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of Wealth – British Colonialism and Economic Impact
Meaning of Drain of Wealth
- The drain of wealth was typically “a phenomenon of colonial rule.” The person to draw pointed attention to this drain of resources from India to England was Dadabhai Naoroji in his book Poverty and Un-British Rule in India (1871).
- Dadabhai tried to prove that mass poverty in India was a direct consequence, among other reasons, of drain of wealth (resources) from India to England.
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| Drain of Wealth |
Forms of Drain of Wealth
- Remittances to England by Company employees:
- For support of families and education of children.
- Of saving from earnings.
- For purchase of British goods for consumption in India.
- Government purchase of stores manufactured in Britain.
- Interest charges on public debt held in Britain (excluding interest payments on railway loans and debts incurred for productive works).
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The Revenue System under Mughal Administration
The system of collecting revenue system under Mughal administration, which establishment was grossly the work of Akbar, can be classified under two heads;
- Imperial or central and
- Provincial
To some extent it followed the Sur example of administrative organization.
Provincial Revenue under Mughal
The provincial revenue was deduced from several minor taxes and duties levied on “trades and occupations, on production and consumption, on various incidents of social life and most of all on transport.” These revenues were obtained and spent solely by the provincial financial authorities and imperial financial authorities did not interfere in these matters.
Must Read: Administrative Structure under the Mughals
Imperial or Central Revenue System under Mughal
The chief sources of imperial or central revenue system under mughal included land revenue – the most important source of State income as it had been in the past-, mint, customs, inheritance, plunder and indemnities, presents (gift), monopolies and the poll-tax.
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Land Revenue System under Mughal
During the period of disorders and confusion after the reigns of Sher Shah and Islam Shah the prominent experiments of revenue system of Surs were nullified. However,Akbar, who had inherited the old system of government and the time-tested customs and procedures, after acquiring the throne, found that there were three types of land in the country namely the Khalsa or crown-lands, the Jagir lands and the Sayurghatlands. Out of these lands the Jagir lands were supervised by some nobles who obtained the local revenues out of which they provided a portion of these collected revenues to the imperial exchequer and kept the rest for themselves. Sayurghat lands were allotted on free tenure.
Akbar, after establishing his freedom completely from Bairam Khan and that of ladies of the haram, understood the importance of reframing the financial system of his growing empire, which were entirely in a confused condition.
Resutedly, a revised assessment was prepared in 1570- 1571 by Muzaffar Khan, who was assisted by Raja Todar Malla in this task. This assessment was ‘based on estimates framed by the local Qanungoes and checked by ten superior Qanungoes at headquarter.’ After the annexation of Gujarat, Todar Mall carried there a regular survey of the land and the assessment was prepared “with reference to the area and quality of the land”.
Akbar in 1575-76 abolished the old revenue areas and divided the whole of the Empire, baring the provinces of Bengal, Gujarat and Bihar, into a large number of units. Each unit yielded one Kror (crore) a year. For each unit an officer designated as Krori was appointed who got the duty of not only of collecting the revenues but also encouraging cultivation.
However, this experiment of Akbar proved disastrous as the Kroris soon engaged themselves in rampant corruption and their cruelty resulted in great misery for peasants. Resultedly Akbar was forced to abolish the – offices of Kroris and the revenue divisions of the past were reinstated. But, at least till the reign of Shah Jahan, the title of Kroris remained in vogue.
When Todar Mall was made the Diwan-i-Ashraf in 1582, some important reforms in the revenue system under mughal came into existence. He established a ‘regulation’ or standard system of revenue collection. The main characteristics of this system were:
(a) Survey and measurement of land,
(b) Classification of land, and
(c) Fixation of rates.
Have a Look at: Mughal Emperors – Story of 15 Mughal Kings of India
Measurement of Lands
For the measurement of lands, in order to assure a content measure, the old units were changed by the Ilahi Gaz or yard (about thirty three inches), Tanab or tent rope, and jarib of bamboos connected by iron rings.
Land was divided into four classes according to “the continuity or discontinuity of cultivation”:
(1) Polaj– under this category came the lands that could be cultivated annually,
(2) Paraudi – under this category fell the lands that were kept uncultivated for some time to get their productive capacity back,
(3) Chachar – under this category came the lands that were kept uncultivated for three or four years, and
(4) Banjar – under this category fell the lands that were kept uncultivated for five years or longer.
You May Also Read: The Administrative System under Delhi Sultanate
Rayotwari System
The revenue of the state was fixed at one- third of the actual produce, which the ryots were permitted to pay either in cash or in kind. The cash rate fluctuated according to crops. This system came to be known as Rayotwari System, and was applied to Northern India, Gujarat and, to some extent, to the Deccan.
The Empire was separated, for the purpose of administration and revenue collection, into Subahs; these Subhas were subdivided into Sarkars; each of the Sarkarsconsisted of a number of Paragana. Each paragana was a cluster of several villages. The revenue collector, the amalgujar, of a district got the assistance of a large subordinate staff.
