Economic Causes - 1857 Revolt

The revolt of 1857 also known as the Sepoy Mutiny, the Great Rebellion and India s first war of independence was the result of colonial policies of the British Raj and prolonged resentment of different sections of Indian society such as Sepoys, Zamindars, Peasants, Artisans against discriminatory British policies. The causes are responsible for this rebellion range from social, religious, administrative, political to economic factors. In this article, we will discuss the economic causes of the war of 1857.

India's Economic Condition Before the Establishment of Colonial Rule

  • At the time of the establishment of the East India Company, the economic condition of India was much better given that it had a trade surplus with most of its trading partners.
  • The Indian trade and industry were well developed.
  • Villages were self-reliant in terms of production.
  • India was also home to different art and crafts and artisans enjoyed protection from local rulers.

Changing Economic Conditions Under Colonial Rule 

Colonial rule in India led to the systematic destruction of India s economy due to the selfish and predatory economic policies followed by the British. They adopted mercantilist and protectionist policies to safeguard their own interest while at the same time destroyed the economic life of India by destroying the self-reliant villages of the country and the handicraft and cottage industries which were the backbone of the Indian economy. The British economic policies led to the pauperization of the peasantry and de-industrialization in India.

Gradually the Indian masses had become aware of the selfish and exploitative character of the East India Company. This was one of the reasons for the anti- British feelings among the Indian public, which manifested itself in the uprising of 1857. Let s discuss all the economic factors of colonial rule which ultimately led to the revolt of 1857 which shook the roots of British Raj in India.

Economic Causes of 1857 Revolt

Destruction of Agriculture

Under the British rule, there was a severe deterioration of the condition of Indian agriculture. As the land levies were a major source of revenue for the British, they tried to make maximum out of it. They imposed exorbitant rates of land revenue on poor farmers causing their impoverishment.

Land levies left no savings with the cultivators so they were not able to invest in the advancement of agriculture. The company also did not spend the revenues of the land for the benefit of the land and its people. Hence, the productivity of land was reduced over time.

Indian agriculture also provided the fodder, such as cotton, indigo, etc. for British industries during the industrial revolution. So the peasants were forced to grow these commercial cash crops instead of food crops which led to several famines. More precisely, twelve major and numerous minor famines witnessed by India between 1770 and 1857.

Permanent Settlement System

In 1793, Lord Cornwallis introduced the system of permanent settlement. Under this system, the land rights of the peasants were taken away and given to landlords (Zamindars), who were declared as the proprietor of the land while the status of the cultivators was reduced to that of the tenants.

Also under this system, the assessments were arbitrary and the rates of assessment were exorbitantly high and exploitative. This led to the oppression of the cultivators at the hands of the company and Zamindars.

Resentment Among Zamindars

While the Zamindars were declared as the proprietor of the land under a permanent settlement system, the company remained the original owner of the land who could sell the land of the Zamindars to the highest bidder, in case they fail to meet the revenue demand of the company.

The land rights of these Zamindars were forfeited with frequent use of quo warranto by the British administration. This resulted in the loss of status for them. Zamindars, whose land rights were forfeited, harbored resentment against the company and found an opportunity presented by the sepoy mutiny.

Heavy Taxation

Under the burden of excessive taxes, the peasant had become progressively indebted and impoverished. There was little left with him after paying the taxes. Peasants were forced to take loans from moneylenders at usurious rates who often evicted them from their land on non-payment of dues.

This led to extreme poverty and indebtedness among the peasantry. Therefore, peasants also harbored resentment against the British rule and participated in the mutiny in great numbers. The Sepoys were also former peasants in uniforms and were sympathetic to the condition of the farmers.

Destruction of Traditional Industries

The company manipulated prices to the detriment of the Indian artisans. The artisans were forced to sell their goods to the British on prices set by the latter. The influx of cheap machine-made goods from Britain made the products of Indian artisans uneconomical. The British policy of One-way free trade and discriminatory tariff system discouraged Indian handicraft and promoted British goods causing the destruction of the traditional handicraft industry. The ruin of the industry increased the pressure on agriculture and land.

Also due to the annexation of Indian states by the East India Company, the major source of patronage of the artisans was cut off, causing their destitution and impoverishment. Thus, these artisans were forced to abandon their profession and move back to their family farming, which caused overburdening of agriculture and disguised unemployment.

Destruction of Trade

Indian goods were purchased by the British with money acquired in India and these goods were further exported out of India. Such exports had no matching imports to retain economic balance. Thus, the balance of trade became lop-sided in favor of Britain gradually.

Biased tariff rates were set by the British. While imports of British goods in India attracted low tariffs, very high and almost prohibitive duty was imposed on Indian made goods in Britain. Thus, this one-way free trade led to further destruction of Indian manufacturing industries.

Britain did not allow India to export manufactured goods that would give competition to Britain's home industries in England (for example-textiles). Therefore, only agricultural raw materials and other non-manufactured goods were exported from India.

Protectionist Policies

The British industries had political support. Britain adopted a protectionist policy towards its industries against the Indian industries. These protectionist measures included discriminatory tariffs, concessions and favorable treatment towards British industries.

The British made no effort to develop Indian industries. This cruel and discriminatory role of the British destroyed the economic life of India and compelled it to become a political slave.


The economic policies of the British were mainly exploitative and led to the severe destruction of the Indian economy. British rule had adversely affected the interest of almost all sections of society and severely affected the way of life in India. As a result, there was an increase in dissatisfaction and hatred against British rule among different sections of Indian society. This disaffection ultimately led to a mass uprising which we know today as the revolt of 1857.

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