Colonialism and capitalism led to a complex integration of colonies into world economy in asubservient manner.
Indian raw material was cheaply exported and finished goods wereexpensively imported which also destroyed domestic industries, handicrafts and handlooms.Ruined artisans failed to find alternative employment and crowded agriculture as sharecroppersand laborers. Modern industries that were developed were guided colonial interest and theywere also stunted in their growth. They couldn’t even replace the erstwhile homegrown cottageindustries, handlooms and handicrafts. Before 1900, cotton, jute and tea dominated and before1930s, cement, sugar and paper dominated. Hallmark of backwardness of Indian industry wasvirtual absence of capital goods and machinery industry and equipment were largely imported.
Further, industrial development was highly uneven in spread. Modern industry contributed ameager 8% of national income at the time of independence. Similarly, electricity and bankingwas also grossly ignored.This subservient and disadvantaged position led to extremely poor domestic savings – less than3% of GNP, as compared to 33% today. Even this chunk of savings was misappropriated by thecolonial rulers in form of economic drain, military and administrative spending. From 1890 to1947, military spending amounted 50% of total government budget.
State support to industrieswas zero in contrast to most of the European countries at that time. While free trade was established with India no tariff protection was given to fledgling Indian industry which was doneaggressively at home. Similarly, currency policy was manipulated in colonial favor.Further, tax structure was highly iniquitous, as peasantry was heavily taxed and upper class likebureaucrats, landlords etc paid hardly any tax. In 1900, land revenue alone contributed morethan 50% of government revenues and salt tax another 16%. As a result, poor investment andlack of modernization of agriculture lead to poor produce and stagnation. Moneylenders,landlords and middlemen made the situation worse and they too find exploitation ofsharecroppers, tenants and laborers easier than investing in agriculture.
Prime agricultural landwas diverted to commercial crops leading to problems of food security as well. At the time ofindependence, 70% land was with landlords and landlessness was at historic high level of 28% attime of independence. Land holdings had fragmented to uneconomical sizes.Better means of communication like railways were used not for development of hinterlands, butto make inroads for exports of rural goods. Railway freights rates were discriminatory anddiscouraged internal movement of goods and promoted external trade. India suffered manyfamines despite good connectivity. Last major famine was Bengal famine of 1943 which took tollof more than 30 lakh lives.
Another hallmark of backwardness was high proportion of rural population which stood at morethan 80% at the time of independence. Dependency on agriculture increased from 67% in 1901to more than 70% in 1947.Education was also underdeveloped and technical education was even worse with only 7engineering colleges at the time of independence. Similarly, health facilities were also poor andthere were just 10 medical colleges by 1947 and epidemics were a regular phenomenon. Lifeexpectancy was hardly 30 years. Medium of higher education was English throughout thecountry. It stifled development of local languages and created a gulf between educatedintelligentsia minority and unlettered masses creating a social divide. Learning by rote waspromoted at the expense of rational inquiry.
Mass education and girls’ education were grosslyneglected.By 1947, almost 50% bureaucrats were Indians, but top positions were still manned by nonIndians.Further, bureaucracy was replete with elite class and caste and posed a major challengein desired social change after independence with its rigid and conservative outlook. Though ICSofficers were largely upright, lower level officials were notoriously corrupt and corruptionreached great heights during Second World War as government tried to increase control andtaxes. It led to massive black-marketing and corruption.There were some positive features of colonial rule as well. Communication means were welldeveloped.
Indian capitalist class also grew after 1914 and by end of Second World War, morethan 60% of industry was driven by Indian capital. Indian capitalist class was more enterprisingand took bold steps after 1914. Similarly, Indian capital had also made significant inroads inbanking and insurance sector.
Further, colonial rule also established modern principle of ‘rule of law’ and judiciary was also relatively independent despite the fact that judicial system wasexpensive and detrimental to the poor. Further, for a long time judicial and administrativefunctions were not separated and bureaucracy wielded enormous power. Several liberties werealso extended and press was also modernized. Constitutional reforms were started after 1857,though real power vested with colonial powers. Only 3% of Indians were able to vote by 1919and just 15% by 1939.
British also led administrative unification of India and through a uniformeducational, judicial and civil structure they achieved union of India. But paradoxically, theysimultaneously also pursued their divide and rule policy as well which culminated intoparticipation and communalization of Indian society.Just a few months before his death, Thakur Rabindranath wrote in 1941 ‘The wheels of fate willsomeday compel the English to give up their empire. But what kind of India will they leavebehind, what stark misery? When the stream of their centuries’ administration run dry at last,what a waste of mud and filth will they leave behind them’.