The village headman, Muqaddam, and the village Patwari were servants of the village community but they were not the servants of the State. Apart from these official there were the Qanungo who had to keep records of revenue that the village had to pay; thePotdar (district treasurer); and the Bitikchi (accountant).
These officers had got a clear instruction of collecting revenue with due care and caution and “not to extend the hand of demand out of season”.
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Industries Contributing to Indian Economy
The Indian Economy is the 9th largest economy of the world and also one of the fastest growing world economies. The most top industries contributing to Indian economy are:
The Indian Economy is the 9th largest economy of the world and also one of the fastest growing world economies. The most top industries contributing to Indian economy are:
10 Industries that Contribute to Indian Economy are:
Retail and Wholesale Trade
Retail industry is the chief pillar supporting the Indian economy and contributes 23% towards the national GDP. The retailing industry comprises of general stores, hand cart vendors, convenience stores and domestic outlets. The new concept of retail supermarkets has worked well and accounts for 4% of total retail market.
Retail industry is the chief pillar supporting the Indian economy and contributes 23% towards the national GDP. The retailing industry comprises of general stores, hand cart vendors, convenience stores and domestic outlets. The new concept of retail supermarkets has worked well and accounts for 4% of total retail market.
Agriculture
India is the 2nd largest producer of farm produce. Agriculture Industry, apart from farming also includes forestry and fishing. It employs half the production of India and makes a contribution of 15.7% to the GDP. The Green Revolution in India has brought significant wealth to the farmers of Indian states of Punjab, Haryana and Uttar Pradesh.
India is the 2nd largest producer of farm produce. Agriculture Industry, apart from farming also includes forestry and fishing. It employs half the production of India and makes a contribution of 15.7% to the GDP. The Green Revolution in India has brought significant wealth to the farmers of Indian states of Punjab, Haryana and Uttar Pradesh.
Real Estate
The urban sectors of India are expanding which means increasing land requirements for educational institutions, healthcare, offices and buildings. It has attracted both domestic real estate developers as well as foreign investors. It contributes around 13.5% of GDP.
The urban sectors of India are expanding which means increasing land requirements for educational institutions, healthcare, offices and buildings. It has attracted both domestic real estate developers as well as foreign investors. It contributes around 13.5% of GDP.
Banking and Insurance
It is well-evolved industry serving as a boon for economic development of India by providing long-term funds for development of infrastructure. Besides, it strengthens the risk taking capacity of the country. The country’s gross domestic saving stands around 32.7%, most of it invested in personal assets like land, property or gold.
It is well-evolved industry serving as a boon for economic development of India by providing long-term funds for development of infrastructure. Besides, it strengthens the risk taking capacity of the country. The country’s gross domestic saving stands around 32.7%, most of it invested in personal assets like land, property or gold.
IT and ITES Industry
The Information technology industry is a knowledge based industry with skilled professionals in India. It has been the chief industry that has led the services sector account for whooping 64% of the entire GDP. The IT sector contributes almost about 9%the national GDP. Exports from the essence of the IIT-IITES industry earns about 77% of the total industry income.
The Information technology industry is a knowledge based industry with skilled professionals in India. It has been the chief industry that has led the services sector account for whooping 64% of the entire GDP. The IT sector contributes almost about 9%the national GDP. Exports from the essence of the IIT-IITES industry earns about 77% of the total industry income.
Transportation Industry
The transportation industry of India is large and expansive viz. roadways, highway, ports, aviation industry and railways all form a part of transportation industry. It is a growing sector which contributes around 8.5% to India’s GDP.
The transportation industry of India is large and expansive viz. roadways, highway, ports, aviation industry and railways all form a part of transportation industry. It is a growing sector which contributes around 8.5% to India’s GDP.
Engineering and Machinery
A large section of capital goods essential for power plants, agriculture technology, cement and construction and steel plants as well as mining essentials are manufactured in India. It is also an efficient producer of tractors, harvesters, earth movers, cars, air pollution control equipment etc. In 2012 this sector alone made a contribution of 8% to the Indian GDP.
Read Also: Top 10 Shipping Companies of India
A large section of capital goods essential for power plants, agriculture technology, cement and construction and steel plants as well as mining essentials are manufactured in India. It is also an efficient producer of tractors, harvesters, earth movers, cars, air pollution control equipment etc. In 2012 this sector alone made a contribution of 8% to the Indian GDP.
Read Also: Top 10 Shipping Companies of India
Chemical Industry
It is one of the earliest of all Indian industries contributes considerably to Indian Economy. It manufactures 70,000 products ranging from toiletries and plastics, to cosmetic, pharmaceuticals, fertilizers and many more. This industry contributes around 7% annually to GDP of India.
It is one of the earliest of all Indian industries contributes considerably to Indian Economy. It manufactures 70,000 products ranging from toiletries and plastics, to cosmetic, pharmaceuticals, fertilizers and many more. This industry contributes around 7% annually to GDP of India.
