Gender inequality in India arises from widespread societal attitudes that prioritize the economic and social status of men and, as a result, favour investment in male children. Policy actions have resulted in significant improvements in women’s educational attainment and political representation, but there has been only limited progress in women’s labour force participation, in rates of domestic violence and rape, and in the abatement of trends in the selective abortion of girls. Attitudes pertaining to the status of women also show limited improvement.

When colonial rule began in the mid-nineteenth century, India and Britain were both poor by modern standards, although Britain was somewhat richer. In 1947, when colonial rule ended, the gap between the two was gigantic. Britain was a sophisticated and wealthy economy where per capita income, health and education had improved dramatically, whereas India was still exceedingly poor on all these metrics. India’s economy changed over 200 years: it was far more engaged in international trade, a modern industrial sector had developed and railways criss-crossed the country. At the same time, productivity was low in all sectors of the economy, especially in agriculture. Life was precarious: as late as 1943, a devastating famine took millions of lives in Bengal, a horror that indicted colonial rule. We introduce the reader to this complex story of transformation without enrichment, briefly commenting on how each chapter fits in the narrative.

Trade and finance together formed the third-largest livelihood type in colonial India. These two activities were interdependent because banks and moneylenders mainly financed commodity trade. The combined share of the two activities rose significantly in national income in the early twentieth century. Behind this growth, the expansion of transport infrastructure and an open economy with few barriers to foreign trade were responsible. It was not, however, a business without friction. A great deal of the historical scholarship around these activities asks how environmental risks, information asymmetry, law and politics shaped the decisions of merchants, lenders and firms, as this chapter shows.

In principle, economic development can be environmentally sustainable and compatible with the rights of the poor to the commons – forests, water and land. In practice, however, the economic transformation of India since independence – rapid increase in agricultural productivity, industrialization, urbanization and the building of much-needed infrastructure, has come at the expense of environmental degradation and the rights of the poor to common property resources. Indian economic policy has for the most part favoured ‘development’ over environmental concerns. But India is a democracy in which civil society and the people can protest and exert pressure to prevent environmental degradation and defend their rights to the commons. The Indian judiciary, the Supreme Court in particular, has also been proactive in intervening to protect the environment. As of now, the impetus toward natural-resource-intensive and polluting growth is winning the day, but the struggle to find a better balance continues. Climate change is making the task much harder.

The chapter examines how India’s emergence as the world’s largest source of international migrants has affected its economy. It first provides a brief framework to understand international migration’s economic effects, arguing that these depend on selection and sorting effects inherent in migration: who goes, how many go, where they go, why they go and how many return. It then examines the different mechanisms and magnitudes of these effects through different types of financial flow via both the current account (remittances) and the capital account (bank deposits, bonds, FDI), via the network effects of the diaspora on trade and via human capital effects due to a ‘brain drain’. It concludes by arguing that the economic effects of migration on India have depended primarily on factors within India. People leave for a reason and will invest only if it makes financial sense to do so.

This chapter deals with the aspects of political economy in British India from c. 1850 to c. 1950, focusing on the major debates and controversies about economic policies, which concerned the role of the colonial state and its implications for British imperial policies. British India had wider economic relations with surrounding Asian and African regions, located as it was within dense regional trading networks, as a hub of transactions of goods, money, people (migration), services and information. Through the development of global economic history, new works and interpretations are presented as a new paradigm against the traditional Eurocentric approach. Using recent works by Asian and Japanese scholars, this chapter analyses a changing economic shift from trade to finance in British India and the transformation of the economic international order of Asia and the role of India in the interwar years, with a special focus on the drastic impacts of the Second World War.

The chapter emphasizes three aspects. First, it points out that, in the colonial period, Indian entrepreneurs were able to establish industrial enterprises in the cotton, jute and iron and steel industries that competed successfully in domestic and overseas markets. Second, it argues that the fact that Indian industrialization emerged from the bazaar economy facilitated the entrance of Indian capitalists into manufacturing and provided them with an advantage for accessing interior markets. The chapter also explores why Indian enterprises failed to engage in highly specialized areas such as the electrical or the pharmaceutical industries or the manufacture of cars, ships or aeroplanes until the mid-twentieth century. Third, the chapter argues that it would be short-sighted to merely focus on the subcontinent or on Indo-British relations when examining the economic development of India in the colonial period. Rather, it points out that Indian economic history needs to be examined within a global framework.

