Economic Impact of British Rule on India

11. Which of the following statements about ‘Agency Houses’ is/are correct

Which of the following statements about ‘Agency Houses’ is/are correct?

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  • They were important commercial formations in the late eighteenth and nineteenth century India.
  • The operation of managing agencies remained confined to Calcutta.

Select the correct answer using the code given below.

1 only
2 only
Both 1 and 2
Neither 1 nor 2
This question was previously asked in
UPSC CAPF – 2022
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Statement 1 is correct. Agency Houses were significant commercial entities in colonial India, playing a crucial role in trade, finance, and industry during the late 18th and 19th centuries. Statement 2 is incorrect. While Calcutta was a major hub for Agency Houses due to its importance as a port and administrative centre, their operations and activities extended to other major port cities like Bombay (Mumbai) and Madras (Chennai), and they controlled enterprises like plantations and mines in various parts of the country.
Agency Houses evolved into ‘Managing Agencies’ and became a dominant form of business organization in India under British rule, controlling diverse enterprises from finance and trade to textiles, tea, jute, and mining.
The Managing Agency system concentrated economic power in the hands of a few firms, often foreign-owned, who managed a large number of companies for a fee and commission. The system continued well into independent India and was eventually abolished by the government in the 1970s due to concerns about concentration of wealth and economic power.

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12. Which of the following pairs is/are correctly matched? 1. Permanen

Which of the following pairs is/are correctly matched?

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1. Permanent Settlement:Lord Cornwallis
2. Ryotwari Settlement:Thomas Munro
3. Mahalwari Settlement:Holt Mackenzie

Select the correct answer using the code given below.

1 only
1 and 2 only
2 and 3 only
1, 2 and 3
This question was previously asked in
UPSC CAPF – 2021
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Pair 1 is correctly matched: The Permanent Settlement (also known as the Zamindari system) was introduced in Bengal, Bihar, and Odisha by Lord Cornwallis in 1793.
Pair 2 is correctly matched: The Ryotwari Settlement was introduced by Captain Alexander Read in some areas of Madras Presidency in 1792, and later developed and widely implemented by Thomas Munro from 1820.
Pair 3 is correctly matched: The Mahalwari Settlement was devised by Holt Mackenzie in 1822 and introduced in parts of North-Western Provinces (later Uttar Pradesh), Central India, and Punjab.
– Permanent Settlement: Zamindars were recognized as owners of land and responsible for collecting revenue; fixed revenue.
– Ryotwari Settlement: Revenue collected directly from the cultivators (ryots); revenue rates were periodically revised.
– Mahalwari Settlement: Revenue collected from villages (mahals) collectively; revenue was periodically revised.
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13. Which one of the following Forest Acts divided forests of India into r

Which one of the following Forest Acts divided forests of India into reserved, protected and village forests ?

Forest Act 1864
Forest Act 1865
Forest Act 1866
Forest Act 1878
This question was previously asked in
UPSC CAPF – 2019
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The correct answer is D) Forest Act 1878.
The British Indian government passed several Forest Acts to assert control over forests and regulate their use, primarily for timber extraction.

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* The Indian Forest Act of 1865 was the first significant step towards monopolizing forest resources by the state. It applied to forests in British India and empowered the government to declare forests as government property.
* The more comprehensive Indian Forest Act of 1878 built upon the 1865 Act. It was enacted by the British colonial government based on recommendations from the German forester Dietrich Brandis.
* A key feature of the 1878 Act was the classification of forests into three categories:
* **Reserved Forests:** These were the most strictly controlled forests, intended primarily for timber production. Local people’s rights were severely restricted or extinguished.
* **Protected Forests:** These forests were also under government control, but some customary rights of local people (like collection of minor forest produce, grazing) might be allowed, often with restrictions.
* **Village Forests:** These were forests assigned to village communities, allowing for their use for local needs, but often still under government supervision.
* This classification system was a significant aspect of the 1878 Act, which aimed at systematic management and exploitation of forest resources while controlling local access and usage.

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Therefore, the Forest Act of 1878 is the one that divided forests into reserved, protected, and village forests.

These Forest Acts had a profound impact on the lives of forest-dwelling communities in India, restricting their traditional rights and access to resources, leading to various forest movements and resistance. The subsequent Forest Act of 1927 further consolidated these laws.

14. Which one of the following commercial centres declined after mid-eight

Which one of the following commercial centres declined after mid-eighteenth century?

