ECONOMICS
CLASS XII
Topic: Indian Economic Development
CASE BASED QUESTIONS
Case Study 1: The Drain of Wealth and its Impact
"On the eve of India's independence in 1947, the Indian economy was characterized by a
severely underdeveloped agricultural sector, a nascent industrial base, and a significant drain of
wealth to the colonial power. British policies had systematically transformed India into a supplier
of raw materials and a market for finished goods, stifling indigenous industries and promoting a
dependency that would have long-term repercussions. The concept of 'drain of wealth,'
popularized by Dadabhai Naoroji, highlighted how India's resources were being extracted
without adequate compensation, leading to impoverishment and famine."
(Question 1) Analyze how the "drain of wealth" mechanism, as described in the passage,
contributed to the underdevelopment of the Indian agricultural sector and industrial base.
Discuss at least two specific ways this drain of resources perpetuated a cycle of poverty and
stunted economic growth on the eve of independence.
Case Study 2: Commercialization of Agriculture and Famine
"While the British introduced some modern infrastructure like railways and telegraphs, their
primary motive was often to facilitate their own economic exploitation. The commercialization of
agriculture, though seemingly a step towards modernity, forced Indian farmers to shift from food
crops to cash crops like cotton and indigo. This shift, coupled with an antiquated land revenue
system that heavily taxed farmers, made them vulnerable to market fluctuations and natural
calamities. Despite India being a major agricultural producer, recurring famines were a grim
reality, highlighting the inherent fragility of the agrarian economy on the eve of independence."
(Question 2) Critically evaluate the statement that "the commercialization of agriculture, though
seemingly a step towards modernity, forced Indian farmers to shift from food crops to cash
crops... making them vulnerable." How did this policy, combined with the land revenue system,
exacerbate the problem of famines in India on the eve of independence, despite its agricultural
potential?
Case Study 3: De-industrialization and Handicraft Decline
"Before the advent of British rule, India was renowned for its vibrant handicraft industries,
especially textiles. However, colonial policies led to a systematic de-industrialization.
Discriminatory tariff policies, which imposed heavy duties on Indian finished goods entering
Britain while allowing duty-free entry for British manufactured goods into India, effectively
destroyed India's indigenous industries. This not only led to widespread unemployment among
artisans but also made India dependent on imports for manufactured goods, severely
weakening its industrial structure by 1947."
(Question 3) The passage describes how discriminatory tariff policies led to the de-
industrialization of India. Explain how this policy mechanism operated to dismantle India's
thriving handicraft industries. What were the long-term consequences of this de-industrialization
for India's economic structure on the eve of independence, beyond just unemployment?
Case Study 4: Infrastructure Development and Colonial Motives
"The limited infrastructure development that occurred during the British Raj, such as the
construction of railways, ports, and some postal services, is often cited as a positive legacy.
However, a deeper analysis reveals that the primary objective behind these developments was
to serve colonial interests – to facilitate the movement of raw materials from the hinterlands to
ports for export and to enable the distribution of British manufactured goods throughout the
country. There was little focus on developing infrastructure that would genuinely foster balanced
regional growth or industrialization for the benefit of the Indian populace."
(Question 4) Analyze the dual nature of infrastructure development under British rule on the
eve of independence. While seemingly beneficial, how did the underlying colonial motives limit
the positive impact of this infrastructure on India's overall economic development? Discuss at
least two ways this approach hindered the formation of a self-reliant and equitable economy.
