Economic history of India Indian reserve Bank held a positive balance of £1160 million, with it, on 14 July 1947, and that British India maintained a trade surplus, with the United Kingdom, for the duration of the British Raj eg. Source: Indian sterling balances, p. 2, 15 Jan.1.1947, Bank of England (BoE), OV56/55. Modern economic historians have blamed the colonial rule for the dismal state of India's economy, with investment in Indian industries limited since it was a colony. Under British rule, India's native manufacturing industries shrank. During the British East India Company's rule in India, production of food crops declined, mass impoverishment and
Political warfare in British colonial India In this way, Britain increased the power of local nobility and made it known to them that their power came from the Queen. "Many of them [princes] owe their very existence to British justice and arms...The situation of these feudatory States, checker boarding all India as they do, is a safeguard. It is like establishing a vast network of friendly fortresses in debatable territory." Also, to appease some of the nobles' concerns in the aftermath of the Indian Mutiny, princes were allowed to adopt heirs rather than have their estates automatically ceded to British control at their death. Direct rule