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Calcutta
Madras
Dhaka
Bombay
This question was previously asked in
UPSC CAPF – 2018
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The correct answer is C) Dhaka.
After the mid-eighteenth century, particularly following the Battle of Plassey (1757) and the consolidation of British power, colonial trade policies and the rise of port cities favoured by the British led to the decline of many traditional inland commercial centres. Dhaka, a major trading city and centre for fine textiles like muslin under Mughal rule, experienced a significant decline as British trade patterns shifted towards Calcutta, Bombay, and Madras, and traditional industries faced competition from British manufactured goods. Calcutta, Madras, and Bombay, on the other hand, grew exponentially under British rule, becoming major Presidency towns and hubs of colonial administration and trade.
The economic policies of the British East India Company and later the British Crown transformed India’s economy, leading to the decline of traditional manufacturing and trading centres and the rise of new port cities that served as nodes for exporting raw materials and importing finished goods from Britain.

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15. Which one of the following statements about land tenure system is NOT

Which one of the following statements about land tenure system is NOT correct?

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During the British rule in India three categories of land tenure system, viz. Zamindari, Mahalwari and Ryotwari were introduced
Under Zamindari system, land was held by one person or at the most by a few joint owners who were responsible for the payment of land revenue
Under the Mahalwari system, the agricultural lands belonged to the Government
Under Ryotwari system, the individual holders had the permanent rights over land and were directly responsible for payment of land revenue
This question was previously asked in
UPSC CAPF – 2017
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The correct answer is C) Under the Mahalwari system, the agricultural lands belonged to the Government.
This statement is incorrect. Under the Mahalwari system, the land revenue settlement was made with the village community (Mahal) as a whole or with the headman of the village on behalf of the community. The agricultural lands typically belonged to the villagers collectively or individually within the village, and the community was jointly responsible for the payment of revenue, although the government fixed the revenue for the entire Mahal. The land did not belong to the Government.
A) During the British rule, the three major land tenure systems were indeed Zamindari (or Permanent Settlement), Mahalwari, and Ryotwari.
B) Under the Zamindari system, the Zamindars were recognized as proprietors of the land and were responsible for collecting rent from the cultivators (ryots) and paying a fixed revenue to the British government.
D) Under the Ryotwari system, settlement was made directly with the individual cultivator (Ryot), who was recognized as the owner of the land and was directly responsible for the payment of land revenue to the government. This system gave Ryots permanent rights over land as long as they paid the revenue.

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16. Which one of the following statements about the Colonial economy is NO

Which one of the following statements about the Colonial economy is NOT correct ?

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The British presence inhibited indigenous capitalism
Laissez-faire actively promoted indigenous capitalism
The 'white collective monopoly' came earliest and remained most pronounced in Eastern India
The Bombay hinterland was difficult to penetrate before the construction of railways
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UPSC CAPF – 2017
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Statement B is NOT correct. While laissez-faire is theoretically minimal state intervention, in the context of colonial India, British economic policies were *not* truly laissez-faire in a way that equally benefited indigenous capitalism. The state actively intervened through policies regarding trade, tariffs, railways, and currency to favor British capital and goods, often hindering the growth of Indian industries and enterprise.
Colonial economic policy in India was characterized by a system designed to serve the interests of Britain, transforming India into a supplier of raw materials and a market for British manufactured goods. This often involved state intervention that created an unequal playing field disadvantageous to indigenous capital.
Statement A is correct; British policies led to deindustrialization and inhibited indigenous capital accumulation. Statement C is correct; the British agency houses established early dominance in Eastern India (Bengal) which became the center of colonial administration and trade. Statement D is correct; infrastructure like railways was built primarily to facilitate the movement of goods for colonial exploitation, making the interior accessible to ports like Bombay.

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17. Consider the following statements: Statement-I: Dadabhai Naoroji arg

Consider the following statements:

  • Statement-I: Dadabhai Naoroji argued that what was being drained out was ‘potential surplus’ that could generate more economic development in India if invested in India
  • Statement-II: Imperialists believed that India was brought into the large capitalist world market and that was in itself a progress towards modernization

Which one of the following is correct in respect of the above statements and the code?

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Both the statements are individually true and Statement II is the correct explanation of Statement I
Both the statements are individually true but Statement II is NOT the correct explanation of Statement I
Statement I is true but Statement II is false
Statement I is false but Statement II is true
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UPSC CAPF – 2017
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Statement I is true; Dadabhai Naoroji, through his ‘Drain Theory’, argued that British rule resulted in the systematic drain of wealth from India, representing a ‘potential surplus’ or investible capital that, if retained and invested in India, could have fueled its industrial and economic development. Statement II is true; Imperialists and colonial apologists frequently argued that British rule brought India into contact with the global capitalist system, promoting trade, infrastructure, and a degree of institutional modernization, which they presented as inherently progressive. Both statements are individually true, reflecting distinct viewpoints (nationalist critique vs. imperialist justification). However, Statement II does not explain why Dadabhai Naoroji developed his argument in Statement I. They represent contrasting analyses of the impact of British rule.
Dadabhai Naoroji critiqued the economic drain, while imperialists claimed modernization through integration into the world market; these are contrasting views, not cause and effect.
Naoroji’s Drain Theory was a cornerstone of early Indian nationalist economic critique, highlighting the exploitative nature of colonial rule. Imperial narratives, conversely, often focused on the ‘benefits’ of British rule, such as railways, telegraphs, and entry into global commerce, portraying them as signs of progress towards modernization.

