Subhash Dey's IED Textbook 2024-25 Sample PDF

Unit 6
DEVELOPMENT EXPERIENCE
(1947-90) &
ECONOMIC REFORMS
SINCE 1991
SUBHASH DEY (Shree Radhey Publications)
Chapter 1 Indian Economy on the Eve of Independence
Chapter 2 Indian Economy (1950-1990)
Chapter 3 Liberalisation, Privatisation and Globalisation:

An Appraisal
Latest CBSE Syllabus 12 MARKS

 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
“India is the pivot of our Empire... If the Empire loses any other part of its Dominion we can survive, but if we lose India, the sun
of our Empire will have set.” —Victor Alexander Vruce, the Viceroy of British India in 1894
The central objective of Planning in India... is to initiate a process of development which will raise the living standards and open
out to the people new opportunities for a richer and more varied life. —First Five Year Plan
There is a consensus in the world today that economic development is not all and the GDP is not necessarily a measure of
progress of a society. —K.R. Narayanan, Former President of India
Chapter 1
Indian Economy on the Eve of Independence
Topics Introduction
A. Low Level of Economic Development The structure of India’s present day economy has its
Under the Colonial Rule roots steeped in the period when India was under
B. Agricultural Sector British rule, which lasted for almost two centuries
before India finally won its independence on 15th
C. Industrial Sector August, 1947.
D. Foreign Trade The sole purpose of the British colonial rule in
E. Demographic Condition India was to reduce the country to being a raw
material supplier for Great Britain’s own rapidly
F. Occupational Structure
expanding modern industrial base.
G. Infrastructure
An understanding of the Indian economy before
independence is necessary to know and appreciate
Learning Outcomes the level of economic development achieved during
the post-independence period, i.e. over the last
seven and half decades.
After studying this chapter, the learners
India had an independent economy before the
will:
advent of the British rule. Agriculture was the
• become familiar with the state of the main source of livelihood for most people, yet the
Indian economy in 1947, the year of country’s economy was also characterised by various
India’s Independence kinds of manufacturing activities.
• understand the factors that led to the
underdevelopment and stagnation of the
Indian economy.
1.8 SUBHASH DEY (Shree Radhey Publications) Indian Economic Development Class XII (CBSE)
Low Level of Economic Development Under the Colonial Rule A

Focus of the economic policies pursued by the colonial government in India:
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 supplier of raw materials and consumer of finished industrial products from Britain.
The colonial government never made any sincere attempt to estimate India’s national
income and per capita income.
 Some notable economists who estimated India’s national income and per capita income during the colonial
period were — Dadabhai Naoroji, William Digby, Findlay Shirras, V.K.R.V. Rao and R.C. Desai. But their
attempts to measure such incomes yielded conflicting and inconsistent results.
It was V.K.R.V. Rao, whose estimates during the colonial period was considered very significant.
 However, most studies revealed that during the first half of the 20th century, the country’s growth rate of
aggregate real GDP was only less than 2% per year and per capita real GDP was close to 0.5% per year.
DEFINITION OF
KEY TERMS
National Income It refers to money value of all the final goods and services produced by the normal residents
residing within/outside a country, during an accounting year.
Per Capita Income Total national income of a country divided by its population in a specific period.
Multiple Choice Questions (MCQs)
Q.1 The notable economist whose estimates India’s per capita income during the colonial period was considered very
significant:
(a) Dadabhai Naoroji (b) William Digby
(c) V.K.R.V Rao (d) R.C Desai
Q.2 The colonial government made no sincere attempts to estimate India’s national and per capita income, but most
studies found that India’s national income growth in the pre-independence era was _______ and per capita income
growth was _______.
(a) close to 5 per cent, more than 2 per cent
(b) less than 3 per cent, more than 1 per cent
(c) close to half per cent, almost 0 per cent
(d) less than 2 per cent, close to half per cent
Chapter-1 Indian Economy on the Eve of Independence SUBHASH DEY (Shree Radhey Publications) 1.9
Q.3 Assertion: (A): India was more of a consumer than a supplier of materials for finished goods
Reason: British policies were more directed towards their own economic interests.
(a) A is true but R is false.
(b) A is false but R is true.
(c) Both A and R are true and R explains A.
(d) Both A and R are true but R does not explain A.
Q.4 Assertion (A): 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.
Reason (R): Such policies brought about 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.
(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, but 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.
Q.5 Statement 1: The colonial government made many sincere attempt to estimate India’s national and per capita
income.
Statement 2: During the British colonial period, 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.
(a) Both the statements are true.
(b) Both the statements are false.
(c) Statement 1 is true, but statement 2 is false.
(d) Statement 2 is true, but statement 1 is false.
Q.6 The economic policies pursued by the colonial government in India were concerned with the protection and
promotion of the economic interests of their home country. How did these policies affect the Indian Economy?
(i) Higher rate of growth of industries, especially Handicraft Industries.
(ii) It transformed the country into supplier of raw materials.
(iii) The country became consumer of finished products from Britain.
(a) Only (i) (b) Only (i) and (ii)
(c) Only (ii) and (iii) (d) All of these
Q.7 Most of the studies disclosed that India’s growth of aggregate real output during the first half of the twentieth
century was less than ________.
(a) 0.5% (b) 5%
(c) 2% (d) 1.5%
Subjective Questions
Q.8 What was the sole purpose of the British colonial rule in India? (1)
Q.9 Why is an understanding of the Indian economy before independence necessary? (1)
Q.10 What was the main source of livelihood for most people during the British colonial rule? (1)
Q.11 Name some notable economists who estimated India’s per capita income during the colonial period. (NCERT) (1)
Condition of Agriculture under the British Colonial Rule B

Stagnant agricultural sector
Despite being the main occupation of the majority of the country’s population during British rule, the agricultural
sector continued to experience stagnation and deterioration. Agricultural productivity became low.
India’s agricultural stagnation under the British colonial rule
Top Tip
Though agricultural productivity became low, however, in absolute terms, the agricultural sector experienced some
growth due to the expansion of the aggregate area under cultivation.
Causes of India’s agricultural stagnation and low productivity
02 03 05
01 Low levels Lack of
04 Lack of resources
Various of irrigation Negligible and
systems of land technology facilities use of incentives
settlement fertilisers
CAUSES OF INDIA’S AGRICULTURAL STAGNATION AND LOW PRODUCTIVITY
1. Various systems of land settlement that were introduced by the colonial government, particularly, the
Zamindari system
The stagnation in the agricultural sector was caused mainly because of the various systems of land settlement
that were introduced by the colonial government, particularly, the Zamindari system which was implemented
in the then Bengal Presidency comprising parts of India’s present-day eastern states.
 The profit accruing out of the agriculture sector went to the zamindars instead of the cultivators.
However, nothing was done to improve the condition of agriculture.
 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 cultivators.
 To a very large extent, the terms of the revenue settlement were also responsible for the zamindars
adopting such an attitude,e.g. dates for depositing specified sums of revenue were fixed, failing which
the zamindars were to lose their rights.
2. Low levels of technology, lack of irrigation facilities and negligible use of fertilisers
Low levels of technology, lack of irrigation facilities and negligible use of fertilisers were responsible for the
plight of the farmers and contributed to the dismal level of agricultural productivity.
3. Lack of resources and incentives

India’s agriculture was starved of investment in terracing, flood-control, drainage and desalinisation of soil.
A large section of tenants, small farmers and sharecroppers neither had resources and technology nor had
incentive to invest in agriculture.
Commercialisation of agriculture
There was some evidence of a relatively higher yield of cash crops in certain areas of the country due to
commercialisation of agriculture. But this could hardly help farmers in improving their economic condition
as, instead of producing food crops, now they were producing cash crops which were to be ultimately used by
British industries back home.
Agriculture during Pre-British India

The French traveller, Bernier, described seventeenth century Bengal in the following way: “The knowledge
I have acquired of Bengal in two visits inclines me to believe that it is richer than Egypt. It exports, in
abundance, cottons and silks, rice, sugar and butter. It produces amply — for its own consumption — wheat,
vegetables, grains, fowls, ducks and geese. It has immense herds of pigs and flocks of sheep and goats. Fish
of every kind it has in profusion. From rajmahal to the sea is an endless number of canals, cut in bygone ages
from the Ganges by immense labour for navigation and irrigation.”
DEFINITION OF
KEY TERMS
Productivity Output per unit of input employed. Increase in the efficiency on the part of capital or labour
leads to increase in productivity. This term is generally used to refer to productivity increase
in labour inputs.
Agricultural Productivity It refers to output per hectare of land.
Land Settlement/Revenue With the British acquiring territorial rights in different parts of India, administration of
Settlement territories was formulated on the basis of survey of land. It was decided in the interests
of government in terms of revenues to be collected from each parcel of land in possession
of either a ryot (means peasant) or a mahal (revenue village) or a zamindar (a proprietary
land holder). Decision in each of these cases was meant for the rights of the latter over land
for the purposes of either ownership of land or rights to cultivation. This system is known
as land/revenue settlement. There were different land settlements formulated in India.
They are (i) system of permanent settlement, which is also known as the zamindari system
(ii) ryotwari system (a system of revenue settlement entered into by the government with
individual tenants) (iii) mahalwari system (a system of revenue settlement entered into by
the government with a mahal).
Desalinisation of soil The removal of salt or other chemicals from soil.
Cash crops An agricultural crop which is grown to sell for profit, e.g. coffee, cocoa, tea, sugarcane, cotton,
spices etc. These are also called commercial crops.
Commercialisation of Change in the cropping pattern from food crops to cash crops (like indigo, jute, cotton etc.) is
agriculture called commercialisation of agriculture. It implies production of crops for the market rather than
for self-consumption i.e. family consumption. During the British rule, the commercialisation
of agriculture acquired a different meaning—it became basically commercialisation of crops.
The British started offering higher price to farmers for producing cash crops rather than for
food crops. They used these cash crops as raw materials for industries in Britain.
Q.1 Under the British rule, Indian agricultural output witnessed stagnation due to _________.
(a) drain of Indian wealth (b) land tenure system
(c) introduction of telecommunications (d) decline in handicrafts
Q.2 Under the British Rule, commercialisation of agriculture resulted in shifting of agricultural production from ______
crops to ________ crops.
(a) Cash, Food (b) Cotton, Jute
(c) Food, Cash (d) Jute, Food
Q.3 During the British rule in India, Indian agricultural output witnessed stagnation due to____________.
(a) Decline in handicrafts (b) Drain of Indian wealth
(c) Land settlement (d) Introduction of railways
Q.4 The stagnation in the agricultural sector during the colonial rule was caused mainly because of __________ .
(a) Lack of irrigation facilities (b) land settlement systems
(c) Low levels of technology (d) Lack of resources
Q.5 Under the zamindari system, the main interest of the zamindars was only to collect rent regardless of the economic
condition of the cultivators. To a very great extent, the terms of ___________ were responsible for the zamindars
adopting such an attitude.
(a) Rent (b) Revenue settlement
(c) Cropping pattern (d) None of these
Q.6 During the British colonial rule, though agricultural productivity became low, there was some evidence of a
relatively higher yield of cash crops in certain areas of the country due to __________ .
(a) Commercialisation of agriculture (b) Government support
(c) Irrigation facilities (d) Increased resources
Q.7 Under the British system of land settlement, the Zamindar’s dues to the state were fixed. What did this mean for
the cultivators?
(a) They received investment support to increase production.
(b) They were exploited and forced to pay rent regardless of the produce.
(c) They had the support of the landlords against the oppressive policies of the British.
(d) They were forced to shift from food crops to commercial crops, leading to food scarcity.
Q.8 Prior to India’s independence, the stagnation in the agricultural sector was mainly caused by ___________.
(a) investment in technology (b) investment in agriculture facilities
(c) advanced infrastructural facilities (d) land settlement system
Q.9 Statement-I: Agriculture productivity was very low during the British Rule.
Statement-II: In absolute terms, there was growth in agriculture sector due to expansion of aggregate area under
cultivation.
(c) Statement-I is true, Statement-II is false.
(d) Statement-II is true, Statement-I is false.
Q.10 Assertion (A): Under the British colonial rule, the agricultural production decreased.
Reason (R): In absolute terms, the agricultural sector experienced some growth due to the expansion of the
aggregate area under cultivation.

