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 strengthen their grip on power. This was either to create a hierarchy of racial types arose, "each arranged into appropriate social classes, whose spiritual and material improvement were entrusted to the paternal direction of gentlemanly rulers" or 'a single hierarchy all its subjects, Indian and British'. The Army and the Civil Service were the main instruments of British power, staffed by only a small number of white officials. This imperial service became, "a large vested interest of the educated upper middle class. By 1913–14, for example, the Government of India devoted no less than 53 million pounds (65 percent of