Explain the effect of great depression of 1929 on Indian economy

Explain the effect of great depression of 1929 on Indian economy.

Effects of the Great Depression on the Indian Economy:

  1. In the 19th century, Colonial India had become an exporter of agricultural goods and importer of manufactured goods. The situation continued during 20th century rule. The depression had immediate effect on Indian trade, India’s exports and imports halved between 1928 and 1934.
  2. The prices fell in India as a result of the international price crisis. Wheat prices fell by 50 per cent between 1928 and 1934. Peasants and farmers suffered due to the fall of prices. Their income lowered but the Colonial government refused to reduce the revenue they collected and this led to their hardships.
  3. Jute producers of Bengal also were hard hit with the collapse of gunny bag export, jute prices crashed, peasants who had borrowed in the hope to increase their production, fell into debts due to the crash of jute prices by 60 per cent.
  4. Peasants used up their savings, mortgaged lands and sold whatever jewellery and precious metals they had to meet their expenses.
  5. The depression did not have much negative effect on urban India. Town dwelling landowners who received rents, people with fixed income or salaried classes became better off with the falling of prices of the foodgrains and other commodities. Industrial investments were not much affected as the government extended tariff protection to industries.