IGNOU HISTORY NOTES : India History From Mid 18th to Mid 19th Century - Economic Impact of Colonial Rule

IGNOU HISTORY Study Notes for IAS, UPSC Exams

History India From Mid 18th to Mid 19th Century

Economic Impact of Colonial Rule

Structure

18.0 0bjectives
18.1 Introduction
18.2 Subordinat~on of 'Native' Capital
18.3 ?omination - Market and the Producers
18.4 City and Countryside
18.5 Transfer of Funds
18.6 External Trade
18.7 Indian Railways and English Capital
18.8 Let Us Sum Up
18.9 Key Words
18.10 Answers To Check Your Progress Exercises

18.0 OBJECTIVES

This Unit completes our survey of the British economic impact on India. Some
major aspects of the theme have already been studied in Units 14-17. We take up
in this Unit a few questions which remain to he discussed:

the changes in the position of the Indian traders and bankers as the English East India Company and English private traders became dominant in India from the 1750's;
how this domination affected the artisans and peasants whose products were drawn into the 'market' by the English Company and business houses;
how famines ravaged the countryside and old cities declined;
what was the system channelising flow of funds from India to England;
how the pattern of foreign trade changed to convert India from being at! exporter of industrial goods to an importer to English manufactured goods and exporter of agricultural goods and raw materials; and
why railways were promoted by British businessmen in England and the government in India and what system was devised to encourage British investors.

18.1 INTRODUCTION

The government of an exclusive company of merchants is perhaps the worst of
all governments for any country whatever." That was the opinion of Adam Smith
in the Wealth of Nations in 1776.
As you know already (Unit 14) Adam Smith's criticism of the monopolist character
of the East India Company was part of an attack on its statutory privileges which
led to the abolition of these privileges in 1813 and 1833. You have also studied the
impact of the Industrial Revolution in Europe and how it led to the rise of a new
form of colonialism (Units 6 and 7). Some aspects of the consequent
transformation of the colonialism in India have been discussed in connection with
the process of commercialization of agriculture (Unit 16) and India's deindustrialization (Unit 17). It remains to be seen how some other dcvelopments,
not discussed till now, reflect the process of colonialisation of the Indian econorny.