Model Answer
0 min readIntroduction
'Laissez Faire', meaning 'let do' or 'let pass', is an economic philosophy advocating minimal governmental interference in the economic affairs of individuals and society. During the pre-independence era, British policies in India were largely guided by this principle, ostensibly to foster free trade. However, this application of 'Laissez Faire' was markedly different from its theoretical form in developed nations. Instead of a level playing field, it became a tool for systematically dismantling Indian industries and transforming the country into a supplier of raw materials for British industries, ultimately hindering India’s economic progress and perpetuating its colonial subjugation.
Implementation of Laissez Faire in Pre-Independence India
The British adopted a 'Laissez Faire' policy in India not out of a genuine belief in free markets, but to maximize their economic gains. This manifested in several key ways:
- Absence of Protective Tariffs: Indian industries faced stiff competition from cheaper, mass-produced British goods due to the lack of protective tariffs. This led to the decline of traditional Indian industries.
- Discouragement of Indian Entrepreneurship: Policies were designed to favor British businesses, making it difficult for Indian entrepreneurs to compete. Access to capital, technology, and markets was severely restricted.
- Land Revenue Systems: Systems like the Permanent Settlement (1793) and Ryotwari system, while seemingly neutral, created conditions that led to landlessness and indebtedness among Indian farmers, forcing them into raw material production for British industries.
- Railways as Extraction Networks: While railways were built, their primary purpose was not to integrate the Indian economy but to facilitate the efficient transportation of raw materials from the hinterland to ports for export to Britain.
Negative Consequences of Laissez Faire
The 'Laissez Faire' approach had devastating consequences for the Indian economy:
- Deindustrialization: Indian textile industry, once globally renowned, suffered immensely. According to historical estimates, the share of Indian textiles in the British import market fell from 57% in 1750 to 8% in 1813. This was a direct result of unchecked British imports.
- Impoverishment of Artisans: Millions of Indian artisans, weavers, and craftsmen lost their livelihoods as their products were unable to compete with cheaper British goods.
- Drain of Wealth: A significant portion of India’s wealth was drained to Britain through various mechanisms, including salaries of British officials, profits from trade, and interest payments on loans. Dadabhai Naoroji estimated the annual drain of wealth to be around £3 million in the mid-19th century (Poverty and Un-British Rule in India, 1901).
- Stagnation of Agriculture: The focus on raw material production led to the neglect of food crops, resulting in frequent famines. The Great Bengal Famine of 1943, exacerbated by wartime policies, is a stark example.
- Limited Industrial Development: The lack of state support and protection hindered the growth of indigenous industries, leaving India dependent on British manufactured goods.
A Contrasting Scenario: Interventionist Policies
Had the British adopted a more interventionist approach, similar to those employed by other industrializing nations like Germany and Japan, the outcome for India could have been significantly different. This would have involved:
- Protective Tariffs: Shielding Indian industries from foreign competition.
- Investment in Education and Technology: Promoting technical education and fostering innovation.
- State-led Industrialization: Establishing and supporting key industries.
- Land Reforms: Addressing land ownership issues and promoting agricultural productivity.
Such policies could have fostered a more balanced and self-reliant Indian economy, reducing its dependence on Britain and laying the foundation for sustainable development.
Conclusion
The 'Laissez Faire' policy implemented by the British in pre-independence India was not a neutral economic doctrine but a deliberate strategy to exploit India’s resources and suppress its industrial development. It resulted in widespread deindustrialization, impoverishment, and a drain of wealth, leaving a lasting legacy of economic underdevelopment. A more proactive and interventionist approach, focused on fostering indigenous industries and protecting Indian interests, could have steered India towards a path of economic prosperity and self-sufficiency.
Answer Length
This is a comprehensive model answer for learning purposes and may exceed the word limit. In the exam, always adhere to the prescribed word count.