how did the Industrial Revolution impact Indian trade?
Answers
Cause of de-industrialisation in India
In the period between 1775-1800, significant innovations occurred in the British cotton industry which increase their total output and the cost of the production declined. It created significant challenges for the Indian produced cotton which was high in prices. In addition, during this time period, the control and influence of British increased in the eastern region of the globe and their control on Indian sub-continent increased significantly.
The fall in the hegemony of Mughals reduced the overall productivity of agriculture and reduced the supply of grains.[15] The grain was the primary consumption good for the Indian workers and was non-tradeable. The reduction in the supply of grain resulted in the rise of its prices. This rise in prices and negative supply shock led to a rise in the nominal wages in the cotton and weaving industry. The increased competition from British cotton and rising nominal wages reduced the profitability of the cotton industry of India. Thus, the negative supply shock in agricultural production is also an important reason behind the de-industrialisation of cotton industries.
The short run as well as long run impact on living standards and growth rate of GDP providing agriculture sector competitive advantage with strengthening of the productivity advance on the land at home or increasing openness to world in turn increases GDP in the short run.[15] The causes of de-industrialisation are region or country specific as in the case of India in the 19th and 20th century. The colonial rule under British destroyed textile and handicrafts industries through their policies and introduction of machine made goods in to the Indian market. Some of the causes of de-industrialisation in India during that period were:
• The abolition of court culture and urban aristocrats resulted in decreased demand for these handicrafts as product demand for these dried up.
Impact of de-industrialisation in India
The effect of de-industrialisation on the Indian subcontinent is difficult to observe before 1810.[15] The factory driven technologies for the production of cotton appeared between 1780 and 1820, but, India started to lose its dominant position as the exporter of cotton before this period due to low wages in the Indian cotton industry. It also acted as a catalyst in migrating work force from cotton industry to Indian grain industry.production.
In India, by 1920, the trade to GDP ratio declined and international trade reshaped the domestic structure of the economy.[21] India became one of the major markets for the British made cotton yarns and cloths and became one of the large suppliers of Grain. The price of cotton decreased by more than a third in the 1900s as compared to the level in 1800.[21] The fall in prices of cotton significantly reduced the production of Indian hand spinning industry which is considered to be the most important specimen of de-industrialisation in India. The industrial revolution of the British cotton industry resulted in the globalization of its colonies as a mean to export excess production. This resulted in the fall the production of cotton in the indigenous industries of colonies due to low prices of British cotton and its derived products.
The large scale de-industrialisation brought far reaching impacts on the economy with loss to traditional economy, which was earlier considered as a blend of agriculture and handicrafts. Spinning and weaving functioned as subsidiary industries in the old economy resulted in differences to the interior equilibrium of the rural market. It created a large base of underemployed and disguised rural unemployed. The number of workers engaged in agriculture sector increased from 7.17 crores to 10.02 crores in 1931 and industrial employed workers decreased from 2.11 crores to 1.29 crores during the same period.[22]
The de-industrialisation of India played an important role in the underdevelopment and increasing poverty of the country. The British led globalisation of Colonial India led to the significant inflow of British Cotton which led to falling in the output of the domestically produced cotton due to low prices.
Conclusion of de-industrialisation in India
As the economic growth was on much minor scale, the effects of this on countering the de-industrialisation are much smaller. As Amiya Bagchi aptly stated: “Thus the process of de-industrialisation proved to be a process of pure immoderation for the several million persons...[16]” The reality is the group declination resulting from the process of de-industrialisation.