Economics of India

When you think of India, what do you think of, economically? An undeveloped country? Beggars in the streets? Poor people living in straw huts? For the most part, India certainly is an undeveloped country. There are people begging in the streets. There are dirty cows wandering around in the middle of the road, sleeping where they like. The question is: is this all because of the British Empire, which arrived in India in 1750?

Back about 250 years ago, India was a very traditional country. In little villages crafts were passed on from father to son, mother to daughter. If you were using a plot of land, it was yours. If you weren't, somebody else would use it. The village families grew crops to eat, not to sell, except for a share of the crops which was then paid to a local princeling, who then paid it to prince, and so on. India was economically independent, and all they needed from the outside world were things like salt and iron.

Then the British Empire arrived. Using their power, they set up new land systems, based on legal standards rather than using the practical system the farmer peasants had been using. These two new land systems were called the Zamindari and the Ryotwari land systems. In the Zamindari system, the British set up private landlords to collect taxes. The landlords were necessary, because they would raise the revenues to bring in more money and therefore have more profit for themselves. But the bulk was still passed on to the British. In the Ryotwari system the peasants' rights to the land depended on how much they paid to the government.

Basically, when the British came they influenced the economy so that crops were grown for commercial use , rather than family consumption. Commercial agriculture also grew because farmers needed more money to pay the British taxes, which were gradually rising.

Was the British impact good for the Indian economy? India's trade with the outside world might not be what it is today, had the British not come and forced India's people to think business-wise. They pushed India forward, from the "ancient" farmer type of economy, into the more industrial, more legally-focused, more profit-forming economy. But the systems they replaced the older rural framework with completely broke down the economy. The new land systems brought all sorts of legal information that was too much for the peasants to handle; then the landlords continuosly raised taxes higher and higher, until the peasants were in debt all year around, and all they worked for was no longer for family consumption but for paying off the debts and taxes. Since the peasants crops were grown to pay off debts and not for eating, they either had to starve or borrow money; which would only put them in more debts, and so the peasants were always enslaved by their constant debts. Then the moneylenders, from whom the peasants borrowed, abused the power they had over the peasants who were in debt, making them work harder, taking advantage of them with legal ways the peasants did not know. So the economy, without the peasants' crops to export in exchange for imported goods, collapsed.

Overall the British did not have a good impact on the Indian economy. They wanted profit, and they got it, but at the cost of the peasants harmonized, simple lives, which were unduly complicated due to the new British rule. Without the British, India would have come into it's own power in it's own time, and maybe some of the fairness and efficiency of the old system would have been a part of that power.