Question

Deindustrialization and its impact on indian economy

Answer 1

Process of De-Industrialisation:

India is not an industrial country in the true and modern sense of the term. But by the standards of the 17th and 18th centuries, i.e., before the advent of the Europeans in India, India was the ‘industrial workshop’ of the world.

Further, India’s traditional village economy was characterised by the “blending of agriculture and handicrafts”.

But this internal balance of the village economy had been systematically slaughtered by the British Government. In the process, traditional handicraft industries slipped away, from its pre-eminence and its decline started at the turn of the 18th century and proceeded rapidly almost to the beginning of the 19th century.

This process came to be known as ‘de-industrialisation’—a term opposite to industrialisation. The use of the word ‘de-industrialisation’ could be traced to 1940. Its dictionary meaning is ‘the reduction or destruction of a nation’s industrial capacity’. This term came into prominence in India to describe the ‘process of destruction of Indian handicraft industries by competition from the products of British manufacture during the nineteenth century’.

Industrialisation is associated with a relative shift in the proportion of national income as well as workforce away from agriculture. In other words, with the progress of industrialisation, proportion of income generated by and the percentage of population dependent on industry should decline.

While estimating the distribution of global output of manufactured goods, P. Bairoch concluded that India’s share of manufacturing output in the world was as high as 1.9.7 p.c. in 1800. In a span of 60 years, it plummeted to 8.6 p.c. (in 1860) and to 1.4. p.c. in 1913. The declining share of industrial output in the’ world output could be attributed to an absolute decline in manufacturing output per person.

This may be a process called ‘de-industrialisation’. Daniel Thorner defined de-industrialisation as a decline in the proportion of the working population engaged in secondary industry to total working population, or a decline in the proportion of population dependent on secondary industry to total population. But in India, quite the opposite rule worked and the nationalist economists like R. C. Dutt and M. G. Ranade labelled it as the process of ‘de- industrialisation’ since the bulk of the population found agriculture rather than industry as a means of livelihood.

In the West, with the progress of industrialisation, while the percentage of people engaged in the primary sector declined, the people thrown’ out of employment following the destruction of handicrafts was counterbalanced by greater employment and income-generating effect in modern factory industries. But, in India, handicrafts succumbed before the machine-made goods.

Hence the name ‘de-industrialisation’. The views of the nationalist economists got a serious political massage during the Swadeshi movement of the early 20th century. But another school of thought mainly represented by foreign economists like Morris D. Morris, Daniel and Alice Thorner argued that de-industrialisation was a myth. Before going into this debate, we will trace out the causes that led to the decline of handicraft industries.

Answer 2

However, whether and why deindustrialization actually happened in India remains open to debate. Quantitative evidence on the overall level of economic activity in 18th and 19th century India is scant, let alone evidence on its breakdown between agriculture, industry, and services.