Mercantilism in British India (1757-1813): Economic Exploitation, Resource Control & Drain of Wealth

Mercantilism: Adam Smith’s Trade Balance Theory

Mercantilism in British India is a form of trade practice where the government focuses on maintaining a favorable trade balance by increasing exports and minimizing imports. This theory was given by “Adam Smith”.

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Phases of British Economic Policy in India There are three broad phases of British Economic policy in India: The First Phase is known as Mercantilism in British India which was characterized by the direct plunder of Indian resources. The Second Phase is also known as the Laissez-faire phase which emphasizes free trade policy. The Third Phase is known as the phase of Finance Imperialism. During this period Britain made heavy investments in infrastructure like Railway, telegraph and others.

Mercantilism in British India (1757-1813): Economic Control and Exploitation

Following are the characteristics of this phase of the Economic policy of the Mercantilism in British India:

• This phase was based on two basic objectives i.e:
  • To acquire a monopoly of trade with India.
  • To take control over the revenue of the government by gaining control over state power.
• New revenue-generating settlements were introduced in the existing Indian Agricultural set-up.
• During this phase, the East India Company resorted to direct plunder of the Indian state.
• This period marked the Drain of Indian wealth which amounted to approx 2-3 percent of Britain’s National Income.
• During this phase, exports from India outnumbered imports of finished goods from Britain.
• However, the weavers were exploited by the company by forcing them to produce under uneconomic compulsions.

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Conclusion

This phase did not see any major changes in administration, judicial functions, society etc. The mercantilist phase only served the economic interest of the East India Company

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