The First World War led to a huge rise in the defence expenditure of the
Government of India. The government in turn increased taxes on
individual incomes and business profits. Increased military expenditure
and the demands for war supplies led to a sharp rise in prices which
created great difficulties for the common people. On the other hand,
business groups reaped fabulous profits from the war. The war created a
demand for industrial goods such as jute bags, cloth and rails, and
caused a decline in the imports from other countries into India. As a
result, Indian industries expanded during the war.