Tourism
It provides for around 6.23% of the national GDP and also accounts for 8.7% of the total national employment. Added to it is the diversity in terrain which attracts tourists who wish to enjoy a complete package. Medical, business as well as sports to tourism has become popular and adds more to the potentials of this industry.
It provides for around 6.23% of the national GDP and also accounts for 8.7% of the total national employment. Added to it is the diversity in terrain which attracts tourists who wish to enjoy a complete package. Medical, business as well as sports to tourism has become popular and adds more to the potentials of this industry.
Textile Industry
Indian Textile Industry is one of the leading textile industries in the world and largely depends upon the textile manufacturing and export. The textile sector accounts for 14% of the total industrial production, contributes about 4% to nation GDP and earns India 17% of its total exports. Around 35 million people are directly employed in this industry.
Must Read: Top 10 Largest Economies of the World
Indian Textile Industry is one of the leading textile industries in the world and largely depends upon the textile manufacturing and export. The textile sector accounts for 14% of the total industrial production, contributes about 4% to nation GDP and earns India 17% of its total exports. Around 35 million people are directly employed in this industry.
Must Read: Top 10 Largest Economies of the World
oitation of Indian Economy
Colonial Exploitation of Indian economy, prior to the British Raj in India, was controlled and managed by village communities, which consisted of farmers and the functionaries. While the farmers were fully engaged in crop farming or Cattle farming, the functionaries provided essential services like that of blacksmiths, goldsmiths, Washer-men and shoe-makers. Although agriculture was subsistence base (depended on rain), cultivators enjoyed the ownership rights.
There were no intermediaries (like Zamindars of the Colonial period) between the State and the farmers who had to pay a reasonable amount as land revenue directly to the king. Rural India’s life was a portrait of prosperity and stability. It was so Bernier, the famous French traveler, described Bengal in 17 century as “richer than Egypt” producing enough for self- consumption and exporting in abundance.
Industry was dominated by handicrafts. However, it had got a worldwide reputation of producing quality products like ‘Decca Muslin’. Export consisted of finished products, imports were largely of gold and silver.
However colonial policies of British Raj, which were intended to exploit the Indian economy as fully as possible, fully reversed the composition or output, as well as the composition of exports and imports, leading to a severe damage to the pace of growth of Indian economy. How did the Britishers achieve their intended goal of subjecting Colonial Exploitation of Indian economy to such an exploitation can be comprehend by the ways and mans they chose:
Colonial Exploitation of Indian Economy – Agriculture Sector
Two factors, invented and implemented by the colonial masters of India, can be held responsible for the backwardness and stagnation of Indian agriculture during the British rule:
Also Read: Industries Contributing to Indian Economy
Land Revenue System Devised by the British Raj:
A unique system of land revenue was invented by the British Raj with an intention to draw maximum benefit from the Indian agriculture and in the process destroying it. This system was popularly termed as the Zamindari system of Land Revenue. This system functioned at three levels:
(a) The Zamindars were made, by their colonial masters, permanent owners of the soil,
(b) it was the responsibility of Zamindars to pay a fix amount to their colonial masters as land revenue, and
(c) Zamindars were given a free hand in extracting as much amount from the tillers of the soil as they could. In this way they set up a triangular relationship among the government, the owner of the soil and the tiller of the soil. The direct result of this land revenue systemwas that the Zamindars became the cruellest exploiters of the tillers of the soil. They frequently raised the land revenue without caring for the miseries of the tillers of the soil.
Eventually tillers became landless labourers and lost the interest in agriculture. However, they could not desert agriculture because there was no alternative means of subsistence for them.
Also Read: Major Crops of India
Forced Commercialisation of Agriculture
The colonial masters forced the farmers to Shift cultivation from the conventional subsistence crops (like rice and wheat) to the commercial crops (Indigo in particular), because Indigo was in great demand in Britain in textile industry for dyeing and bleaching. It resulted in the farmers’ helplessness to be at a mercy of landlords because they became dependent on them for cash to buy food. Earlier farmers would grow grain for their family consumption but this forced shift in crop cultivation completely ruined them.
Under the British rule the Zamindars started to exploit agriculture as a source of un-earned income, the zamindar never invested, rather unfortunately, this income in agriculture. They wasted it on their luxurious lifestyle.
Colonial Exploitation of Indian Economy – Industrial Sector
Industrial sector in India, prior to the British rule, implied predominance of handicrafts which were systematically destroyed by permitting tariff-free import of machine made goods from Britain. However, they placed a heavy duty on export of Indian handicraft products. As a consequence while the British products started pouring in the Indian markets, the handicraft products of India began to lose their domestic as well as foreign markets.
One important factor of the decaying of handicraft in India was the end of princely courts due to the hold of the British rule. Nawabs, rajas, princes and emperors formed the princely classes which used to patronise the handicrafts that enabled this industry in acquiring in international reputation. This ended with the end of this princely class.
Must Read: Phases of British Rule in India
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