Q.11 Assertion (A): Commercialisation 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.
Q.12 Assertion (A): Agriculture was the main source of livelihood for most people.
Reason (R): About 65 per cent of the country’s population lived mostly in villages and derived livelihood directly
or indirectly from agriculture.
Q.13 Assertion (A): The main cause of the stagnation in the agricultural sector in India under the British colonial rule
was the zamindari system.
Reason (R): The stagnation in the agricultural sector was caused mainly because of the various systems of land
settlement that were introduced by the colonial government, particularly the zamindari system.
Q.14 Assertion (A): The zamindari system of revenue settlement introduced by the colonial government caused immense
misery and social tension among the cultivators.
Reason (R): The main interest of the zamindars was only to collect rent regardless of the economic condition of the
cultivators.
Q.15 Assertion (A): The main interest of the zamindars was only to collect rent regardless of the economic condition of
the cultivators, which caused immense misery and social tension among the cultivators.
Reason (R): Dates for depositing specified sums of revenue were fixed by the British, failing which the zamindars
were to lose their rights.
Q.16 Assertion (A): During the British colonial period, agricultural productivity became low though, in absolute terms,
the sector experienced some growth due to the expansion of the aggregate area under cultivation.
Reason (R): This stagnation in the agricultural sector was caused mainly because of the various systems of land
settlement that were introduced by the colonial government.

Q.17 Statement 1: Besides land settlement systems introduced by the colonial government, low levels of technology,
lack of irrigation facilities and negligible use of fertilisers, all added up to aggravate the plight of the farmers and
contributed to the dismal level of agricultural productivity.
Statement 2: During the British colonial period, there was a relatively higher yield of food crops in certain areas of
the country due to commercialisation of agriculture.
(d) Statement 2 is true, but statement 1 is false
Q.18 Assertion (A): Commercialisation of agriculture could hardly help 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.
Q.19 Statement 1: During the British colonial period, India’s agriculture was starved of investment in terracing, flood-
control, drainage and desalinisation of soil.
Statement 2: While 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 agriculure.
Q.20 Which of the following is the cause of India’s agricultural stagnation and low productivity?
(i) Various systems or terms of revenue settlement.
(ii) Low levels of technology and lack of irrigation facilities.
(iii) Lack of resources to investing terracing flood control, drainage and desalinisation of soil.
(a) Only (i)
(b) Only (i) and (ii)
(c) Only (ii) and (iii)
(d) All of these
Q.21 Which one of the following statements does not characterise the condition of Indian Agricultural condition on the
eve of independence?
(a) Agricultural sector was experiencing stagnation.
(b) Aggregate area under cultivation was contracting.
(c) Agricultural productivity became low in absolute terms.
(d) Cash crops were more produced.
Q.22 During the British rule, the agricultural sector experienced stagnation mainly due to the:
(a) Land settlement systems
(b) Foreign trade
(c) Infrastructure
(d) Industries
Q.23 “India’s economy under the British colonial rule remained fundamentally agrarian.” How do you say so? (1)
Q.24 What was the main cause of the stagnation in the agricultural sector in India under the British colonial rule? (1)
Q.25 In which part of the country was the zamindari system of revenue settlement introduced by the colonial
government? (1)
Q.26 How did the zamindari system of revenue settlement introduced by the colonial government cause immense misery
and social tension among the cultivators? (1)
Q.27 The main interest of the zamindars was only to collect rent regardless of the economic condition of the cultivators,
which caused immense misery and social tension among the cultivators. Why did the zamindars adopt such an
attitude? (1)
Q.28 Discuss any two causes of India’s agricultural stagnation during the Colonial period. (3)
Q.29 State and explain the condition of Indian agriculture on the eve of independence. (4)
Q.30 “During the British colonial rule, despite being the occupation of about 85% of India’s population, the agriculture
sector continued to experience stagnation and, not infrequently, unusual deterioration. Agricultural productivity
became low.” Do you agree with the above statement? Give valid reasons in support of your answer. (6)
Industrial Sector during the British Colonial Rule C

Collapse of India’s world famous handicraft industries during the British rule
Before the advent of the British rule, India was well-known for its handicraft industries in the fields of cotton
and silk textiles, metal and precious stone works etc. These products enjoyed a worldwide market because of the
reputation of the fine quality of material used and the high standards of craftsmanship seen in all imports from India.
Textile Industry in Bengal
Muslin is a type of cotton textile which had

its origin in Bengal, particularly, places in
and around Dhaka (spelled during the pre-
independence period as Dacca), now the
capital city of Bangladesh. ‘Daccai Muslin’
had gained worldwide fame as an exquisite
type of cotton textile. The finest variety of
muslin was called malmal. Sometimes,
foreign travellers also used to refer to it as
malmal shahi or malmal khas implying that it
was worn by, or fit for, the royalty.
India was well-known for its handicrafts industries .
The rule of the British government led to the collapse of India’s world famous handicraft industries. The
establishment of a few manufacturing units was no substitute to the near wholesale displacement of the country’s
traditional handicraft industries.
The decline of the indigenous handicraft industries created not only massive unemployment in India but also a
new demand in the Indian consumer market, which was now deprived of the supply of locally made goods. This
demand was profitably met by the increasing imports of cheap manufactured goods from Britain.
The two-fold motive behind the systematic de-industrialisation effected by the British:
The primary motive of the colonial government behind this policy of systematically de-stabilising India was two-
fold.
1. To get raw materials from India at cheaper rates
The first motive was to reduce India to the status of a mere exporter of important raw materials for the
upcoming modern industries in Britain and,
2. To sell finished products produced by the Britain industries in Indian market at higher prices
The second motive was to turn India into a sprawling market for the finished products of those industries
so that their continued expansion could be ensured to the maximum advantage of their home country —
Britain.
India could not develop a sound industrial base under the colonial rule.
The modern industry began to take root in India during the second half of the nineteenth century, but its
progress remained very slow.
 Initially, the industrial development was confined to the setting up of cotton and jute textile mills.
The cotton textile mills, mainly dominated by Indians, were located in the western parts of the country,
namely, Maharashtra and Gujarat, while the jute mills dominated by the foreigners were mainly concentrated
in Bengal.
 Subsequently, the iron and steel industries began coming up in the beginning of the twentieth century. The
Tata Iron and Steel Company (TISCO) was incorporated in 1907.
 A few other industries in the fields of sugar, cement, paper etc. came up after the Second World War.
Other shortfalls of the industrial policy pursued by the British colonial administration:
1. Lack of capital goods industry
There was hardly any capital goods industry to help promote industrialisation in India.
Meaning
Capital goods industry means industries which can produce machine tools which are, in turn, used for producing articles for
current consumption.
2. Low growth rate

The growth rate of the new industrial sector and its contribution to the Gross Domestic Product (GDP) or
Gross Value Added (GVA) remained very small.
3. Limited area of operation of the public sector
Another significant drawback 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.
DEFINITION OF
KEY TERMS
Gross Domestic Product It is the market value of all final goods and services produced by all the firms in the economy
(GDP) within the domestic territory during a fiscal year.
Gross Value Added (GVA) The sum of a country’s GDP and net of indirect taxes and subsidies in the economy during a
fiscal year. (GVA = GDP – Indirect Taxes + Subsidies)
Competency Based Question

In order to understand the complexities of the industrial sector in India on the
eve of independence, elaborate on the prevailing conditions that contributed to
“Systematic de-industrialization” and technological backwardness.
During British colonial rule, India experienced a significant decline in its traditional and indigenous industries, which is
an example of systematic deindustrialization.
Three main factors that led to the decline of industrial activities in India during British rule are:
• Decline of Indian courts: The disappearance of Indian courts struck the first blow at Indian handicrafts. As native
states passed under British rule, the demand for fine articles, for display in durbars and other ceremonial occasions
disappeared. The ordinary demand did continue for some time longer, but the younger generation lacked the means
and inducement to patronize the arts and handicrafts and they declined.
• Introduction of New Patterns: With the disappearance of Indian states, old rulers and nobles also disappeared and
their place was taken up by the European Officers and tourists. Indian craftsmen, however, did not clearly understand
the forms and patterns which suited European tastes. They tried to please their new customers by copying their
forms and patterns.
• Competition of Machine Made Goods: Apart from the abolition of Indian courts and the introduction of foreign
influences, it was the superior manufacturing technique based on power and improved machinery which enabled the
British manufacturers to drive the Indian artisans from out of their home market.
Q.1 Which of the following industries were in operation in our country at the time of independence?
(i) Cotton and Jute textile industries
(ii) Iron and steel industries
(iii) Sugar, cement and paper industries
(a) Only (i) (b) Only (i) and (ii)
Q.2 Dring the second half on the 19th century, the cotton textile mills mainly dominated by Indian entrepreneurs were
located mainly in ___________.
(a) Bengal (b) Maharashtra
(c) Calcutta (d) Madhya Pradesh
Q.3 During the British rule, the iron and steel industries began coming up in the beginning of the twentieth century.
___________ was incorporated in 1907.
(a) Cotton and Jute Textile Mills Ltd.
(b) Tata Iron and Steel Company
(c) AN Steels India Ltd.
(d) Sharan Iron Steel Industries Ltd.
Q.4 The Tata Iron and Steel Company was incorporated in ________.
(a) 1907 (b) 1910
(c) 1921 (d) 1850
Q.5 Assertion (A): India could not develop a sound industrial base during the British rule.
Reason (R): Britishers followed restrictive trade policies, which led to the rise of Indian handicraft industries.
Q.6 Assertion (A): Britishers destroyed indigenous handicraft market in India.
Reason (R): India was made market for British manufactured products.
Q.7 Assertion (A): India developed a sound industrial base under the colonial rule.
Reason (R): The country’s world famous handicraft industries declined.
Q.8 Assertion (A): During the second half of the 19th century, 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 in 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.
Q.9 Assertion (A): India could not develop a sound industrial base under the colonial rule
Reason (R): Because the intention of colonial rule was to reduce India to the status of a mere exporter of important
raw materials for the upcoming modern industries in Britain.
Q.10 Assertion (A): India had an independent economy before the advent of British rule. Though agriculture was the
main source of livelihood for most people, yet, the economy of the country was characterised by various kinds of
manufacturing activities.
Reason (R): There was lack of capital goods industries in India.
Q.11 Assertion (A): Before the advent of the British rule, India was particularly well known for its handicraft industries
in the fields of cotton and silk textiles, metal and precious stone works etc.
Reason (R): These products enjoyed a worldwide market based on the reputation of the fine quality of material
used and the high standards of craftsmanship seen in all imports from India.

