Indian Economic Development - Class 11 - Notes

Unit I: Development Policies and Experience (1947-1990)

Chapter 1: Indian Economy on the Eve of Independence

  • Introduction

    • Focuses on understanding India's economic development post-independence, emphasizing the impact of British rule, which transformed India into a raw material supplier for Britain.

  • Low Level of Economic Development Under the Colonial Rule

    • Highlights pre-colonial India's independent economy known for its high-quality handicraft industries with a global market.

    • Colonial economic policies prioritized British interests, altering India's economy to supply raw materials and consume British finished goods.

    • Estimates of national and per capita income were attempted by economists like Dadabhai Naoroji and V.K.R.V. Rao.

    • Aggregate real output growth was minimal at less than 2%, with per capita output growing at a mere 0.5% per year.

  • Agricultural Sector

    • Describes India as an agrarian economy with 85% of its population in villages dependent on agriculture, which suffered stagnation due to colonial land settlement systems like the zamindari system.

    • Zamindars focused on rent collection rather than agricultural improvement, supported by revenue settlement terms that led to loss of rights upon failure to meet revenue deposits.

    • Low technology levels, lack of irrigation, and minimal fertilizer use further decreased agricultural productivity.

    • Cash crops, intended for British industries, did not benefit Indian farmers.

    • Minimal investment in essential agricultural infrastructure worsened conditions for small farmers and tenants.

  • Industrial Sector

    • Notes the failure to develop a robust industrial base under colonial rule, with declining handicraft industries and no emergence of modern industries.

    • The aim was to make India an exporter of raw materials and a market for British goods, leading to unemployment and reliance on cheap British imports.

    • Modern industry began slowly in the late 19th century, limited to cotton and jute mills, followed by iron and steel (TISCO in 1907), and later, sugar, cement, and paper industries post-World War II.

    • The public sector was restricted to railways, power, communications, and ports.

  • Foreign Trade

    • Explains how India's foreign trade was adversely affected by British policies, turning India into an exporter of raw materials and an importer of finished goods from Britain.

    • Britain monopolized India’s exports and imports, with more than half of the trade limited to Britain.

    • The Suez Canal’s opening in 1869 increased British control.

    • India generated a large export surplus at the cost of domestic scarcity of essential commodities.

    • The surplus funded colonial expenses in Britain, war costs, and invisible imports, causing a drain of Indian wealth.

  • Demographic Condition

    • Mentions the first census in 1881 and the shift from the first to the second stage of demographic transition after 1921.

    • Social development indicators were poor, with literacy below 16% and female literacy at about 7%.

    • Inadequate public health facilities led to high mortality rates, with infant mortality at 218 per thousand.

    • Life expectancy was low at 32 years, exacerbated by extensive poverty.

  • Occupational Structure

    • Notes little change in occupational structure, with agriculture employing 70-75% of the workforce, while manufacturing and services accounted for only 10% and 15-20%, respectively.

    • Regional variations emerged, with some areas showing a decline in agricultural dependence and an increase in manufacturing and services.

  • Infrastructure

    • Describes infrastructure development (railways, ports, etc.) under colonial rule, primarily serving British interests.

    • Roads were mainly for army mobilization and raw material extraction.

    • Railways, introduced in 1850, facilitated long-distance travel and commercialized agriculture, impacting village self-sufficiency.

    • Inland trade and sea lanes were developed but remained insufficient.

    • Electric telegraphs maintained law and order, while postal services were inadequate.

    • Aviation sector began with Tata Airlines in 1932.

  • Conclusion

    • Summarizes that by independence, British rule had significantly impacted the Indian economy, with challenges in agriculture, industry, foreign trade, infrastructure, poverty, and unemployment.

What was the focus of the economic policies pursued by the colonial government in India?

  • Protected and promoted British economic interests, transforming India into a raw material supplier and consumer of British goods.

Name some notable economists who estimated India’s per capita income during the colonial period.

  • Dadabhai Naoroji, William Digby, Findlay Shirras, V.K.R.V. Rao, and R.C. Desai

What were the main causes of India’s agricultural stagnation during the colonial period?

  • Zamindari system, rent collection priority, low technology, lack of irrigation, and minimal fertilizer use

Name some modern industries which were in operation in our country at the time of independence.

  • Cotton textiles, jute, iron and steel (TISCO), sugar, cement, and paper

What was the two-fold motive behind the systematic de-industrialisation effected by the British in pre-independent India?

  • To make India an exporter of raw materials and a market for British products

The traditional handicrafts industries were ruined under the British rule. Do you agree with this view? Give reasons in support of your answer.

  • Colonial policies dismantled India's handicraft industries through competition and unequal trade policies

What objectives did the British intend to achieve through their policies of infrastructure development in India?

  • To mobilize the army and extract raw materials

Critically appraise some of the shortfalls of the industrial policy pursued by the British colonial administration.

  • Failed to create a modern industrial base; limited public sector operations

What do you understand by the drain of Indian wealth during the colonial period?

  • Export surplus funded British expenses, not benefiting India

Which is regarded as the defining year to mark the demographic transition from its first to the second decisive stage?

  • 1921

Give a quantitative appraisal of India’s demographic profile during the colonial period.

  • Low literacy (below 16%), high infant mortality (218 per thousand), low life expectancy (32 years)

Highlight the salient features of India’s pre-independence occupational structure.

  • Agriculture dominated (70-75%), regional variations existed

Underscore some of India’s most crucial economic challenges at the time of independence.

  • Surplus labour, low productivity, need for industrial modernization, infrastructure upgrades, poverty, and unemployment

When was India’s first official census operation undertaken?

  • 1881

Indicate the volume and direction of trade at the time of independence.

  • Export of raw materials, import of finished goods from Britain

Were there any positive contributions made by the British in India? Discuss.

  • Railways: Enabled long-distance travel

Chapter 2: Indian Economy 1950-1990

  • Introduction

    • Independent India aimed for a socialist society with a strong public sector, private property, and democracy, influenced by Nehru.

    • The Planning Commission was established in 1950 to initiate five-year plans.

  • The Goals of Five Year Plans

    • Plans aimed for growth, modernization, self-reliance, and equity.

    • Growth meant increasing the capacity to produce goods and services.

    • Modernization included