What economic impact did the First World war have on India? (2024)

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What economic impact did the First World war have on India? ›

There was a huge rise in the defense expenditure of the Government of India. There was a sharp increase in the prices of daily commodities. The war drove the demand for industrial goods like jute bags, clothes, rails, and steel.

i The First World War created a new economic and political situation in India. It led to huge increase in defence expenditure which was Financed by war loans and increasing taxes custom duties were raised and income tax was introduced. ii Prices increased doubling between 1913-18. This hit the common people.

In fact, as the war continued the economic and political climate in the country deteriorated. The war years were difficult ones for Indians on the home front whose lives were negatively impacted by massive recruitment efforts, high taxes and a sharp rise in prices.

The Second World War had a debilitating effect on the Indian economy. The British war efforts drained India's resources, leading to inflation, famine, and widespread economic distress, most notably the Bengal Famine of 1943.

Industrial production in India increased during the First World War because British mills became busy to support the war needs and the imports from Manchester declined, while Indian mills suddenly had a huge home market to supply.

The main economic consequence during and at the end of WWI was the loss of money and resources on both sides. The countries involved had to invest many resources in weapons, strengthen their armies, and the developing new technological advantages. Before the war, Germany had emerged as a new industrial power.

Hence, the depression had an impact on India as well. From 1926, agricultural prices started to fall, resulting in the decline of the exports, and the demand for agricultural goods fell. The peasants found it extremely difficult to sell their harvests and pay their revenue.

During World War 1, India was a British colony who aided the British empire on the promise that dominion status would be given to them at the end of the war, meaning that India would still be part of the British Empire, but as an independent community. However the promise to grant dominion status was not kept.

The First World War created a new economic and political situation. It led to a huge increase in defence expenditure which was financed by war loans and increasing taxes. Custom duties were raised and income tax was introduced. Through the war years prices increased leading to extreme hardships for the common mass.

India Gate commemorates the over 74,000 personnel from undivided India who died in the First World War as well as those that fell in operations on or beyond the North-West Frontier and in the Third Afghan War in 1919. However, only 13,516 names of the latter are inscribed on it.

What was the effect of great economic depression on India after the First World War? ›

During the period 1929–1937, exports and imports in India fell drastically, crippling seaborne international trade in the region; the Indian railway and agricultural sectors were the most affected by the depression.

American factories were retooled to produce goods to support the war effort and almost overnight the unemployment rate dropped to around 10%. As more men were sent away to fight, women were hired to take over their positions on the assembly lines.

Foremost among these trends was the expansion of employment, which paralleled the expansion of industrial production. In 1944, unemployment dipped to 1.2 percent of the civilian labor force, a record low in American economic history and as near to “full employment” as is likely possible (Samuelson).

India had an earlier start than most late industrializing countries in the non-Western world. It led the contemporary developing world in two major industries of the Industrial Revolution, cotton textiles and iron and steel.

Till the First World War, industrial growth was slow. The war created a dramatically new situation. With British mills busy with war production to meet the needs of the army, Manchester imports into India declined. Suddenly, Indian mills had a vast home market to supply.

However, after the Industrial Revolutions, they started to set up large-scale factories. Manufacturers installed new machinery, raw materials came up, and an abundance of the human workforce was employed in factories to make machine-made goods.

As many as 8.5 million soldiers and some 13 million civilians died during World War I. Four imperial dynasties collapsed as a result of the war: the Habsburgs of Austria-Hungary, the Hohenzollerns of Germany, the sultanate of the Ottoman Empire, and the Romanovs of Russia.

The First World War was a truely global event that changed the course of history in many participating as well as non-participating countries. In East Asia, the war stimulated the further rise of Japan as the leading power in the region during the war, yet also its radicalization and social protests after 1918.

The First World War destroyed empires, created numerous new nation-states, encouraged independence movements in Europe's colonies, forced the United States to become a world power and led directly to Soviet communism and the rise of Hitler.