Q.12 Statement 1: The primary motive of the colonial government behind the policy of systematically deindustrialising
India was to reduce India to the status of a mere exporter of important raw materials for the upcoming modern
industries in Britain and, to turn India into a sprawling market for the finished products of those industries.
Statement 2: The decline of the indigenous handicraft industries created not only massive unemployment in
India but also a new demand in the Indian consumer market, which was now deprived of the supply of locally
made goods.
Q.13 Before the advent of the British rule, India was well-known for its handicraft industries in the fields of cotton and
silk textiles, metal and precious works etc. These products enjoyed a worldwide market due to:
(i) reputation of the fine quality of material used.
(ii) high standards of craftsmanship seen in all imports from India
(iii) wide exports market.
(a) Only (i)
(b) Only (i) and (ii)
(c) Only (ii) and (iii)
(d) All of these
Q.14 Read the following statements relating to industrial sector during British rule and state the correct sequence of these
statements.
(i) Cheap imports of British manufactured goods increased in the country.
(ii) The growth rate of Industrial sector was very small.
(iii) India was reduced to be mere exporter of raw material.
(iv) India faced shortage of locally made goods.
(a) (ii), (iv), (i), (iii)
(b) (iii), (i), (iv), (ii)
(c) (iii), (iv), (i), (ii)
(d) (i), (iv), (iii), (ii)
Q.15 Name some modern industries which were in operation in our country at the time of independence. (NCERT) (1)
Q.16 Define Capital goods industry. (1)
Q.17 Name the area of operation of the public sector under the British colonial rule. (1)
Q.18 Explain any two shortfalls of the industrial policy under the British rule. (3)
Q.19 For which industries was India particularly well-known during the British colonial rule and why? (3)
Q.20 What was the two-fold motive behind the systematic deindustrialisation effected by the British in pre-independent
India? (NCERT) (3)
Q.21 The traditional handicrafts industries were ruined under the British rule. Do you agree with this view? Give reasons in
support of your answer. (NCERT) (4)
India’s Foreign Trade During the British Colonial Period D

The 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.
1. Britain’s monopoly control over India’s exports and imports
For all practical purposes, Britain maintained a monopoly control over India’s exports and imports. As a result,
more than 50% of India’s foreign trade was restricted to Britain while the remaining was allowed with a few
other countries like China, Ceylon (Sri Lanka) and Persia (Iran).
The opening of the Suez Canal in 1869 further intensified British control over India’s foreign trade.
Trade Through the Suez Canal
Suez Canal is an artificial waterway running

from north to south across the Isthmus of
Suez in north-eastern Egypt. It connects
Port Said on the Mediterranean Sea with the
Gulf of Suez, an arm of the Red Sea. The
canal provides a direct trade route for ships
operating between European or American
ports and ports located in South Asia, East
Africa and Oceania by doing away with the
need to sail around Africa. Strategically and
economically, it is one of the most important
waterways in the world. Its opening reduced
the cost of transportation and made access
to the Indian market easier.
Suez Canal: used as highway between India and Britain
2. India as exporter of raw material and importer of finished goods

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.
3. Generation of a large export surplus but at a huge cost – Drain of Indian wealth
The most important characteristic of India’s foreign trade throughout the colonial period was the generation of a
large export surplus. But this export 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.
 Furthermore, 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 fought by the British government, and
• the import of invisible items.
All of these led to the drain of Indian wealth.
DEFINITION OF
KEY TERMS
Tariff A tax on imports, which can be levied either on physical units, e.g. per tonne (specific) or
on value. Tariffs may be imposed for a variety of reasons including: to raise government
revenue, to protect domestic industry from subsidised or low-wage imports, to boost domestic
employment, etc. Apart from the revenue that they raise tariffs achieve little good—they
reduce the volume of trade and increase the price of the imported commodity to consumers.
Export Surplus Export surplus is the excess of exports over imports.

Describe three key features of India’s foreign trade on the eve of independence.
Illustrate with examples the country’s trading patterns with other nations.
On the eve of independence in 1947, India’s foreign trade was characterized by several key features:
• Dominance of British Trade Relations: The country’s trade was largely focused on exporting raw materials, such as
cotton, jute and tea to Britain and importing finished goods in return. This trade pattern resulted from the exploitative
economic policies imposed by British colonial rule, which hindered India’s industrial development.
Example: The export of raw cotton from India to Britain for use in British textile mills was a significant aspect of
India’s foreign trade at that time.
• Limited Diversification of Trading Partners: India had limited trading partners outside the British Empire. The
colonial rule discouraged India from actively engaging in trade with other countries, and the majority of its foreign
trade was confined to British colonies. This lack of diversification in trading partners restricted India’s economic
growth and hindered the development of a more dynamic foreign trade landscape.
Example: India’s trade relations with neighboring countries, such as Sri Lanka and Myanmar, were mainly influenced
by British colonial policies and were limited in scope.
• Low Share of Industrial Exports: India’s foreign trade was characterized by a relatively low share of manufactured or
industrial goods in its export basket. The economy was primarily agrarian, and the majority of exports consisted of
primary agricultural commodities. This limited India’s ability to earn foreign exchange and hindered the development
of a self-reliant industrial base.
Example: India’s major exports, such as jute, tea, and spices, were primarily agricultural products with limited value
addition.
Overall, on the eve of independence, India’s foreign trade was dominated by the colonial relationship with Britain,
lacked diversification in trading partners, and had a limited share of industrial exports. These characteristics reflected the
country’s dependence on colonial trade policies and underscored the need for India to redefine its trade strategy post-
independence.
Q.1 Identify the result of the large export surplus during the colonial period.
(a) domestic markets flooded with raw materials
(b) an increase in gold and silver reserves
(c) scarcity of essential commodities
(d) cheap imported consumer goods
Q.2 Statement 1: Commercialization of agriculture under the British rule was responsible for frequent famines between
1875 and 1900.
Statement 2: During British rule, India began to export food grains.
(a) Statement 1 is true and Statement 2 is false.
(b) Statement 1 is false and Statement 2 is true.
(c) Both Statements 1 and 2 are true.
(d) Both Statements 1 and 2 are false.
Q.3 Which of the following is NOT true about foreign trade during the colonial rule?
(a) India suffered from large trade deficit.
(b) Restrictive policies of commodity production, were followed.
(c) Britain maintained a monopoly control over India’s exports and imports.
(d) India became an exporter of primary products and an importer of finished consumer goods.
Q.4 Read the following statements relating to foreign trade during British rule and choose the correct sequence of these
statements.
(i) India was exporter of products like raw silk, cotton etc.
(ii) Britain maintained monopoly control over India’s foreign trade.
(iii) India generated large export surplus
(iv) Exports did not result in any flow of wealth into the country.
(a) (i), (ii), (iii), (iv) (b) (iv), (iii), (ii), (i)
(c) (ii), (i), (iii), (iv) (d) (iv), (i), (ii), (iii)
Q.5 Identify the false statement in context of India’s foreign trade.
(a) Exporter of raw material. (b) Surplus in foreign trade account.
(c) Importer of finished goods. (d) Import of gems and pearls from Britain.
Q.6 In the 20th century, under British rule, India had an export surplus. Where was this surplus used?
(a) To invest in capital goods industries in India
(b) To invest in capital goods industries in Britain
(c) To meet the official and war expenses of the British
(d) To pay the salaries of Indian government employees
Q.7 Identify the correct statement from the following:
(a) Restrictive policies of commodity production, trade and tariff pursued by the colonial government adversely
(b) Effective trade policies of commodity production, trade and tariff pursued by the colonial government
favorably affected the structure, composition and volume of India’s foreign trade.
(c) Liberal policies of commodity production, trade and tariff pursued by the colonial government adversely
(d) Restrictive policies of commodity production, trade and tariff pursued by the colonial government favorably
Q.8 Assertion (A): The establishment of the Suez Canal intensified Britain’s control over India’s foreign trade.
Reason (R): The Europeans no longer had to travel around Africa to reach India.
(a) A is true but R is false. (b) A is false but R is true.
(c) Both A and R are true and R explains A. (d) Both A and R are true and R does not explain A.
Q.9 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.

Q.10 Assertion (A): During British rule, India saw huge drain of wealth.
Reason (R): India generated large export surplus during the period.
Q.11 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.
Q.12 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).
Q.13 Statement 1: More than Half of India’s Foreign trade was restricted to Britain.
Statement 2: Britain maintained Monopoly control on India’s Import and Export.
Q.14 Statement 1: During the colonial period, balance of trade remained unfavourable.
Statement 2: There was a large export surplus during the colonial period.
Q.15 Statement 1: The opening of the Suez Canal in 1869 reduced the cost of transportation and made access to the
Indian market easier.
Statement 2: More than 90% 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).
Q.16 Read the following statements relating to foreign trade during British rule and state the correct sequence of these
statements.
(i) India was exporter of products like raw silk, cotton etc.
(ii) Britain maintained monopoly control over India’s foreign trade.
(iii) India generated large export surplus
(iv) Exports did not result in any flow of wealth into the country.
(a) (i), (ii), (iii), (iv) (b) (ii), (i), (iii), (iv)
(c) (ii), (i), (iv), (iii) (d) (iv), (iii), (i), (ii)
Q.17 Which restrictive policies pursued by the colonial government adversely affected the structure, composition and
volume of India’s foreign trade? (1)
Q.18 Indicate the direction of trade during the British rule. (1)
Q.19 Indicate the structure and composition of India’s foreign trade during the colonial period. (2)
Q.20 Comment upon any two salient features of foreign trade policy of India, on the eve of Independence. (3)
Q.21 “The most important characteristic of India’s foreign trade through out the colonial period was the generation of a
large export surplus. But this surplus came of a huge cost to the country’s economy.”
Do you agree with the above statement? Give valid reasons in support of your answer. (3)
Q.22 Indicate the volume and direction of foreign trade of India at the time of Independence. (NCERT) (4)
Q.23 How did the restrictive policies of commodity production, trade and tariff pursued by the British colonial government
affect the structure, composition and volume of foreign trade? (4)
India’s Demographic Condition During the Colonial Period E

 Various details about the population of British India were first collected through a census in 1881. It revealed
the unevenness in India’s population growth. Subsequently, every ten years such census operations were
carried out.
 Before 1921, India was in the first stage of demographic transition.
 The second stage of transition began after 1921 (Year of Great Divide). However, neither the total population
of India nor the rate of population growth at this stage was very high. The various social development
indicators were also not quite encouraging.
Quantitative appraisal of India’s demographic profile during the colonial period
1. Low level of literacy rate
The overall literacy level was less than 16%. Out of this, the female literacy level was at a negligible low of
about 7%.
2. Lack of adequate public health facilities
Public health facilities were either unavailable to large chunks of population or, when available, were highly
inadequate. Consequently, water and air-borne diseases were rampant and took a huge toll on life.
3. High infant mortality rate
The overall mortality rate was very high and in that, particularly, the infant mortality rate was quite
alarming – about 218 per thousand in contrast to the present infant mortality rate of 33 per thousand.
Lack of adequate public health facilities, occurrence of frequent natural calamities and famines
pauperised the hapless Indian people and resulted in engendering high mortality rates.
4. Low life expectancy

