Final answer:
On the eve of Independence, the Indian Economy was robust in some sectors but faced significant challenges due to British colonial policies. Deindustrialization had weakened traditional industries like textiles, and much of the financial capital was 'drained' to Britain, highlighting a need for a shift towards self-reliance and economic restructuring following independence.
Step-by-step explanation:
On the eve of Independence, the Indian Economy was markedly shaped by the period of British colonial rule. Initially, India was a wealthy nation with a large merchant and artisan class, renowned for its cotton textiles and was the world's largest exporter of cotton cloth by the mid-eighteenth century. Despite this, there were Indian entrepreneurs like Dwarkanath Tagore who invested in industrial development, including India's first coal mines and the establishment of banks.
However, the policies of British colonial rule gradually led to deindustrialization, where the previously booming textile industry was undercut by mass-produced British textiles due to laws like the Calico Acts, which prohibited the importation of finished cotton textiles that competed with English weavers. Handicraft industries thrived and merchant wealth grew, albeit under the shadow of heavy taxes imposed on peasants.
The colonial economic model ensured that India's trade surpluses benefited Great Britain, causing a 'drain' of financial capital from India. The Economic Drain Theory became a rallying point for independence, as this flow of capital was heavily criticized. Infrastructure development favored British economic interests, using Indian revenue to further British trade at the cost of Indian self-reliance. By Independence, Indian industries such as textiles were largely eclipsed by British imports, emphasizing the need for economic restructuring post-independence.