Q4. In what ways did the Great Depression affect India?
In the nineteenth century, colonial India had become an exporter of agricultural goods and importer of manufactures. The great depression immediately affected Indian trade. British India adopted a protective trade policy which, though beneficial to the United Kingdom, caused great damage to the Indian economy.
India’s exports and imports nearly halved between 1928 and 1934. Due to the drastic collapse of international trade and the very little revenue obtained for it, India could only pay off her home charges by selling off her gold reserves. The international financial crisis combined with detrimental policies adopted by the Government of India resulted in the soaring prices of commodities.
Peasants and farmers suffered more than urban dwellers. As international prices crashed, prices in India also plunged. Between 1928 and 1934, wheat prices in India fell by 50 per cent. Though agricultural prices fell sharply, the colonial government refused to reduce revenue demands. Peasants producing for the world market were the worst hit. Across India, peasants’ indebtedness increased.
Farmers who were cultivating food crops had earlier moved over to cash crop cultivation in large numbers to meet the demands of the mills in the United Kingdom. Now, they were crippled as they were unable to sell their products in India due to the high prices; nor could they export the commodities to the United Kingdom which had recently adopted a protective policy prohibiting imports from India.
The discontent of farmers manifested itself in rebellions and riots. The Salt Satyagraha of 1930 was one of the measures undertaken as a response to heavy taxation during the Great Depression.