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18. Which of the following is / are characteristic(s) of the Ryotwari syst

Which of the following is / are characteristic(s) of the Ryotwari system?

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  • 1. It was the brainchild of Thomas Munro
  • 2. It was meant to reduce intermediaries
  • 3. Cultivating peasants were gradually impoverished by the system
  • 4. It was introduced in parts of Madras and Bengal Presidency

Select the correct answer using the code given below :

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1 only
1, 2 and 3
2 and 4 only
2, 3 and 4
This question was previously asked in
UPSC CAPF – 2016
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Statements 1, 2, and 3 are characteristic of the Ryotwari system. Statement 1: Thomas Munro, along with Charles Reed, was instrumental in developing and implementing the Ryotwari system. Statement 2: It aimed to establish a direct settlement between the government and the cultivator (Ryot), thereby reducing the role of intermediaries like Zamindars. Statement 3: While initially intended to benefit peasants, high revenue demands fixed by the state and rigid collection methods often led to the impoverishment of cultivating peasants. Statement 4 is incorrect; the Ryotwari system was primarily introduced in parts of the Madras and Bombay Presidencies, as well as Assam, but not Bengal Presidency (where the Permanent Settlement was prevalent).
The Ryotwari system established a direct relationship between the colonial state and the individual peasant cultivator regarding land revenue collection.
The revenue under the Ryotwari system was not permanently fixed but was periodically revised (usually every 20-30 years). This system eliminated the Zamindars as intermediaries but placed the burden of direct revenue payment and the risk of crop failure squarely on the peasant.

19. Which of the following is NOT a characteristic of the Permanent Settle

Which of the following is NOT a characteristic of the Permanent Settlement ?

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The Permanent Settlement vested landownership rights in the Zamindar
The Permanent Settlement continued to pay attention to the customary occupancy rights of peasants
The burden of the high revenue assessment was shifted to the peasants under the Permanent Settlement
The condition of the actual cultivators of the land declined under Permanent Settlement
This question was previously asked in
UPSC CAPF – 2016
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The Permanent Settlement, introduced in 1793 by Lord Cornwallis, explicitly ignored the customary occupancy rights of the peasants. It vested ownership rights in the Zamindars (landlords).
The Permanent Settlement created a new class of landlords (Zamindars) who were given proprietary rights over land in exchange for a fixed revenue payment to the state, largely disregarding the traditional rights of cultivators.
Under the Permanent Settlement, the revenue demand was fixed at a high rate. Zamindars, in turn, extracted high rents from the peasants, leading to their impoverishment and decline in condition. If Zamindars failed to pay the fixed revenue, their land could be confiscated and sold.

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20. Which of the following statements with regard to construction of railw

Which of the following statements with regard to construction of railways in colonial India by the British companies is/are NOT true ?

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  • 1. The companies were guaranteed a return of 5 per cent on their investment by Government of India
  • 2. The railways were to be managed mainly by the Government
  • 3. There was no system of preferential freight charges
  • 4. The companies were to get the land free from the Government
1 and 3
2 and 3 only
4 only
2, 3 and 4
This question was previously asked in
UPSC CAPF – 2015
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The correct option is B.
Let’s examine each statement regarding railway construction in colonial India by British companies:
1. The companies were guaranteed a return of 5 per cent on their investment by Government of India: This is TRUE. Under the ‘guarantee system’, private British companies were encouraged to invest in railways with a guaranteed minimum return, initially 5%, on their invested capital by the Indian government. This system proved costly for the Indian treasury.
2. The railways were to be managed mainly by the Government: This is NOT TRUE. Initially, the railways constructed under the guarantee system were managed by the private British companies themselves. Government management of railways became more prominent later, after the expiry or purchase of these companies’ contracts.
3. There was no system of preferential freight charges: This is NOT TRUE. There *was* a system of preferential freight charges which favored the export of raw materials and import of finished goods over the movement of domestic goods within India. This policy harmed Indian industries and promoted the colonial economic pattern.
4. The companies were to get the land free from the Government: This is TRUE. The land required for railway construction was provided free of cost by the Government of India to the companies.
The statements that are NOT true are 2 and 3.
The guarantee system was a key feature of early railway development in India. While it facilitated rapid construction, its financial terms were heavily skewed in favour of the British companies, leading to significant losses for the Indian government, especially when traffic was low or costs exceeded estimates. The structure of freight rates served colonial interests by facilitating trade with Britain rather than promoting internal Indian markets or industries.

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