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
Colonial India Olson concludes that the East India Company's attempt to annexe and expand its direct control of India, by arbitrary laws such as Doctrine of Lapse, combined with employment discrimination against Indians, contributed to the 1857 Rebellion. The East India Company officers lived like princes, the company finances were in shambles, and the company's effectiveness in India was examined by the British crown after 1858. As a result, the East India Company lost its powers of government and British India formally came under direct British rule, with an appointed Governor-General of India. The East India Company was dissolved the following year