World War I had economic repercussions globally. It marked the end of the first era of globalisation. The post-war period was characterised by economic turmoil. Trade collapsed, and protectionist measures surged. Many countries experienced deep recessions. The balance of economic power began to shift towards the United States and Japan.
Impact on the Indian Economy
The war drastically altered the Indian economic landscape. The British focus on the war effort increased demand for Indian goods. Indian industries initially benefitted from this surge. However, shipping disruptions caused supply chain issues. This duality led to inflation, with industrial prices nearly doubling from 1914 to 1920. Agricultural prices rose but not as as industrial ones.
Inflation and Industrial Growth
Inflation during this period favoured industrial enterprises. The internal terms of trade shifted unfavourably for agriculture. This trend persisted, particularly during the Great Depression. Despite challenges, Indian industries began to thrive due to rising prices. The war years catalysed a shift in colonial policy towards more interventionist measures.
Shift in Colonial Policy
The British government realised the need for strategic industrial depth in India. This was crucial for maintaining control during global disruptions. Nationalist movements also pressured the colonial state for industrial support. In March 1916, Ibrahim Rahimtoola proposed a committee to explore industrial policies. The proposal was accepted, leading to the Indian Industrial Report of 1918.
The Indian Industrial Report
The report brought into light the necessity of state support for industrial growth. However, it fell short of granting fiscal autonomy to India. The report concluded that a robust stimulus was essential for economic development. This stimulus required an organised system of technical and financial aid. The dissenting note by Madan Mohan Malaviya emphasised the need for more substantial government support.
Fiscal and Tariff Commissions
The aftermath of the report led to the establishment of a Fiscal Commission. This aimed to provide some fiscal autonomy to India. A Tariffs Commission was also set up to protect select industries. These developments laid the groundwork for future industrial policies.
Economic Consequences of the War
The war had long-term economic implications for India. Profits during the war provided initial capital for emerging industrial groups. This capital became instrumental for growth leading to independence. The acceptance of state support for industrialisation was very important. It set the stage for structured national planning efforts in later decades.
Indian Contribution to the War Effort
India played important role in supporting the British during World War I. Approximately 1.3 million Indian soldiers served in various theatres. The Government of India and princes provided food, money, and ammunition. Despite this support, the consequences were dire for many Indians. High casualty rates and inflation caused widespread suffering.
Rise of Nationalism
The war effort initially united Indian nationalist leaders. They believed their loyalty would lead to political concessions. However, disillusionment grew as the war progressed. The Montagu-Chelmsford Reforms failed to meet expectations. This led to a resurgence of nationalism and mass protests.
Political Agitation Post-War
Following the war, Punjab became a hotspot for nationalist activity. Returning soldiers sparked political movements against colonial rule. The Rowlatt Act of 1919, which restricted civil liberties, ignited outrage. Mahatma Gandhi called for satyagraha in response to this legislation.
The Khilafat Movement
The Khilafat Movement emerged in response to the British treatment of the Turkish Sultan. Leaders like Mohammad Ali and Shaukat Ali rallied support for this cause. The movement aligned with the Non-Cooperation Movement, uniting diverse groups. This collaboration strengthened the national movement, particularly in Bengal.
Economic Hardships After the War
Post-war India faced severe economic challenges. Inflation and recession created widespread hardship. Many industries struggled to survive amidst rising costs. Artisans and workers faced unemployment and high prices. Soldiers returning home were shocked by the poverty they encountered.
Urban and Rural Discontent
Urban educated classes experienced high unemployment rates. They became increasingly aware of racial discrimination. This led to heightened tensions and demands for change. Rural peasants faced heavy taxation and poverty. They awaited leadership to voice their grievances.
Government Response to Economic Strain
The British government increased military spending in response to unrest. This led to higher taxes on individuals and businesses. The resulting economic strain caused widespread dissatisfaction. Many Indians began to demand protection for local industries.
Mass Nationalism After 1919
Post-1919, the struggle against British rule evolved into a mass movement. Peasants, tribals, and workers participated actively. The war had expanded the British army, coercing villages into service. Many soldiers returned with a new understanding of imperialism.
Influence of Global Events
The Russian Revolution of 1917 inspired Indian nationalists. News of worker and peasant struggles spread rapidly. This global context heightened the urgency for change in India. The contributions of Indians during the war went largely unrecognised.
Gandhi’s Emergence as a Leader
Amidst this charged atmosphere, Mahatma Gandhi emerged as a prominent leader. His approach resonated with various segments of society. Gandhi’s call for nonviolent resistance gained traction. The post-war period set the stage for broader civil disobedience movements.
