First World War created a new economic situation by:
1. New taxes like income tax were introduced and customs duties were raised to finance increasing war expenditure.
2. Prices of goods almost doubled in the few years and became a huge burden for the poor.
3. There was crop failure in many parts of India which led to a shortage of food.
Explanation: The participation of British in WWI proved heavy for Indians; not just financially but also physically. There was even forced recruitment in the village areas.
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