Indian economy on the eve of independence had various features that were a result of colonial rule and exploitation. The economy was largely agrarian and dependent on agriculture, and the industrial sector was underdeveloped. The British had established a system of governance and economic policies that favored their interests and suppressed the growth of the Indian economy.

Agriculture

• Agriculture was the backbone of the Indian economy, with nearly 70% of the population engaged in agriculture.
• The land tenure system was oppressive and exploitative, with farmers having to pay high rents and taxes to the British.
• The use of primitive tools and techniques of farming resulted in low productivity and low yields.
• The farmers were dependent on monsoons, and droughts and floods often led to crop failures and famine.

Industry

• The industrial sector was underdeveloped, and most of the industries were owned and controlled by the British.
• The Indian entrepreneurs were discouraged and faced various obstacles in setting up industries.
• The industries were mainly focused on raw material extraction and processing, and there was no emphasis on developing a manufacturing sector.

Trade

• The British had established a monopoly over the Indian trade and commerce, and Indian goods were exported to Britain at low prices.
• The Indian merchants faced various restrictions and taxes on their trade, which hindered their growth and development.
• The trade policies were designed to benefit the British, and Indian goods were replaced with imported goods, which resulted in a drain of wealth from India.

Banking

• The banking system was underdeveloped, and most of the banks were owned and controlled by the British.
• The Indian entrepreneurs and farmers had limited access to credit, and the interest rates were high.
• The banking policies were designed to benefit the British, and there was no emphasis on economic development.

Overall, the Indian economy on the eve of independence was characterized by a colonial legacy of exploitation and underdevelopment. The policies and systems implemented by the British were designed to benefit their interests and hinder the growth of the Indian economy. The Indian economy had a long way to go in terms of developing its infrastructure, industries, and financial institutions.

Feature of Indian economy on the eve of independence:

1. Stagnant economy: There was very slow or no economic growth in the country. As a result of stagnation, there was unemployment, death, and suffering due to lack of food.

2. Backward economy: Indian economy was a backward and per capita income was very low and in India, it was just Rs. 230 from 1947-1948.

3. Agricultural backwardness: With 70% of people engaged in agriculture, its contribution to GDP was only 50%. Productivity and production too were extremely low.

4. Industrial backwardness: Industrial sector was not developed, there was a lack of basic and heavy industries in the country.

5. Widespread Poverty: The people in the country could not even meet their basic needs i.e food, shelter and clothing. Unemployment and Illiteracy were other issues faced by the country.

6. Poor Infrastructure: Infrastructure like communication, transport, power or energy was underdeveloped.

7. Major dependence on imports: As a result of industrial backwardness in the country several consumer goods like medicines were imported from abroad.

8. Limited Urbanisation: Majority of the population lived in villages meaning that they lacked opportunities outside agriculture.

9. Colonial economy: As India was a British colony, Britishers exploited Indian economy for their own benefits.