Located on a large delta, eastern India confronted a series of ecological challenges in the previous centuries – from the filling up of marshy lands to deforestation. But its developed state of agriculture and handicrafts placed it at the forefront of the country’s economic development, attracting foreign traders to settle therein, and finally to establish their rule in this region. But the question is: how did its economy perform during colonial rule? Indeed, the economic environment that it confronted was not always conducive. Initially, it received a boost from the trading activities of the Company. But later on, an uncongenial environment followed, ruining its age-old industries. Also, many opportunities emerged, thereby giving rise to many modern industries. The chapter seeks to highlight how eastern India’s economic development was shaped during colonial rule. Apart from agriculture and industry, it discusses the development of transport facilities, and also demographic issues, including migration.

Under the extremes of Indian socialism, the financial system was a handmaiden for state control of the economy, directing resources according to the wishes of the government. State control was achieved through government ownership. A great deal has changed, with a first (1947–1992) and second (1992–2016) phase of central planning where there were conflicting themes of liberalization and enhanced state control. In many areas, private financial firms are now important. The full ecosystem of modern finance, with information processing and risk taking by private persons, blossomed in the equity market. For two decades there was a remarkable policy process that yielded gains in fields such as the equity market, pension reforms, bankruptcy code and so on. But alongside this there was the expansion of the ‘administrative state’ in the form of financial regulators. Regulators engage in micro-management of products and processes. While there is isomorphic mimicry with many things that look like a financial system, officials retain substantial control over how finance works. In a functional perspective, Indian finance today resembles the environment of the 1980s more than meets the eye.

The chapter surveys the economic consequences of the 1947 Partition. It highlights that these were long term and complex, not confined to the ‘hotspots’ of Punjab and Bengal, but subcontinental in scale. Borders disrupted transport and river networks. Large-scale violence destroyed homes and properties, while refugee resettlement profoundly impacted the socio-economic fabric of major cities, notably Calcutta, Delhi, Lahore and Karachi. As most manufacturing units were in India, Pakistan began with a relatively weaker industrial base. The economies of Punjab and Bengal were impacted in multifaceted yet divergent ways. While economic effects in Bengal were largely deleterious, the Punjab quickly overcame adversity, emerging as a pioneer of the Green Revolution. Pakistan emerged as a geopolitical anomaly. Disparities in per-capita income and resource-sharing vitiated relations between eastern and western wings. Border regimes created economic silos, restricting labour mobility, especially in Bengal. Ports and maritime networks were impacted, bilateral trade suffered due to exchange rate disagreements and conflicts arose over water sharing, necessitating international mediation.

Agriculture was the main pillar of the Indian economy under British rule. Production increased in the second half of the nineteenth century, when the agricultural area expanded, the cultivation of cash crops spread, irrigation networks were extended and export of agricultural commodities increased. In the first half of the twentieth century, production stagnated as room for further area expansion vanished, technical breakthroughs to enhance per-acre yield were limited, and the public investment in infrastructure lost its momentum. Bengal and eastern Indian areas experienced the most stagnation, while Punjab and Madras continued to grow with improvement in land productivity, including shifts to higher-value-added crops. Nevertheless, on average, the absolute level of land productivity of major crops in colonial India lagged behind global standards of that time. The chapter suggests that limited resource endowments constrained by inadequate technical breakthroughs and institutional constraints, such as the structure of land rights, were the main causes of stagnation.

India’s states or regions – heterogeneous by population size, language, geography, creed and culture – have broadly followed the national economic performance and structural transformation. However, inter-regional inequality (among its other dimensions) has risen unabated, with stability in their ranks and shares of output and employment. There are few signs of unconditional convergence. Yet interstate labour migration has remained modest, though rising. Mandatory tax-sharing methods and policy goals have failed to dent rising inequalities. Though following national policy templates, states have charted varied development paths, with contrasting outcomes. A rising ‘north–south’ divide is discernible, with Kerala in pole position in social progress, while Gujarat prioritizes output growth. Large north Indian ‘BIMARU’ states remain bimaru, with persistent gaps in health and social development outcomes relative to the national average. Beneath the seeming state-level stability, discernible churn among districts, crops, clusters and urban enclaves is evident, without significantly transcending the states’ pecking order.

A great deal of the scholarly debate and discussion on independent India’s history of employment is centred on why modernization and diversification of the economy did not draw more people out of agriculture, which was one of the key aims of economic policy at independence. Starting with that issue, the chapter analyses long-term data to reveal a number of ways employment, wages and working conditions changed. These trends include impressive growth in service sector employment, a recent rise in the share of the formal sector in employment and rapid growth in real wages in agriculture. However, the key question remains why manufacturing continues to take a relatively small share of the addition to the labour force.