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 that indirect rule allowed for social development through gradual change from within rather than shattering the social fabric, producing opposition from the local populace. Indirect rule is less confrontational and more collaborative, therefore a better means for domination. The colonial administration recognised around 600 semi-autonomous princely states, nominally advised by a British resident; the states possessed one quarter of the country’s population. British administrators also employed tax collectors and landlords even in the more "directly" ruled regions of the country and paid for the landlord’s loyalty with large tracts of land and some power to collect taxes for personal use.