Economic Transformation in India: Top 6 Causes | British Rule

The following points highlight the top six causes of economic transformation in India. The causes are: 1. Establishment of ‘Pax Britanica’ 2. Establishment of P.W.D. Department and Railways 3. Impact of Western System and Ideals 4. Influx of Foreign Capital and Entrepreneurs 5. Industrial Revolution in England 6. Commercial and Other Policies.

Economic Transformation: Cause # 1.

Establishment of ‘Pax Britanica’:

The conquest of India by the British was completed in 1818. In India political unity was established just with the establishment of British rule along-with a strong Central Power in the country. The British rule brought law and security in India for the first time and resulted in economic unity of the country which were considered as the first requirement of economic progress.

Economic Transformation: Cause # 2.

Establishment of P.W.D. Department and Railways:

During the regime of Lord Dalhousie, the Public Works Department was established in 1850 and with it roads started to develop in various parts of our country. Moreover, railways were also gradually developed after 1853. All these have resulted into breaking the isolation of villages and also expanded markets of our commodities by linking remote villages with outside world.

Economic Transformation: Cause # 3.

Impact of Western System and Ideals:

With the gradual adoption of Western law and English education system and with the growing contact with Britishers along-with their ideas and institutions, the old traditional and value-system of Indian people had to face a lot of changes. All these factors had resulted in serious impact on the traditional economy of India both directly and indirectly.

Economic Transformation: Cause # 4.

Influx of Foreign Capital and Entrepreneurs:

The establishment of British rule in India had resulted in a huge inflow of foreign capital along-with the entry of a good number of foreign entrepreneurs. These led to greater volume of investment and simultaneous development of factory system of industries, plantation industries like tea and coffee, indigo, coal mining, railway, transport etc.

Indian Economy remained stagnant over centuries for all practical purposes. During those days, the rate of savings was very poor and moreover that meagre amount of savings was again habitually invested in gold and silver ornaments and also in real estates.

Under such a situation, the inflow of foreign capital and its productive investment opened vast opportunities before Indian people and brought a continuous flow in its economy.

Economic Transformation: Cause # 5.

Industrial Revolution in England:

After the Industrial Revolution in 1750 and more especially after 1800, British factory products started to enter into Indian markets at a very cheaper rate. This flow of factory products made a severe blow to the traditional economy of India. Indian handicrafts had to face stiff competition from the cheap factory products of the British.

Economic Transformation: Cause # 6.

Commercial and other Policies:

During the colonial rule, British government enforced its commercial and other policies on the Indian people. More particularly, the laissez-faire policy enforced by the British had created a serious impact on the traditional economy of our country. Moreover, the trade policy of the British had threatened our home industries, leading to a total change in the production system of our country.

All these had transformed the Indian economy into a primary producing country, exporting mostly raw materials, tea etc. and importing British industrial products. Introduction of these policies were causing drainage of precious resources of India.

Thus the above mentioned factors were primarily responsible for the transformation of Indian economy during the British rule. Thus the Indian economy was gradually transformed from a self-sufficient economy into a colonial economy.