<P> The Indian economy under the British Raj describes the economy of India during the years of the British Raj, from 1858 to 1947 . During this period, the Indian economy essentially remained stagnant, growing at the same rate (1.2%) as the population . India experienced deindustrialization during this period . Compared to the Mughal Era, India during the British colonial era had a lower per - capita income, a large decline in the secondary sector, and lower levels of urbanisation . India's share of the world economy and share of global industrial output declined significantly during British rule from 28% to 2% . </P> <P> The subject of the economic impact of British imperialism on India remains contentious . The issue was raised by British Whig politician Edmund Burke who in 1778 began a seven - year impeachment trial against Warren Hastings and the East India Company on charges including mismanagement of the Indian economy . Contemporary historian Rajat Kanta Ray argues the economy established by the British in the 18th century was a form of plunder and a catastrophe for the traditional economy of Mughal India, depleting food and money stocks and imposing high taxes that helped cause the famine of 1770, which killed a third of the people of Bengal . In contrast, historian Niall Ferguson argues that under British rule, the village economy's total after - tax income rose from 27% to 54% (the sector represented three quarters of the entire population) and that the British had invested £ 270 million in Indian infrastructure, irrigation and industry by the 1880s (representing one - fifth of entire British investment overseas) and by 1914 that figure had reached £ 400 million . He also argues that the British increased the area of irrigated land by a factor of eight, contrasting with 5% under the Mughals . </P>

Indian cities did not expand as rapidly as in england in the nineteenth century. why was this so
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