Impact of Railways on employment generation

7/23/2019 Impact of Railways on employment generation

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EHI ASSIGMNMENT

Aashutosh SainiRoll No. 33

Q. In what manner did the railways affect industrialisation andemployment creation in the Indian economy during the colonialrule ?( 2 mar!s "

Ans.

The introduction of railways in 1853 had a significant impact on theIndian economy and its rapid expansion affected industrialisation andemployment creation in several ways. This network which covered mostof the subcontinent radically altered India!s transportation system."ailways offered the possibility of greatly reduced transport costs as wellas reliability and speed. It was believed that this network would assistthe economic development of India and provide both a market for #ritishgoods and a source of raw material.

#$%&'$#N) *R#A)I'N

$nce in operation the railways offered substantial advantages over moretraditional modes of transport such as pack%bullocks camels boats andhuman carriers. #y reducing transport costs railways broughtconsiderable savings and economic benefits to India. "ailways helpedIndian agricultural commodities to become competitive internationallyand made possible an enormous expansion in the export of productssuch as wheat rice &ute leather oilseeds and cotton. #efore coming ofthe railways farmers used to grow a variety of crops in their land thatwas basically meant for subsistence. This was due to limited

connectivity with other areas because of lack of a fast and effectivemode of transport. #ut now agriculture began to becomecommerciali'ed. Instead of producing solely for local market in whichprice fluctuated agriculturalists found that they could sell their surplusesoutside the local region. Thus agriculture output began to increase whichaffected employment. The expansion of acreage generated by railwaysled to a net increase in &obs in the agricultural sector.The decline in transport costs also had an impact in the non agriculturalsector. In some regions it caused output and employment in certainoccupations to expand in others to contract. "ailways was one of thema&or sources of employment creation in colonial India. It re(uired so



many workers that by the late nineteenth century they constituted thelargest single employer within the modern sector of the economy. )et atthe same time railways were creating &obs they were the cause of lossof &obs to many owners and operators of alternative means of longdistance transport who found themselves unable to compete with

railways. *hatever the absolute gain or loss in non agriculturalemployment in net terms railways did not alter the composition of thelabour force in the ma&or sectors of non agriculture that is at the all Indialevel approximately the same percentage of total workers was employedin trade industry and services at the beginning of the period underthe consideration as at the end. +imilarly the proportion of workers inagriculture and non agriculture did not alter significantly and Indiaremained a pre ,dominantly agricultural country.

IN+,S)RIA&ISA)I'N#efore the advent of railways there were virtually no modern industriesin India. In the manufacturing sector the effect of railways on output andemployment was mixed. "ailways played a ma&or role in the growth ofIndia!s modern industry by transporting raw materials at lower cost andcarrying finished goods to different markets. -owever the growth wasextremely limited. -eavy industries like the Indian railway workshop thatmanufactured locomotives were not able to expand and grow during the

colonial period. That is why materials and manpower for railways wereimported from #ritain which was promoting industrialisation there andstagnation in India. The overnment of India did little to aid or stimulatethe development of heavy industries or management skills within India.The colonial government and the railway companies followed policiesfrom which #ritish industry and financial institutions were the primarybeneficiaries and completely ignored India!s industrial development. $nthe other hand with the introduction of railways small and localindustries that were earlier sheltered from competition by the high costof transport were forced to compete with industries outside the localregion."ailways stimulated coal production but they did not provide thedemand to the coal industry that they did in other countries wheregreater use of machinery and increased productivity conse(uently led tolower coal prices. Though India had ample coal production but the ratesfor transporting it by rail were very high and low price of labourprevented the use of machinery for production. The rise in the railway

rates hindered Indian industries. Industries needed coal as their rawmaterial though it was extracted for cheap but transportation increasedthe final costs and hence it discouraged industries as they were not able



to compete with foreign producers who had the advantage of low costsof transportation in their own country and low sea%rates to India. /s aresult the spread affects from increased production of coal remainedlimited. The industry was in !comparative disadvantage!. The high rateshit the infant industries particularly those not located at the ports. #lock

rates did impede the establishment of industries that would have servedinternal markets.

*'N*&,SI'N"ailways led to increased agricultural output growth of modern industryand miming new &obs 0although many &obs were lost redistribution ofurban population higher incomes for some segments of the populationand numerous other economic changes. In the limited economic

development that India experienced before independence railwaysun(uestionably played a ma&or role. *ithout them freight shipmentswould have been much more expensive more resources would havebeen used to ship goods and fewer goods would have been transportedto internal and overseas markets.













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Impact of Railways on employment generation