Deindustrialization & Decline of Traditional Crafts | History Optional for UPSC (Notes) PDF Download

Deindustrialization of Indian of Traditional Crafts

Indian Handicraft Industries in the 18th Century:

• At the start of British rule in the mid-18th century, Indian handicraft industries produced about 25% of all manufactured goods globally.

Decline Due to British Rule:

• The decline of traditional industries in India was a direct result of British rule. While Western countries were industrializing in the 19th century, India experienced deindustrialization, a decrease in export demand for Indian goods, and a reduction in the workforce dependent on secondary industries.

Impact of the Industrial Revolution:

• India’s traditional handicraft industry declined significantly during the same period when the Industrial Revolution was taking off in England. The British tightly controlled the Indian economy, hindering local industrial growth.

Contrast with Europe and North America:

• In contrast to European countries, 19th-century India faced a steep decline in handicrafts, which continued into the 20th century. Unlike Europe, India did not see a sufficient rise in modern industry to offset this decline.

Continued Deindustrialization:

• Even after the emergence of modern industry in India post-World War I, the trend of deindustrialization persisted, with a decline in the percentage of workers in industry and an increase in the agricultural workforce.

Economic Shift from 1881 to 1911:

• Economist Colin Clark noted that between 1881 and 1911, the proportion of the workforce engaged in "manufacture, mining, and construction" decreased sharply from 35% to 17%.

National Writers' Views:

• National writers across different perspectives—Moderates, Extremists, and Gandhites—argued that the British developed aspects of the Indian economy, such as railways, ports, and irrigation, to serve British industrial interests while neglecting and even hindering the growth of modern industry in India.

Freedom Struggle Slogans:

• During the freedom struggle, the themes of deindustrialization and British indifference to Indian industrial development became central rallying points in the anti-colonial movement.

Factors Responsible for the Decline of Handicrafts in India

• The decline of traditional handicrafts in India was significantly influenced by the establishment of British rule.
• British rule brought about major changes that negatively impacted traditional industries.
• Competition from Machine-Made Goods: British machine-made goods flooded Indian markets, especially cotton textiles, due to mass production capabilities.
• Traditional handicrafts struggled to compete with these cheaper, mass-produced items.
• Initially, imported British woollen textiles had a limited market in India, but as industrial production increased, their presence grew.
• British Trade Policy: The British trade policy significantly influenced the demand for Indian products.
• Britain promoted the export of its machine-made goods to India, shifting the nature of Indo-British trade.
• India transitioned from being primarily an exporting country to an importing one.
• British goods, such as cotton textiles, flooded Indian markets, leading to the decline of traditional industries.
• Free Trade Policies: Post-1813, one-way free trade was encouraged, particularly in cotton textiles.
• Indian goods faced high tariffs in Britain, while British goods entered India duty-free.
• Preferential Tariff Policies: Between 1878 and 1895, preferential tariff policies aimed to resolve crises in the British industrial economy by creating a captive market in India.
• Impact on Artisans: The demand for Indian goods plummeted, causing many artisans to abandon their hereditary professions.
• Railways: The establishment of railways facilitated the spread of British goods across India.
• Railways also enabled the procurement of raw materials, significantly impacting industries such as cotton textiles,silk,wool,iron,paper, and lead.
• Decline of Indian Rulers and Princely States: The decline of Indian rulers and princely states diminished the demand for specific types of handicraft products.
• The disappearance of native courts that patronized arts and handicrafts led to a decline in artistic excellence and economic importance.
• Changes in Demand: New classes, such as European officials and the Indian educated professional class, emerged after British rule.
• These classes often preferred British-made products, leading to a decline in demand for traditional Indian handicrafts.
• Impact on Crafts Guilds: British rule adversely affected crafts guilds and organizations, impacting traditional handicrafts.
• Imperial Methods: British methods, such as imposing British Free Trade, heavy duties on Indian manufacturers, and exporting raw materials from India, further strained Indian handicrafts.

