India in the pre-colonial period had a stable economy. Self-sufficient agriculture, flourishing trade and rich handicraft industries. Subsistence farmers, organized in small village communities carried on agricultural operations in India. "Landlords were not landowners; they only had the right or privilege to collect taxes from the peasants" (Rothermund, page 1). A village was more or less a self-sufficient economic unit and its business contacts with the outside world were limited to payment of land revenue (generally in kind) and the purchase of a few

The British East India Company got a legal charter for trade from the Mughal ruler in 1600, and soon this trading company started conquering India. The conquests began in 1757 with the defeat of the Nawab of Bengal by Robert Clive. The East India Company ruled India for a century, i.e., from the decisive Battle of Plassey in 1757 to 1857 when Indians fought a war of independence. The British defeated the Indians in this war and in 1858 Queen Victoria assumed the responsibility of direct rule over India. The rule of East India Company ended and the British Parliament became directly responsible for the governance of India and this continued till 1947. The essence of British colonial policies in India was determined by the dynamics of society, which witnessed many changes in Britain. "The modern British society progressed through stages like mercantile capitalism to industrial capitalism and from competitive industrial capitalism to monopoly industrial capitalism." (Rothermund, page 31). The interests of mercantile British capitalism lay in trade with India. The interests of industrial capitalism were, on the other hand, market oriented, in which the Indian colony was to provide raw maternal and buy manufactured goods from Britain. Thus social and economic changes in Britain directly influenced British colonial policies in India.

necessary things from the town nearby. The farmer raised only those crops, which he needed for his own use and shared the same with the village artisan who supplied him with simple manufactures that he needed for his domestic consumption. Means of communication were of a primitive type. Therefore, trade in agricultural produce, was somewhat limited. The farmer usually raised enough produce to feed himself and the non-agricultural members of the village community. If his crop yielded more than the consumption needs, due to favorable climatic conditions, he stored that surplus for use in the lean years. Storage of food grains was a common practice among the pre-colonial agriculturists and constituted, under these conditions, the only remedy against famines.

Besides the external drain theory, the Indian nationalists argued that British rule led to the de-industrialization of India. India was an exporter of cotton manufacture and this was how the Company started its trade but gradually India became an importer of cotton manufacture and thus Indian artisans, craftsmen and important trading centers collapsed and whatever manufacturing activity existed was destroyed under the impact of imports of cotton manufacture almost exclusively from Britain. "For more than seventy-five years up to 1913, India remained the major importer of cotton goods from Britain, often taking more than forty per cent of the British exports." (Bagchi, Page 189) Thus the industrialization of England was accompanied by the decline and destruction of Indian cotton manufacturer. As a result, India witnessed, from the early 19th century onwards, a steady decline in population dependent on indigenous industries and a consequent over-burdening of agriculture. This proved injurious to both. "The sufferings of artisans have to be kept in mind as a significant factor in the understanding of many movements of our period: both in the way in which de-industrialization stimulated patriotic sentiments among intellectuals alike in the Moderate, Extremist and Gandhian eras, as well as more directly, in occasional urban and rural explosions of various types." (Bagchi, Page 48).

Two important aspects of British colonial rule over India are explained by two theories, the 'drain theory' and the theory of 'de-industrialization'. The drain theory, as formulated by the Indian nationalists, referred to the process by which, a significant part of India's national wealth was being exported to England for which India got no economic returns. In other words, India was made to pay an indirect tribute to the English nation. Needless to say, this drain of

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Approximate Pages = 11 (250 words per page double spaced)