1. The economic life in 18th century India had imprints of the contemporary political scenario of the country. Examine.
Note: Many students failed to understand the theme of the question. Those who understood focused more on economic aspects rather than political events. Here the flow of Ideas should be from Political events to economic impact.
Key Political events of eighteenth century India:
Decline of Mughal Empire, war of succession, rise of nobility.
Formation of Independent states, eg.Hyderabad.
Attack of Ahmad Nadir Shah in 1739.
Establishment of firm roots of European powers.
Rise and Fall of Marathas.
Battle of Plassey,Battle of Buxar,British control over Bengal.
Diwani rights to British over Bengal,Assam and Orissa.
Policy of Dual government by Lord Clive.
The answer should be focused around these events and consequent economic impact in different regions and on eighteenth century India as a whole,
Increase of International trade and subsequesnt decline and one sided trade.
Ruin of agriculture,change in cultivation pattern,shift towards cash crops .
Destruction of traditional business centers and de industrialization.
Rising taxation demands .
Impact on farmers and artisans etc.
As the question is about examining it is also required to see some positive economic developments as well,
Agricultural prosperity in independent princely states.
Rise of port led trade.
Increase in international trade and more reach of Indian products in Global markets.
Rising income and increased trade in stable princely states,eg. Awadh.
Establishment of new centers of trade,big markets and cities,eg Surat.
Write about the interwoven relationship of politics and economy,few hints about the consequent economic ruin under full British control in later centuries and conclude accordingly.
2. Wellesley is known for his expansionist policies in India. Discuss the instruments employed by him to achieve this end.
The large-scale expansion of British rule in India occurred during the Governor-Generalship of Lord Wellesley who came to India in 1798 at a time when the British were locked in a life-and- death struggle with France all over the world. Till then, the British had followed the policy of consolidating their gains and resources in India and making territorial gains only when this could be done safely without antagonising the major Indian powers. Lord Wellesley decided that the time was ripe for bringing as many Indian states as possible under British control. By 1797 the two strongest Indian powers, Mysore and the Marathas, had declined in power. Political conditions in India were propitious for a policy of expansion: aggression was easy as well as profitable.
To achieve his political aims Wellesley relied on following methods:
1) The system of Subsidiary Alliances- Those native princes or rulers who would enter into Subsidiary Alliance would not be free to declare war against any other power, nor enter into negotiations with, any power, native or otherwise without the consent of the English. Under his Subsidiary Alliance system, the ruler of the allying Indian state was compelled to accept the permanent stationing of a British force within his territory and to pay a subsidy for its maintenance. All this was done allegedly for his protection but was, in fact, a form through which the Indian ruler paid tribute to the Company. Sometimes the ruler ceded part of his territory instead of paying annual subsidy. The treaty was signed with the Nizam of Hyderabad in 1798 and 1800. The Nawab of Awadh was forced to sign a Subsidiary Treaty in 1801.
2) Outright war- Lord Wellesley defeated Tipu Sultan in 4th Mysore War and the Marathas in Anglo Maratha war and concluded alliance with them. With these wars the influence of French in India was permanently damaged
3) The assumption of the territories of previously subordinated rulers.
4) Wellesley not only occupied territories but also planned to consolidate them. He therefore established a college at Fort William for training up the newly appointed officers of the Company who came from England without any experience or knowledge of the Indian affairs.
Victories in Wars, control in Internal /External Affairs, Diplomacy etc helped EIC to have a good hold over Indian territory and thus EIC became paramount power in India and Wellesley became one of the greatest Empire Builders that England had ever produced.
3. The relation between the East India Company and the British Parliament was never a smooth one. Do you agree. Examine the evolution of this relationship and also discuss the factors that brought about significant changes in that relationship.
Evolution of the relationship:
In 1773 when company approached the government for loan, Parliament used this opportunity to get control over company by passing Regulating Act of 1773.
Pitts India Act in 1784 was passed separating management of company’s administrative and commercial activities.
1813 Charter Act asserted ‘undoubted sovereignty’ of the crown over the Indian territories.
1833 Charter Act ended company’s monopoly over trade with India. Only trade in tea and trade with China was retained as company monopoly.
After 1857 rebellion, under the Government of India Act 1858, the British crown took over the company possessions and company was abolished.
Factors that were responsible for changes in relationship:
East India company is a trading company, which took a charter to trade exclusively with India in 1600 from the British. The British government was losing lot of gold and silver due to the trade with India. This had put the government at crossroads with EIC.
The Britishers also complained of excessive imports from India, especially that of cotton, as it was affecting their livelihood. Import tariffs were also thus placed with sores the relations.
Trade with India could only be carried out with East india Company, this caused lot of resentment among Mercantile Class in London
The activities of company official who gained wealth in India and used it for luxurious lives in London attracted resentment and jealousy. Some even used this wealth to gain political influence by buying their way into Parliament.
Conscience is an intuition that assists in distinguishing right from wrong which differs from person to person sometimes due to ideological differences. Politics work on allegiance where people vote accordingly with a trust that elected would work on the promises given.
Politicians shift their allegiance due to,
Coalition issues: when a government is formed in coalition there is a basic ideological/goal differences but they come together to form government. When these differences lead to dysfunction or dissatisfaction to major party members they tend to shift to some new allegiance. Bihar is the recent example for this situation
Power politics: when a party feels its loosing majority, it tend to shift its path and pair with some other to keep the power in hands
Personal Motives: though the politics are party based we still have many parties which are dependent on one strong leader this single person might have his own personal motives involved which leads to shift
Inter-party issues: this is due to the differences between the party members.
The thought that politicians in India have no moral conscience if not completely but holds true to some extent.
The use of muscle and money power in elections and use of money and goods to get votes (Tamil Nadu elections) shows their moral corruption
Frequent horse trading of members of legislatures and cross voting in legislatures before the arrival of elections.
