Economic Impact of British Rule on India

21. The following item consists of two statements, Statement I and Stateme

The following item consists of two statements, Statement I and Statement II. Examine these two statements carefully and select the correct answer using the code given below:
Statement-I : India’s share of world manufacturing output steadily declined during the 19th and the 20th centuries.
Statement-II : There was no absolute decline in production in India during the colonial rule.

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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
This question was previously asked in
UPSC CAPF – 2015
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The correct option is C.
Statement I: India’s share of world manufacturing output steadily declined during the 19th and the 20th centuries, particularly during the colonial period. This is historically accurate, largely due to the de-industrialization process where traditional Indian industries (like textiles) declined because of competition from British manufactured goods, discriminatory policies, and lack of state support.
Statement II: There was no absolute decline in production in India during the colonial rule. This statement is generally false, especially concerning traditional manufacturing and handicrafts. While some new sectors might have emerged or grown (e.g., jute, tea, railways), the decline in traditional industries was absolute, not just relative to world production. Historians debate the extent of overall economic decline, but the notion of *no* absolute decline in *production* broadly (especially in key traditional sectors) during certain phases of colonial rule is incorrect.
The process of de-industrialization led to a significant decline in India’s contribution to world manufacturing. While colonial rule introduced railways and some modern industries, these did not compensate for the destruction of traditional livelihoods and industries. The economic impact of colonial rule is a subject of historical debate, but the decline of traditional manufacturing is widely accepted, and this decline was absolute in many sectors, leading to loss of employment and impoverishment for artisans.

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22. The Permanent Settlement was rarely extended to other regions because

The Permanent Settlement was rarely extended to other regions because :

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increase in agricultural prices after 1810 increased the value of the harvest, while the Permanent Settlement disallowed an increase in the State’s share
the economic theories of Ricardo influenced the policy makers
the State found it expedient to settle directly with the ryot
all of the above
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UPSC CAPF – 2014
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All the provided statements are valid reasons why the Permanent Settlement was not widely extended to other regions of British India after its implementation in Bengal, Bihar, and Orissa. The fixed revenue demand (Statement A) became disadvantageous for the state when agricultural prices and land value increased. The evolving economic theories, particularly those influenced by Ricardo (Statement B), suggested that the state should capture the increase in land value. Consequently, the British administration found it more financially beneficial and expedient to adopt alternative land revenue systems like the Ryotwari and Mahalwari systems in other territories, which allowed for periodic revisions of revenue settlement directly with the cultivators or village communities (Statement C).
The failure to extend the Permanent Settlement was primarily due to the financial loss incurred by the state from fixing revenue permanently in the face of rising agricultural prices and the influence of new economic theories advocating for the state to share in increased land value.
The Permanent Settlement created a class of loyal zamindars but deprived the state of a share in the increasing wealth generated from agriculture. The Ryotwari and Mahalwari systems, implemented in large parts of South and North India respectively, allowed the state to periodically reassess land revenue, ensuring that it could benefit from increases in agricultural productivity and prices.

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23. The first major boost to modern industry in India happened in the 1860

The first major boost to modern industry in India happened in the 1860s. It was a direct result of

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the demand created in America because of the Civil War
the demand created in Europe because of the Civil War in America
the decline in competition from the cotton mills of Lancashire and Manchester
the support of government to industries in India
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UPSC CAPF – 2013
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The 1860s were marked by the American Civil War (1861-1865). This conflict severely disrupted the supply of raw cotton from the United States to the textile mills in Lancashire and Manchester, England. European, particularly British, demand for cotton shifted heavily towards India, leading to a massive boom in cotton cultivation, trade, and prices in India. This influx of capital and activity provided the first major stimulus for the development of a modern textile industry in India, as well as related infrastructure like railways and ports for transporting cotton.
– The American Civil War disrupted cotton supply to Europe.
– European (British) demand for Indian cotton surged in the 1860s.
– This cotton boom stimulated early industrial growth and infrastructure development in India.
The period of the “Cotton Boom” brought significant wealth to cotton-growing regions in India but also led to land speculation and economic instability once the American Civil War ended and US supply resumed. This event highlighted India’s potential as a supplier of raw materials to the British industry.

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24. Which one among the following statements about industries in colonial

Which one among the following statements about industries in colonial India is not correct?

