ABSTRACT

India as a colony of Britain had to obviously support Britain’s war efforts and it was this priority that defined India’s monetary policies during the war years. Throughout the eighteenth century and early nineteenth century the East India Company was riddled with debt to fight its wars in India. This was once again the situa-

tion with Britain at the end of the war. Its sterling debt in India had increased manifold during the Second World War. It is also interesting to note that soon after the Company acquired diwani in 1765, Bengal faced a cataclysmic famine that took some 10 million lives. In 1943, just four years before India regained independence, Bengal had to once again face another horrendous famine that claimed some 3 million lives. And like the famine of 1770, one important reason for the famine of 1943 has been attributed to (mis)management of money supply.