Q.In which ways did the expansion of the railways affect Indian economic development in the second half of the 19th Century.

Q. In which ways did the expansion of the railways affect Indian economic development in the second half of the 19th Century.

Ans:

Railways are considered to be contribution of British rule towards the development of modem economic infrastructure. Governor General Dalhausie issued his famous Railway Paper in 1853. And Bombay to Thane was the first railway line opened for public traffic in 1853. Since then the railway continue to expend in different parts of India during British Rule. By the turn of the century India had a railway network of about 25000 miles.
But, the very way the railways were constructed makes it clear that its main purpose was to serve the interests of the empire, rather than the needs of the Indian economy. ©crackingcivilservices.com

Impact on Indian economic development:

• Positive impact:
  • It was a development in direction of modern economic infrastructure.
  • It integrate the Indian market to some extent and provided a cheaper mode of transportation for both people and goods, which were taken advantage of by the Indian businesses at a later stage. Later, it promoted industries and internal trade of India.
  • The railways had also encouraged the construction of feeder roads and a few other strategic roads interconnecting different regions of India.
  • Foreign investment increased drastically, British bankers and investors looked as railway as a channel for safe investment of their surplus capital. The total capital outlay down to 1901 was 226,773,200 Euro.
  • Railway emerged as the largest employer in India. By the turn of century, it employed 4 lakhs men and by 1928, the number of employees had risen to 8 lakhs.
• Negative impact:
  • The railway lines were not built out of the Indian Exchequer but by private English Companies under a system of “Government Guarantee System”. The railway projects provide an instance of private enterprise at public risk due to the following reasons:
    • The Government of India provided the private enterprise with free grants of land and guaranteed interest at rate of about 5% on the capital outlay, if necessary from Indian revenues. The return guaranteed was much above the contemporary rate of returns in Europe.
    • Free land was given to the private companies with 99 years lease, after the expiry of which the railway line would become the government property.
      • But any time before that, even a few months before the expiry of the lease, the company could return the lines to the government and claim full compensation for all capital expended, i.e. they could enjoy 5% guaranteed profit for 99 years and then get back all their capital.
    • The Guarantee system led to much reckless expenditure on the part of the Companies and imposed an enormous financial burden on the Government. Gradually some changes were introduced:
      • Guarantee system was abolished in 1869 and the government took the responsibility of Railway construction.
      • Guarantee system was revived in 1879. Now interest fixed was 4% or less. This continued till 1900.
  • The railway made the imperialistic exploitation of the Indian economy and resources very easy for the Britishers. They were constructed at an enormous cost to the Indian tax-payer, and for an equally enormous profit to the British capitalists and industrialists.
  • Railways facilitate the collection and export of raw materials and agricultural goods from the interior. It enabled imported English manufactured goods to reach the interior of the country.
  • The railways helped the Britishers to destroyed the Indian industries and handicrafts. the finished goods of England flooded every Indian market at a rapid speed.
  • The Indians were kept out of the sphere of investment and investment was mainly made by the British capitals.
  • The multiplier effect of the railway construction boom benefited British economy, as machinery, railway lines, and up to a stage even coal was imported from England.
    • The transfer of technology remained confined to low technology areas, such as plate-laying, bridge-building or tunnelling,
  • The high positions in the railway employment was occupied by the British worker and by Anglo-Indians. Indians were employed only at lower positions.

Apart from impacts on economic fields, the railway also had political and social impacts. It facilitated the exchange of ideas and movement of people at between different regions and facilitated the growth of Indian nationalism. ©crackingcivilservices.com