The First World War created a new economic situation in India.
1. The huge increase in defense expenditure was financed by war loans and increasing taxes. Customs duties were raised and income tax was also introduced.
2. The prices of commodities doubled between 1913-1918, leading to extreme hardships for the common people. Villages were also called upon to supply soldiers, and forced recruitment in rural areas caused widespread anger.
3. Crops failed in many parts of India in 1918-19 and 1920-2, resulting in acute shortage of food. This acute economic situation was further accompanied by an influenza epidemic and according to the census of 1921, about 12 to 13 million people perished because of the famine and the epidemic.
NOTE – The First World War (1914-1918) left a serious impact on the lives of the Indian people. Economically and financially, people faced problems in their day to day lives as the prices of goods and taxes and duties increased. Indian markets were also affected badly.
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