Economic Impact of First World War on India
Though India was not directly involved in the first world war, it faced many challenges after the war as it was primarily dependent on British and German goods. The condition of British and German industries was adverse because of the war, and ultimately, India had to face a scarcity of goods. The economic impact of the first world war on India is as under-.
- There was a significant increase in the expenditure on defence.
- The colonial government of India fell off.
- The focus on taxes shifted to individual and business profits. The taxes on the business profits and personal income were increased.
- There was a high demand for opportunities for the development of industries by Indian business groups.
- As there was an increase in the demand for war materials and military expenditure was high, the prices of the raw material increased.
- Demand for food supplies, particularly cereals, led to rampant food inflation.
- The steel industry benefited a lot because of the high demand for armour. Along with this, the manufacturing industries, particularly the cotton industries, benefited after the British goods were reduced in the market after the war.