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The jute industry was almost entirely owned by Europeans
The cotton textile industry was almost wholly owned by Indians
The cotton textile industry was small in size
The growth of cotton industry was the result of government support
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UPSC CAPF – 2013
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The correct answer is D. The statement that the growth of the cotton industry was the result of government support is incorrect. The growth of the cotton textile industry in colonial India was largely achieved through Indian entrepreneurship and capital, often despite facing unfavorable policies from the colonial government which prioritized British interests.
– The jute industry, located primarily in Bengal, was indeed dominated by European ownership.
– The cotton textile industry, based mainly in Western India (Bombay, Ahmedabad), was predominantly owned and managed by Indian businessmen.
– The cotton industry grew significantly from the late 19th century onwards, becoming one of the largest modern industries in India. It was by no means “small in size” relative to the overall industrial landscape of colonial India.
– The colonial government’s policies, such as imposing excise duties on Indian textiles while allowing free entry for British goods, were generally not supportive of indigenous industries competing with British manufacturers.
The growth of the Indian-owned cotton textile industry is often cited as an example of successful Indian enterprise in the face of colonial economic policies that favoured the interests of the British manufacturing sector.

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25. Who among the following used the term ‘Drain of Wealth’ for the first

Who among the following used the term ‘Drain of Wealth’ for the first time?

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Surendranath Banerjee
Bal Gangadhar Tilak
Dadabhai Naoroji
Mahatma Gandhi
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UPSC CAPF – 2012
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Dadabhai Naoroji was the first Indian to systematically critique the economic impact of British rule and is credited with using and popularizing the term ‘Drain of Wealth’.
– Dadabhai Naoroji, known as the ‘Grand Old Man of India’, articulated the theory that Britain was systematically draining India’s wealth and resources without adequate economic return.
– He presented detailed calculations of this drain in his writings and speeches, most notably in his book “Poverty and Un-British Rule in India”.
– His work provided a strong economic rationale for Indian nationalism and exposed the exploitative nature of British colonial policies.
While other early nationalists like Ranade and R.C. Dutt also critiqued the economic policies of the British, Naoroji’s formulation and quantification of the ‘Drain Theory’ were particularly impactful and widely recognized.

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26. Match List-I with List-II and select the correct answer using the code

Match List-I with List-II and select the correct answer using the code given below the Lists :
List-I (British Policy)
A. Agrarian Settlements
B. Divide and Rule
C. Excluding Indians from Government Jobs
D. Wars and Conquests

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List-II (Consequence)
1. Partition
2. Famines and popular rebellions
3. Increase of home charges
4. Alienation of the Indian middle class

A-3, B-4, C-1, D-2
A-1, B-2, C-4, D-3
A-3, B-2, C-4, D-1
A-2, B-1, C-4, D-3
This question was previously asked in
UPSC CAPF – 2012
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The correct matches between the British Policies and their consequences are Agrarian Settlements – Famines and popular rebellions, Divide and Rule – Partition, Excluding Indians from Government Jobs – Alienation of the Indian middle class, and Wars and Conquests – Increase of home charges.
– Agrarian Settlements (like Permanent Settlement, Ryotwari, Mahalwari) often led to excessive revenue demands, peasant impoverishment, land alienation, and disruption of traditional systems, contributing to frequent famines and sparking peasant uprisings and rebellions.
– The Divide and Rule policy, by promoting communal divisions (especially between Hindus and Muslims), was a major factor contributing to the circumstances that led to the Partition of India in 1947.
– The policy of largely excluding educated Indians from higher administrative and military posts created dissatisfaction and alienation among the burgeoning Indian middle class, who felt denied legitimate opportunities and representation.
– The continuous Wars and Conquests undertaken by the British in India and abroad (using Indian resources and troops) led to a massive increase in expenditure borne by India, contributing significantly to the ‘Home Charges’ – the costs transferred from India to Britain.
These consequences highlight the exploitative nature of British rule in India, impacting different segments of the population and fueling anti-colonial sentiment.

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27. Which one among the following relates to a land revenue policy introdu

Which one among the following relates to a land revenue policy introduced by the English East India Company?

