Economics: An Overview of Indian Economy: State of the Indian Economy

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State of the Indian Economy at the Time of Independence

India inherited economy from the British who were ruling this country for their gain. The British were never interested in the development of India, their aim was to exploit the resources of India and take it to England. Some notable features at the end of British period are as follows:

State of the Indian Economy

State of the Indian Economy

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Decline of Handicrafts Industry

Emperors and kings who were ruling India, promoted the interest of local artisans, carpenters, artists, weavers, etc. and uplift the handicraft industry to make the nation beautiful. An important part of Indian handicraft were the textile handicrafts. But when British came, they had to face closure. They replaced the human labour with machines to produce goods and sell in market at cheaper rate due to which Indian handicrafts suffered.

Production of Cash Crops

Crops like jute, sugarcane, ground nuts were all cultivated in India. These crops were required in England to produce various goods, so the British offered money to poor farmers in India to raise the production of these crops. Since these crops are used in factories as raw materials to produce goods, they are called cash crops.

Famines and Shortage of Food

Famine is a situation where many people do not get food to eat and die from hunger and diseases. During British period 33 times famine occurred and the most devasting was the Bengal famine of 1943 where 15 million died due to lack of food. Reason for occurrence of famines are as follows :

  • Due to low rainfall and essence of irrigation facilities the food grain production was very less.

  • Food grains of India were used to export to England and feed its soldiers by British government.

  • Poor people had not enough money to purchase food grains.

  • Indian farmers were encouraged to produce cash crops which led to fall in production of food grains.

Intermediaries in Agriculture

Agriculture being the major occupation of more than 70% Indian population was dependent on it and became the major source of revenue to British government. British appointed Zamindars, Mahalwaris and Ryotwari to collect revenue in the form of rent, tax, etc. from common people and submit it to government. These peoples were known as intermediaries as they used to act between British government and common people. They used to cheat and exploit common people.

Positive Contribution of British Rule

Some positive things which happened during British period are as follows :

  • The British government introduced railway in the year 1850.

  • They established first jute mill, cotton mill and coal mine between 1850-1855.

  • The British government also established telecommunication, telegraph, post offices in the country.

Changes in the Features of Indian Economy After Independence

A new era began in India’s history after its independence. The Indian government took all the responsibility of welfare and security of its citizens. The major features of Indian economy are as follows:

Low Level of Per Capita Income

Per capita income is calculated by dividing national income by population. In numerical terms,

Income of an individual is a major indicator of his or her standard of living. Per capita income gives the idea of income earned on an average by an individual in the economy in a year. India’s per capita income is very low as compared to developed nation and not enough to lead a decent life by an individual.

Slow Growth of Per Capita Consumption

Growth refers to increase over time India’s per capita income is not only low but also growing very slowly. There are few reasons of it which are as follows:

Unending Wants

Wants of people are increasing day by day and to satisfy those increasing wants he/she need more money.

Increased Price of Goods and Services

Though the income of a person grows at a steady rate but along with the prices of goods and services also increases.

To Help Each Other

We want our income to grow because we may want to help each other at times of needs or to please each other.

Heavy Population Pressure

India’s economy is overpopulated. At the time of independence, the population of India was 350 million whereas in 2020 it is near about 1.37 billion . India is the country with second largest population in the world. Large population emerges problems like lack of food, lack of infrastructure facility, lack of per capita income. The resources are limited, and it is to be distributed among all the peoples of the country and share which they got is very less. But India’s population is its strength also because our more than half of the population is young which is high as compared to other nations.

Existence of Poverty

Poverty is a curse on humanity. Poverty is a situation where a person is not able to get a two square meal a day to eat. A poor person cannot afford his or her daily needs or necessities to buy from the market. They has no shelter to live, proper clothes to wear, they cannot afford to get education, health care, etc. the reasons of existence of poverty are:

  • Unemployment is the major cause of poverty.

  • Exploitation by other on the basis of caste or religion or gender.

  • Absence of inherited property in the form of land or house, etc.

  • Less efforts by government to remove poverty.