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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