Class 12 Economics Long Questions with Answers - Indian Economy On The Eve Of Independence

Q.1. State the features of the Indian economy at the time of independence.
Ans. At the time of independence, the Indian economy was struggling with many issues. Let's look at the main problems:

(A) Rampant Poverty: India had a large population, which led to widespread poverty. Many people were unemployed and illiterate, making poverty a big problem.

(B) Unequal Commercialization of Agriculture: Farming was only developed in a few productive areas, creating an imbalance in productivity across the country. Rich states had better farming conditions, while poor states lagged due to problems like outdated farming methods, lack of irrigation, and minimal use of fertilizers. For example, while some regions had proper irrigation systems, others relied only on rainfall.

(C) Semi-Feudal Economy: A Feudal Economy is an economic system characterized by a rigid social structure where land is the main source of wealth and power.​India's economy was slow, stagnant, and backward. The rate of economic growth was very low, with per capita income growing at just 0.5% per year.

(D) Poor Infrastructure: India lacked proper transportation, communication systems, and electricity. This poor infrastructure slowed down India's economic progress. For instance, many villages were not connected by proper roads or electricity.

(E) Limited Growth of Consumer Goods Industries: Industries producing goods like jute, textiles, sugar, and matchboxes existed but were controlled by the British. The profits mainly went to Britain, leaving these industries underdeveloped.

(F) Decline of Cottage Industries: Before British rule, India was famous for its handicrafts like cotton, silk textiles, metalwork, and precious stone crafts. These products were sold worldwide. However, British policies destroyed these industries, and by the time of independence, most of them were almost wiped out.

(G) Limited Foreign Trade: India’s trade with other countries was very restricted. The British made India a supplier of raw materials (like cotton and spices) and an importer of finished goods (like textiles from Britain).

(H) Other Challenges: India was also dealing with problems like poverty, malnutrition, poor health facilities, and a rapidly growing population.

Q.2. How did the British exploit the Indian agriculture sector?
Ans. 
(A) India is an agricultural country. 85 per cent of the Indian population was engaged directly or indirectly in agriculture. In order to provide British Industries with cheap raw materials, the Indian farmers were forced to grow cash crops (like Indigo and cotton) instead of food crops like rice and wheat. This led to commercialization in India.
(B) However, despite the occupation of such a large population, this sector continued to experience stagnation and unusual deterioration.
(C) Although the agricultural sector was the main source of national income and employment, it remained backward and deficient. It was burdened with defective institutions like ‘Zamindari’ and ‘Jagirdari’.
(D) The British government had paid little attention to land reforms or to increasing agricultural productivity.
(E) India, once an important exporter of food grains, started suffering from an ever-worsening food shortage.
(F) Agricultural productivity was low because there was a low level of technology, a lack of irrigational facilities and negligible use of fertilizers. Cash crops of the farmers were to be ultimately used by the British industries at home.
(G) Furthermore, the country's partition at the time of independence gave a setback to India’s agricultural production. A sizable portion of the undivided country’s highly irrigated and fertile land went to Pakistan, which impacted India’s agricultural production adversely. India’s jute goods industry suffered heavily due to a lack of raw materials. Thus, the Indian agricultural sector stagnated at the time of independence.

Q.3. what was the condition of the industrial sector on the eve of independence?
Ans.
(A) The scenario of the industrial sector under British colonial rule was under-developed.
(B) British policies transformed the Indian economy into a mere supplier of raw materials and consumer of the finished industrial products from Britain.
(C) There was a lack of heavy, basic and capital goods industries and the country was almost totally dependent upon foreign nations for supply of machines, engines, spare parts, etc.
(D) Manufacturing capacity was also very limited. Modern industry began to take root in India during the second half of the 19th century.
(E) The first iron and steel company, TISCO (Tata Iron and Steel Company) was established in Jamshedpur. This plant began production in 1912.
(F) Industries like sugar, cement and paper also came up after the Second World War. However, there was an absence of capital goods industries at the time of Independence. As a result, the contribution of the industrial sector to the national GDP remained very low.

Q.4. Explain the factors responsible for the downfall of indigenous handicraft industries during British rule.
Ans. The decline of Indian handicraft industries during British rule was caused by the following reasons:

(i) Unfair Tax Policy: The British created rules to benefit industries in Britain. They allowed raw materials to be exported from India and British-made goods to be imported into India without any taxes. However, Indian handicraft products had heavy taxes when exported. As a result, British products easily entered Indian markets, while Indian handicrafts lost both local and foreign customers.

(ii) Competition from Machine-Made Products: British factories produced cheap, machine-made goods. These low-cost products were preferred over handmade Indian items, forcing many craftsmen to shut down their businesses due to tough competition.

(iii) Changing Demand: As British culture became popular, a new class of Indians began adopting a Western lifestyle. This shift in preferences increased demand for British goods and reduced demand for Indian handicrafts, causing their decline.

(iv) Improved Infrastructure: The British built railways and improved transportation mainly for their benefit. This made it easier for British products to be transported and sold all over India. As a result, the market for cheap British goods grew, while Indian handicrafts, which were more expensive, continued to decline.

Q.5. Write a short note on the volume and composition of Indian trade during British rule.
Ans. 
India has always been an important trading nation. However, the restrictive policies of commodity production, trade and tariff pursued by the colonial government hurt the structure, composition and volume of India’s foreign trade. Consequently, India became an exporter of primary products such as raw silk, cotton, wool, indigo, jute, etc. and an importer of finished consumer goods like cotton, silk and woollen clothes and capital goods like light machinery produced in the industries based in Britain. Britain maintained a monopoly control over India’s exports and imports. More than 50 per cent of India’s trade was confined to Britain. Other countries with which India used to trade were China, Ceylon (Sri Lanka) and Persia (Iran). The opening of the Suez Canal further intensified British control over India’s foreign trade.

Q.6. Give a brief account of the state of various social development indicators on the eve of Independence.
Ans. The state of various social development indicators was also not quite encouraging:
(i) The overall literacy level was less than 16 per cent. Out of this, the female literacy level was as low as 7 per cent.
(ii) Public health facilities were either unavailable to large sections of the population or, when available, were highly inadequate. As a result, water and air-borne diseases were widespread and took a huge toll on life.
(iii) The overall mortality rate was inevitably very high. The infant mortality rate, particularly, was quite alarming at about 218 per thousand.
(iv) Life expectancy was also very low, that is, only 44 years.
(v) Extensive poverty prevailed in India during the colonial period. It contributed to the worsening demographic profile of India’s population.

Q.7. Explain the methods of colonial exploitation of the Indian economy.
Ans. The British colonial rule exploited the Indian economy in the following ways:
(A) The Industrial Revolution took place in England in the eighteenth century. India was treated as a supplier of raw materials to the British industry. The British exploited the Indian economy to the maximum extent for cheap raw materials to support British industries.
(B) The Indian economy was a market for the finished British products. British government developed railways in India only to meet this purpose.
(C) The British imposed an exploitative land revenue policy. The stagnation in the agricultural sector was caused mainly because of these policies. Under this policy, the profit accruing out of the agriculture surplus went to zamindars instead of the cultivators.
(D) The British colonial rule inflicted upon the Indian economy a very high cost of administration. It also made heavy remittances to Britain in the form of savings and surpluses from their business ventures in India.
(E) Before the British rule, Indian handicrafts enjoyed a worldwide reputation for being quality products. British colonial rule destroyed the demand for Indian handicrafts by imposing a discriminatory tariff policy.
(F) British colonial rule deliberately neglected the development of economic infrastructure such as transportation, power, communication and social infrastructure such as education, health, housing, etc.