Life expectancy was also very low – 32 years in contrast to the present 69 years.
5. Extensive poverty
Extensive poverty prevailed in India during the colonial period which contributed to the worsening profile
of India’s population of the time.
Overall literacy level < 16%
Low level of literacy rate Female literacy level about 7%.
Lack of public health facilities

Lack of adequate public
Water and air-borne diseases
health facilities
Quantitative
appraisal of India’s
High overall mortality rate
demographic High infant mortality rate Infant mortality rate 218 per
profile during the thousand
colonial period
32 years
At present it is 69 years.
Low life expectancy
Worsening profile of India’s

Extensive poverty population
DEFINITION OF
KEY TERMS
Demographic transition Demographic transition refers to the historical shift from high birth rates and high death rates
(in societies with minimal technology, education and economic development) to low birth
rates and low death rates (in societies with advanced technology, education and economic
development). It is a concept developed by demographer Frank Notestein in 1945 to describe
the typical pattern of falling death and birth rates in response to better living conditions
associated with economic development. Notestein identified three phases of demographic
transition, pre-industrial, developing and modern industrialised societies. Later another phase,
post-industrial was also included.
Literacy Rate Literacy rate measures the proportion of literate population in the age group of 7 years or
above.
Mortality rate The word ‘mortality’ comes from ‘mortal’ which originates from the Latin word mors
(meaning death).Mortality Rate is defined as the number of deaths per 1,000 people in a year.
Infant Mortality Rate It is the number of deaths of infants before reaching the age of one, in a particular year, per
1,000 live births during that year. It indicates the number of children that survive first year of
their life.
Life Expectancy Life Expectancy is defined as number of years, on an average ,an individual is expected to
live.
Life Expectancy at Birth The number of years a newborn infant would live if prevailing patterns of age-specific
(years) mortality rates at the time of birth were to stay the same throughout the child’s life.
Morbidity rate Morbidity rate means propensity to fall ill, It may affect productivity of workers. Activities like
Air pollution and safety hazards connected to transportation also affect morbidity, particularly in
densely populated areas.
Q.1 The multifaceted process of demographic transition within the context of India pertains to:
(a) a sudden decline in the population growth rate due to migration
(b) a change in the population density across different states in India
(c) a significant increase in the birth rate and death rate simultaneously
(d) a shift from high birth and death rates to low birth and death rates over time
Q.2 India entered the ____________ stage of Demographic Transition after the year 1921.
(a) fourth (b) second
(c) third (d) first
Q.3 Read the following statements relating to demographic condition of India during British Rule and choose the
correct sequence of these statements.
(i) Overall mortality rate was very high
(ii) Water and airborne diseases were rampant
(iii) Public health services were either unavailable or were inadequate
(iv) Infant mortality was at alarming level
(a) (i), (ii), (iii), (iv) (b) (iii), (ii), (i), (iv)
(c) (ii), (i), (iii), (iv) (d) (iv), (i), (ii), (iii)
Q.4 When was India’s first official census operation undertaken? (NCERT)
(a) 1850 (b) 1869
(c) 1881 (d) 1921
Q.5 Which is regarded as the defining year to mark the demographic transition from its first to the second decisive
stage? (NCERT)
(a) 1850 (b) 1869
(c) 1881 (d) 1921
Q.6 During the British colonial rule, the various social development indicators were not quite encouraging. The overall
literacy level was ___________ .
(a) Less than 16% (b) About 7%
(c) About 1% (d) Less than 5%
Q.7 During the British colonial rule, the overall mortality rate was very high and in that, particularly, the infant mortality
rate was quite alarming about __________ per thousand in contrast to the present rate of 40 per thousand.
(a) 118 (b) 218
(c) 40 (d) 68
Q.8 During the British colonial rule,Life expectancy was also very low _________ in contrast to the present 69 years.
(a) 33 years (b) 32 years
(c) 55 years (d) 66 year
Q.9 The second stage of demographic transition began after ________.
(a) 1907 (b) 1921
(c) 1930 (d) 1850
Q.10 Which of the following statements does not characterise demographic condition of India on the eve of
independence?
(a) Literacy level was less than 16%. (b) Water and air borne diseases were rampant.
(c) Mortality rate was low. (d) Life expectancy was 32 years.
Q.11 Which one of the following was high during British rules in India?
(a) Literacy Rate (b) Female literacy
(c) Infant Mortality Rate (d) Life Expectancy
Q.12 Which of the following statements is not true about the demographic condition of India during the Colonial
period ?
(a) Infant mortality rate was very high.
(b) After 1921, India entered the second stage of demographic transition.
(c) Life expectancy was too high.
(d) Female literacy rate was just 7%.
Q.13 On the eve of Independence, India’s demographic condition was characterised by which of the following statement?
(a) Low level of literacy, low mortality rates and high life expectancy.
(b) High level of literacy, high mortality rates and low life expectancy.
(c) Low level of literacy, high mortality rates and high life expectancy.
(d) Low level of literacy, high mortality rates and low life expectancy.
Q.14 ‘Since independence, India has witnessed a considerable fall in the Infant Mortality Rate in India’ Identify which of
the following may not be one of the reasons for the fall in the Infant Mortality Rate?
(a) Improvement in health facilities over the years
(b) Improvement in educational standards over the years
(c) Fall in standard of living of the population of the nation over the years
(d) Technological expansion over the years
Q.15 Statement 1: Various details about the population of British India were first collected through a census in 1921,
which revealed the unevenness in India’s population growth.
Statement 2: The second stage of demographic transition began after 1921. The total population of India and the
rate of population growth at this stage was very high.
Q.16 India’s demographic condition on the eve of independence was characterised by:
(a) High level of literacy, high mortality rates, high life expectancy and high level of poverty.
(b) Low level of literacy, low mortality rates, low life expectancy and Low level of poverty.
(c) Low level of literacy, low mortality rates, high life expectancy and high level of poverty.
(d) Low level of literacy, high mortality rates, low life expectancy and high level of poverty.
Q.17 When was India’s first official census operation undertaken? (NCERT) (1)
Q.18 Which is regarded as the defining year to mark the demographic transition from its first to the second decisive
stage? (NCERT) (1)
Q.19 What was the literacy rate in India during the colonial period? (1)
Q.20 How was the overall mortality rate during the British rule quite alarming? (1)
Q.21 State the meaning of Mortality Rate. (1)
Q.22 “During the colonial period, a number of socio-economic indicators were in a dilapidated state.” List any three such
indicators that led to the worsening of India’s demographic profile. (1)
Occupational Structure during the Colonial Period F

Meaning
Occupational structure refers to the distribution of workforce across different sectors of an economy – the agricultural sector,
the manufacturing sector and the services sector.
Salient features of India’s pre-independence occupational structure:

1. Predominance of agriculture sector
The agricultural sector accounted for 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.
2. Growing regional variation
 Parts of the Madras Presidency, Bombay and Bengal witnessed a decline in the dependence of the workforce
on the agricultural sector due to rise of the manufacturing and the services sectors.
Madras Presidency comprises areas of the present-day states of Tamil Nadu, Andhra Pradesh,
Kerala and Karnataka.
 However, there had been an increase in the share of workforce in agriculture in states such as Orissa,
Rajasthan and Punjab.
Q.1 During the colonial period, there was regional variation in the occupational structure. Parts of 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. However, there had been an increase
in the share of workforce in agriculture in states such as _____.
(a) Orissa (b) Rajasthan
(c) Punjab (d) All of these
Q.2 ________ sector played a predominant role in occupational structure during the Colonial period.
(a) Agriculture (b) Manufacturing
(c) Service (d) Infrastructure
Q.3 From the following, identify the incorrect statement in the light of India’s pre-independence occupational structure.
(a) Agricultural sector accounted for the largest share of workforce.
(b) Industrial and Service sectors grew at a faster rate than the agriculture sector.
(c) Agriculture sector was marked with disguised unemployment.
(d) Unbalanced growth was created due to unequal distribution of workforce.
Q.4 Occupational structure refers to__________.
(a) size of labour force in a country
(b) number of people living in a country
(c) distribution of workforce among different sectors of an economy
(d) nature of different occupations
Q.5 Statement 1: During the colonial period, The agricultural sector accounted for 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.
Statement 2: Parts of the then Madras Presidency (comprising areas of the present-day states of Tamil Nadu, Andhra
Pradesh, Kerala and Karnataka),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.
(a) Both the statements are true. (b) Statement 1 is true, but statement 2 is false.
(c) Both the statements are false. (d) Statement 2 is true, but statement 1 is false.
Q.6 Which sector of the Indian economy accounted for the largest share of workforce during the colonial period? (1)
Q.7 “The pre-independent India’s occupational structure experienced growing regional variation.” Justify the above
statement with valid explanation. (3)
Q.8 Highlight the salient features of India’s pre-independence occupational structure. (NCERT) (4)
Infrastructure Development in India under the Colonial Regime G

Some efforts were made by the colonial regime to improve infrastructure facilities in India such as railways,
ports, water transport, posts and telegraphs but these efforts were spiced with selfish motives.
The real motive of the British behind infrastructure development in India was to subserve various colonial
interests, and not to provide basic amenities to the people.
Construction of Roads
Roads constructed in India prior to the advent of the British rule were not fit for modern transport. 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.
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 to send these to far
away England or other foreign destinations.
Introduction of the Railways
The British introduced the railways in India in 1850 and it
is considered as one of their most important contributions.
The railways affected the structure of the Indian economy in
two important ways: On the one hand, it enabled people to
undertake long distance travel and thereby break geographical
and cultural barriers; while 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.
Thus, the social benefits, which the Indian people gained
owing to the introduction of the railways, were outweighed First Railway Bridge linking Bombay with Thane, 1854
by the country’s huge economic loss.
Development of the inland trade and sea lanes

Along with the development of roads and railways, the British also took measures for developing the inland
trade and sea lanes. However, these measures were far from satisfactory.
 Uneconomical inland waterways
The inland waterways 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, yet it failed to compete with the railways, which had to
be ultimately abandoned.
 Expensive electric telegraph
The introduction of electric telegraph in India, which served the purpose of maintaining law and order, was
very expensive.
 Inadequate postal services
The postal services despite serving a useful public purpose, remained all through inadequate.
Explain any two main causes behind infrastructural development by British rule.
Two main causes behind infrastructural development by British rule were:

• Mobilisation of army: The roads were built primarily to serve the purpose of mobilising the army within India and
drawing out raw materials from the countryside to the nearest railway station or the port.
• Maintenance of law and order: The introduction of the electric telegraph in India served the purpose of maintaining
law and order.
Q.1 Which of the following statements is not true about India’s economic development during British rule?
(a) Handicraft products were well known worldwide.
(b) Agriculture was the main source of livelihood.
(c) India transformed into supplier and consumer of finished industrial products.
(d) Per capita income grew by half percent in the first half of twentieth century.
Q.2 Identify, which of the following indicates the adverse impact of British rule in India.
(a) Introduction of communication networks in India
(b) Change in composition of India’s foreign trade
(c) Introduction of modern administrative system in India
(d) Introduction of railways in India
Q.3 _________ is one of the main positive contribution made by the British in India.
(a) Construction of all weather roads
(b) Introduction of railways
(c) Development of inland trade and sea lanes
(d) None of these
Q.4 Arrange the following events of India before the independence in chronological order:
(i) The opening of the Suez Canal
(ii) Introduction of the railways
(iii) Second stage of demographic transition

