Colonialism refers to a system of political and social relations between two countries, of which one is the ruler and the other is its colony. The ruling country has political control over the colony and determines the subjugated country’s economic policies.
Long story short
British rule and exploitation of India
- Merchant capital and the exploitation
- Direct plunder under the guise of trade
- Land revenue as an instrument to plunder the peasantry
- Corrupt and unscrupulous officers made large fortunes.
- Industrial capital and the exploitation
- Export of machine-made goods to India by England.
- Development of the jute industry and plantations
- Revenue and expenditure policies of the British
- Finance capital and the exploitation
- British finance capital in the state sector
- Investment in railways
- Investment in plantations
- Participation of British finance capital in other sectors, such as rubber plantations, mining, banking and finance and industries like, paper, rubber, match-box and tramways.
India - an underdeveloped economy
Whatever the criteria, the Indian economy is presently an underdeveloped economy.
Low per capita income
India’s PPP estimate for GNP is one-tenth of the US.
Inequitable distribution of income
The distribution of income and wealth is inequitable.
High incidence of poverty
The problem of mass poverty is an outcome of income inequality. As of the latest data nearly 20% of the population lives in poverty.
Predominance of agriculture
The share of agriculture in Gross Value Added is very low indicating low productivity and more are employed in the agriculture sector, which in fact shows the underdeveloped state of the economy.
Rapid population growth and high dependence ratio
India is going through the second phase of demographic transition, which is a falling death rate and high birth rate. which led to a population explosion. also, the pressure on land resources increases as more are employed in agriculture. J. J. Spengler has argued that “an increase in population raises the ratio of people to the land and other sources of raw materials and, as a consequence, production tends to decline per unit of variable cost in the concerned industries.”
Low level of human development
In terms of HDI, India ranks lower than its Asian peers.
Unemployment
Unlike the west, unemployment in India is chronic and results from structural defects in the economy. According to Ragnar Nurkse, if some people are removed from agriculture and absorbed by some other sectors, the agricultural output will not fall also it will increase the total output of the economy due to the factor some are absorbed into some other productive sector. Urban unemployment is due to failing of industries to generate enough jobs to meet the demand arising from urban migration and the increasing demand for white-collar jobs.
Scarcity of capital
Savings and investment rates were low, which was inevitable for economic growth.
Technological backwardness
there still exists a wide gap between the sophisticated production techniques of the developed countries and India’s technology.
Lack of entrepreneurs
Joseph A. Schumpeter argues “the function of entrepreneurs is to reform or revolutionise the pattern of production by exploiting an invention or, more generally, an untried technological possibility for producing a new commodity or producing an old one in a new way by opening up a new source of supply of raw materials or a new outlet for products, be reorganizing an industry and so on.”
India - A developing economy
Economic development in India has broadly two facets:
- National Income Trends
Rise in Net National Product
NNP is the measure of economic output that takes into account the depreciation of capital stock. It is a measure of a country’s economic well-being, as it shows the amount of new wealth that is being created each year, after accounting for the loss of value of the existing capital stock.
Rise in per capita income
Per capita income is a measure of a country’s economic well-being that shows the average income earned by each person in a country.
- Structural Changes
Significant changes in the sectoral distribution of domestic products
more population are moving away from the primary sector to the secondary and tertiary sectors for employment.
slow changes in employment structure
T. S. Papola notes, “A sharper decline in the contribution of agriculture in GDP than its share in employment implies a decline in its relative productivity and increase in income differentials between agriculture and the non-agrarian sectors.”
Growth of basic capital goods industries
Basic capital goods industries refer to the industries that produce capital goods, which are goods that are used to produce other goods and services. India witnesses an increase in these industries due to its big efforts.
Expansion in social overhead capital
Social Overhead Capital refers to the infrastructure and public goods that are necessary for a country’s economic growth and development, such as roads, bridges, ports, airports, power plants, water supply systems, telecommunications systems, education and health care systems, research and development institutions and other public goods that are necessary for a country’s economic and social development.
Progress in the banking and financial sector
Significant progress in the banking and financial sector take place in India post-independence.