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  Benefits of the British Rule in India  


By: Dr.Dipak Basu
June 10, 2006
iews expressed here are author’s own and not of this website. Full disclaimer is at the bottom.


(The author is a Professor in International Economics in Nagasaki University, Japan)

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A number of historians both India and foreign writers and historians have started justifying the empire and even asking USA to take up the “White Man’s Burden” to bring civilizations and justice to the dark world of the dark skinned people. The views of the Western historians like Neil Ferguson or Michael Ignatief are being reflected by their Indian counterparts like Triankar Roy, Dipak Lal, or even Man Mohan Singh in his lecture in Oxford University recently. The surprising matter is that even the Sangha Parivar writers like M.S.Menon, and Priyadarshi Dutta are also propagating the benefits that the British rule has brought to India.

Before the British came, India was one of the richest countries in the world. In 1800, India, China and Egypt (and probably many of the kingdoms of central Africa) were economically more developed than Britain. Indeed the British had nothing for sale that was of interest to the Indians or Chinese. When the British left in 1947, India was poor and industrially backward.

Britain did bring free trade to India and China. Britain had extracted large surpluses from India, and forced it into a free-trade pattern, which obliged India to export commodities and become a dumping ground for British manufactures. Historians estimate that the net transfer of capital from India to Britain averaged 1.5 percent of GNP in the late nineteenth century. The wealth transfer was financed by a persistent trade surplus of India, which was sent back to Britain or spend to expand the British Empire India’s export-import ratio was 172.5 percent in 1840-69, 148 percent in 1870-1912, and 133.4 percent in 1913-38. This export orientation was a tool of colonial exploitation, and free trade a British ploy to force its manufactures on India and crush domestic industry.

Instead of enriching the world, the British Empire impoverished it. The empire was run on the cheap. Instead of investing in the development of the countries they ruled, the British survived by doing deals with indigenous elites to sustain their rule to extract maximum amount of revenues for Britain itself, which the British historians now deny.  

Whether in 18th-centuryIndia, 19th-century Egypt or 20th-century Iraq, the story is the same. As long as taxes were paid, the British cared little about "the rule of law". They turned a blind eye to Indian landlords who extracted rent by coercion or indigo and opium - planters who had forced Indian farmers to cultivate and their products were forced upon the Chinese. Unable to sell anything to the Chinese, Britain sent in its gunboats, seizing Hong Kong and opening up a market for opium grown in India. Despotic repression was fostered where it protected British interests.

India is the prime example. Ruled by Muslims before the British, India was a prosperous, rapidly commercializing society. The Jagat Seth, India's biggest banking network and financier of the East India Company, rivaled the Bank of England in size. British rule pauperized India. The British restricted Indian weavers' ability to trade freely and the result was a drastic drop in living standards. Dhaka, now the capital of impoverished Bangladesh, was once a state-of-the-art industrial city. Its population fell by half during the first century of British rule. Now, average Indian incomes are barely a tenth of the British level in terms of real purchasing power. It is no coincidence that 200 years of British rule occurred in the intervening time.

Rabindranath Tagore wrote “The chronic want of food and water, the lack of sanitation and medical help, the neglect of means of communication, the poverty of educational provision, the all pervading spirit of depression that I have myself seen to prevail in our villages after over a hundred years of British rule make me despair of its beneficence.” 

The impact of British rule in India:

As Davis concludes: "If the history of British rule in India were to be condensed to a single fact, it is this: there was no increase in India’s per-capita income from 1757 to 1947." (in Late Victorian Holocausts: El Nino famines and the making of the Third World by M. Davis, London, Verso Books, 2001) In fact, incomes may have declined by 50 percent in the last half of the 19th century.

Shares of world GDP (percent)





















Source: Davis, 2001 

Destruction of agriculture:

Karl Marx wrote in Consequences of British Rule in India,

“England has broken down the entire framework of Indian society, without any symptoms of reconstitution yet appearing. The British in East India accepted from their predecessors the department of finance and of war, but they have neglected entirely that of public work s.”

