The First World War had the following economic impact on India:
(i) In order to meet a huge rise in defense expenditure, the government increased taxes on individual incomes and business profits.
(ii) Increased military expenditure and the demands for war supplies led to a sharp rise in prices which created great difficulties for the common people.
(iii) The war created a demand for industrial goods like jute bags, cloth, rail, etc. and caused a decline in imports from other countries into India.
(iv) Indian industries expanded during the war and Indian business groups began to demand greater opportunities for development.
(v) Business groups reaped fabulous profits from the war.