Sure Shot Questions: Indian Economy On the Eve of Independence | Economics Class 12 - Commerce PDF Download

Based on a careful analysis of the previous years' questions and trends, we've put together a list of questions that are most likely to appear in the  Class 12 Economics Board exams. These predictions aren’t just guesses—they’re based on how often these questions show up and how CBSE usually frames its papers.

Q1: What were the key features of the Indian economy on the eve of independence?
Ans: On the eve of independence, the Indian economy was characterized by several challenges: 

• Rampant poverty and unemployment, exacerbated by a large, illiterate population. 
• Unequal commercialization of agriculture, with productive regions benefiting more than backward areas reliant on outdated methods and limited irrigation. 
• A semi-feudal economy with stagnant growth and a low per capita income growth of 0.5% annually. 
• Poor infrastructure, lacking adequate transportation, communication, and electricity, hindering economic progress. 
• Underdeveloped consumer goods industries, such as jute and textiles, with profits largely benefiting the British. 
• Decline of cottage industries, like handicrafts, due to British policies. 
• Restricted foreign trade, with India serving as a supplier of raw materials and a market for British finished goods. 
• Social issues like malnutrition, poor health facilities, and rapid population growth further strained the economy.

Q2: How did British policies exploit the Indian agricultural sector?
Ans: The British exploited Indian agriculture by: 

• Forcing farmers to grow cash crops like indigo and cotton for British industries, reducing food crop production and causing food shortages. 
• Neglecting land reforms and agricultural productivity, leading to stagnation despite 85% of the population depending on agriculture. 
• Implementing the Zamindari system, where profits went to landlords rather than cultivators, burdening the sector. 
• Failing to invest in technology, irrigation, or fertilizers, resulting in low productivity. 
• The partition of India, which allocated fertile lands to Pakistan, further reduced agricultural output, particularly affecting the jute industry due to raw material shortages.
  
  

Q3: Describe the state of the industrial sector in India on the eve of independence.
Ans: The industrial sector in India on the eve of independence was underdeveloped due to British policies. India was reduced to a supplier of raw materials and a market for British finished goods, with limited manufacturing capacity. There was a severe lack of heavy and capital goods industries, making India dependent on foreign nations for machinery and spare parts. Modern industries, like the Tata Iron and Steel Company (TISCO) established in 1912, began to emerge in the late 19th century, followed by sugar, cement, and paper industries post-World War II. However, the absence of capital goods industries kept the industrial sector’s contribution to GDP low, stifling economic growth.

Q4: What factors led to the decline of indigenous handicraft industries during British rule?
Ans: The decline of indigenous handicraft industries was driven by: 

• Unfair tax policies, where British goods entered India duty-free, but Indian handicrafts faced heavy export taxes, reducing their competitiveness. 
• Competition from cheap, machine-made British products, which outpriced handmade Indian goods. 
• Changing consumer preferences, as a new class of Indians adopted Western lifestyles, reducing demand for traditional crafts. 
• Improved infrastructure, like railways, which facilitated the spread of British goods across India, further diminishing the market for local handicrafts.
  
  

Q5: Explain the volume and composition of Indian foreign trade during British rule.
Ans: During British rule, India’s foreign trade was heavily restricted by colonial policies. India became an exporter of primary products like raw silk, cotton, wool, indigo, and jute, and an importer of British finished goods, such as textiles and light machinery. Over 50% of India’s trade was controlled by Britain, with limited trade allowed with countries like China, Ceylon (Sri Lanka), and Persia (Iran). The opening of the Suez Canal in 1869 intensified British control by reducing transportation costs, further skewing trade in Britain’s favor and limiting India’s economic benefits.

Q6: Describe the state of social development indicators in India on the eve of independence.
Ans: Social development indicators in India on the eve of independence were dismal: 

• Literacy was below 16%, with female literacy at just 7%. 
• Public health facilities were either unavailable or inadequate, leading to rampant water- and air-borne diseases. 
• The overall mortality rate was high, with an alarming infant mortality rate of 218 per thousand. 
• Life expectancy was only 44 years, reflecting poor health and living conditions. 
• Extensive poverty and malnutrition further worsened the demographic profile, highlighting the neglect of social development under British rule.
  