“There have been in Asia, generally, from immemorial times, but three departments of Government; that of Finance, or the plunder of the interior; that of War, or the plunder of the exterior; and, finally, the department of public works. Climate and territorial conditions, especially the vast tracts of desert, extending from the Sahara, through Arabia, Persia, India, and Tartary, to the most elevated Asiatic highlands, constituted artificial irrigation by canals and water-works the basis of Oriental agriculture. Hence an economical function devolved upon all Asiatic Governments, the function of providing public works. This artificial fertilization of the soil, dependent on a Central Government, and immediately decaying with the neglect of irrigation and drainage, explains the otherwise strange fact that we now find whole territories barren and desert that were once brilliantly cultivated, as Palmyra, Petra, the ruins in Yemen, and large provinces of Egypt, Persia, and Hindostan; it also explains how a single war of devastation has been able to depopulate a country for centuries, and to strip it of all its civilization.”

Destruction of self-sufficient rural economy:

“British steam and science uprooted, over the whole surface of Hindostan, the union between agriculture and manufacturing industry.”

“The third form of destruction was the destruction of the self-sufficient village society of India. Under this simple form of municipal government, the inhabitants of the country have lived from time immemorial. These small stereotype forms of social organism have been to the greater part dissolved, and are disappearing, not so much through the brutal interference of the British tax-gatherer and the British soldier, as to the working of English steam and English free trade.”

“Those family-communities were based on domestic industry, in that peculiar combination of hand-weaving, hands-spinning and hand-tilling agriculture, which gave them self-supporting power. English interference having placed the spinner in Lancashire and the weaver in Bengal, or sweeping away both Hindoo spinner and weaver, dissolved these small communities, by blowing up their economical basis”

De-industrialization of India under the British:

After destroying its agriculture British had embarked upon the destruction of Indian industry. Several Indian historians have argued that British rule led to a de-industrialization of India. By the Act 11 and 12 William III, cap. 10, it was enacted that the wearing of wrought silks and of printed or dyed calicoes from India, Persia and China should be prohibited, and a penalty of £200 imposed on all persons having or selling the same. Similar laws were enacted under George I, II and III, in consequence of the repeated lamentations of the afterward so “enlightened” British manufacturers. And thus, during the greater part of the 18th century, Indian manufactures were generally imported into England in order to he sold on the Continent, and to remain excluded from the English market itself. 

Ramesh Chandra Dutt argued (in Economic History of India, London, 1987):

“ India in the eighteenth century was a great manufacturing as well as a great agricultural country, and the products of the Indian loom supplied the markets of Asia and Europe. It is, unfortunately, true that the East India Company and the British Parliament, following the selfish commercial policy of a hundred years ago, discouraged Indian manufacturers in the early years of British rule in order to encourage the rising manufactures of England. Their fixed policy, pursued during the last decades of the eighteenth century and the first decades of the nineteenth, was to make India subservient to the industries of Great Britain, and to make the Indian people grow raw produce only, in order to supply material for the looms and manufactories of Great Britain”.

According to Karl Marx, ” However changing the political aspect of India’s past must appear, its social condition has remained unaltered since its remotest antiquity, until the first decennium of the 19th century. The handloom and the spinning wheel, producing their regular myriads of spinners and weavers, were the pivots of the structure of that society.”

“It was the British intruder who broke up the Indian handloom and destroyed the spinning wheel. England began with driving the Indian cottons from the European market; it then introduced twist into Hindostan, and in the end inundated the very mother country of cotton with cottons.”

From 1818 to 1836 the export of twist from Great Britain to India rose in the proportion of 1 to 5,200. In 1824 the export of British muslins to India hardly amounted to 1,000,000 yards, while in 1837 it surpassed 64,000,000 of yards. But at the same time the population of Dacca decreased from 150,000 inhabitants to 20,000. This decline of Indian towns celebrated for their fabrics was by no means the worst consequence. “

There is a good deal of truth in the deindustrialization argument. Moghul India did have

a bigger industry than any other country, which became a European colony, and was unique in being an industrial exporter in pre-colonial times. A large part of the Moghul industry was destroyed in the course of British rule.  

