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UPSC MainsECONOMICS-PAPER-II202510 Marks150 Words
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Q5.

Answer the following questions in about 150 words each: (e) Describe the phases of colonisation in British India.

How to Approach

The question asks to describe the phases of colonisation in British India. The approach will involve outlining the three distinct economic phases identified by historians: Mercantile Capitalism, Industrial Capitalism, and Finance Capitalism. For each phase, I will describe its characteristics, key policies, and economic impact on India, ensuring to cover the period from 1757 until India's independence.

Model Answer

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Introduction

British colonization in India was a complex and multifaceted process, primarily driven by economic motives, which evolved over roughly two centuries. Historians, notably Marxist scholars like R.P. Dutt, have categorized this colonial exploitation into three distinct phases. Each phase represented a different mode of extracting wealth and resources from India, adapting to the changing economic landscape of Britain and the world. These phases systematically transformed India's economy to serve British imperial interests, leading to a profound and lasting impact on the subcontinent's development.

The economic exploitation of British India can be broadly categorized into three phases, each marked by distinct strategies and objectives:

1. Mercantile Capitalism (1757-1813)

This initial phase, following the Battle of Plassey in 1757, was characterized by the East India Company's direct plunder and monopoly over trade. The primary objective was to acquire wealth through:

  • Monopoly Trade: The Company established exclusive control over Indian goods like textiles, spices, and raw materials, selling them at high prices in European markets.
  • Direct Plunder and Tribute: Revenues from taxation, particularly after acquiring 'Diwani' rights over Bengal, Bihar, and Orissa in 1765, were used to purchase Indian goods for export, leading to a significant 'drain of wealth'.
  • Limited Transformation: During this period, there were no significant structural changes in India's administration or economic systems, except for those necessary to facilitate the Company's trade and revenue collection.

2. Industrial Capitalism (1813-1858)

This phase coincided with Britain's Industrial Revolution and began with the Charter Act of 1813, which ended the East India Company's trade monopoly in India. India was transformed into:

  • Supplier of Raw Materials: India became a crucial source of raw materials (e.g., cotton, indigo, jute) for British industries.
  • Market for British Manufactured Goods: Cheap, machine-made British goods flooded the Indian market, severely undermining traditional Indian handicraft industries, leading to deindustrialization.
  • Free Trade Policy: British policies promoted 'free trade' which, in reality, was highly protectionist for British industries and detrimental to Indian ones through high tariffs on Indian exports to Britain.
  • Commercialization of Agriculture: Peasants were encouraged or forced to cultivate cash crops for export rather than food grains, leading to food insecurity.

3. Finance Capitalism (1858-1947)

Following the 1857 Revolt, direct British Crown rule initiated this phase, characterized by large-scale British capital investment in India, primarily through financial institutions and infrastructure development.

  • Investment in Infrastructure: Significant British capital was invested in railways, roads, post and telegraph systems, irrigation, and mining. While seemingly developmental, the main motive was to facilitate the extraction of raw materials, movement of troops, and deeper penetration of British goods into India's interior.
  • Financial Control: British banks, export-import firms, and managing agencies consolidated control over India's economy, channeling profits and interest back to Britain.
  • Limited Industrial Development: While some modern industries (like jute and cotton mills) emerged, their growth was largely controlled by British capital and often suppressed if they competed with British industries.
  • Integration into Global Capitalist System: India was firmly integrated into the British-dominated global capitalist system as a dependent colony, supplying raw materials and markets.

Conclusion

The three phases of British colonization—Mercantile Capitalism, Industrial Capitalism, and Finance Capitalism—demonstrate a progressive deepening of economic exploitation in India. From direct plunder and monopolistic trade to transforming India into a raw material supplier and a market for British goods, and finally to controlling its financial systems and infrastructure, each phase systematically served Britain's evolving imperial needs. This sustained economic drain and structural subjugation profoundly impoverished India, stifled indigenous industrial growth, and laid the groundwork for persistent economic challenges even after independence in 1947.

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.

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Additional Resources

Key Definitions

Drain of Wealth Theory
Propounded by Dadabhai Naoroji, this theory argued that a significant portion of India's national wealth was being siphoned off to Britain without adequate economic returns, contributing to India's poverty and underdevelopment.
Deindustrialization
The process of decline in indigenous manufacturing and handicraft industries in India due to competition from cheaper, machine-made British goods and discriminatory colonial policies, leading to a shift of the workforce back to agriculture.

Key Statistics

Historian Angus Maddison estimated that India's share of world income declined from 24.4% in 1700 to 4.2% in 1950, largely attributable to colonial economic policies. (Source: World Economy: A Millennial Perspective, Angus Maddison)

Source: World Economy: A Millennial Perspective, Angus Maddison

During the early phase of mercantilism (1757-1813), the drain of wealth from India was estimated to be around 2-3% of Britain's national income, playing a crucial role in financing Britain's Industrial Revolution. (Source: Drishti IAS)

Source: Drishti IAS

Examples

Indigo Cultivation

During the Industrial Capitalism phase, British planters forced Indian peasants, particularly in Bengal and Bihar, to cultivate indigo on their most fertile lands, often under coercive contracts. This system, known as the 'Dadan' system, led to widespread peasant distress and eventually the Indigo Revolt (1859-60).

Railway Development

The extensive railway network built in India during the Finance Capitalism phase (e.g., the first railway line from Bombay to Thane in 1853) primarily served British interests by facilitating the transport of raw materials from the interior to ports for export and manufactured goods from ports to markets. It also aided troop movement for administrative control.

Frequently Asked Questions

▶How did the British land revenue policies relate to these phases of colonization?

British land revenue policies like Permanent Settlement (1793), Ryotwari System (1792), and Mahalwari System (1822) were primarily implemented to maximize revenue extraction, which directly funded the Company's trade and administration in the Mercantile phase, and later supported the overall colonial apparatus in the Industrial and Finance Capitalism phases. They created new land relations that supported the colonial economic structure.

▶What was the role of the Charter Act of 1813 in shaping the second phase of colonization?

The Charter Act of 1813 ended the East India Company's monopoly on trade with India (except for tea and trade with China). This opened India to all British merchants and manufacturers, marking the formal beginning of the Industrial Capitalism phase. It facilitated the influx of British manufactured goods and intensified India's role as a supplier of raw materials.

Topics Covered

Indian HistoryPolitical ScienceColonialismBritish EmpireHistorical Periods
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