Opposite Views on Industrial Decline in Colonial India

• Western Scholars' Perspective: Morris D. Morris and A. Thorner argue that the decline of handicraft industries was a natural part of the Industrial Revolution and the factory system.
• Morris D. Morris: Challenged the idea of imperial exploitation, suggesting that colonial rule actually stimulated economic activity in India. He believed that handloom weavers were not worse off at the end of the period and that there might have been absolute growth.
• Thorner: Compared census data from 1881 to 1931 and found that the industrial distribution of the workforce remained stable. He acknowledged a shift from industry to agriculture between 1815 and 1880.
• Modern Economic Historians: Question the nationalist view of deindustrialization. They argue that the rate of deindustrialization is hard to measure due to lack of reliable data and the multiple occupations of Indian artisans, many of whom were also involved in agriculture.
• Despite the impact of cheap Manchester-produced cotton textiles on Indian weavers, there is evidence that Indian handlooms continued to produce coarse cotton cloth for poorer consumers until the 1930s.
• Statistical Data from Gangetic Bihar: Showed a decline in the proportion of industrial population from 18.6% in 1809-13 to 8.5% in 1901. The percentage of weavers and spinners dropped drastically from 62.3% to 15.1%, supporting the nationalist thesis.
• While employment decreased, real income per worker in industry increased between 1900 and 1947, indicating improvement in the industrial situation. This rise was attributed to increased per worker productivity in crafts, not modern industries.
• Tirthankar Roy's Argument: Increased productivity was achieved through technological specialization and industrial reorganization, such as shifting from family labor to wage labor in small-scale industries, especially in the handloom textile sector.
• Commercialization: Increased labor productivity in small-scale industries involved producing for non-local markets and shifting from local to long-distance trade. These factors aided artisanal industry but did not lead to successful industrialization.
• The basic occupational structure remained unchanged between 1881 and 1951, with agriculture providing 70%,manufacturing 10%, and services 10-15% of employment.

The decline of Indian handicrafts was not universal “for the periods differed from one part of the country to another”.

• The decline of Indian handicrafts was not the same everywhere; it varied from one region to another.
• Rajasthan experienced a decline in handicrafts only after the railways were introduced in 1911.
• Despite facing significant challenges, Indian handicrafts could not be entirely eliminated. The rural population, deeply rooted in poverty and tradition, continued to buy relatively cheaper khadi cloth and locally made iron and wooden agricultural tools.
• The Swadeshi movement in the early 20th century promoted indigenous products on patriotic grounds, creating a market for khadi in urban areas.
• During the Gandhian era, village industries received support, and the promotion of khadi helped sustain Indian handicrafts.

Negative Consequences of the Decline of Handicraft Industries

• The decline of handicraft industries eroded the self-sufficiency of the village economy.
• Destruction of traditional industries led to overcrowding in the agrarian sector.
• The decline of the artisan class, who became associated with agricultural activities, put additional pressure on the agricultural sector as there were no alternative livelihoods available at that time.
• This situation led to increased pressure on land and widespread pauperization.
• Those who became associated with agriculture often lacked land or resources, leading them to become agricultural laborers.
• The decline of traditional industries negatively impacted the diverse economic activities of occupational, commercial, and industrial centers.
• Main centers such as Surat,Dhaka, and Murshidabad experienced decline due to this.
• The void left by the decline of traditional industries could not be filled by the growth of modern industries.
• The decline of these traditional industries marked the loss of an important productive sector.
• This decline led to economic hollowness, contributing to the widespread poverty and penury in India during that period.

Positive consequences of the ruin of handicraft industries

Growth of Industrial Market in India:

• The industrial market in India expanded, facilitating the availability of both domestic and foreign goods.
• This growth was not limited to the production of essential commodities for military and recreational purposes, but also included items for daily use.
• India evolved into a vast industrial market, paving the way for the development of a modern exchange system.
• The expansion of exchange relations fostered economic integration, contributing to India's integration into the global economy.

Decline of Traditional Industries:

• The decline of traditional industries marks the downfall of pre-capitalist handicraft industries.
• In a way, it signifies the reduction of industries shaped by feudalistic ideals, creating a foundation for modern industries.

Transformation of Labor Class:

• The class linked with the medieval handicraft industry merged into the modern labor class.
• This decline set the stage for the emergence of modern industries, giving rise to a new labor class that became a crucial part of the capitalist economy.
• The emergence of this labor class reflects historical dynamism.

Ruralization of Indian Economy

Deindustrialization and Agricultural Shift in India:

• Deindustrialization led to a shift towards agriculture, with many jobless workers from industrial towns like Dacca, Murshidabad, and Surat moving to villages for survival.
• This shift resulted in increased dependence on agriculture and a decline in industrial development, a trend described as ruralization or peasantization of the Indian economy.
• British writers in the 19th and 20th centuries portrayed India as traditionally agricultural, reflecting this shift.

British Economic Policy and Agricultural Development:

• British policies aimed to destroy Indian handicrafts and transform India into an agricultural supplier for Britain.
• In 1769, the British encouraged the production of raw materials like raw silk while discouraging finished products like silk fabrics.
• The House of Commons in 1783 supported policies that aimed to change India into a source of raw materials for British industries.
• This policy led to the decline of many national industries in India, benefiting British manufacturers.

