The Spine of Indian Economy was Badly Injured during the 200 Years of British Rule

Introduction: The 200 years of British colonial rule profoundly damaged the Indian economy, leading to the deindustrialization, impoverishment, and stagnation of a once-thriving economic system.

1. Deindustrialization: Before British rule, India was a global leader in textile manufacturing. However, British policies destroyed Indian industries to favor British goods. The imposition of high tariffs on Indian goods and the flooding of the Indian market with cheap British products led to the decline of the textile industry. For example, the Bengal textile industry collapsed as British imports increased, leading to widespread unemployment.

2. Drain of Wealth: The economic drain theory proposed by Dadabhai Naoroji explains how the British extracted wealth from India without adequate compensation. This “drain” included profits from Indian resources and labor being transferred to Britain, severely weakening India’s economy. By the late 19th century, it was estimated that over 4 million pounds were drained annually.

3. Destruction of Traditional Agriculture: The British imposed exploitative land revenue systems like the Permanent Settlement in Bengal and the Ryotwari system in South India. These systems prioritized revenue collection over the welfare of the peasants, leading to widespread poverty and famines, such as the Great Bengal Famine of 1770.

4. Stagnation and Poverty: The systematic exploitation led to the stagnation of the Indian economy. By the time of independence in 1947, India had become one of the poorest countries in the world, with a life expectancy of just 32 years and literacy rates below 20%.

Conclusion: The British rule left India economically crippled, with its industries dismantled, agriculture in disarray, and wealth siphoned off. The recovery from this severe injury has taken decades and continues to shape India’s economic policies today.