This essay explains the process of colonization of Indian economy.

It is essential to know the meaning of colonialism and the process of the making of Indian economy. Colonialism is the process of one country taking control of another, something that British empire did from 16th century to the mid of 20the century. When we are talking about colonialism, the things we take into account is the process of colonization of the Indian economy was integrated to the British economy through trade and capital and how England dominated the Indian economy. Long year back India was not a one country but made up of, the small pieces of the different kingdoms and it is ruled by only a single empire. That was a time when foreigners actually occupied places in India. Half of them settled in India and became Indians. Half of the people looted the country, went back and became rich. This happened many years back, but the discussion will cover the recent period of the Indian history. British rule in India was started from 1757 when Siraj-udDaula was defeated by the English east India Company, but it was not the actual starting of the imperialism. The imperialism started from the second half of the 19th century and the first half of the 20th century. Before 1757 Britishers main focus was on their interests of making money. It passed through several stages, but their interest was throughout the same. The English east India Companys aim was just to make money, by becoming a monopolist. They wanted a monopoly power, so that there will be no English merchants or European merchants for the competition against them. They were also against the Indian merchants for the competition, as there idea was to buy Indian goods in a reasonable amount and to sell them abroad in an expensive amount, so as to maximize their profits. There were different problems exists at that like monopoly power was not possible when there was ordinary trade. Ordinary trade implies lot of companies and competition among them, so the monopoly power is only achieved by giving bribery to the British government as to step out from the competition. To achieve the monopoly power various political and economic measures were also applied to force the British government to approve the monopoly of the right to trade with India and the east to English east India Company. The British laws were not that successful for the approval of the monopoly power because British laws could not keep out the merchants and the trading companies of other European countries. The English East India Company had, to do a powerful war to achieve their goal. East India Company had to maintain a navy, as the trading areas were far away across the seas. The prevention of the competition from Indians was not easy as Indian merchants were protected by the Mughal Empire. But the Mughals became weak in the early 18th century, so the East India company increased using there navy power as to maintain the trading process in India. The second major objective of the East India Company was to control their financial resources, so as to maintain their navy, armies, trading and forts. The company achieved this by doing the local taxation in its coastal areas like Calcutta, madras and Bombay. Gradually, to increase their financial resources and taxes, the idea of company was to expand the territory. This was the beginning of the British capitalism for the development; so as to develop more they need more capital for the investment in industries, trade and agriculture. The wealth drained out of India played a major role in financing the British capitalism. In this stage Indian merchants were thrown out, while weavers are forced to sell their products in lower prices or to work under the company at low wages. The important feature of this stage is that there were no changes seen in any system. Only the administration system were changed and the aim to make the revenue collection more efficient. The resources of the Britain were limited, so as for the resources India played a major role because India was rich. The two main objectives of the Britain were achieved. In the intellectual field no changes were seen to spread the modern ideas which change

the entire way of life in east. Only two institutes were opened at that time. These were the changes in the first stage of colonialism. In the second stage the monopolisation and the collection of the revenues was not that useful method for the British industrialists. Now the British industrialist is in urge of foreign outlets, so as to sell their manufactured goods and to increase their output. The British industries needed raw material and the British working man needed food stuffs which should be imported. Britain wants India to be their trading partner, so as India should import the raw material and food stuff. In this idea, the problem emerged which was that India should pay for their imports. India also had to pay wealth to British civil and military officials. They also had to pay interest on the British capital which was invested in India. For centuries India was an exporter of cotton textiles. India also had to export the products in other countries and Britain. Indias pattern of foreign trade was changed. Now India became an importer of cotton textiles, exporter of cotton and other raw materials. Indias wealth was drained in this period. In 1813, the idea of free trade was introduced and tariffs for incoming goods were