Social Scientist. v 7, no. 77 (Dec 1978) p. 13.

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Framework of Economic Policies under British Rule

LAISSEZ-FAIRE was the keynote of economic policy in India ever since triumphant industrial capital from England began to exert its influence over the government of India and its activities. Reflecting in retrospect, Trevelyan underlined the classical view that the primary business of government was to protect life and property and to enable all classes of persons to pursue their respective industries and enterprises without molestation and with as little burden of taxation as possible. The contemporary thinking was that the time and strength of the government and its officers were severely taxed to perform even this indispensable duty in a tolerably efficient manner. As a corollary, the conduct of all undertakings which were required to support the industry of a country formed no part of the government.1 It was this outlook which was exploited by company promoters like Chapman who organised powerful] lobbies in favour of guaranteed railway companies. Lord Dalhousie echoed these ideas in his famous Minutes.3 True to the spirit of this guiding philosophy, James Wilson, the architect of the Indian financial system, expressed his faith in balanced budgets. An extension of this classical notion of public finance was the use of loan finance only during times of war.3 Hence the reliance on private foreign capital for the provision of the basic economic overheads in India. Helping private

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