Question

What economic impact did the First World War have on India?

Answer 1

The First World War led to a huge rise in the defence expenditure of the Government of India. The government in turn increased taxes on individual incomes and business profits. Increased military expenditure and the demands for war supplies led to a sharp rise in prices which created great difficulties for the common people. On the other hand, business groups reaped fabulous profits from the war. The war created a demand for industrial goods such as jute bags, cloth and rails, and caused a decline in the imports from other countries into India. As a result, Indian industries expanded during the war.