The second blow to Indian industry came from massive imports of cheap textiles from

England after the Napoleonic wars. In the period 1896-1913, imported piece goods supplied about 60 per cent of Indian cloth consumption, 45 and the proportion was probably higher for most of the nineteenth century. Home spinning, which was a spare-time activity of village women, was greatly reduced.  

It took India 130 years to manufacture textiles and to eliminate British textile imports. India could probably have copied Lancashire's technology more quickly if she had been allowed to impose a protective tariff in the way that was done in the USA and France in the first few decades of the nineteenth century, but the British imposed a policy of free trade. British imports entered India duty free, and when a small tariff was required for revenue purposes Lancashire pressure led to the imposition of a corresponding excise duty on Indian products to prevent them gaining a competitive advantage. This undoubtedly handicapped industrial development. If India had been politically independent, her tax structure would probably have been different. In the 1880s, Indian customs revenues were only 2.2 per cent of the trade turnover, i.e. the lowest ratio in any country. In Brazil, by contrast, import duties at that period were 21 per cent of trade turnover. 

British rule had not promoted industrialization in India either. Japan and China were not colonized by the British; they remained independent.  The Indian steel industry started fifteen years later than in China, where the first steel mill was built at Hangyang in 1896. The first Japanese mill was built in 1898. In both China and Japan the first steel mills (and the first textile mills) were government enterprises, whereas in India the government did its best to promote imports from Britain.  

Until the end of the Napoleonic wars, cotton manufactures had been India’s main

export. They reached their peak in 1798, and in 1813 they still amounted to £2 million, but thereafter they fell rapidly. Thirty years later, half of Indian imports were cotton textiles from Manchester. This collapse in India’s main export caused a problem for the Company, which had to find ways to convert its rupee revenue into resources transferable to the UK. The Company therefore promoted exports of raw materials on a larger scale, including indigo, and opium, which were traded against Chinese tea. These dope-peddling efforts provoked the Anglo-Chinese war of 1842 in which the British drug-pushers won and forced China to accept more and more opium. 

Financial Exploitation of India: 

Until 1898 India, like most Asian countries, was on the silver standard. In 1898, India under British rule, had to adopt a gold exchange standard which tied the Rupee to Pound at a fixed value of 15 to 1, thus forcing India to export more for smaller amount of British goods. This was another kind of exploitation of the Indian people making them poorer and poorer. 

Another important effect of foreign rule on the long-run growth potential of the

economy was the fact that a large part of its potential savings was siphoned abroad. There can be no denial that there was a substantial outflow, which lasted for 190 years. If

these funds had been invested in India they could have made a significant contribution to raising income levels.  

The first generation of British rulers was rapacious. Clive took quarter of a million

Pounds for himself as well as a jagir worth £27,000 a year, the Viceroy received £25,000 a year, and governors £10,000. The starting salary in the engineering service was £420 a year or about sixty-times the average income of the Indian labor force. From 1757 to 1919, India also had to meet administrative expenses in London, first of the East India Company, and then of the India Office, as well as other minor but irritatingly extraneous charges. The cost of British staff was raised by long home leave in the UK, early retirement and lavish amenities in the form of subsidized housing, utilities, rest houses, etc. Under the rule of the East India Company, official transfers to the UK rose gradually until they reached about £3.5 million in 1856, the year before the mutiny.

In addition, there were private remittances.  

D. Naoroji, (in Poverty and Un-British Rule in India, London, 1901) suggests that the annual remittances including business profits from mainly India and to a limited extent from China were already 6 million in 1838. R.P. Dutt argues that 'the spoliation of India was the hidden source of accumulation which played an all important role in helping to make possible the Industrial Revolution in England' (in Economic History of India, London, 1897) 

In the twenty years 1835-54, India’s average annual balance on trade and bullion was favorable by about £4.5 million a year. During the period of direct British rule from 1858 to 1947, official transfers of funds to the UK by the colonial government were called the “Home Charges”. They mainly represented debt service, pensions, India Office expenses in the UK, purchases of military items and railway equipment. Government procurement of civilian goods, armaments and shipping was carried out almost exclusively in the UK. By the 1930s these home charges were in the range of £40 to £50 million a year. Some of these flows would have occurred in a non-colonial economy, e.g. debt service on loans used to finance railway development, but a large part of the debt was incurred as a result of colonial wars. Some government expenditure was on imports, which an independent government would have bought from local manufacturers. Of these official payments, we can legitimately consider service charges on non-productive debt, pensions and furlough payments as a balance of payment drain due to colonialism.

