Q. With reference to the impact of the First World War (1914–1918) on the Indian economy, consider the following statements:

1. There was a substantial rise in prices due to inflationary pressures.
2. Indian industries, especially textiles, steel and chemicals, expanded rapidly.
3. Farmers benefitted from rising prices of foodgrains and raw materials.

Which of the above statements are correct?
Answer: 1, 2 and 3
Notes: The First World War caused significant inflation, and prices almost doubled in India. Disrupted imports led to rapid growth in Indian industries such as textiles, steel, and chemicals. Farmers benefited from rising prices and demand for food grains and raw materials. All three statements are correct as they represent the major economic impacts of the war on India.