CHAPTER 7

AN ECONOMIC CRITIQUE OF COLONIALISM

Arora IAS Short Notes

India Struggle for Independence(1857-1947) Notes

Revision Notes or Short Notes

 

Part-1

Indian National Movement: Economic Critique of Colonialism

 

Context:

• Indian national movement uniquely focused on economic exploitation by British rule.
• Early 19th century Indian intellectuals initially supported British rule for modernization.
• Disillusionment set in after 1860 due to lack of progress and development.

Key Figures (1870-1905):

• Dadabhai Naoroji (Grand Old Man of India): Analyzed drain of wealth from India.
• Mahadev Govind Ranade: Advocated for modern industrial development.
• Romesh Chandra Dutt: Published “The Economic History of India” critiquing colonial rule.

Main Arguments:

• British rule hindered India’s economic development.
• Colonialism subordinated the Indian economy to the British economy.
• British policies aimed at:
  • Extracting raw materials from India.
  • Providing a market for British goods.
  • Attracting British investments.

Strategies:

• Analyzed and exposed colonial economic policies.
• Advocated for an independent Indian economy.
• Used powerful language to raise awareness.

Overall Significance:

• Early nationalists laid the foundation for future nationalist agitation.
• Highlighted the economic exploitation at the heart of colonialism.

 

Part-2

Indian Nationalist View on Poverty and Development

 

Poverty as a National Issue:

• Dadabhai Naoroji highlighted India’s worsening poverty.
• Early nationalists saw poverty as man-made, not inevitable.
• C. Dutt: “India’s poverty is due to economic causes, not nature.”

Causes of Poverty (blamed on colonialism):

• Colonial policies and structure.

Solution: National Development

• Focus on increasing people’s “productive capacity and energy.”
• Aim: Rapid development of modern industry.

Importance of Industrialization:

• Seen as key to economic transformation and national development.
• V. Joshi: “Industrialism represents a superior civilization.”
• Ranade: “Factories can give a new birth to the Nation.”
• Unites diverse populations through shared interests (Surendranath Banerjea).

Industry as the Foundation:

• All economic policies viewed through the lens of industrialization.
• Foreign trade, railways, tariffs, currency, finance, and labor laws seen as tools for industrial growth.

 

Part-3

Early Indian Nationalists: Views on Foreign Capital

 

Disagreement with British Viewpoint:

• British officials like John Stuart Mill and Lord Curzon saw foreign capital as key to India’s development.

Nationalist Opposition:

• Dadabhai Naoroji: Foreign capital led to “despoilation” and “exploitation” of India.
• Indian nationalists saw foreign capital as:
  • Hindrance to Indian capital growth.
  • Cause of capital drain from India.
  • Strengthening British economic control.
  • Political danger leading to subjugation.
• Bipin Chandra Pal (1901): Foreign capital a “two-edged evil” harming both economy and politics.

Nationalist Argument:

• Genuine development required Indian capital to lead industrialization.
• Foreign capital wouldn’t fulfill this task.

Political Concerns:

• Foreign capital investment seen as leading to political subjugation.
• Nationalists feared foreign capitalists would demand security through continued British rule (quoted from The Hindu, 1889).

 

Part-4

Early Nationalists’ Critique of British Economic Policies

 

Decline of Handicrafts:

• Nationalists blamed British policies for destroying traditional Indian industries.
• British focus was on promoting their own manufactured goods.

Foreign Trade and Railways:

• Nationalists argued these did not signify development.
• Foreign trade favored export of raw materials and import of British goods, harming Indian industries.
• Railways primarily benefited British industry by facilitating import of goods.
• V. Joshi: Railway expenditure – “Indian subsidy to British industries.”

Free Trade Policy:

• Seen as unfair competition for nascent Indian industries against established British ones.
• Tariff policies favored British interests.

Colonial Finance:

• Nationalists criticized high taxes on poor and neglect of development spending.
• Demanded:
  • Reduction of land revenue.
  • Abolition of salt tax.
  • Income tax and import duties.
• High military expenditure seen as serving British imperial needs, not India’s.

 

Part-5

The Drain Theory: Core of Nationalist Economic Critique

 Concept:

• Wealth transfer from India to Britain (salaries, pensions, loans, profits, government expenses).
• Drain took form of excess exports with no return benefit.
• Estimated drain: half of government revenue, more than land revenue, over a third of savings (8% of national income today).

Key Figure:

• Dadabhai Naoroji (1867): “Britain is draining and bleeding India.”
• Launched a lifelong campaign against the drain.
• Believed the drain was the root cause of India’s poverty.

Other Nationalist Voices:

• C. Dutt: Drain as central theme of “Economic History of India.”
• Compared drain to “fertilizing rain” enriching other lands, not India.
• Drain seen as impoverishing India and causing famines.

Significance of the Drain Theory:

• Explained how colonialism exploited India’s resources.
• Exposed the economic core of British imperialism.
• Easily understood concept for the masses (drain of money similar to peasant experiences).
• Powerful political slogan (“No Drain”).
• Highlighted the fundamental contradiction between India and British rule.
• Became a major theme of nationalist agitation (especially during Gandhi era).

 

Part-6

Nationalistic Economic Agitation: Weakening Colonial Legitimacy

 

Colonial Power Relied on:

• Moral authority and public belief in its benevolent character.
• Belief that British rule benefitted India (e.g., “benefits of British rule” in textbooks).

Nationalist Economic Argument:

• British rule caused India’s poverty, not prosperity. (e.g., Tilak’s Kesari: “India…a vast pasture for the Europeans to feed upon.”).
• British economic policies prioritized British interests, not India’s. (e.g., P. Ananda Charlu: “India is defenceless…where the very fence begins to feed on the crop.”).
• Sachidanand Sinha: British administration served “the task of exploitation.”

Dadabhai Naoroji’s Critique:

• British rule exploited India under a “face of beneficence.”
• “The romance is the beneficence…the reality is the ‘bleeding’ of the British Rule.”
• Claimed security under British rule was a myth. (e.g., “There is no security of property at all…life is simply ‘halffeeding,’ or starvation…”)
• Law and order came at the cost of economic drain. (“There is an Indian saying: ‘Pray strike on the back, but don’t strike on the belly.'”)

 

Part-7

Economic Agitation and Rise of Political Nationalism in India

 

Erosion of Faith in British Rule:

• Nationalists linked economic issues with India’s political status.
• British administration seen as prioritizing exploitation, not Indian development.
• This led to questioning of British rule’s legitimacy.

Seeds of Discontent and Self-Government Demands:

• Early nationalists, despite moderation, sowed seeds of disloyalty.
• 1875-1905: Period of intellectual unrest and growing national consciousness.
• By 1905, self-government demands became prominent.
• Dadabhai Naoroji: Advocated for “selfgovernment” and treatment like other British colonies.
• 1906: “Selfgovernment or Swaraj” declared as the national movement’s goal.

Foundation of Indian Nationalism:

• Based on a “brilliant scientific analysis” of colonial economics.
• Highlighted contradiction between Indian interests and British rule.
• This critique became a core theme for later nationalists (Gandhi era).

 

 

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