JAIIB Paper 1 - Comprehensive Notes

1000 AD: India and China contributed 50.5% of global GDP.
1600 AD: 52% (China - 29%, India - 23%).
1820: India's share dipped to 16.1% due to British colonialism.
2021: India's global GDP share reached 7.3% (IMF).
India ranked 3rd in the world in terms of GDP purchasing power parity (PPP) -- after USA and China.
India experienced dismal economic performance during British Raj, the British East India Company exploited raw materials instead of industrialisation.

World Bank categorizes economies by per capita income.
India’s economy is the 3rd largest by PPP but has a low per capita income (PCI) ranking.
Low per capita income is linked to poverty, unemployment, and illiteracy.
Five-year plans addressed developmental issues through targets and fund allocation.
Influencing factors include:
- Low per capita real income.
- Rapid population growth.
- High unemployment, underemployment, and disguised unemployment.
- Reliance on the primary sector.
- Vicious cycle of poverty.
- Rising unemployment.
India transitioned from an agricultural economy (53.1% GDP in 1950) to industry and services.
1950: Agriculture sector was dominant.
* Industry: 16.6%,
* Services: 30.3%.
1980-81 Services sector (38%) surpassed Agriculture (36.1%) to become largest contributor to India's GDP
* The industry (25.9%).

British colonialism damaged India’s commerce, trade, and investment through unilateral capital and raw material transfer.
India remained a low-quality labor market, and literacy was low.
1867-68: Dadabhai Naoroji estimated national income in “Poverty and Un-British Rule in India”
- British India national income was Rs. 340 crore.
- Per capita income was Rs. 20 per annum.
1948-49: per capita income was Rs. 142 p.a.
Other economists (William Digby, Findlay Shirras, V.K.R.V. Rao, R.C. Desai) produced similar national income findings.
Atkinson estimated per capita income at Rs. 172.
Horne estimated it at Rs. 158 in 1948–1949 prices for 1875 and 1891, respectively.
Curzon projected per capita income in 1902 to be Rs. 148 in 1948–1949 prices.
By 1947, per capita income rose to Rs. 250 per year.
Angus Maddison noted India’s shrinking global income share:
- 1600 A.D= 23% but
- 1947= 3% upon British withdrawal.
Global trade share declined from 33% in 1600 to less than 3% in 1947.
Manmohan Singh remarked India was the “brightest jewel” but the “poorest country” at the turn of the 20th century.

3rd Phase : began in 1857 (Sepoy Mutiny) - colonial exploitation.
India's global GDP : 1600 AD (23%) to 1947 (3%).
Global export: from 33% to 3%.
Zamindari, Mahalwari & Ryotwari systems introduced – high land tax from farmers.
Commercialisation created intermediaries, increased famines, & reduced farmers to landless labor.
Deindustrialisation: in mid 19th century contributed to trade by the trade policy that was unfavorable to India, also railroads assisted the British in moving commodities from the hinterlands to ports and vice versa.

unilateral movement of riches from India to Britain, without a sufficient economic, commercial, and material return.
through remittances, home charges, and transfer of revenue from private business or investment.
Dadabhai Naoroji, R.C. Dutta, and C.N. Vakil researched wealth drain.
Edmund Burke (1783) explained economic drain mechanism.
Philip Francis (1776) classified drain economy into four streams.
India’s share of world economy went down from 23% in 1600 to 3% in 1947 (Angus Maddison).
Clive took quarter of a million pounds for himself, plus a Jagir worth £27,000 a year.
British salaries were high: The Viceroy received £25,000 a year, and governors £10,000.
The starting salary in the engineering service was £420 a year or about sixty times the average income of the Indian labour force.
In 1856, official transfers to the UK reached about £3.5 million.