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
Company rule in India to the Dogra Dynasty of Jammu, and thereby became a princely state. In 1854 Berar was annexed, and the state of Oudh two years later. The second form of asserting power involved treaties in which Indian rulers acknowledged the Company's hegemony in return for limited internal autonomy. Since the Company operated under financial constraints, it had to set up "political" underpinnings for its rule. The most important such support came from the "subsidiary alliances" with Indian princes during the first 75 years of Company rule. In the early 19th century, the territories of these princes accounted for two-thirds of India.