After the Indian Rebellion of 1857, the British Government took over the administration from Company rule in India to establish the British Raj there. The British Raj was the period of Crown rule in India between 1858 and 1947, for around 200 years of British occupation. The system of governance was instituted in 1858 when the rule of the East India Company was transferred to the Crown in the person of Queen Victoria.

The British Raj in the Indian subcontinent lasted until 1947, when the British provinces of India were eventually partitioned into two sovereign dominion states (thus, undermining the idea of Dominion, as the original pre war British Dominions were not sovereign): the Dominion of India and the Dominion of Pakistan, leaving the princely states to choose between them. Most of the princely states decided to join either the Dominion of India or the Dominion of Pakistan, except the state of Jammu and Kashmir. It was only at the last moment that Jammu and Kashmir agreed to sign the "Instrument of Accession" with India. The two new dominions later became the Republic of India and the Islamic Republic of Pakistan (the eastern half of which became the People's Republic of Bangladesh in 1972). The province of Burma in the eastern region of the British Indian Empire had been made a separate colony in 1937 and became independent in 1948.

The East India Company was an English and later British joint-stock company.The Dutch East India Company was the first to issue public stock. It was formed to trade in the Indian Ocean region, initially with Mughal India and the East Indies, and later with Qing China. The company ended up seizing control of large parts of the Indian subcontinent, colonised parts of Southeast Asia, and colonised Hong Kong after a war with Qing China.

Prelude

Effects on the economy

In the later half of the 19th century, both the direct administration of India by the British Crown and the technological change ushered in by the industrial revolution, had the effect of closely intertwining the economies of India and Great Britain., In fact, many of the major changes in transport and communications (that are typically associated with Crown Rule of India) had already begun before the Mutiny. Since Dalhousie had embraced the technological change then rampant in Great Britain, India too saw rapid development of all those technologies. Railways, roads, canals, and bridges were rapidly built in India and telegraph links equally rapidly established in order that raw materials, such as cotton, from India's hinterland could be transported more efficiently to ports, such as Bombay, for subsequent export to England., Likewise, finished goods from England were transported back just as efficiently, for sale in the burgeoning Indian markets. However, unlike Britain itself, where the market risks for the infrastructure development were borne by private investors, in India it was the taxpayers—primarily farmers and farm-labourers—who endured the risks, which, in the end, amounted to £50 million. In spite of these costs, very little skilled employment was created for Indians. By 1920, with a history of 60 years of its construction, only 10 percent of the "superior posts" in the railways were held by Indians.

The rush of technology was also changing the agricultural economy in India: by the last decade of the 19th century, a large fraction of some raw materials—not only cotton, but also some food-grains—were being exported to faraway markets. Consequently, many small farmers, dependent on the whims of those markets, lost land, animals, and equipment to money-lenders. More tellingly, the latter half of the 19th century also saw an increase in the number of large-scale famines in India. Although famines were not new to the subcontinent, these were particularly severe, with tens of millions dying, and with many critics, both British and Indian, laying the blame at the doorsteps of the lumbering colonial administrations.

Another incontrovertible fact of British rule is that India's population increased more than twofold from 170 million in 1750 to 425 million in 1950, a rough measure of major improvements in public health and nutrition, despite India's cyclical famines.

In terms of the longer lasting effects and legacies of the economic impact of the British Raj, the impact predominantly stems from the irregular investment of areas of infrastructure. Simon Carey explains how the investment into Indian society was 'narrowly focused' and favoured the growth of transportation of goods and workers. Therefore, India has since seen an uneven economic development of society. For example, Acemoglu et al. (2001) identify how the inability of certain areas of rural India to cope with disease and famine best explain this uneven development of the nation. Carey also points out that a lasting impact of the British Raj is the transformation of India into an agricultural trading economy. Therefore, some areas of India, predominantly in affluent urban areas, have benefited from the legacies of the British Raj in the long term due to the transformation of Indian economic culture to a production based economy. However, the majority of Indian society has experienced a negative impact of the British Raj, especially in rural and suburban areas, due to the focus of investment into transport such as railways and canals rather than into healthcare and primary education.

