Daily Answer Writing Challenge-11th October

Q1. How did British economic policy in India shape its way from “mercantilism” to “financial imperialism”? (150 words, 10 Marks) 

Approach: 

• Introduction: Briefly introduce the beginning of the British economic policies in the 18th century. 
• Body:  

• • Mention how the British economic policy in India shaped its way from “mercantilism”  to “financial imperialism through different phases. 
• Conclusion: Conclude by stating how the British economic policies were designed for the maximum exploitation of resources in India. 

Answer: 

British economic policies in India started with the policy of mercantilism in the 18th century  and from the mid-19th century, they followed the policy of financial imperialism. Broadly, British  economic policies are categorised into three different phases.  

• The First Phase (1757-1813): 

• • ‘First Phase’ generally dates from 1757, when the British East India Company (EIC) acquired  the right to collect revenue from the territories in the eastern and southern parts of the  country, to 1813, when the company’s monopoly over trade with India came to an end. 
  • This phase is characterised by the policy of “mercantilism”. 

• • • EIC was a trading company at this stage. 
    • They brought precious metals like silver, gold, and exchanged them with Indian goods  like spices and cotton textiles. 
    • They used to purchase Indian goods at a cheaper rate and sell them in Europe at a  higher price. 
  • British administration also focused primarily on maximising colonial revenue after getting  Diwani rights in 1765. 
  • Britain’s Industrial Revolution was fuelled by the wealth and money looted from India. The  company also pursued aggressive territorial expansion in India, as it was looking to expand  its geographical territories. 
• Second Phase (1813-1858):  

• • ‘Second Phase’ generally began with the Charter Act of 1813, when the East India Company  lost its monopoly of trading rights in India until 1858 when all territories acquired by the  company were under the direct control of the British Crown.  
  • It was a phase of free trade.  

• • • The British made India a supplier of raw materials and a consumer market for  manufactured goods.  
    • There was no import duty which could possibly protect Indian industries.
  • The commercialisation of agriculture was another significant event of this phase.
• Third Phase (1858- 1947):  

• • This phase is regarded as the phase of “Financial Imperialism” when some British capital  was invested in the country.  

• • • Machine-made goods in England are always cheaper than hand-made goods in India.
    • As a result, deindustrialisation occurred due to unequal competition with British goods. 
    • The British capital-controlled banks and foreign trading firms managed various agencies  in India. 
  • Developed countries and industrialised countries became increasingly competitive for  colonies in Asia, Africa, and Latin America. 

The economic policies were designed in such a way that maximum exploitation of resources could  be done, primarily in the industrial and agricultural sectors.