(i) In 1853, Lord Dalhousie decided to construct railways in India. The introduction of railways has been considered as a marker of the modernization that took place under British rule. But, the construction of the railways in India only further strengthened the colonial nature of India's economic development.
(ii) The railway network made it easier to penetrate the interior markets and sources of raw material in the colony and linked them to port cities, instead of linking internal markets to each other. The railway network was thus, primarily geared to serve the interest of foreign trade.
(iii) Railway lines built in frontier regions would facilitate army movement and some famine lines were built in scarcity areas. The whole project was built with British capital, and investors in Britain were guaranteed 5% interest, which was paid out of Indian revenue.
(iv) Most of the high level expertise and railway equipment like machinery, railway lines and even coal to an extent, was imported from Britain.
(v) The penetration of the interiors of the country by railways ruined the Indian handicrafts industry. Till now the handicrafts industry had been enjoying patronage both from local ruling elites and markets overseas.
(vi) With the expanding control of the British, traditional native courts disappeared. The British also enforced an unequal tariff system. The entry of Indian commodities in British markets was restricted by high custom duties.
(vii) In turn, the Industrial Revolution in Europe enabled the mass production of cheap machine-made goods, which flooded Indian markets. Indian commodities could not compete with this and lost both their overseas and domestic markets. This destructive process led to deindustrialization that increased pressure on land.