(iv) Incorporation of the Tata Iron and Steel Company
(c) (ii), (i), (iv), (iii) (d) (iv), (i), (ii), (iii)
Q.5 Write the correct sequence of alternatives given in Column II by matching them with respective terms in Column I:
Column I Column II
A. India’s first official census (i) less than 2%
B. Introduction of the railways in India (ii) about 7%
C. India’s annual growth rate of aggregate real output during colonial period (iii) 1850
D. Female literacy level at the time of independence (iv) 1881
(c) (ii), (i), (iv), (iii) (d) (iv), (iii), (i), (ii)
Q.6 Choose the statements which does not state about infrastructure condition on the eve of India’s independence.
(a) Roads were constructed by Britishers primarily for movement of army.
(b) Railways were introduced in 1820.
(c) Indian exports expanded during this period.
(d) Britishers took measures to develop inland trade and sea routes.
Q.7 Identify which of the following statement is correct:
(a) British colonial rule made India net importer of raw material.
(b) The real motive behind infrastructure development by Britishers was to serve the people of India.
(c) India generated large export surplus during the British rule.
(d) Indian handicraft industry enjoyed world-wide reputation under the British rule.
Q.8 Identify the correct statement from the following:
(a) India developed sound industrial base under the colonial rule.
(b) India had very developed capital goods industries structure on the eve of independence.
(c) Under the colonial rule, India generated export surplus.
(d) The real motive of development of infrastructure under the British rule was to ensure development of India.
Q.9 In which of the following ways did the British Raj impact the Indian economy the most?
(a) The British made India an exporter of cotton from an exporter of cloth that led to large-scale unemployment.
(b) The establishment of railways by the British provided short-term employment for many Indians.
(c) The British expanded their army with Indian sepoys and fought in wars overseas.
(d) The British provided tax concessions to rural farmers and landless labourers.
Q.10 Arrange the following event in the correct chronological order:
i. The year of great divide
ii. Establishment of Tata Iron and Steel Company (TISCO)
iii. Introduction of Railways in India by the British
iv. Opening of Suez Canal
(a) iv, ii, i, iii (b) i, iv, iii, ii
(c) ii, iii, iv, i (d) iii, iv, ii, i
Q.11 Assertion (A): The British introduced railways in India in 1850, which is considered one of their most important
contributions.
Reason (R): The British had India’s best interests in mind while developing the infrastructure.
Q.12 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.
Q.13 Assertion (A): Under the colonial regime, there was no infrastructure development.
Reason (R): Under the colonial regime, basic infrastructure such as railways, ports, water transport, posts and
telegraphs did develop though these efforts were spiced with selfish motives.
(c) Both A and R are true and R explains A. (d) Both A and R are true but R does not explain A.
Q.14 Statement 1: Under the colonial regime, the motive behind infrastructure development was to provide basic
amenities to the people.
Statement 2: The real motive behind infrastructure development was to subserve various colonial interests.
Q.15 Assertion (A): During the colonial rule, there always remained an acute shortage of all weather roads.
Reason (R): People mostly living in rural areas suffered grievously during natural calamities and famines.
(c) Both A and R are true and R explains A. (d) Both A and R are true but R does not explain A.
Q.16 Assertion (A): The social benefits, which the Indian people gained owing to the introduction of the railways were
out-weighted by the country’s huge economic loss.
Reason (R): It fostered commercialisation of Indian agriculture which adversely affected the self-sufficiency of the
village economies in India. Secondly, the benefits of increase in India’s exports did not accrue to the Indian people.
Q.17 Assertion (A): The colonial government also took measures for developing the inland trade and sea lanes. However,
these measures were far from satisfactory.
Reason (R): The inland waterways proved uneconomical as in the case of the coast canal on the Orissa coast.
Though the canal was built at a huge cost, yet it failed to compete with the railways, which soon transversed the
region running parallel to the canal, and had to be ultimately abandoned.
Q.18 Assertion (A): On the eve of independence, the social and economic challenges before the country were enormous.

Reason (R): The agricultural sector suffered from extremely low productivity. The industrial sector was crying for
modernisation, diversification, capacity building and increased public investment. Infrastructure facilities needed
up-gradation and expansion. There was a prevalence of rampant poverty and unemployment.
Q.19 Assertion (A): The sole purpose of the British colonial rule in India was to reduce the country to being a raw
material supplier.
Reason (R): The intention was to reduce India to the status of a mere exporter of important raw materials for the
upcoming modern industries in Britain and,to turn India into a sprawling market for the finished products of those
industries so that their continued expansion could be ensured to the maximum advantage of their home country.
(c) Both A and R are true and R explains A. (d) Both A and R are true but R does not explain.
Q.20 Statement 1: Under the colonial regime, basic infrastructure such as railways, ports, water transport, posts and
telegraphs did develop.
Statement 2: The real motive of the British behind infrastructure development was to provide basic amenities to
the people.
Q.21 Which basic infrastructure did develop under the colonial regime? (1)
Q.22 State any one positive contribution made by the British in India. (1)
Q.23 When did the British introduce the railways in India? (1)
Q.24 What was the purpose of the British behind the introduction of the expensive system of electric telegraph in India? (1)
Q.25 What was the real motive of the British behind infrastructure development in India? (1)
Q.26 What were the main purposes of the British behind construction of all weather roads in India? (2)
Q.27 How did the railways affect the structure of the Indian economy? (3)
Q.28 “The introduction of the railways in India was considered as one of the most important contributions of the
British. However, the social benefits, which the Indian people gained owing to the introduction of the railways, were
outweighed by the country’s huge economic loss.” Do you agree with the above statement? Give valid reasons. (4)
Q.29 Were there any positive contributions made by the British in India? Discuss. (NCERT) (4)
Q.30 “The social and economic challenges before India at the time of independence were enormous.” Do you agree with
the statement? Give reasons. (6)
By the time India won its independence, the impact of the two-century long British colonial rule was already
showing on all aspects of the Indian economy.
• The agricultural sector was already 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.
In a nutshell, the social and economic challenges before the country were enormous.
Points to Ponder
 An understanding of the economy before independence is necessary to know and appreciate the level of
development achieved during the post-independence period.
 Under the colonial dispensation, the economic policies of the government were concerned more with the
protection and promotion of British economic interests than with the need to develop the economic condition
of the colonised country and its people.
 The agricultural sector continued to experience stagnation and deterioration despite the fact that the largest
section of Indian population depended on it for sustenance.
 The rule of the British-India government led to the collapse of India’s world famous handicraft industries
without contributing, in any significant manner, to its replacement by a modern industrial base.
 Lack of adequate public health facilities, occurrence of frequent natural calamities and famines pauperised the
hapless Indian people and resulted in engendering high mortality rates.
 Some efforts were made by the colonial regime to improve infrastructure facilities but these efforts were
spiced with selfish motives. However, the independent Indian government had to built on this base through
planning.
Full Forms
TISCO Tata Iron and Steel Company GDP Gross Domestic Product
GVA Gross Value Added IMR Infant mortality rate
ECONOMIC DATA
Indian Economy on the Eve of Independence
 During the first half of the 20th century, the country’s growth rate of aggregate real GDP was only less than 2% per year
and per capita real GDP was close to 0.5% per year.
 More than 50% of India’s foreign trade was restricted to Britain.
 During the colonial period, overall literacy level was less than 16%. Out of this, the female literacy level was at a negligible
low of about 7%.
 Infant Mortality Rate was quite alarming – 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.
 During the colonial period, the agricultural sector accounted for 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.
Timeline
1850 Introduction of the railways in India by the British

1854 First Railway Bridge linking Bombay with Thane
1869 Opening of the Suez Canal
1881 First official population census of India
1907 The Tata Iron and Steel Company (TISCO) was incorporated.
1921 Second stage of demographic transition in India (Year of Great Divide)
1932 Tata Airlines, a division of Tata and Sons, was established inaugurating the aviation sector in India.
CASE STUDY Based Multiple Choice Questions (MCQs)

CASE STUDY 1: Read the following and answer Q. 1-4 on the basis of the same:
India’s economy under the British colonial rule remained fundamentally agrarian. However, despite being the occupation
of such a large population, the agricultural sector continued to experience stagnation and, not infrequently, unusual
deterioration. Agricultural productivity became low though, in absolute terms, the sector experienced some growth due
to the expansion of the aggregate area under cultivation. This stagnation in the agricultural sector was caused mainly
because of the various systems of land settlement that were introduced by the colonial government. Particularly, under
the zamindari system which was implemented in the then Bengal Presidency comprising parts of India’s present-day
eastern states, the profit accruing out of the agriculture sector went to the zamindars instead of the cultivators. However,
a considerable number of zamindars, and not just the colonial government, did nothing to improve the condition of
agriculture. 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. To a very great extent, 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. Besides this, low levels of technology, lack of
irrigation facilities and negligible use of fertilisers, all added up to aggravate the plight of the farmers and contributed to
the dismal level of agricultural productivity. There was, of course, some evidence of a relatively higher yield of cash crops
in certain areas of the country due to commercialisation of agriculture.
Q.1 India’s economy under the colonial rule remained fundamentally agrarian. Which of the following justify this?
(a) About 85 per cent of the country’s population lived mostly in villages.
(b) Most of the population derived livelihood directly or indirectly from agriculture.
(c) Both (a) and (b)
(d) The agricultural sector continued to experience stagnation and, not infrequently, unusual deterioration.
Q.2 Which of the following does not characterise the condition of Indian Agricultural condition on independence?
(a) Agricultural sector was experiencing stagnation.
(b) Aggregate area under cultivation was contracting.
(c) Agricultural productivity became low in absolute terms.
(d) Cash crops were more produced.
Q.3 Commercialisation of agriculture during British rule led to _________.
(a) More production of food crops
(b) Improvement in the economic condition of farmers
(c) More production of cash crops used by Britishers as raw material

