Impact of industrial revolution on India’s economy

Source: The post impact of industrial revolution on India’s economy has been created, based on the article “We missed Industrial Revolution” published in “Business standard” on 3rd June 2024.

UPSC Syllabus Topic: GS Paper 3-science and technology -developing new technology.

Context: The article discusses how the invention of the spinning jenny in Britain started the Industrial Revolution, which significantly impacted India’s economy and independence movement. It compares this historical event with modern challenges in India, such as the focus on IT services over product innovation, and the education system’s issues, including the trend of students studying abroad. Impact of industrial revolution on India’s economy

For detailed information on India has an opportunity to lead the fourth industrial revolution read this article here

What triggered the Industrial Revolution?

1. Invention of the Spinning Jenny: James Hargreaves created the spinning jenny in 1764, allowing one person to spin multiple threads simultaneously. This innovation drastically improved the efficiency of cotton production.
2. Impact on Further Inventions: The spinning jenny inspired further technological advancements, such as Samuel Crompton’s spinning mule and Charles Babbage’s weaving machine, accelerating the pace of industrial development.
3. Catalyst for the Industrial Revolution: These innovations collectively triggered the Industrial Revolution, transforming industries by enhancing production capabilities and reducing the need for manual labor, marking a significant turn in manufacturing history.

Why wasn’t the Spinning Jenny invented in India?

1. Economic Conditions: Economic historian Robert Allen notes that high wages relative to capital costs in Britain made inventions like the spinning jenny profitable there but not in India.
2. Lack of Financial Incentive: In India, lower labor costs compared to Britain meant there was less economic incentive to invest in labor-saving technologies, which deterred innovation in mechanized cotton production.

What are the current educational and economic challenges in India?

1. Educational System Challenges: The emphasis on coaching for entrance exams, like those for the IITs, detracts from genuine learning and innovation. Only about 10,000 out of 200,000 applicants are admitted annually, highlighting intense competition and high rejection rates.
2. Study abroad: Annually, approximately 450,000 Indian students choose to study abroad, driven by limitations in domestic educational opportunities, with families spending significant amounts on overseas education.
3. Shift in Tech Industry Focus: Initially, protective policies enabled local hardware development. However, with lobbying by NASSCOM in 1991, tax exemptions were introduced for software exports, and import duties were significantly reduced. This led to a dependency on service-based revenue over innovation in product development.

How does the shift to AI impact India’s tech industry?

1. Potential Missed Opportunities: As the global tech industry pivots towards artificial intelligence (AI), India is likely to continue its role primarily as a supplier of IT workforce rather than leading in AI product innovation. This could limit India’s position in the global tech hierarchy.
2. Economic Impact: India’s tech industry currently generates substantial revenue by providing IT services, earning about $250 billion and employing over 5 million people. This success in service provision, however, might be overshadowed if AI reduces the need for a large tech workforce.

Question for practice:

Examine the factors contributing to the lack of invention of the spinning jenny in India compared to Britain.