Impact of the Industrial Revolution on British Colonial Policy:

• The Industrial Revolution in Britain increased the demand for raw materials and markets for British goods.
• This shift necessitated a change from mercantile capitalism to free trade capitalism in India.
• The abolition of the Company’s trade monopoly and the end of its commercial activities were part of this transition.

Development of Indian Agriculture under British Rule:

• Britain aimed to develop India’s agricultural resources despite challenges like the poor quality of raw materials.
• The Charter Act of 1833 facilitated British settlement and investment in Indian agriculture.
• British capital was used to develop plantation industries in tea, coffee, indigo, and jute.
• The Government of India supported this development through policies like the Assam Wasteland Rules, which allowed large land grants for agricultural use.

Labour Exploitation in Indian Plantations:

• Labour for tea estates in Assam was recruited through force and fraud.
• Legislation such as Act XIII of 1859 and the Inland Immigration Act of 1882 legalized the exploitation of labour and penalized breaches of contract.

Shift from Industry to Agriculture:

• Historians Alice and Daniel Thorners suggest a significant shift from industry to agriculture in India between 1815 and 1880.
• Statistics on this shift are limited, with the first census conducted in 1881.

Population Dependency on Agriculture:

• R. P. Dutt analyzed census data from 1891 to 1921 to track the increasing reliance on agriculture:
  (i) 1891: 61.1%
  (ii) 1901: 66.5%
  (iii) 1911: 72.2%
  (iv) 1921: 73.0%
• The 1931 census reported 61.1% of the population engaged in agricultural and pastoral pursuits, but this figure was seen as misleading due to changes in classification.

Consequences of Agricultural Overdependence:

• The rise in the number of people dependent on agriculture did not indicate an increase in agricultural production, but rather the impoverishment of rural populations.
• Various factors hindered the modernization of Indian agriculture and acted as a built-in depressor.
• The stagnation in agricultural production, despite a growing population, led to recurring famines and rising poverty in the 19th and early 20th centuries.

After the World War

• Modern manufacturing only grew rapidly after World War One.
• Before World War Two, the overall income from the secondary sector increased at a rate of only 3.5 percent per year.
• This rate was not fast enough to start an industrial revolution in India.
• A reason for the slow economic development was the role of the colonial state in the 19th century.
• Despite the British government's official commitment to a laissez-faire policy, it practiced a policy of discriminatory intervention.
• After 1813, when Indian trade was freed from the monopoly of the East India Company, India became an attractive field for British private capital investment.
• Investment areas included railways, jute industry, tea plantations, and mining.
• The Indian money market was dominated by European banking houses.
• Indian entrepreneurs struggled while European counterparts thrived due to better access to capital.
• Indian entrepreneurs relied on family and community for capital.
• British economic interests operated through Chambers of Commerce and Managing Agency Houses.
• These entities influenced government policies and eliminated local competition.
• By the time of World War One, around sixty agency houses dominated industries like jute, coal mining, and tea plantations.
• These agency houses controlled 75 percent of industrial capital and nearly half of industrial employment in India.
• Most of the industrialization that occurred was driven by British capital, with profits sent back to Britain.
• Official policies were discriminatory and favored British development.
• An example of economic favoritism is the tea plantation in Assam, established in 1833.
• This plantation was set up under government sponsorship to reduce costly tea imports from China.
• Later, these plantations were transferred to individual capitalist ownership, deliberately excluding native investors.
• The Inland Emigration Act of 1859 ensured a steady supply of labor for the plantations.
• This act prevented migrant workers from leaving the sites.
• The tea industry remained dominated by British capital until the 1950s.
• Similarly, coal mining in eastern India was also dominated by British interests.

India’s economic and financial obligations to the empire

• Between 1880 and World War One, a series of financial crises exposed India's inability to bear the financial burden of serving the British Empire.
• These crises were caused by several factors:
  (i) Increased Indian demands for a fair share of resources.
  (ii) The rise of a vocal political opinion made any increase in internal taxation risky.
  (iii) Macro-economic factors such as fluctuating exchange rates, trade depressions, and natural disasters also played a role.
• These factors weakened the imperial goal and led to greater devolution of power.
• Over time, import tariffs were imposed against British textiles, effectively protecting Indian industries.
• There was a shift in the British industrial economy, and the Indian market lost its significance for the growth sectors in Britain.
• British investments in the Indian capital market declined, as did the use of the Indian army for the defense of the empire.
• As a result, India's role in the imperial structure became subordinate to its own domestic needs.
• The imperial goal and ideology were adjusted to accommodate the financial and political pressures emerging in India.
• This reduction of imperial economic interests in India is seen by some historians as a key factor behind the decision to transfer power.