(d) Expansion of the aggregate area under cultivation
Q.4 The stagnation in the agricultural sector during the colonial rule was caused mainly because of _________ .
(a) Lack of irrigation facilities
(b) Land settlement systems
(c) Low levels of technology
(d) Lack of resources
India could not develop a sound industrial base under the colonial rule. Even as the country’s world famous handicraft
industries declined, no corresponding modern industrial base was allowed to come up to take pride of place so
long enjoyed by the former. The primary motive of the colonial government behind this policy of systematically
deindustrialising India was two-fold. The intention was, first, to reduce India to the status of a mere exporter of
important raw materials for the upcoming modern industries in Britain and, second, to turn India into a sprawling
market for the finished products of those industries so that their continued expansion could be ensured to the
maximum advantage of their home country — Britain.
In the unfolding economic scenario, the decline of the indigenous handicraft industries created not only massive
unemployment in India but also a new demand in the Indian consumer market, which was now deprived of the supply
of locally made goods. This demand was profitably met by the increasing imports of cheap manufactured goods from
Britain. During the second half of the nineteenth century, modern industry began to take root in India but its progress
remained very slow. Initially, this development was confined to the setting up of cotton and jute textile mills. The cotton
textile mills, mainly dominated by Indians, were located in the western parts of the country, namely, Maharashtra and
Gujarat, while the jute mills dominated by the foreigners were mainly concentrated in Bengal. Subsequently, the iron
and steel industries began coming up in the beginning of the twentieth century. The Tata Iron and Steel Company
(TISCO) was incorporated. A few other industries in the fields of sugar, cement, paper etc. came up after the Second
World War. However, there was hardly any capital goods industry to help promote further industrialisation in India.
Capital goods industry means industries which can produce machine tools which are, in turn, used for producing articles
for current consumption. 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. Furthermore, the growth rate of the new
industrial sector and its contribution to the Gross Domestic Product (GDP) or Gross Value Added remained very small.
Another significant drawback 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.5 The traditional handicrafts industries were ruined under the British rule. Which of the following justifies this?
(a) The decline of the indigenous handicraft industries created not only massive unemployment in India but also a
new demand in the Indian consumer market, which was now deprived of the supply of locally made goods.
(b) Even as the country’s world famous handicraft industries declined, no corresponding modern industrial base
was allowed to come up to take pride of place so long enjoyed by the former.
(c) The primary motive of the colonial government behind the policy of systematically deindustrialising India
was to reduce India to the status of a mere exporter of important raw materials for the upcoming modern
industries in Britain
(d) None of the above
Q.6 _______ industries help promote further industrialisation in India.
(a) Cotton and Jute Textile
(b) Iron and Steel
(c) Capital goods
(d) Consumer goods
Q.7 The primary motive of the colonial government behind the policy of systematically deindustrialising India was:
(a) To reduce India to the status of a mere exporter of raw materials for the upcoming modern industries in
Britain.
(b) To turn India into a sprawling market for the finished products of those industries so that their continued
expansion could be ensured to the maximum advantage of their home country — Britain.
(c) Both (a) and (b)
(d) Decline of traditional handicrafts industries in India.
Q.8 The Tata Iron and Steel Company (TISCO) was incorporated in:
(a) 1907
(b) 1910
(c) 1921
(d) 1850
Various details about the population of British India were first collected through a census in 1881. Though suffering
from certain limitations, it revealed the unevenness in India’s population growth. Subsequently, every ten years such
vcensus operations were carried out. Before 1921, India was in the first stage of demographic transition. The second
stage of transition began after 1921.
However, neither the total population of India nor the rate of population growth at this stage was very high. The various
social development indicators were also not quite encouraging. The overall literacy level was less than 16 per cent. Out
of this, the female literacy level was at a negligible low of about seven per cent. Public health facilities were either
unavailable to large chunks of population or, when available, were highly inadequate. Consequently, water and air-borne
diseases were rampant and took a huge toll on life. No wonder, the overall mortality rate was very high and in that,
particularly, the infant mortality rate was quite alarming—about 218 per thousand in contrast to the present infant
mortality rate of 33 per thousand. Life expectancy was also very low—44 years in contrast to the present 69 years. In
the absence of reliable data, it is difficult to specify the extent of poverty at that time but there is no doubt that extensive
poverty prevailed in India during the colonial period which contributed to the worsening profile of India’s population of
the time.
Q.9 ‘Mortality rate’ refers to:

(a) number of years, on an average an individual is expected to live.
(b) the propensity to fall ill.
(c) the number of people who have a disease compared to the total population.
(d) the annual number of deaths (from a disease or in general) per 1,000 people.
Q.10 Which of the following refers to the number of people who have a disease compared to the total population?
(a) Morbidity rate (b) Mortality rate
(c) Infant Mortality Rate (d) Maternal Mortality Rate
Q.11 ________ during the colonial period which contributed to the worsening profile of India’s population of the time.
(a) High morbidity rate (b) High Infant Mortality Rate
(c) Low level of life expectancy (d) Extensive poverty
Q.12 The overall mortality rate was very high during the British colonial period, because:
(a) The overall literacy level was less than 16 per cent.
(b) Public health facilities were either unavailable to large chunks of population or, when available, were highly
inadequate.
(c) The infant mortality rate was quite alarming—about 218 per thousand in contrast to the present infant
mortality rate of 33 per thousand.
(d) Life expectancy was very low—44 years in contrast to the present 69 years.
COMPETENCY
Based Questions
Q.1 Answer the following questions on the basis of the picture given below and your general knowledge:
A large section of India’s population did not have basic needs such as housing.
(i) Identify the profile of India’s population during the colonial period. (1)
(ii) Give a quantitative appraisal of India’s demographic profile during the colonial period. (3
Q.2 Answer the following questions on the basis of the text and picture given below and your general knowledge:
Trade Through the Suez Canal

Suez Canal is an artificial waterway running
from north to south across the Isthmus of
Suez in north-eastern Egypt. It connects
Port Said on the Mediterranean Sea with
the Gulf of Suez, an arm of the Red Sea.
The canal provides a direct trade route
for ships operating between European or
American ports and ports located in South
Asia, East Africa and Oceania by doing
away with the need to sail around Africa.
Strategically and economically, it is one
of the most important waterways in the
world. Its opening in 1869 reduced the
cost of transportation and made access to
the Indian market easier.
Suez Canal: Used as highway between India and Britain
(i) How did the opening of the Suez Canal in 1869 affect India’s foreign trade? (1)
(ii) What was the most important characteristic of India’s foreign trade throughout the colonial period? How did
this come at a huge cost to the country’s economy? Explain. (3)
(i) What was the most important contribution made by the British in India? (1)
(ii) When was the first railway bridge linking Bombay with Thane built? (1)
(iii) “The railways affected the structure of the Indian economy in two important ways.” Explain the statement. (2)
Chapter 1
INDIAN ECONOMY
ON THE EVE OF
INDEPENDENCE
A Low Level of Economic Development

Focus of the economic policies pursued by the colonial government in India: Protection and promotion of the economic
interests of their home country, rather than development of the Indian economy.
Impacts — India became supplier of raw materials and consumer of finished industrial products from Britain.
 The colonial government never made any sincere attempt to estimate India’s national income and per capita income. Some
notable economists estimated India’s national income and per capita income — Dadabhai Naoroji, William Digby, Findlay
Shirras, V.K.R.V. Rao and R.C. Desai. V.K.R.V. Rao’s estimates was considered very significant.
 However, the country’s growth rate of aggregate real GDP was only less than 2% per year and per capita real GDP
was close to 0.5% per year.
B Condition of Agriculture under the British Rule

1. Stagnant agricultural sector: Despite being the main occupation of about 85% of the country’s population during British
rule, the agricultural sector continued to experience stagnation and low agricultural productivity.
Causes of India’s agricultural stagnation and low productivity:
(i) Various systems of land settlement that were introduced by the colonial government, particularly, the
zamindari system: The profit of the agriculture sector went to the zamindars instead of the cultivators. The main interest
of the zamindars was only to collect rent regardless of the economic condition of the farmers, causing immense misery.
The terms of the revenue settlement were also responsible for such attitude of zamindars, e.g. dates for depositing revenues
were fixed, failing which the zamindars were to lose their rights.
(ii) Low levels of technology, lack of irrigation facilities and negligible use of fertilisers were responsible for the
plight of the farmers and contributed to the low level of agricultural productivity.
(iii) Lack of resources and incentives: India’s agriculture was starved of investment in terracing, flood-control, drainage,
etc. Tenants, small farmers and sharecroppers had no resources and incentive to invest in agriculture.
2. Commercialisation of agriculture: Commercialisation of agriculture could not help farmers in improving their economic
condition because, instead of producing food crops, now they were producing cash crops which were to be used by British
industries.
C Features and Shortfalls of Industrial Policy

1. Collapse of India’s world famous handicraft industries
The establishment of a few manufacturing units was no substitute to the collapse of the country’s traditional handicraft
industries. It created not only massive unemployment in India but also promoted imports of cheap manufactured goods
from Britain.
The two-fold motive behind the systematic de-industrialisation effected by the British:
 To get raw materials from India at cheaper rates. The first motive was to make India exporter of important raw
materials for the modern industries in Britain.
 To sell finished products produced by the Britain industries in Indian market at higher prices so that their
continued expansion could be ensured to the maximum advantage of their home country — Britain.
2. India could not develop a sound industrial base under the colonial rule. Initially, industrial development was confined to the setting
up of cotton and jute textile mills. Subsequently, the iron and steel industries began coming up in the beginning of 20th century. The Tata Iron
and Steel Company (TISCO) was incorporated in 1907. A few other industries like sugar, cement, paper etc. came up after II World War.
3. Lack of capital goods industry to help promote industrialisation in India.
4. Low growth rate: The growth rate of the new industrial sector and its contribution to the GDP or GVA remained very small.
5. Limited area of operation of the public sector: Public sector was confined only to the railways, power generation, communications, ports
and some other departmental undertakings.
D Features of India’s Foreign Trade Policy

1. Britain’s monopoly control over India’s exports and imports: More than 50% of India’s foreign trade was restricted
to Britain while the remaining was allowed with a few other countries like China, Ceylon (Sri Lanka) and Persia (Iran).
The opening of the Suez Canal in 1869 further intensified British control over India’s foreign trade.
2. India as exporter of raw material and importer of finished goods: India became an exporter of primary products such as raw
silk, cotton, sugar, indigo, jute etc. and an importer of finished consumer goods like cotton, silk and woollen clothes and capital goods
produced in the factories of Britain.
3. Generation of a large export surplus but at a huge cost – Drain of Indian wealth: Several essential commodities –
food grains, clothes, kerosene etc. were scarcely available in the domestic market. Furthermore, export surplus was used to
make payments for office expenses, war expenses, and the import of invisible items. All of these led to the drain of Indian
wealth.
E India’s Demographic Profile during British Rule

1. Low level of literacy: The overall literacy level was less than 16%.
2. Lack of adequate public health facilities. Consequently, water and air-borne diseases were rampant and took a huge toll
on life.
3. High infant mortality rates: The infant mortality rate was quite alarming – about 218 per thousand.
4. Low life expectancy: Life expectancy was also very low – only 32 years.
F India’s Pre-independence Occupational Structure

1. Predominance of agriculture sector
The agricultural sector accounted for the largest share of workforce — 70-75% while the manufacturing and services sectors
accounted for only 10% and 15-20% respectively.
2. Growing regional variation
 Parts of the Madras Presidency, Bombay and Bengal witnessed a decrease in the share of workforce in agriculture due to
rise of the manufacturing and services sectors.
 However, there was an increase in the share of workforce in agriculture in states such as Orissa, Rajasthan and Punjab.
G Infrastructure Development in India by British

