bengal witnessed a decline in the
dependence of the workforce on the agricultural sector with a commensurate increase in the
manufacturing and the services sectors.
Q.7 What was the impact of industrial revolution of Great Britain on Indian handicraft industry?
Prior to the industrial revolution, India had an internationally acclaimed cotton textile industry which
was exported to different parts of the world including Europe, Middle East and the Americas among
others. After the Industrial Revolution, Britain started producing machine-made goods and textiles that
were much cheaper than the Indian goods. They were also often better in quality. Indian handicrafts
slowly died because they could not compete against the cheaper products from Britain that
were flooding the Indian markets.
Q,8 What is capital goods industry? How was capital goods industry developed during the British
period?
Ans-Capital goods industry means industries which can produce machine tools which are used for
producing articles for current consumption. There was hardly any capital goods industry in India during
colonial period to help promote further industrialisation in India.
The establishment of a few manufacturing units here and there was no substitute to
the near wholesale displacement of the country’s traditional handicraft industries. the growth rate of the
new industrial sector and its contribution to the Gross Domestic Product (GDP) remained very small.
One of the significant drawbacks of the new industrial sector was the very limited area of operation of
the public sector. This sector remained confined only to the railways, power generation,
communications, ports and some other departmental undertakings.
Q.9) Discuss three principal causes of backwardness of the Indian economy at the time of
independence.
Ans) Principal causes of backwardness of the Indian economy at the time of independence are:
(1) India was treated as a colony which served as a source of raw material to British industry and their
finished goods. Apart from this the British had no interest in development of the country.
(2) Destruction of Indian handicrafts by the British proved detrimental to the Indian economy
(3) Land revenue policy followed by the British exploited the farmers which led to their object poverty
and backwardness.
Q.10 Explain the effects of decline of Indian handicraft industry on Indian economy.
(1) Massive unemployment- competition with machine made cheap, decreased supply of locally
made goods. the decline of the indigenous handicraft industries created massive unemployment among
Indian handicraft workers.
(2) burden on agriculture-handicraft workers who lost their work due to decline in demand of their
product, were forced to become landless labours and this increased pressure on Indian agriculture.
(3) encouragement to import of cheap manufactured goods- presence of cheap machine-made
goods created new demand in the Indian consumer market This demand of machine-made cheap goods
was profitably met by the increasing imports of cheap manufactured goods from Britain.