Question

Mention any two major effects of Great Depression on the Indian economy.

Hint:

The Great Depression not only impacted global trade but also led to significant economic hardships in colonial countries like India, highlighting the vulnerability of an agrarian economy heavily dependent on exports.

Answer 1

The Great Depression, which began in 1929, had significant effects on the global economy, and India was not an exception. Two major effects of the Great Depression on the Indian economy were: 1. Decline in Agricultural Prices:
The agricultural sector in India was hit hard by the Great Depression. The demand for Indian agricultural products, such as cotton, jute, and wheat, fell in international markets. This led to a sharp decline in the prices of agricultural goods. Indian farmers, already burdened with taxes and debts, suffered further as they received lower prices for their produce, which worsened their financial situation.
2. Reduction in Industrial Output:
The industrial sector in India also faced significant setbacks during the Great Depression. The demand for industrial products, especially textiles and other manufactured goods, decreased drastically. This resulted in factory closures, reduced production, and widespread unemployment. The decline in industrial output further worsened the economic conditions, particularly in urban areas, where many workers were left unemployed.