The main focus of the economic policies pursued by the colonial government was to make India a mere supplier of Britain's own flourishing industrial base. The policies were concerned mainly with the fortification and advancement for their home- country. The interests of the Indian economy were completely ignored. Such policies brought structural changes in the Indian economy by transforming it to a supplier of raw materials and consumer of finished products from Britain.
The impact of these policies are as follows :
(i) Low economic development : Indian economy
experienced very low level of economic development. The reason for such a low level of development was that the British government was more concerned with the promotion of economic interests of their home- country. Consequently, the colonial rule transformed India's agriculture sector into a mere supplier of raw materials for the British Industries. This not only ; affected the production of the agricultural sector j but also ruined the small manufacturing units like i handicrafts and cotton industries.
(ii) Backwardness of Indian agriculture : Under the colonial rule, India was basically an agrarian economy employing nearly 75% of its population. The growth of the agriculture sector was meagre. This was due to the prevalence of various systems of land settlement, particularly zamindari system. As a result of zamindari system, burden of high revenues on the poor peasants took place which led India to face shortage of food grains. Therefore, Indian agriculture remained backward and primitive.
(iii) De-industrialisation of Indian economy : India
failed to develop a sound and strong industrial base during the colonial rule. The cause of deindustrialisation can be attributed to the downfall of India's handicraft industry and the cause of bleak growth of modern industry was the lack of investment. On one hand, the British government imposed heavy tariffs on the export of Indian handicraft products and on the other i hand, allowed free exports of Indian raw materials to Britain and free import of British products to India. As a result of heavy tariffs, the Indian exports became costlier and its demand in the International market fell drastically that led to the collapse of Indian handicraft industries. Simultaneously, the demand for the handicrafts products also fell in the domestic markets due to stiff competition. As a result, the domestic industries lacked investment and growth initiatives.
(iv) Regression in foreign trade : During the colonial rule, the British government had the monopoly power over India's foreign trade. The British government used the trade policy according to the interests of their home-country. The exports and imports transactions were restricted only to India and Britain. On one hand, the exports from India provided the cheap raw materials to the British industries and on the other hand, India's imports from Britain provided a new market for Britain's products. Moreover, the surplus generated from foreign trade was not invested in the Indian economy, instead it was used in administrative and war purpose by Britain to spread their colonial power.