The Great Depression of 1929 had a very severe impact on India, which was then under the rule of the British Raj.


The Government of British India adopted a protective trade policy which, though beneficial to the United Kingdom, caused great damage to the Indian economy.


During the period 1929–1937, exports and imports fell drastically crippling seaborne international trade. The railways and the agricultural sector were the most affected.


The international financial crisis combined with detrimental policies adopted by the Government of India resulted in the soaring prices of commodities.

High prices along with the stringent taxes prevalent in British India had a dreadful impact on the common man.


The discontent of farmers manifested itself in rebellions and riots.


The Salt Satyagraha of 1930 was one of the measures undertaken as a response to heavy taxation during the Great Depression.


The Great Depression and the economic policies of the Government of British India worsened the already deteriorating Indo-British relations. When the first general elections were held according to the Government of India Act 1935, anti-British feelings resulted in the Indian National Congress winning in most provinces with a very high percentage of the vote share.

The Great Depression and its Impact on the Indian Economy

The Great Depression was a severe worldwide economic downturn that occurred during the 1930s, starting in the United States and spreading to other parts of the world. It was the longest, deepest, and most widespread depression of the 20th century. The impact of the Great Depression on the Indian economy was significant and far-reaching.

1. Overview of the Great Depression:
- The Great Depression began with the stock market crash of 1929 in the United States, which led to a sharp decline in economic activity.
- It resulted in widespread unemployment, reduced industrial production, and a significant drop in international trade.

2. Impact on Indian Trade:
- India was a British colony during this period, heavily dependent on trade with its colonial rulers.
- The collapse of global trade severely affected India's export-oriented industries, such as jute, tea, and textiles.
- Exports fell drastically, leading to a decline in foreign exchange earnings and a balance of payment crisis.
- The Indian rupee depreciated significantly against major currencies, further hampering trade.

3. Agricultural Sector:
- Agriculture, the backbone of the Indian economy, was hit hard during the Great Depression.
- Falling agricultural prices and reduced demand for agricultural products led to rural distress.
- Farmers faced declining incomes, widespread indebtedness, and increased landlessness.
- This, in turn, led to social unrest and agrarian movements demanding land reforms.

4. Unemployment and Poverty:
- The Great Depression resulted in a massive rise in unemployment in India.
- Industries faced closures and layoffs, leaving many workers without jobs.
- The urban poor faced destitution and poverty, exacerbating social and economic inequalities.

5. Financial Sector:
- The Indian banking system was also affected by the Great Depression.
- Many banks failed, leading to a loss of public confidence in the financial sector.
- The government had to intervene to stabilize the banking system and restore public trust.

6. Role of Indian National Congress:
- The Indian National Congress, the leading political party during that time, demanded economic reforms and relief measures for the affected population.
- They called for indigenous industrialization and protectionist policies to revive the economy.

7. Legacy of the Great Depression:
- The Great Depression had a long-lasting impact on the Indian economy.
- It highlighted the vulnerabilities of the colonial economic structure and the need for self-reliance.
- It also paved the way for economic policies promoting industrialization and import substitution in the post-independence era.

In conclusion, the Great Depression had a profound impact on the Indian economy, leading to a decline in trade, agricultural distress, unemployment, and financial instability. It exposed the weaknesses of the colonial economic structure and contributed to the demand for economic reforms and self-reliance in the future.