Condition of Indian Economy on the Eve of British Conquest – Free Modern History Notes for UPSC 2025

The condition of the Indian economy on the eve of British conquest was marked by a complex interplay of economic structures, social hierarchies, and political systems. Prior to British colonization, India was renowned for its rich cultural heritage, advanced economic systems, and flourishing trade networks. However, various factors such as internal conflicts, declining Mughal authority, and the advent of European trading powers had already begun to shape the economic landscape of the subcontinent.

India in the pre-colonial period had a stable economy. Self-sufficient agriculture, flourishing trade and rich
handicraft industries-these were some of the features of the Indian economy.

Agriculture

1. Before British rule, Indian agriculture was mainly carried out by subsistence farmers organized in small village communities.
2. Villages were self-sufficient and had limited contact with the outside world, primarily paying land revenue and buying essentials from nearby towns.
3. Farmers grew crops for their own consumption and shared with village artisans, who provided goods they needed.
4. Trade in agricultural produce was limited due to primitive communication and self-sufficiency within villages.
5. Surplus crops were stored for future use, serving as a buffer against famines.
6. Towards the late 18th century, changes began as village communities broke up due to new economic forces.
7. These forces included changes in land ownership and the rise of an export trade, influenced by British rule.

Trade

1. Despite being mostly self-sufficient and having limited communication, India engaged in extensive trade within Asia and Europe.
2. India maintained a balance between imports and exports. It imported items like pearls, wool, dates, and silk from various regions, while exporting cotton textiles, raw silk, spices, and precious stones.
3. Pre-colonial Indian trade had two main features: a favorable balance of trade and a suitable commodity pattern. This means India exported more than it imported, and its trade aligned well with its manufacturing capabilities.
4. Indian trade specialized in exporting what it was good at producing and importing what it needed.
5. However, during colonial times, there was a significant change in India’s trade pattern. Although it still had an export surplus, the types of goods traded shifted. India went from being a major exporter of cotton textiles to importing them, which harmed its traditional handicraft industries.

Handicraft Industries

1. Indian artisans were highly skilled and renowned worldwide, contributing to India’s favorable foreign trade.
2. India produced a wide range of goods including cotton and silk fabrics, sugar, jute, dyestuffs, minerals, metallic products, and arms.
3. Various towns across India were thriving centers of industries like textile production, shipbuilding, and woolen manufacturing.
4. By the end of the 18th century, India was a major player in global trade and industry.
5. However, colonialism disrupted India’s economic prowess, starting with the industrial revolution in England.
6. British machine-made cloth replaced indigenous products, leading to the decline of traditional Indian industries and the displacement of artisans.
7. This pressure from British goods resulted in the downfall of economic centers and a decrease in the number of skilled weavers.

Two significant aspects of the gradual expansion of British rule in India are noteworthy.

1. The British learned from their experiences in one region of India and applied them in other regions, which enhanced their effectiveness in governing a vast colony like India.
2. Changes in British society, particularly in its economic structure, influenced colonial policies in India. As British society evolved from mercantile capitalism to industrial capitalism, their interests in India shifted from trade to market-oriented approaches. Therefore, British colonial policies were shaped by the dynamics of British society and its economic transformations.

In conclusion, the British East India Company obtained a trading charter from the Mughal ruler in 1600, eventually leading to its gradual conquest of India. Starting with the defeat of the Nawab of Bengal in 1757, the Company ruled India for a century until the Indian War of Independence in 1857. Following this conflict, Queen Victoria assumed direct rule over India in 1858, marking the end of the East India Company’s rule. Subsequently, governance of India fell under the jurisdiction of the British Parliament until 1947.