There were also substantial private remittances by British officials in India either as

savings or to meet educational and other family charges in the UK. In the inter-war period, these amounted to about £10 million a year, and Naoroji estimated that they were running at the same level in 1887. These items were clearly the result of colonial rule.  

In addition, there were dividend and interest remittances by shipping and banking interests, plantations, and other British investors. The total ‘drain’ due to government pensions and leave payments, interest on non-railway official debt, private remittances for education and savings, and a third commercial profits amounted to about 1.5 per cent of national income of undivided India from 1921 to 1938 and was probably a little larger before that. Net investment was about 5 per cent of national income at the end of British rule, so about a quarter of Indian savings were transferred out of the economy, and foreign exchange was lost which could have paid for imports of capital goods.

As a consequence of this foreign drain the Indian balance of trade and bullion was always positive.  In spite of its constant favorable balance of trade, India acquired substantial debts. By1939 foreign assets in India amounted to $2.8 billion, of which about $1.5 billion was government-bonded debt and the rest represented direct investment (mainly tea, other plantations and the jute industry).  

India did not reduce its foreign debt during the First World War as many other

developing countries did. Instead, there were two ‘voluntary’ war gifts to the UK amounting to £150 million ($730 million). India also contributed one-and-a-quarter million troops, which were financed from the Indian budget. The 'drain' of funds to England continued in the interwar years because of home charges and profit remittances.

There was also a small outflow of British capital. In the depression of 1929-33, many developing countries defaulted on foreign debt or froze dividend transfers, but this was not possible for India. The currency was kept at par with sterling and devalued in 1931, but the decisions were based on British rather than Indian needs. Furthermore, the salaries of civil servants remained at high level, and the burden of official transfers increased in a period of falling prices.  

During the Second World War, India's international financial position was transformed.

Indian war finance was much more inflationary than in the UK and prices rose threefold, so these local costs of troop support were extremely high in terms of Pound, as the exchange rate remained unchanged. 

For the last fifty years of British rule there is no increase in per capita income.  The most noticeable change in the economy was the rise in population from about 170 million to 420 million from 1757 to 1947. Very little incentive was provided for investment and almost nothing was done to promote technical change in agriculture. At the bottom of society the position of sharecropping tenant and landless laborers remained wretched.

Meanwhile Indian taxes funded Britain's Indian army, which was used to expand the empire into Africa and Asia and which made a major contribution to defending the same empire in two world wars--all at no cost to the 'home' country! Lord Salisbury said India 'was an English barrack in the Oriental seas from which we may draw any number of troops without paying for them'.

Man-Made Famines in British India:

The British brought an unsympathetic and ruthless economic agenda to India" and that "the creation of famine" was brought about by British "sequestration and export of food for enhanced commercial gain." Three important factors caused devastating famines in India under British rule. First, India’s indigenous textile industries were destroyed by London’s high tariffs and the import of cheap British manufactured products, impoverishing millions of town dwellers, who were forced into the countryside to compete for dwindling land. Second, India’s traditional granary reserve system, designed to offset the impact of bad harvests, was dismantled. Third, India’s peasants were pressured into growing crops for export, making them dependent on fluctuating world market prices for their means of subsistence. As a result, tens of millions of people died of starvation. These famines were not caused by shortages of food. They took place at the very same time that annual grain exports from India were increasing.

One third of the population of the then province of Bengal, which includes today’s Bangladesh, West Bengal, Orissa, Bihar and South Assam, were wiped out in the famine of 1770, immediately after Bengal was occupied by the British Easy India Company, due to their inhuman tax system. According to author Mike Davis, during the famine of 1876, "the newly constructed railroads, lauded as institutional safeguards against famine, were instead used by merchants to ship grain inventories from outlying drought stricken districts to central depots for hoarding...In Madras city, overwhelmed by 100,000 drought refugees, famished peasants dropped dead in front of the troops guarding pyramids of imported rice."

