Consider the following statements about the initial development of railways in India by the British : 1. Private financial investors for railways would get land free from the British Government in India. 2. The investors would get a return of 5 percent on their capital from the government if they ran at a loss or secured inadequate profit. 3. The railways would be jointly managed with the government. How many of the above statements is/are correct?
- (a)1
- (b)2
- (c)3
- (d)None
Correct — B, 2. Exactly two of the three statements hold. Under the guarantee system that opened India's railway age from 1849, the British Indian government gave private English companies land free of charge and guaranteed them a fixed return of five per cent on their capital whether or not the line made money — so statements 1 and 2 are both correct. Statement 3 is the false one: management stayed entirely with the companies. The government carried the financial risk and got no share of the running, and it was only in 1944 that the railway companies were taken over by the state.
- (a)1 — Counts only one correct statement, but two of the three are sound. The guaranteed rate of return is as well documented as the free land — it is the defining feature of the arrangement.
- (c)3 — Would require joint management to be true as well. It is not: the guarantee bought the companies capital security, not a partnership, and the state stayed out of operations for almost a century.
- (d)None — Rejects everything, including two well-attested terms of the guarantee system. Free land and a five per cent guaranteed return are the two clauses every account of the system names.
India's railways were built by private British joint-stock companies under a bargain called the guarantee system. From 1849, beginning with the Great Indian Peninsula Railway, the Government of India offered each company free land for the line and a guaranteed annual return of five per cent on the capital it raised in London; if earnings fell short, the difference came out of Indian revenues. The first passenger train ran from Bori Bunder to Thane on 16 April 1853, under Lord Dalhousie, whose 1853 minute set out the plan for a network. Because the return was guaranteed regardless of performance, the system has been criticised ever since as one that transferred risk to the Indian taxpayer while leaving profit and control with the companies.
The tempting statement is the third one, because a government that hands over free land and underwrites the dividend sounds like a partner. It was not one — that is exactly the point critics of the arrangement have always made. A guarantee is a financial promise, not a management stake, and the companies ran their own lines until the state takeover of 1944. If you can place the five per cent figure and the free land, the count is settled at two whichever way you read statement 3, since the two you are sure of already exceed the one-statement option.
- The guarantee system provided free land and guaranteed a five per cent rate of return to private English companies building railways in India.
- The Great Indian Peninsula Railway was incorporated on 1 August 1849; India's first passenger train ran Bori Bunder to Thane on 16 April 1853.
- Lord Dalhousie's railway minute of 1853 set out the plan for a country-wide network.
- The railway companies were taken over by the Government of India in 1944.
- Assuming that free land and an underwritten dividend imply joint management; the guarantee was purely financial.
- Placing the state takeover in 1947 rather than 1944.
- Reading the five per cent as a cap on profits rather than a floor — companies could and did earn more.
Asked as a how-many-statements count on the terms of a colonial economic arrangement — CDS prefers this format for colonial infrastructure and finance.
Which of the following statements correctly explains the impact of Industrial Revolution on India during the first half of the nineteenth century?
- (a) Indian handicrafts were ruined.
- (b) Machines were introduced in the Indian textile industry in large numbers.
- (c) Railway lines were laid in many parts of the country.
- (d) Heavy duties were imposed on the imports of British manufactures.
Answer(a) Indian handicrafts were ruined — mechanised mills, railway building and protective duties all came later.
Its rejected option (c) is the chronological anchor for this item: railway construction belongs to the second half of the nineteenth century, after the 1849 guarantee and the 1853 first run.
- practice — not a real PYQ
Under the guarantee system, what did the Government of India promise private railway companies?
- (a)A monopoly over all freight traffic
- (b)Free land and a guaranteed five per cent return on capital
- (c)Exemption from all Indian taxation for fifty years
- (d)A fixed share of land revenue from the districts served
Answer(b) Free land and a guaranteed five per cent return on capital — the shortfall, if any, was met from Indian revenues.
- practice — not a real PYQ
India's first passenger railway service ran in 1853 between
- (a)Howrah and Hooghly
- (b)Madras and Arcot
- (c)Bori Bunder and Thane
- (d)Delhi and Meerut
Answer(c) Bori Bunder and Thane — the 16 April 1853 run of the Great Indian Peninsula Railway.