Question

explain the impact of great depression on Indian economy

Answer 1

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The Great Depression of 1929 had a very severe impact on India, which was then under the rule of the British Raj. The Government of British India adopted a protective trade policy which, though beneficial to the United Kingdom, caused great damage to the Indian economy. During the period 1929–1937, exports and imports fell drastically crippling seaborne international trade. The railways and the agricultural sector were the most affected.

The international financial crisis combined with detrimental policies adopted by the Government of India resulted in soaring prices of commodities. High prices along with the stringent taxes prevalent in British India had a dreadful impact on most Indians. The discontent of farmers manifested itself in rebellions and riots. The Salt Satyagraha of 1930 was one of the measures undertaken as a response to heavy taxation during the Great Depression.

The Great Depression and the economic policies of the Government of British India worsened already deteriorating Indo-British relations. When the first general elections were held according to the Government of india act 1935, anti-British feelings resulted in the pro-independence Indian National Congress winning in most provinces with a very high percentage of the vote share.

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Answer 2

Trade surplus:

When the value of exports is higher than value of imports, it is called as ‘Trade Surplus’.

Britain had a trade surplus with India for the following reasons:

(i) Britain used this surplus to balance its trade deficits with other countries - that is. with countries from which Britain was importing more than it was selling to.

(ii) This is how n multi-lateral settlement system works - it allows one country’s deficit with another country to be settled by its surplus with a third country.