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Pitt's India Act
Mahalwari Settlement
Regulating Act
Subsidiary Alliance
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UPSC CAPF – 2012
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Among the given options, the Mahalwari Settlement is a land revenue policy introduced by the English East India Company. Introduced primarily in the North-Western Provinces, Oudh, and parts of Central India and Punjab, it involved collecting revenue from villagers jointly on the basis of a ‘mahal’ or village, with the village headman responsible for collection.
The three main land revenue systems introduced by the British in India were the Permanent Settlement (Bengal, Bihar, Odisha), the Ryotwari Settlement (Madras, Bombay, Assam), and the Mahalwari Settlement (North-Western Provinces, etc.).
Pitt’s India Act (1784) and the Regulating Act (1773) were administrative and political reforms aimed at controlling the EIC’s affairs. The Subsidiary Alliance was a military and political treaty system introduced by Lord Wellesley to bring Indian states under British control.

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28. Statement I : The economy of India in the 19th century came to a state

Statement I :
The economy of India in the 19th century came to a state of ruin under the English East India Company.
Statement II :
The English East India Company’s acquisition of Diwani right led to the miseries of the peasants and those associated with the traditional handicrafts industry of India.

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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 – 2012
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Both Statement I and Statement II are individually true, and Statement II is the correct explanation of Statement I. Statement I is true because the economic policies of the English East India Company, particularly in the 19th century, systematically exploited India’s resources and labour for the benefit of Britain, leading to de-industrialization, drain of wealth, and widespread poverty, thus ruining the Indian economy. Statement II provides a key mechanism through which this ruin occurred. The acquisition of Diwani rights in Bengal (1765) gave the EIC control over revenue collection. This led to excessive revenue demands on peasants, impoverishing them. Simultaneously, the EIC’s trade policies, designed to promote British manufactured goods and suppress Indian textiles and handicrafts, devastated traditional Indian industries, leading to unemployment and misery for artisans. Thus, the miseries caused by the Diwani right directly contributed to the overall ruin of the Indian economy described in Statement I.
The English East India Company’s policies, especially after gaining Diwani rights, led to the exploitation of India’s resources and traditional industries, contributing significantly to the decline of the Indian economy in the 19th century.
The period following the acquisition of Diwani is often referred to as the ‘Plassey Plunder’ period, highlighting the intense economic exploitation. The ‘Drain of Wealth’ theory, later popularized by Dadabhai Naoroji, articulated how India’s resources and wealth were systematically transferred to Britain under colonial rule, a process heavily influenced by the EIC’s control over revenue and trade.

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29. Which one among the following was *not* correct about Permanent Settle

Which one among the following was *not* correct about Permanent Settlement in India ?

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It was introduced by Lord Cornwallis
It was implemented in Bengal and Bihar
Zamindars were only revenue collectors but not the owners of the land
The cultivators were reduced to the status of tenants
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UPSC CAPF – 2010
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Statement C is not correct about the Permanent Settlement. Under the Permanent Settlement (introduced in 1793), Zamindars were recognized as the proprietors (owners) of the land in their zamindaris, not merely as revenue collectors. They were required to pay a fixed amount of revenue to the British East India Company by a specific date, failing which their zamindari could be auctioned off. This made the Zamindars landowners with hereditary rights, unlike the previous system where they were essentially intermediaries collecting revenue on behalf of the state.
– Introduced by Lord Cornwallis in 1793 in Bengal, Bihar, and Orissa.
– Made Zamindars the hereditary owners of the land.
– Revenue demand was fixed permanently for the Zamindars.
– Cultivators were reduced to the status of tenants, often without security of tenure.
– Aimed to ensure a stable revenue income for the Company and create a loyal class of landlords.
The system created a class of absentee landlords and often led to the oppression of peasants, as Zamindars extracted high rents from their tenants to meet the fixed revenue demand.

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30. Patta was a written agreement between the :

Patta was a written agreement between the :

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peasant and zamindars providing a record of the amount of rent.
peasants and the state.
zamindars and the state.
peasants and zamindars regarding cesses to be paid except rent.
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UPSC CAPF – 2010
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A Patta (or Pottah) was a written document or lease issued by the zamindar to the peasant (ryot) under systems like the Permanent Settlement. It was intended to be a record of the terms under which the land was held, specifically mentioning the area of land, the amount of rent payable by the peasant to the zamindar, and sometimes other conditions. It served as a kind of tenancy agreement.
The issuance of pattas was intended to protect peasants from arbitrary demands by providing a clear record of their rental obligations. However, in practice, zamindars often failed to issue proper pattas, or issued unfair ones, making it difficult for peasants to challenge excessive demands or evictions.
The counterpart document to the Patta, which the zamindar received from the ryot acknowledging the agreement and promising to pay the rent, was called a Qabuliyat (acceptance).

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