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
Direct colonial rule Direct colonial rule Direct colonial rule is a form of colonialism that involves the establishment of a centralized foreign authority within a territory, which is run by colonial officials. According to Michael W. Doyle of Harvard University, in a system of direct rule, the native population is excluded from all but the lowest level of the colonial government. Ugandan academic Mahmood Mamdani classifies direct rule as centralized despotism: a system where natives were not considered citizens. The opposite of direct colonial rule is indirect rule, which integrates pre-established local elites and native institutions into the administration of the colonial government.