Effects of the Great Depression on the Indian Economy :
(i) In the 19‌th ‌ century, colonial India had become an exporter of agricultural goods and importer of manufactured goods. This situation continued well into the 20th century during the British rule. The depression had immediate effect on Indian trade. India's exports and imports halved between 1928 and 1934.
(ii) The prices fell in India as a result of the international price crash. Wheat prices fell by 50 per cent between 1928 and 1934. Peasants and farmers suffered due to the fall of prices. Their income lowered but the colonial government refused to reduce the revenue they collected and this led to their hardships.
(iii) Jute producers of Bengal also were hard hit. With the collapse of gunny bag export, jute prices crashed. Peasants, who had borrowed in the hope to increase their production fell deep into debts due to the crash of jute prices by 60 per cent.
(iv) Peasants used up their 'savings, mortgaged lanids and sold whatever jewellery and precious metals they had to meet their expenses.
(v) The depression did not have much negative effect on urban India. Town dwelling landowners, who received rents, people with fixed income or salaried class became better off with the falling of prices of the foodgrains and other commodities. Industrial investments were not much affected as the Government extended tariff protection to industries.
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(i) The most dynamic industries in Britain were clearly cotton and metals. Growing at a rapid pace, cotton was the leading sector in the first phase of industrialization up to the 1840 s.
(ii) Later iron and steel industry led the way. With the expansion of railways in England from the 1840s and in the colonies from 1860s, the demand for iron and steel increased.
(iii) The new industries could not displace traditional industries. At the end of the 19 th century, less than 20 per cent of the total workforce was employed in technologically advanced industrial sectors.
(iv) The pace of change in the 'traditional' industries was not set by steam-powered cotton or metal industries. Ordinary and small innovations were the basis of 'growth in many non-mechanised s sectors such as food processing building, pottery, glass work, tanning, furniture making and production of implements.
(v) The technological changes occurred slowly. New technology was expensive and merchants and industrialists were cautious about using it. "The machine often broke down and their cost of repair was costly.