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Following are the characteristics of Indian economy at the eve of independence:
- Semi-feudal Economy- India was a mixture of feudal economy and capitalist economy. Zamindars acted as middlemen between the British government and the farmers. Zamindars grew rich by unduly suppressing the poor farmers.
- Backward Economy and Stagnant Economy- The British government exploited the Indian economy in a selfish manner. They did not develop any income-earning abilities of the Indians. National products grew at a very slow rate of 0.5% per year. There was widespread poverty. A stagnant economy is an economy which is characterised by a prolonged period of slow economic growth.
- Heavy dependence on imports: India was relying on imports of Essential goods from other countries especially food grains.
- Depleted Economy- Even though India was not involved in World Wars I and II, all the expenses were charged to India. Capital goods were used without any proper repairs and maintenance. Natural resources were exploited to the maximum extent.
- Disintegrated Economy- The Partition of India created a shortage of raw materials for jute and cotton mills as most of the cotton and jute growing areas went to Pakistan. The Partition resulted in the loss of the market and problem of rehabilitation of a large number of refugees from Pakistan.
- Colonial Economy- The British government transformed the Indian economy into a colonial economy totally dependent on British and allied countries.
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