  

Q7: How did the British exploit the Indian economy during colonial rule?
Ans: The British exploited the Indian economy through: 

• Using India as a supplier of cheap raw materials for their industries during the Industrial Revolution. 
• Transforming India into a market for British finished goods, supported by railway development. 
• Implementing exploitative land revenue policies like the Zamindari system, where profits went to landlords. 
• Imposing high administrative costs and remittances to Britain. 
• Destroying handicraft industries through discriminatory tariffs.
• Neglecting infrastructure development like transportation, education, and health, prioritizing colonial interests over Indian welfare.
  
  

Q8: What was the Zamindari system, and what were its key features during British rule?
Ans: The Zamindari system, introduced by the British in the Bengal Presidency, recognized Zamindars as permanent landowners responsible for paying fixed revenue to the colonial government. Its features included: 

• Zamindars were permanent owners of the land, unlike cultivators who were mere tenants. 
• Profits from agriculture went to Zamindars, not cultivators, discouraging investment in farming. 
• Zamindars focused on rent collection, neglecting agricultural improvements, leading to stagnation. This system prioritized revenue collection for the British, exacerbating the plight of farmers.
  
  

Q9: What was the role of the public sector during British rule in India?
Ans: The public sector under British rule was limited and primarily served colonial interests. It was confined to areas like railways, power generation, communications, and ports, developed to facilitate the transport of raw materials and British goods. For example, railways were introduced in 1850 to connect ports for exports, not to benefit the Indian population. The public sector’s role was minimal, focusing on enhancing British administrative efficiency and market access rather than promoting widespread economic or social development in India.

Q10: How did the introduction of railways impact the Indian economy during British rule?
Ans: Introduced in 1850, railways had a dual impact on the Indian economy. Positively, they enabled long-distance travel, connecting regions like Bombay, Calcutta, and Madras, breaking geographical and cultural barriers. However, they fostered the commercialization of agriculture, forcing farmers to grow cash crops for British industries, which disrupted village self-sufficiency. While export volumes increased, the benefits largely went to the British, with little economic gain for Indians, as railways primarily served colonial trade interests.

Q11: What was the demographic profile of India under British rule?
Ans: India’s demographic profile under British rule was marked by: 

• A literacy rate below 16%, with female literacy at 7%. 
• High mortality rates, with an infant mortality rate of 218 per thousand due to inadequate health facilities. 
• Low life expectancy of 44 years, compared to 69 years today. 
• Widespread poverty and malnutrition, worsened by a rapidly growing population, which strained resources and contributed to poor living conditions.
  
  

Q12: What was the economic drain of India during British rule, and who introduced this concept?
Ans: The economic drain of India, a concept introduced by Dadabhai Naoroji in the 19th century, referred to the systematic transfer of India’s wealth to Britain. India’s export surplus was used to fund British administrative expenses, military costs, and remittances, rather than benefiting the Indian economy. For example, revenues and trade surpluses were redirected to Britain, leaving India with shortages of essential commodities like food grains and clothes, impoverishing the population and hindering economic growth.

Q13: How did the Suez Canal influence British control over India’s foreign trade?
Ans: The Suez Canal, opened in 1869, significantly intensified British control over India’s foreign trade by reducing transportation costs and time between Britain and India. It provided a direct trade route, connecting Port Said to the Gulf of Suez, bypassing the longer route around Africa. This made it easier for Britain to export raw materials from India and import finished goods, reinforcing India’s role as a supplier and market. Over 50% of India’s trade was confined to Britain, with the canal strengthening this monopoly and limiting India’s trade with other nations.

Q14: What were the two primary motives behind the British policy of deindustrialization in India?
Ans: The British policy of deindustrialization had two primary motives: 

• To reduce India to a supplier of raw materials, such as cotton and jute, to fuel Britain’s industrial growth during the Industrial Revolution. 
• To transform India into a market for British finished goods, like textiles and machinery, ensuring the continued expansion of British industries. These policies led to the decline of Indian handicrafts, increased unemployment, and created a demand for British goods in the Indian market.
  
  

Q15: Why did agricultural productivity remain low during the colonial period despite increased cultivated land?
Ans: Agricultural productivity remained low despite increased cultivated land due to: 

• Exploitative land settlement systems like the Zamindari system, where profits went to landlords, not cultivators, discouraging investment. 
• Low levels of technology, with reliance on traditional farming methods. 
• Lack of irrigation facilities, making agriculture dependent on erratic rainfall. 
• Negligible use of fertilizers, limiting soil fertility. 
• British policies prioritizing cash crops for export over food crops, leading to food shortages and reduced productivity, further aggravated by the partition’s loss of fertile lands to Pakistan.