abolished. Administration was expanded, reaching the smaller villages so that the British good could reach there and the raw materials could be drawn out. Modern education which was introduced in 1813, expanded in 1833 because they cannot hire Englishmen in higher wages for the administrative purposes. Due to the expansion of the administration and the judiciary, there was a shortage of man power. Hence, modern education system was introduced to train the Indians. Transportation was introduced to transport the large scale imports and the exports. Telegraph systems was introduced for the facility of the business transactions. Liberal imperialism was the new political ideology. Due to the emergence of the liberal imperialist political ideology in this metropolis, it was believed that Britain could carry on exploitation equally well with independent nations as long as free trade prevailed. Therefore, talk of training Indians for self-government was heard. The third stage in India begun in 1860s. At that time England lost its industrial monopoly and many new countries underwent industrialization. This was the period, where lot of competition happened. Countries like japan developed powerful industries and was searching for a foreign market for, their products. Secondly, Technological transformations happened in international transport. Modern chemical factories were introduced and petroleum as a fuel introduced for making of combustible engines and the use of electricity for industrial purposes. On the one hand industrial development was developing and on the other hand new industries were introduced and they were consuming the raw material in a large quantity without which the industry can be at risk. Industrial development led to the expansion of the urban people as there were needs of more food. Thirdly, there is a greater accumulation of capital and the new banking system, trusts and corporation was developed. These changes brought about a new stage of colonialism in India. The production of steel in 1850 was 80,000 tons and in 1900 it led to 28 million tons. The pace of industrial development became much faster than ever before. Now, they would need more material, markets and foodstuffs for their workers. There were lot of capital which should be invested in different sectors. In developed countries money invested in banks as fixed capital with guaranteed profit. Outlets were to be formed for the investment of a capital. Main feature of the third stage was, when the colony used as an investment of the capital. More Britishers capital began to be invested in the colony. They set up industries in India because of the wages were low, so they gained profits. British capital entered Indian industries in railways, jute, cotton textiles, iron and steel, shipping, tea plantation and coal mining. Earlier trade with India in the first stage continued in the second stage. India

became an important arena or market for trade of British capital. The Indian army was the chief instrument for the expansion. British captured large part of the world with the help of Indian army with the help of the Indian army and British navy. By 1904, nearly 52% of Indian revenue was spent on the maintenance of Indian army. In this stage the term benevolent despotism was introduced. Great colonization of Africa begins.one feature of this phase was the usage of the Indian army, a new type of nationalism developed in England, new areas came under control. India was a pride for Britain and it became a part of British nationalism. India was a jewel in the crown of British. The responsibility to civilize the world is called the white mans burden. England and Europe was civilized and it was the duty to civilize others. There was a contradiction of the investment of capital which is white man decided to look for colonies which had more money. They invested their capital in the white colonies because they thought that India as a colony would not give good returns and India was not a rich economy. The impact of Britishers on agriculture. Britishers played a major role in Indias economy but it was not to improve the Indian agriculture system but was just to increase the production and welfare. They were doing this for their own purpose, so as to collect the land revenue and the surplus from the Indian economy. The British introduced two major land revenue systems. One was Zamindari and second one was Ryotwari system. Under zamindari system taxes are collected by old farmers or revenue collectors and Zamindars turn into private landlords. The revenue collection they had to give to government. Under the ryotwari system the government directly collect the revenue from the individual cultivators who were the owners of the land. Whatever the system name is, they take a high rent from the peasants cultivators, who suffered. After 1901 revenue system were little reduced, by that the time agrarian economy was ruined. Due to the system the peasants suffered a lot because to pay high rents some or the other day they had to borrow money to pay the taxes. The second important thing which led Indian peasants suffered a lot is to sell their crops cheaply. These problems led to a new system which doesnt permit the development of agriculture. It was a new structure that colonialism evolved. The most problematic thing was that no efforts were made to improve agricultural practises or to develop agriculture, so as to increase the production. No resources