Here is a primer on how they bankrupted India during WW2 to pay for an imperial war at the cost of the poorest Indian peasants.
The Raj “paid” for all its purchases, and hence it was legitimate is the defense used by apologists of the Raj, but in reality the defense is not even gossamer think. The Raj paid for its purchases with scrips and not hard British Pounds.
They also increased the debt levels. