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

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

Answer: The Government of India’s defence spending increased dramatically as a result of the First World War. As a result, the government raised taxes on individual income and corporate profits. Increased military spending and demand for war supplies resulted in a sharp price increase that harmed the general public. It was difficult for them to meet even their most basic needs.

(I) To cover a massive increase in defence spending, the government raised taxes on individual income and corporate profits.

(ii) Rising military spending and demand for war supplies resulted in a sharp increase in prices of commodities, putting ordinary people in a difficult position.

(iii) The war increased demand for industrial goods such as jute bags, cloth, and rail, among other things, and caused prices to rise.