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The First World War (1914), created a new economic and political situation worldwide. It led a huge increase in defence expenditure which was financed by war loans and increasing taxes; custom duties were raised and income tax introduced.

Impact of the First World War on Society

Between 1913 to 1918, the prices of foodgrains increased largely which led to extreme hardship for the common people. The peasantry suffered from heavy rents and taxes. Villagers were called upon to supply soldiers. This forced recruitment in rural areas caused widespread anger. After the war, foreign goods once again began to be imported and foreign capital began to be invested in a large sdale. Indian industries faced heavy losses and even closure.

Social Conditions after the War

In 1918-19 and 1920-21, crops failed in many parts of India, resulting in acute shortage of food. There was also an influenza epidemic. According to the census of 1921, 12 to 13 million people died as a result of famines and the epidemic. People hoped their sufferings would be reduced after the war, but that did not happen.