Positive Contributions of the Britishers in India
1. Introduction of the Railways in India in 1850 is considered as one of their most important contributions. It enabled
people to undertake long distance travel.
However, 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.
2. Construction of Roads: There always remained an acute shortage of all weather roads to reach out to the rural areas during
the rainy season.
3. Development of the inland trade and sea lanes: However, these measures were far from satisfactory.
 The inland waterways proved uneconomical as in the case of the Coast Canal on the Orissa coast.
 Introduction of electric telegraph in India was very expensive.
 The postal services remained all through inadequate.
Main causes behind infrastructural development by British rule:
1. Mobilisation of army: The roads were built primarily to serve the purpose of mobilising the army within India and drawing
out raw materials from the countryside to the nearest railway station or the port.
2. Maintenance of law and order: The introduction of the electric telegraph in India served the purpose of maintaining law
and order.
NOTES
Chapter 1
for
Slow
Learners
INDIAN ECONOMY ON THE EVE OF INDEPENDENCE
A Low Level of Economic Development

The colonial government never made any sincere attempt to estimate India’s national income and per capita income. Some
economists estimated India’s national income and per capita income — Dadabhai Naoroji, William Digby, Findlay Shirras,
V.K.R.V. Rao and R.C. Desai. V.K.R.V. Rao’s estimates was considered very significant. However, the country’s growth rate
of aggregate real GDP was only less than 2% per year and per capita real GDP was close to 0.5% per year.
B Condition of Agriculture under the British Rule

1. Stagnant agricultural sector: The agricultural sector continued to experience stagnation and low agricultural
productivity. Causes:
(i) Various systems of land settlement that were introduced by the colonial government, particularly, the
zamindari system: The profit went to the zamindars. The main interest of the zamindars was only to collect rent
regardless of the economic condition of the farmers.
(ii) Low levels of technology, lack of irrigation facilities and negligible use of fertilisers contributed to the low level
of agricultural productivity.
2. Commercialisation of agriculture could not help farmers in improving their economic condition because, instead of producing
food crops, now they were producing cash crops which were to be used by British industries.
C Features and Shortfalls of Industrial Policy

1. Collapse of India’s world famous handicraft industries: It created massive unemployment in India and promoted
imports of cheap manufactured goods from Britain. The two-fold motive behind the systematic de-industrialisation
effected by the British:
(i) To get raw materials from India at cheaper rates for the modern industries in Britain.
(ii) To sell finished products produced by the Britain industries in Indian market at higher prices.
2. Lack of capital goods industry to help promote industrialisation in India.
3. Low growth rate: The growth rate of the new industrial sector and its contribution to the GDP remained very small.
4. Limited area of operation of the public sector like railways, power generation, communications, ports only.
D Features of India’s Foreign Trade Policy

1. Britain’s monopoly control over India’s exports and imports: More than 50% of India’s foreign trade was restricted to
Britain while the remaining was allowed with China, Ceylon (Sri Lanka) and Persia (Iran).
The opening of the Suez Canal in 1869 further increased British control over India’s foreign trade.
2. India became an exporter of raw material and importer of finished goods produced in the factories of Britain.
3. Generation of a large export surplus but at a huge cost – Drain of Indian wealth: Essential commodities – food grains,
clothes, kerosene etc. were scarcely available in the domestic market. Export surplus was used to make payments for office
expenses, war expenses, etc.
E India’s Demographic Profile during British Rule

1. Low level of literacy — less than 16%.
2. Lack of adequate public health facilities causing water and air-borne diseases.
3. High infant mortality rates – about 218 per thousand.
4. Low life expectancy – only 32 years.
F India’s Pre-independence Occupational Structure

1. Predominance of agriculture sector: The agricultural sector had the largest share of workforce (70-75%) while the
manufacturing sector (only 10%) and services sectors (15-20% only).
2. Growing regional variation: Parts of the Madras Presidency, Bombay and Bengal witnessed a decrease in the share of
workforce in agriculture. However, there was an increase in the share of workforce in agriculture in states such as Orissa,
Rajasthan and Punjab.
F Infrastructure Development in India by British

Positive Contributions of the Britishers in India:
1. Introduction of the Railways in India in 1850. However, it fostered commercialisation of Indian agriculture.
2. Construction of Roads
3. Development of the inland trade and sea lanes.
Main causes behind infrastructural development by British rule:
1. Mobilisation of army: Roads were built for mobilising the army within India.
2. Maintenance of law and order: The introduction of the electric telegraph in India served the purpose of maintaining law and order.
Suggested Additional Activities

 Take note of the agricultural prosperity in our country in the seventeenth century. Contrast it with agricultural
stagnation around the time when the British left India, around 200 years later.
 Compare the map of British India with that of independent India and find out the areas that became parts
of Pakistan. Why were those parts so important to India from the economic point of view? (Refer, to your
advantage, Dr Rajendra Prasad’s book, India Divided).
 What were the various forms of revenue settlement adopted by the British in India? Where did they implement
them and to what effect? How far do you think those settlements have a bearing on the current agricultural
scenario in India? (In your attempt to find answers to these questions, you may refer to Ramesh Chandra Dutt’s
Economic History of India, which comes in three volumes, and B.H. Baden-Powell’s The Land Systems of British
India, also in two volumes. For better comprehension of the subject, youcan also try and develop an illustrated
agrarian map of British India either by hand or with the help of your school computer. Remember, nothing helps
better than an illustrated map to understand the subject at hand).
 Prepare a list showing where and when other modern industries of India were first set up. Can you also find
out what the basic requirements are for setting up any modern industry? What, for example, might have been
the reasons for the setting up of the Tata Iron and Steel Company at Jamshedpur, which is now in the state of
Jharkhand?
 How many iron and steel factories are there in India at present? Are these iron and steel factories among the
best in the world or do you think that these factories need restructuring and upgradation? If yes, how can this
be done? There is an argument that industries which are not strategic in nature should not continue to be in
the public sector. What is your view?
 On a map of India, mark the cotton textiles, jute mills and textile mills that existed at the time of independence.
 Prepare a list of items that were exported from and imported into India during the British rule.
 Collect information from the Economic Survey for various years published by the Ministry of Finance,
Government of India, on various items of export from India and its imports. Compare these with imports and
exports from the pre-independence era. Also find out the names of prominent ports which now handle the bulk
of India’s foreign trade.
 Can you find out the reasons behind frequent occurrence of famines in India before independence? (You may
read from Nobel Laureate Amartya Sen’s book, Poverty and Famines.)
 Prepare a pie chart for the occupational structure in India at the time of independence.
 There is a perception still going around that in many ways the British administration in India was quite
beneficial. This perception needs an informed debate. How would you look at this perception? Argue this out
in your class—‘Was the British Raj good for India’?
 Prepare a list of goods and services that were available to people in pre-independence India in rural and urban
areas. Compare it with the consumption pattern of such goods and services by the people today. Highlight the
perceptible difference in the people’s standard of living.
 Find pictures of towns/villages, in your vicinity, of the pre-independence period and compare these with their
present scenario. What changes can you mark? Are such changes for better or for worse? Discuss.
 Rally around your teacher and organise a group discussion on ‘Has the Zamindari system really been
abolished in India’? If the consensus is negative, then what measures would you think should be taken to
banish it and why?
 Identify the major occupations followed by the people of our country at the time of independence. What
major occupations do the people follow today? In the light of reform policies, how would you visualise the
occupational scenario in India 15 years from now—say, 2035?
Self Assessment Tests
GENERAL INSTRUCTIONS
1. Short Answer Questions of 3 marks each to be answered in 60 to 80 words.
2. Short Answer Questions of 4 marks each to be answered in 80 to 100 words.
3. Long Answer Questions of 6 marks each to be answered in 100 to 150 words
Directive Words You are supposed to:

Name/Identify/Which Write the name of the concept/term only
Define Give the exact meaning
State Make clear
Explain Give clear reasons
Describe Give a description of
Illustrate Give example/diagram
Discuss Give the important arguments, for and against
Comment Give your reasoned opinions on
Calculate/Compute Work out using the information provided
Defend/Refute Write whether given statement is correct/incorrect
To score 100 per cent in your test, the presentation of answers is as much important as their content.
 Don’t forget to write Question Number you are answering.
 Answer each question from new page (except 1 mark questions)
 Give answer in points, as far as possible, rather than in paragraphs.
 Leave one line space between two headings
 Leave at least 2-3 lines space between two answers of 1 mark questions.
 Write the main heading in capital letters. (Use dark and bold pen like Pilot V10)
 Underline the headings with pencil.
 Explanation/description from next line of heading.
 Use bullets while giving explanation.
 Attempt all parts of a question together.
 Write impersonally. In other words, do not use ‘I’ or ‘We’ in your answers. For example, do not write
— “I don’t agree with the statement.” Rather you should write — “The given statement is not correct.”
 Take care with sentences and punctuation. In general, try to write short sentences.
Self Assessment Test 01

Time allowed : 45 min. Maximum Marks : 20
Q.1 The sole purpose of the British colonial rule in India was _______. (1)
(i) To reduce the country to being a raw material supplier for Great Britain’s own rapidly expanding modern
industrial base.
(ii) To transform the country into consumer of finished industrial products from Britain.
(iii) To turn India into a sprawling market for the finished products of those industries so that their continued
expansion could be ensured to the maximum advantage of their home country — Britain.
(a) Only (i) and (ii) (b) Only (i) and (iii)
Q.2 Read the following statements and select the correct alternative: (1)
Statement 1: Commercialisation of agriculture was coercively introduced by the Britishers.
Statement 2: The aim of commercialisation of agriculture was to support the British industries.
(a) Both the statements are true. (b) Both the statements are false.
(c) Only statement 1 is true. (d) Only statement 2 is true.
Q.3 Read the following statements relating to industrial sector during British rule and choose the correct sequence of
these statements. (1)
(i) Cheap imports of British manufactured goods increased in the country.
(ii) The growth rate of Industrial sector was very small.
(iii) India was reduced to be mere exporter of raw material.
(iv) India faced shortage of locally made goods.
(a) (i), (ii), (iii), (iv) (b) (iv), (iii), (ii), (i)
(c) (iii), (iv), (ii), (i) (d) (iii), (iv), (i), (ii)
Q.4 Identify the correct statement from the following: (1)
(a) Restrictive policies of commodity production, trade and tariff pursued by the colonial government adversely
(b) Effective trade policies of commodity production, trade and tariff pursued by the colonial government
favorably affected the structure, composition and volume of India’s foreign trade.
(c) Liberal policies of commodity production, trade and tariff pursued by the colonial government adversely
(d) Restrictive policies of commodity production, trade and tariff pursued by the colonial government favorably
Q.5 State and discuss any two indicators that help in measuring the health status of a country. (3)
Q.6 Comment upon any two salient features of occupational structure of India on the eve of Independence. (3)
Q.7 “Under the colonial regime, basic infrastructure such as railways, ports, water transport, posts and telegraph develop.
However, the real motive behind infrastructure development was not to provide basic amenities to the people but
to subserve various colonial interests.“
What objectives did the British intend to achieve through their policies of infrastructure development in India? (4)
Q.8 Identify and briefly explain three key features of the Indian economy on the eve of independence that contributed
to its predominantly stagnant structure. (6)
02 Self Assessment Test

