Economic Causes

The colonial policies of the East India Company destroyed the traditional economic fabric of the Indian society. The peasantry were never really to recover from the disabilities imposed by the new and a highly unpopular revenue settlement. Impoverished by heavy taxation, the peasants resorted to loans from money-lenders/traders at usurious rates, the latter often evicting the former from their land on non-payment of debt dues. These money-lenders and traders emerged as the new landlords, while the scourge of landless peasantry and rural indebtedness has continued to plague Indian society to this day. The older system of zamindari was forced to disintegrate.

British rule also meant misery to the artisans and

handicrafts people. The annexation of Indian states by the Company cut off their major source of patronage—the native rulers and the nobles, who could not now afford to be patrons of the crafts workers. Added to this, British policy discouraged Indian handicrafts and promoted British goods. The highly skilled Indian craftsmen were forced to look for alternate sources of employment that hardly existed, as the destruction of Indian handicrafts was not accompanied by the development of modern industries.

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It was the British intruder who broke up the Indian handloom and destroyed the spinning-wheel. England began with depriving the Indian cottons from the European market; it then introduced twist into Hindustan and in the end inundated the very mother country of cotton with cottons.”

—Karl Marx, in 1853

The Indian trade and mercantile class was deliberately crippled by the British who imposed high tariff duties on Indian-made goods. At the same time, the import of British goods into India attracted low tariffs, thus encouraging their entry into India. By mid-nineteenth century, exports of cotton and silk textiles from India practically came to an end. Free trade—one way, that is—and refusal to impose protective duties against machine-made goods from Britain simply killed Indian manufacture.

Zamindars, the traditional landed aristocracy, often saw their land rights forfeited with frequent use of a quo warranto by the administration. This resulted in a loss of status for them in the villages. In Awadh, the storm centre of the revolt, 21,000 taluqdars had their estates confiscated and suddenly found themselves without a source of income, “unable to work, ashamed to beg, condemned to penury”. These dispossessed taluqdars seized the opportunity presented by the sepoy revolt to oppose the British and try to regain what they had lost.

The ruin of Indian industry increased the pressure on agriculture and land, which could not support all the people; the lopsided development resulted in pauperisation of the country in general.