Beginnings of self-government The first steps were taken toward self-government in British India in the late 19th century with the appointment of Indian counsellors to advise the British viceroy and the establishment of provincial councils with Indian members; the British subsequently widened participation in legislative councils with the Indian Councils Act 1892. Municipal Corporations and District Boards were created for local administration; they included elected Indian members

The Indian Councils Act 1909 – also known as the Morley-Minto Reforms (John Morley was the secretary of state for India, and Gilbert Elliot, fourth earl of Minto, was viceroy) – gave Indians limited roles in the central and provincial legislatures, known as legislative councils. Indians had previously been appointed to legislative councils, but after the reforms some were elected to them. At the centre, the majority of council members continued to be government-appointed officials, and the viceroy was in no way responsible to the legislature. At the provincial level, the elected members, together with unofficial appointees, outnumbered the appointed officials, but responsibility of the governor to the legislature was not contemplated. Morley made it clear in introducing the legislation to the British Parliament that parliamentary self-government was not the goal of the British government.

The Morley-Minto Reforms were a milestone. Step by step, the elective principle was introduced for membership in Indian legislative councils. The "electorate" was limited, however, to a small group of upper-class Indians. These elected members increasingly became an "opposition" to the "official government". The Communal electorates were later extended to other communities and made a political factor of the Indian tendency toward group identification through religion.

World War I and its causes World War I would prove to be a watershed in the imperial relationship between Britain and India. 1.4 million Indian and British soldiers of the British Indian Army would take part in the war, and their participation would have a wider cultural fallout: news of Indian soldiers fighting and dying with British soldiers, as well as soldiers from dominions like Canada, Australia and New Zealand, would travel to distant corners of the world both in newsprint and by the new medium of the radio. India's international profile would thereby rise and would continue to rise during the 1920s. It was to lead, among other things, to India, under its own name, becoming a founding member of the League of Nations in 1920 and participating, under the name "Les Indes Anglaises" (The British Indies), in the 1920 Summer Olympics in Antwerp.Olympic Games Antwerp 1920: Official Report , Nombre de bations representees, p. 168. Quote: "31 Nations avaient accepté l'invitation du Comité Olympique Belge:... la Grèce – la Hollande Les Indes Anglaises – l'Italie – le Japon ..." Back in India, especially among the leaders of the Indian National Congress, it would lead to calls for greater self-government for Indians through sport.

In 1916, in the face of new strength demonstrated by the nationalists with the signing of the Lucknow Pact and the founding of the Home Rule leagues, and the realisation, after the disaster in the Mesopotamian campaign, that the war would likely last longer, the new viceroy, Lord Chelmsford, cautioned that the Government of India needed to be more responsive to Indian opinion. Towards the end of the year, after discussions with the government in London, he suggested that the British demonstrate their good faith – in light of the Indian war role – through a number of public actions, including awards of titles and honours to princes, granting of commissions in the army to Indians, and removal of the much-reviled cotton excise duty, but most importantly, an announcement of Britain's future plans for India and an indication of some concrete steps. After more discussion, in August 1917, the new Liberal Secretary of State for India, Edwin Montagu, announced the British aim of "increasing association of Indians in every branch of the administration, and the gradual development of self-governing institutions, with a view to the progressive realization of responsible government in India as an integral part of the British Empire." This envisioned reposing confidence in the educated Indians, so far disdained as an unrepresentative minority, who were described by Montague as "intellectually our children". The pace of the reforms was to be determined by Britain as and when the Indians were seen to have earned it. However, although the plan envisioned limited self-government at first only in the provinces – with India emphatically within the British Empire – it represented the first British proposal for any form of representative government in a non-white colony.

Earlier, at the onset of World War I, the reassignment of most of the British army in India to Europe and Mesopotamia had led the previous viceroy, Lord Harding, to worry about the "risks involved in denuding India of troops." Revolutionary violence had already been a concern in British India; consequently, in 1915, to strengthen its powers during what it saw was a time of increased vulnerability, the Government of India passed the Defence of India Act, which allowed it to intern politically dangerous dissidents without due process and added to the power it already had – under the 1910 Press Act – both to imprison journalists without trial and to censor the press. Now, as constitutional reform began to be discussed in earnest, the British began to consider how new moderate Indians could be brought into the fold of constitutional politics and, simultaneously, how the hand of established constitutionalists could be strengthened. However, since the reform plan was devised during a time when extremist violence had ebbed as a result of increased wartime governmental control and it now feared a revival of revolutionary violence, the government also began to consider how some of its wartime powers could be extended into peacetime.