British Colonial Rule

India before British rule was economically stable, self-sufficient and prosperous. Colonisation aimed at profiting from cheap labour and surplus raw materials easily accessible in India. The country known as the golden eagle was rich in handicraft skills in areas like silk, metal, cotton, etc.

The colonial period in India saw significant changes in the aggregate output, which was less than 2% in the first half of the 20th century. This figure coupled with ½ % growth in per capita output yearly showing the major exploitation India suffered. 

The British Government never bothered to estimate India’s per capita and national income. Yet individuals like Dadabhai Naoroji, Findlay Shirras, R.C. Desai, William Digby and V.K.R.V. Rao tried figuring out India’s economic strength.

In the following segment, students will learn about the changes in the six factors of Indian economy. This will further help in strengthening the all-round growth of young learners in the field of economics. 

Sectors Which Were Affected During the British Rule

India before British rule flourished with wealth, agricultural and resources which were incurred by the British Government to manage their administrative expenses and wars. British transformed India into a supplier of raw materials and finished goods for cheap for 200 years. The sectors which suffered a massive blow in terms of the economy are explained below. 


1. Agriculture Sector During Colonial Rule in India 

Indian economy before British rule was primarily based on agriculture and trade based on it. Nearly 85% of the country's population was depended on the output from agriculture directly or indirectly. Yet this sector started facing stagnation and deterioration as the production per hector was deficient. 

Again the vulnerability to climates like unpredictable rainfall or low rainfall caused the output to lower down further. British Government did not attempt to help the poor in the revival of the economy or irrigation facilities.

Furthermore, the land revenue system, Lagaan system and commercialisation of agriculture pushed the agriculture sector to deteriorate. 

2. Industrial Sector During the British Colonisation of India 

India before British rule was prosperous in the handicraft sector, textile, production of metal and precious stone works, etc. These finished goods had a demand in the foreign market due to their fine quality and high craftsmanship. However, British infiltrated the Industrial sector with the introduction of systematic de-industrialisation. This reduced India into an exporter of raw materials and importer of finished goods as colonisers focused on promoting British market. 

3. Foreign Trade  During Colonisation of India 

India was known to trade quality raw materials and finished goods since ancient times. However, with the restrictive policies by the British Government like tariffs affected the foreign trade. This caused a downfall in composition, structure, production and volume of export. Reasons like the generation of large surplus, monopoly control and reduction of India’s handicraft value caused this tension.

4. Demographic Conditions British Policies in India

Demographic conditions during colonisation exhibited features of stagnation and backwardness in terms of economy. The birth rate and death rate as per data showed a major increase of nearly 40% and 48% per thousand respectively.

5. Occupational Conditions During the Advent of the British in India

India before British rule and after depended on agriculture which caused an issue of land availability. This caused a barrier in the economy as a majority focused on farming as a means of survival rather than an occupation for income.

6. Infrastructure During Colonisation

To understand what the colonial period was, students need to understand the condition of infrastructure in India. Under colonisation, basic amenities like railways, roads, telegram developed gradually. However, the motive behind this change was to promote British goods and exploit the Indian labour.

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FAQs (Frequently Asked Questions)

Q1. What Were the Reasons for the Stagnation of the Agriculture Sector in India During Colonisation?

Ans. There were ideally three major reasons for the stagnation of the agricultural sector in India

1. Zamindari or Land Revenue System 

Britishers introduced the zamindari system which allowed landowners to show their authority over the soil. Indians were forced to pay a fixed sum to the government as land revenue to cultivate the soil. They were paying rent despite the economic disparity, which further raised social tension and misery. There were also systems like Ryotwari and Mahalwari, which led to the downfall of the agricultural sector in India.

2. Limited Resources

As tillers had to pay a substantial amount of rent known as ‘Lagaan’, they lacked surplus for agriculture. Farmers needed extra funds to invest in fertilisers or irrigation, which became impossible—thereby lowering the production and economy of India.

3. Commercialisation of Agriculture

This led to a relatively higher yield of cash crops like indigo, cotton, etc. Commercialisation led to a shift from self-consumption to profit-making, causing an issue for poor masses.

Q2. What Were the Policies Applied By the British to Destroy the Handicraft Industry in India?

Ans. Britishers followed three policies to deteriorate the Indian Industrial sector. They were:

Tariff Policy 

Britishers followed a discriminatory policy which allowed tariff-free exports of materials from India. This was the primary reason behind the downfall of industries in India as British imported tariff-free products for promotion.

Machine-made Products

British started selling machine made products which were cheap and better in quality than hand-made goods. This caused a barrier in labours income as competition forced much business in India to shut down.


British introduced a railway system in India, increasing demand for cheap industrial products which were easily accessible. This caused a downfall in the Indian handicraft market as people supported the machine-made goods.

Q3. What is Systematic De-industrialisation Practised During British Rule?

Ans. Systematic de-industrialisation referred to the status of the industrial sector during colonisation which led to the decay of Indian handicraft industry and growth of modern industries.

The reason behind the downfall of industries was majorly due to-

Britishers were trying to exploit India's raw materials and primary products by force. This was done to fulfil the rising needs of industries during the emergence of the British era. 

Boosting of the British market by importing expensive goods at low tariff 

The British Government incurred huge expenses to fight wars with Indian wealth by implementing their imperialism policy.