how did first world war effected the economy
The defence expenditure of the Government of India rose highly due to the first world war.
Due to the rise in defence expenditure the government increased the taxes which included an increase in taxes on individual incomes and that on business profits.
With an increase in military expenditure and the demand of war supply increased, hence the prices of common goods rose which lead to great difficulties for common people.
However business class reaped profits from the war as the war catered huge demand for industrial goods such as rails, cloth and jute bags and as a result of the war there was a decline in the imports from other countries and the domestic business class reaped great profits.
Due to the rise in defence expenditure the government increased the taxes which included an increase in taxes on individual incomes and that on business profits.
With an increase in military expenditure and the demand of war supply increased, hence the prices of common goods rose which lead to great difficulties for common people.
However business class reaped profits from the war as the war catered huge demand for industrial goods such as rails, cloth and jute bags and as a result of the war there was a decline in the imports from other countries and the domestic business class reaped great profits.