The recent switch of alliance of a powerful and respected chief minister of a state with the ideologically different groups shows the hollowness of Ideals and ideology based on convenience rather than adherence.
Allegations of voting against the party whip / abstain from voting in legislatures / allegations of vote for note questions their party loyalties.
Frequent shift of allegiances leads to less faith among electors in leaders,policy paralysis, Developmental issues by causing political instability,this shows preference to own interest rather than interest of people.
But all is not so gloomy in the Indian political setup.Politicians many a times switch allegiances not due to hunger of money or power but due to following reasons,
1.Conflict of ideology with the government or with the party leadership. The examples of BR Ambedkar resigning from government due to ideological differences.
2.Formation of separate parties from the parent party due to poor leadership and corruption in the party.
3.Since we reside in a democratic nation, the right to express oneself and use are choice are totally legal.
4.Post the enactment of Anti Defection Law, it has the switching of allegiance has become more difficult and and is seen as unethical and often leads to punishment by the people in elections.
So even though we have many cases of switching of allegiance , such changes do not often occur due to lack of morality or ideology but can be due to the need of the people being represented, security of nation or for changes in the ideology of the party and hence calling all politicians immoral might not be true in our democracy.
5. For the better performance of infra sector, newer and innovative funding techniques and sources are to be devised, changes in regulatory framework in which infrastructure companies operate and the tax framework which applies to the sector are to be made favourable. Elucidate.
McKinsey Report 2015 explicitly mentions that India needs a trillion dollar investment to improve its rank in Global competitiveness index in Infrastructure segment which stands at 69th position in order to attract global investments and gain investor confidence requires changes in both regulatory and tax framework along with various innovative methods to raise funds.
INNOVATIVE FUNDING METHODS:
a) Various new financial instruments to attract global investors like Masala bonds, Green bonds may be considered.
b) Judge Isher Ahluwalia committee recommendations of making ULBs self-sufficient needs to be implemented widely which has been implemented by PUNE.
c) NIIF mentioned in the union budget has to be implemented in toto to begin work on stalled projects and also white field projects.
d) Similarly new methods as used in Bengaluru metropolitan city like use of Premium floor space index, betterment tax, cess, development fee can be considered.
e) TIF (Tax incremental Financing ) can be used by ULBs to increase tax payers base and generate more revenue
f) Category II AIFs (alternative investment funds) have to be encouraged like VCFs etc.
g) REITs and INVITs need to be operationalized soon.
h) Monetise idle resources like railway lands etc as suggested by Sam pitroda
a) Defer implementation of GAAR and prevent Tax terrorism
b) GST can be a potential game changer with uniform tax regime that can minimise non-compliance and increase taxpayer’s base.
c) Government should have a look at MAT rate in order to make SEZ competitive and attractive again.
d) There is a need to restore section 10(23G) which provides for exemption of tax on interest on infra finance.
OECD paper suggests that along with economic growth there is an urgent need to improve regulatory architecture in India.
Need to minimise government interference in domain of Independent regulators like
TRAI, CCI etc.
Need to improve consumer participation in regulatory compliance.
Need to simplify procedures and bureaucratic red tape to improve our ease of business ranking need to make simple and unified single window policy .
eg: TS-IPASS system is seen as an example implemented by Govt. of Telangana
Foreign investors need to be given national treatment and quicker and simpler arbitration mechanisms have to be in place.
Hitherto unregulated areas like real estate must come under RERAs etc.
PPP mechanism which has been under a cloud of suspicion has to be simplified and made transparent and independent grievance redressal policies have to be put in place as suggested by Vijay Kelkar
This is an incremental and arduous process but a sound beginning will reap great benefits for India to emerge as a economic powerhouse in the near future.
It is said that 21st century is an age of Asian century. India could become part of the glowing Asian century only through a heavy investment in Infrastructure sector. In pursuance of this objective following ways are devised:-
Newer innovative funding:
– As the traditional mode of funding is already overstressed balance sheet of banks. Issuing corporate bonds, Municipality bonds are alternative investment mechanisms.
– Funding in Real State Investment Trust (Re-Invit) through mutual fund could also be pursued.
– Investment in Renewable energy sector through green bonds, blue bonds could also be pursued.
– Loans from multilateral lending bodies like NDB, which is focusing in investing in the renewable sector, could be channelized.
– Loans from Asian Development Bank (ADB), Asian Investment Infrastructure Bank (AIIB) which are focusing on investment in infrastructure could be mobilized.
– Financial support from Global Climate Fund (GCF) could be received in coming decades to fund renewable energy projects.
Changes in Regulatory environment:
– New Infrastructure regulatory bodies like RERA (Real State Regulatory Authority) should be created in new infrastructure sectors like renewable energy.
– Railway Regulatory Authority and Railway Development Authority as recommended by Bibek Debroy committee should be developed.
– A separate regulatory and development authority for roadways apart from NHAi has to be created. Regukataries bodies like IWAI (Inland water ways Authority of India), AAI (Airport Authority of India) has to be revamped.
Since, building roadways, waterways, railway routes, investment in renewable energy is the government priority, it has to find ways to raise new resources from fiscal mechanism and otherwise. In this framework, role of taxation and cess and surcharge comes into picture.
Since, a separate tax for infra investment could not be introduced as it is a combined pool of resources, separate cess and surcharges should be used. Clean Energy Fund for green projects should be continued. Fees and fines from the polluting industries could be used to fund clean energy projects. PPP in infrastructure sector should be continued as it alleviates pressure on government finances.
Thus, revamping of existing regulatory mechanisms and creating new one, devising new ways of funding and raising fiscal resources by cess and surcharge could go a long way in boosting infrastructure development in India.
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