Q.1 Read the following statements — Assertion (A) and Reason (R) and choose the correct alternative: (1)
Assertion(A): During colonial rule, both mortality rates and infant mortality rates were very high.
Reason (R): British never paid any heed towards improvement of public health facilities in India.
(a) Both Assertion (A) and Reason (R) are true.
(b) Both Assertion (A) and Reason (R) are false.
(c) Assertion (A) is true and Reason (R) is false.
(d) Assertion (A) is false and Reason (R) is true.
Statement 1: During the colonial period, overall mortality rate was very high and in that, particularly, the infant
mortality rate was quite alarming—about 218 per thousand in contrast to the present infant mortality rate of 33
per thousand.
Statement 2: Life expectancy was also very low — 44 years in contrast to the present 69 years.
(a) Both the statements are true. (b) Both the statements are false.
(c) Only Statement 1 is true. (d) Only Statement 2 is true.
Q.3 During the colonial period, the occupational structure of India showed little sign of change. The agricultural sector
accounted for the largest share of workforce, which usually remained at a high of (i)_________ per cent while the
manufacturing and the service sectors accounted for only (ii)_______ and (iii)_______ per cent respectively. (1)
(a) (i) 55-60 (ii) 8 (iii) 5-10 (b) (i) 60-65 (ii) 9 (iii) 10-15
(c) (i) 65-70 (ii) 10 (iii) 15-20 (d) (i) 70-75 (ii) 10 (iii) 15-20
Q.4 From the set of the events given in Column-I and the corresponding year in Column-II, choose the incorrect pair: (1)
Column-I Column-II
A. Introduction of railways in India (i) 1850
B. Incorporation of TISCO (ii) 1807
C. First Official Census of India (iii) 1881
D. Opening of Suez Canal (iv) 1869
(a) A - (i) (b) B - (ii)
(c) C - (iii) (d) D - (iv)
Q.5 How was zamindari system of revenue settlement responsible for the poor economic condition of the cultivators? (3)
Q.6 What do you understand by the drain of Indian wealth during the colonial period? (3)
Q.7 (a) Name any one prominent economist who estimated India’s National Income during the Colonial period. (1)
(b) What was the focus of the economic policies pursued by the colonial government in India? What were the
impacts of these policies? (3)
Q.8 “India could not develop a sound industrial base under the British colonial rule. Even as the country’s world famous
handicraft industries declined, no corresponding modern industrial base was allowed to come up to take pride of
place so long enjoyed by the former.”
In the light of the above statement, critically appraise some of the shortfalls of the industrial policy pursued by the
British colonial administration. (6)
Self Assessment Test

Time allowed : 45 min.
03 Maximum Marks : 20
Q.1 Choose the statements which truly state about infrastructure condition on the eve of India’s independence. (1)
(i) Roads were constructed by Britishers primarily for movement of army.
(ii) Railways were introduced in 1820.
(iii) Indian exports expanded during this period.
(iv) Britishers took measures to develop inland trade and sea routes.
(a) Only (i) and (ii) (b) Only (i) and (iii)
(c) Only (i), (ii) and (iii) (d) Only (i), (iii) and (iv)
Q.2 Various details about the population of British India were first collected through a census in __________ . (1)
(a) 1881 (b) 1911
(c) 1921 (d) 1931
Statement 1: Zamindari system was introduced by the British, to ensure proper control over the revenue system in
India.
Statement 2: Zamindars were given full freedom to collect and keep the rent collected by them.
(a) Statement 1 is true and statement 2 is false.
(b) Statement 2 is true and statement 1 is false.
(a) Both statements are true.
(b) Both statements are false.
Assertion (A): An understanding of the Indian economy before independence is necessary.
Reason (R): It will help to know and appreciate the level of economic development achieved during the post-
independence period.
Q.5 (a) Define occupational structure. (1)
(b) Comment upon any two salient features of demographic conditions of India as on the eve of Independence. (2)
Q.6 Critically appraise some of the shortfalls of the industrial policy pursued by the British colonial administration. (3)
Q.7 Underscore some of India’s most crucial economic challenges at the time of independence. (4)
Q.8 Analyze the complex challenges posed by India’s foreign trade situation on the eve of independence. Investigate the
factors that led to the trade imbalances and dependence on imports during this period. (6)

Q.1 The country’s growth rate of aggregate real output during the first half of the twentieth century was only
(i) ________ and per capita real output was (ii) __________. (1)
(a) (i) less than 1% per year (ii) about 1% per year
(b) (i) less than 2% per year (ii) about 0.5% per year
(c) (i) less than 3% per year (ii) about 0.25% per year
(d) (i) less than 4% per year (ii) about 5% per year
Assertion (A): India’s economy under the British colonial rule remained fundamentally agrarian.
Reason (R): About 85% of the country’s population derived livelihood directly or indirectly from agriculture.
Statement 1: During the second half of the nineteenth century, modern industry began to take root in India. There
were many capital goods industry to help promote industrialisation in India.
Statement 2: 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.4 Opening of __________ Canal significantly reduced the cost of transportation of goods between Britain and
India. (1)
(a) Agra
(b) Munak
(c) Suez
(d) Conolly
Q.5 What objectives did the British intend to achieve through their policies of infrastructure development in India?
Explain any three points. (3)
Q.6 (a) Define Life Expectancy. (1)
(b) Why did the export surplus not result in any flow of gold or silver into India? (2)
Q.7 (a) Which sector of the Indian economy accounted for the least share of workforce during the colonial period? (1)
(b) Define the following terms: (3)
(i) Commercialisation of agriculture
(ii) Capital goods industry
(iii) Morbidity
Q.8 Answer the following questions on the basis of the text and picture given below and your general knowledge:
Agriculture During Pre-British India

The French traveller, Bernier, described
seventeenth century Bengal in the
following way: “The knowledge I have
acquired of Bengal in two visits inclines
me to believe that it is richer than Egypt.
It exports, in abundance, cottons and
silks, rice, sugar and butter. It produces
amply — for its own consumption —
wheat, vegetables, grains, fowls, ducks
and geese. It has immense herds of pigs
and flocks of sheep and goats. Fish of
every kind it has in profusion. From
rajmahal to the sea is an endless number
of canals, cut in bygone ages from the
Ganges by immense labour for navigation
and irrigation.”
India’s agricultural stagnation under the British colonial rule
(i) Give a contrast on the condition of agriculture in our country in the seventeenth century and the time when
the British left India, around 200 years later. (3)
(ii) State any two causes of India’s agricultural stagnation during the colonial period. (3)

Q.1 Write the correct sequence of alternatives given in Column II by matching them with respective terms in
Column I: (1)
Column I Column II
A. Focus of the economic policies pursued by (i) To use a large export surplus to make payments for
the colonial government in India the expenses incurred by an office set-up in British,
expenses on war, and import of invisible items.
B. Motive of the British behind the systematic (ii) To reduce India to the status of a mere exporter of
de-industrialisation in India important raw materials for the upcoming modern
industries in Britain.
C. Motive of the British behind infrastructural (iii) Protection and promotion of the economic interests
development in India of their home country then withe the development of
the Indian economy.
D. Motive of the British behind monopoly (iv) To subserve various colonial interests, e.g. mobilising
control over India’s exports and imports the army within India and drawing out raw materials
from the countryside to the nearest railway station or
the port to send these to England.
(a) (i), (ii), (iii), (iv) (b) (iii), (ii), (iv), (i)
(c) (ii), (i), (iv), (iii) (d) (iv), (i), (ii), (iii)
Statement 1: The introduction of railways in India in 1850 fostered the commericialisation of India agriculture
and the volume of India’s exports expanded.
Statement 2: Along with the development of roads and railways, the colonial dispensation also took measures for
developing the inland trade and sea lanes. And, these measures were highly satisfactory.
Q.3 In the Swadeshi Movement against the British, started in 1905, Indians started ditching British goods for Indian
products. Which of the following would have been the likely impact of the movement?

P: Rise in import of raw materials

Q: Fall in imports from Britain

R: Rise in production of goods in India

S: Rise in export tariffs
(a) only P and R
(b) only P and S
(c) only Q and R
(d) only R and S

Assertion (A): The construction of railways led to huge economic losses to the Indian economy.

Reason (R): It enhanced commercialization of Indian agriculture, which adversely affected the comparative self-
sufficiency of the village economies in India.
Q.5 What were the main causes of India’s agricultural stagnation during the colonial period? State any three points. (3)
Q.6 State the two-fold motive for the systematic destabilisation of indigenous Indian industries in the British era. (3)
Tata Airlines, a division of Tata and Sons, inaugurating the aviation sector in India
(i) When was the Tata Airlines, a division of Tata and Sons, established? (1)
(ii) “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.” Justify the statement by giving two valid reasons. (3)
Q.8 Provide a case study of infrastructure development during British colonial rule in a specific region of India.
Highlight three key infrastructural projects initiated by the British administration and analyze their impact on the
region’s economy, transportation, and communication systems. (6)

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Unit 6

Chapter 1 Indian Economy on the Eve of Independence

Chapter 2 Indian Economy (1950-1990)

Chapter 3 Liberalisation, Privatisation and Globalisation:

Latest CBSE Syllabus 12 MARKS

Low Level of Economic Development Under the Colonial Rule A

Multiple Choice Questions (MCQs)

Condition of Agriculture under the British Colonial Rule B

India’s agricultural stagnation under the British colonial rule

Causes of India’s agricultural stagnation and low productivity

CAUSES OF INDIA’S AGRICULTURAL STAGNATION AND LOW PRODUCTIVITY

3. Lack of resources and incentives

Agriculture during Pre-British India

Agricultural Productivity It refers to output per hectare of land.

Desalinisation of soil The removal of salt or other chemicals from soil.

Multiple Choice Questions (MCQs)

(a) A is true but R is false.

(c) Both A and R are true and R explains A.

Industrial Sector during the British Colonial Rule C

Textile Industry in Bengal

Muslin is a type of cotton textile which had

India was well-known for its handicrafts industries .

2. Low growth rate

Competency Based Question

Multiple Choice Questions (MCQs)

(c) Assertion (A) is true, but Reason (R) is false.

India’s Foreign Trade During the British Colonial Period D

Trade Through the Suez Canal

Suez Canal is an artificial waterway running

Suez Canal: used as highway between India and Britain

2. India as exporter of raw material and importer of finished goods

Competency Based Question

Multiple Choice Questions (MCQs)

(c) Assertion (A) is true, but Reason (R) is false.

India’s Demographic Condition During the Colonial Period E

4. Low life expectancy

Lack of public health facilities

Worsening profile of India’s

Multiple Choice Questions (MCQs)

Occupational Structure during the Colonial Period F

Salient features of India’s pre-independence occupational structure:

Multiple Choice Questions (MCQs)

Infrastructure Development in India under the Colonial Regime G

Development of the inland trade and sea lanes

Competency Based Question

Two main causes behind infrastructural development by British rule were:

Multiple Choice Questions (MCQs)

(iii) Second stage of demographic transition

1850 Introduction of the railways in India by the British

CASE STUDY Based Multiple Choice Questions (MCQs)

(c) More production of cash crops used by Britishers as raw material

Q.9 ‘Mortality rate’ refers to:

Trade Through the Suez Canal

A Low Level of Economic Development

B Condition of Agriculture under the British Rule

C Features and Shortfalls of Industrial Policy

D Features of India’s Foreign Trade Policy

E India’s Demographic Profile during British Rule

F India’s Pre-independence Occupational Structure

G Infrastructure Development in India by British

A Low Level of Economic Development

B Condition of Agriculture under the British Rule