Test: Indian Economy On The Eve Of Independence - 1 - UPSC MCQ

Among the notable estimators — Dadabhai Naoroji, William Digby, Findlay Shirras, V.K.R.V. Rao and R.C. Desai — it was Rao, whose estimates during the colonial period was considered very significant. However, most studies did find that the country’s growth of aggregate real output during the first half of the twentieth century was less than two per cent coupled with a meagre half per cent growth in per capita output per year.

The growth of the aggregate real output (GDP) was less than 2% during the first half of the 20th century and growth of per capita income was just 0.5%.

So option D is correct.

India's economy under British rule remained primarily agrarian - around 85% country's population lived in villages and derived livelihood directly or indirectly through agriculture.

Agriculture, with its allied sectors, is the largest source of livelihoods in India. 70 percent of its rural households still depend primarily on agriculture for their livelihood, with 82 percent of farmers being small and marginal. In 2017-18, total food grain production was estimated at 275 million tonnes (MT).

So option A is correct.

Low productivity in agriculture is due to low level of technology. In India farm farmers are still using poor and old agriculture technology of farming. in some areas farmer still do agriculture for survival.

So option B is correct.

Capital goods industry means industries which can produce machine, tools etc. which are, in turn, used for producing articles for current consumption.

So option B is correct.

Tata Iron and Steel Company was founded  and established on 26 August 1907.

So option C is correct.

The opening of the Suez Canal significantly impacted India's foreign trade by enhancing British control. Key points include:

• The Suez Canal, opened in 1869, provided a direct trade route between Britain and India.
• It reduced transportation costs, making it easier for British goods to reach Indian markets.
• As a result, more than half of India's foreign trade was restricted to Britain, limiting trade with other nations.
• India primarily exported raw materials while importing finished goods, reinforcing British economic dominance.
• This dynamic created an export surplus that did not benefit the Indian economy, leading to a drain of wealth.

The use of fertilizers was negligible. It also added up to aggravate the plight of the farmers.

So option B is correct.

The export surplus during the colonial period did not benefit India's economy for several reasons:

• The surplus was primarily used for British war expenses and administrative costs.
• India's foreign trade was largely controlled by Britain, limiting benefits to the local economy.
• Essential commodities, such as food grains and clothing, were exported, leading to shortages.
• Investment in local industries was minimal, hindering economic development.
• The focus on cash crops for export reduced the production of food crops, impacting food security.

The primary motive of the colonial government behind the systematic deindustrialisation of India was two-fold:

• To reduce India to a mere exporter of raw materials for British industries.
• To transform India into a market for British finished goods, ensuring the continued expansion of these industries.

This policy led to:

• A significant decline in indigenous handicraft industries, resulting in widespread unemployment.
• A shift in demand within the Indian market, now reliant on cheap imports from Britain.
• Slow progress of modern industry in India during the late 19th century.

Overall, the colonial strategy aimed to maximise benefits for Britain at the expense of India's economic development.