The British refused to provide adequate relief for famine victims on the grounds that this would encourage indolence. Sir Richard Temple, who was selected to organize famine relief efforts in 1877, set the food allotment for starving Indians at 16 ounces of rice per day--less than the diet for inmates at the Buchenwald concentration camp for the Jews in Hitler’s Germany. British disinclination to respond with urgency and vigor to food deficits resulted in a succession of about two dozen appalling famines during the British occupation of India. These swept away tens of millions of people. The frequency of famine showed a disconcerting increase in the nineteenth century,” under the British rule

(in Famines in India, Asia Publishing House, Bombay, 1963).  

Very few would be aware of the horrendous calamities inflicted on Indians by the British.  The annual death rate in 1877 in British labor camps during the Deccan famine was about 94%. Extraordinarily low population growth between 1870 and 1930 (due to famine, malnourishment-exacerbated disease and cholera, plague and influenza epidemics) was due to this exploitative policy.  In 1943 Bengal Famine in British-ruled India about 5 million people were perished, but it was never mentioned in the British history books, because it was caused by a deliberate British “scorched earth policy” to deprive the Azad Hind Army and the Japanese to receive any support from the local people. 

The annual death rate in India before 1920 was about 4.8% but this declined to 3.5% by 1947 and is presently about 0.9%( http://countrystudies.us/india/32.htm). Using a baseline “expected” annual death rate value of 1.0% and assuming an “actual” pre-1920 value of 4.8% one can estimated that the avoidable (excess) mortality was about 0.6 billion during 1757-1837, 0.5 billion during 1837-1901 and 0.4 billion during 1901-1947. Thus the British rule of India was associated with an excess (i.e. avoidable) mortality totaling 1.5 billion – surely one of the greatest crimes in all of human history.

An extraordinary feature of the appalling record of British imperialism with respect to genocide and mass, worldwide killing of huge numbers of people (by war disease and famine) is its absence from public perception. There is no mention of famine in India or Bengal in the British textbooks of history. New historians in India are now putting the blame on the victims. Meghnad Desai in his article in Cambridge History of India puts the blame on the Indian speculators; Amartya Sen suggested (in ‘Ingredients of Famine Analysis’, Quarterly Journal of Economics, Vol XCVI, 1981) that people in that area had eaten too much to create the famine. 


The progress made in India under British Rule like the coming of railways, Postal System, Telegraphic communications, etc., were all undertaken by the British Administration to facilitate their rule. The aim of British policy was to integrate the Indian economy with that of the British in way such that India supplied Great Britain with cheap raw material for being manufactured into valued-added (costly) finished products. It is not true that if India remained independent it could not have developed railways or telegraphic system; Japan or Thailand was never colonized but they have today much better infrastructure than that in India.

India during the British rule was to provide a ready captive market for British goods made from Indian raw materials. The resultant enrichment and industrial development was to take place in Britain and not in India. Thus at the dawn of independence, India inherited an economy that had the worst features of both the feudal and the industrial ages without the advantages of either. As Rabindranath Tagore wrote in 1941, in his letter from the deathbed to British member of parliament Mrs.Rothbone, that “…in the Soviet Union illiteracy was eradicated with two decades but in India even after two centuries of British rule only 15 percent of the Indians were literate”.

Priyadarsi Dutta, parliamentary secretary to Balbir Punj, the chairman of the BJP’s think-tank, wrote in The Organizer, the organ of the R.S.S on 28 May 2006, that the British rule was only a learning process emphasizing the positive aspects of the British empire as written in the history text books in Britain. Thus, they are suggesting that thousands of our heroes and heroines of the freedom struggle who had sacrificed their lives to liberate India were all very stupid. This is the indication of cultural imperialism, which is bound to take place in India along with the ‘globalization’, and the ‘economic reforms’ put forward by no other than the Anglo-American economists and policy-makers.

Dr.Dipak Basu

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