The economic consequences of the British rule can be studied under three heads:

• Decline of Indian Handicrafts and progressive ruralisation of the Indian economy
• Growth of the new land system and the commercialisation of Indian agriculture
• Process of industrial transition of India

Decline of Handicrafts

• While India was an exporter of Handicrafts before the Industrial Revolution, the revolution reversed the character of India’s foreign trade
  • Increase in demand for raw material for British industries
  • Hence, steps were made to crush Indian handcrafts as well as commercialise agriculture to meet the interests of the British industries
• Principle causes for the decline of Indian handicrafts
  • Disappearance of Princely courts
  • Hostile policy of the East India Company and the British Parliament
  • Competition of machine-made goods
  • The development of new forms and patterns of demand as a result of foreign influence
• Economic consequences of the decline of handicrafts
  • Increased unemployment
  • Back-to-the-land movement: handicrafts were forced to take up agriculture or become landless labourers. This increased the pressure on land. This trend of growing proportion of the working force on agriculture is described as ‘progressive ruralisation’ or ‘deindustrialisation of India’. Thus, the crisis in handicrafts and industries seriously crippled Indian agriculture.

Land System during 1793-1850

• 1793: permanent settlement
• Zamindari, Ryotwari, Mahalwari systems
• Absentee landlordism emerged
• The result of the whole change in the land system led to the emergence of subsistence agriculture
• It helped the concentration of economic power in the hand of absentee landlords and moneylenders in rural India.

Commercialisation of Agriculture (1850-1947)

• Define: Production of crop for sale rather than for family consumption
• What distinguished commercial agriculture from normal sales of marketable surplus was that it was a deliberate policy worked up under the pressure from British industries. It was thus forced upon the Indian peasantry.
• Resistance: Indigo revolution etc
• Why CA? Industrial Revolution
• Impact of railways and road transport: Railways and road transport made possible a huge expansion in cash cropping, for national and international markets, and production regimes across the subcontinent were placed in a new context of opportunity
• Impact of CA
  • Mass movement to commercial agriculture caused decline in food production, increase in prices and famines.
  • Halted the process of industrialisation in India