India's economy was negatively impacted during British colonial rule. The British exploited India's resources and prioritized their own economic interests. They established policies that made India a major exporter of raw materials and importer of British manufactured goods. This restricted India's industrial growth and left the country impoverished at the time of independence. While some infrastructure like railways were developed, overall colonial policies stagnated India's economic progress.

1. Low Level of Economic Development
under the Colonial Rule
• India was an independent economy before the British
rule.
• The British rule adversely affected the Indian economy-
served their own economic interests
• They exploited India by exporting the raw materials
and Britishers made finished goods.
• The colonial government made no efforts in estimating
India’s national and per capita income.
• Economists such as Dadabhai Naoroji, William Digby,
Findlay Shirras, V.K.R.V Rao and R.C. Desai estimated
India’s per capita income during the colonial period.

2. Features of Indian Agriculture sector
on the Eve of Independence
• Low agricultural productivity
• High vulnerability
• Indebtedness of the tillers of the soil
• Prominent consumption of the owners of the
soil
• Small and fragmented landholdings

3. Causes of India’s agriculture
Stagnation during the colonial period
• Land Revenue System
• High dependency on monsoon
• Lack of resources
• Commercialization of agriculture

4. Industrial Sector
• Declining of the Handicraft Industries
• REASONS:
• 1. Biased tariff policy
• Unfair competition
• Disappearance of princely courts
• Western Lifestyle

5. Foreign Trade
• India had place in the foreign trade activities before the
British rule. However, the policies made by the colonial
government adversely affected the foreign trade:
• Policies made India an importer of final consumer
goods from British industries and an exporter of raw
materials.
• In 1869, the Suez Canal was opened.
• The colonial government maintained monopoly over
India’s foreign trade for its own economic interests.
• This practice resulted in the restriction of more than
50% of India’s foreign trade to British and the rest to
other countries.

6. Demographic Condition
• Higher Birth and death Rate
• High infant mortality Rate
• Low Life Expectancy Rate
• Mass illiteracy
• Low standard of Living

7. Occupational Structure
• Agricultural sector
• Prime occupation during the colonial government was
farming.
• Under farming, approximately 70–75% of the population
depended on the agricultural sector for their subsistence.
• There existed regional variation in the occupational
pattern.
• States such as Tamil Nadu, Kerala, Andhra Pradesh,
Karnataka, Maharashtra and West Bengal showed a
declining trend of dependency on the agricultural sector.
• Punjab, Odisha and Rajasthan showed an increase in the
share of workforce engaged in agriculture.

8. • Manufacturing sector
• Approximately 10% of the total population
was engaged in the manufacturing sector
during the colonial government.
• India had a well-developed industrial base
before British entry.
• However, the colonial government’s unfair
policies ruined the industrial sector of India.

9. • Service sector
• Approximately 15–20% of the total
population was engaged in the service sector
during the colonial period.

10. economic challenges at the time of
Independence.
• Low level of agricultural productivity: The British government took
advantage of India’s agricultural sector for its own profitability.
Hence, India’s agricultural sector was badly exploited and
experienced stagnancy, a low level of productivity and a lack of
investment. Slow progress in the industrial sector: India could not
develop its industrial sector under the British rule because they
faced tough competition from the British industries and lacked
capital, infrastructure and technology.
• Poor infrastructure: There were no proper infrastructure facilities to
impart technical knowledge to labourers and to develop trading and
commerce in the economy. There was also a need to upgrade and
expand the railway network. Poverty: The plight of the Indian
population at the time of independence was poor as the colonial
government used India’s wealth for the development of its home
country.

11. Positive contributions made by the
British in India
• Positive contributions made by the British: Introduction of railways: The
British introduced the railway system and a huge network of
transportation helped in the economic and social growth of India.
Development of means of communication: The colonial government
introduced the most modern and well-organised system of
communication. Introduction of the laws and justice system: The
colonial government outlined a system of laws and established courts for
justice to maintain law and justice in the country. Political and economic
unification of the country: Under the British rule, political and economic
unification was first established in India. Commercialisation of
agriculture: The colonial government took steps to commercialise
agriculture. This changed the attitude of Indian farmers and they started
producing agricultural products according to requirements. Introduction
to English language: English helped Indians to integrate with other
countries. Knowing the language also helped Indian manufacturers to
communicate with producers from other countries.