were introduced like seeds, manures and fertilizers etc. The peasants were so poor that they cannot buy the resources and improve agriculture. Government behaved like a landlord there main aim was just to extract high revenues and doesnt want to take any step for the improvement and development of agriculture. This was the result of stagnation in the agrarian economy. Between 1901 and 1939, the fall in the per capita income production of food grains was over 24%. Most of this happen occurred after 1918. The impact of Britishers on trade and Industry. Indian textiles industry suffered in 3 stages which is less money, loosing England as a market and loosing India as a market. European Indian markets were flooded with handicrafts. India became an exporter of cotton in 1850s. Deindustrialization happened in cotton. Jute was grown and manufactured in India after Deindustrialization. Deindustrialization means destruction of traditional handicrafts industry and decrease in the number of people dependent on industry. India supplied raw jute to England. Jute was manufactured in India stopped. Home industry in jute came to an end by the end of the 19th century. In this era, wax bangles were replaced by glass bangles. Bangles were manufactured in England and the traditional manufacturing suffered in India. Many of them went to agriculture which created an overburdening of agriculture. In proportion of male force in agriculture there was an increase from 65% to 78% from the end of 19th century to 20th century. Male in industry declines from 16% to 9% from 1881 to

1931. This happened because many shifted to agriculture. This is known as ruralisation of Indian economy. An increase in import of cotton goods and decrease in export of cotton manufactured goods. Decline and destruction of indigenous industries like handlooms were destroyed. Increase in the no of agricultural workers and decrease in the industrial workers. These were the problem happened because of deindustrialization. With the rise of industrialization the traditional handicraft industries were destroyed. When in England these traditional industries were declined, modern industries were constructed. Handlooms shifted to the modern industries but Indians did do the same because the modern industries developed in India were controlled by British. This effected Indian economy. As a result India was less industrialized at the end of 19th century a period of industrialization in the world. India was more industrialized in the beginning of 19th century and less in the beginning of 20th century (all manufactured goods were been imported). All over the world traditional manufacturing was replaced but in India there was no alternative unemployment. Indian people had no choice but to go back to farming.in England who lost out also gained. Industries developed in India were controlled by British. India started industrialization very late. The commercialization of agriculture, has three different meanings that is producing crop not for own consumption but for the market, in return of money. Not for exchange or consumption but for the market. Secondly, shifting from food crops to crash crops and to become dependent on a market for producing cash crops. Thirdly, agricultural this is exposed to capitalism, where land can be bought and sold. When land is used as an investment, it becomes a commodity. Land is something on which taxes are paid. Its an inevitable part of modern economic development. Commercialization happened in modern England. In 19th century commercialization happened at a much larger scale. In the 18th century Indian peasants were sold to shift from crops to silk, jute etc. by east India Company. The trading wasnt much because of the cost of trading. After 1850s commercialization happened because of railways. Two factors played an important role in commercialization are railways; railways facilitated the commercialization. Secondly, it was the civil war in America; civil war between north America and South America. America traditionally was a big supplier of cotton to the British industries. Now because of civil war supply of raw cotton discontinued. Then the Britishers took cotton from India that is how India entered into commercialization after 1850s. In this way capitalism began to enter India. Commercialization happened in England as well. Industrialization, many peasants moved into cities. The number of people producing food went down. The rent got commuted from kind into cash. The land area under cash crops increased, the land producing food became less but the productivity of land increased in England. The land producing food did not increase very much. Production of food did not suffer. This is the time of deindustrialization in India, where land is shifting from food to cash crops. People are dependent on agriculture because of deindustrialization. This is the time people were shifting from industry to agriculture. There was an absence of growth of industries. Uneven development of commercialization. In England the output per acre were increased. In India commercialization produced a shortage of food. By then, the railway created a situation of starvation of famines, which lead to the shortage of food. Rich peasants were benefitted from commercialization like they were getting rent as they were landlords, well off peasants and they had money to invest in the land and small peasants lost out and became landless labours.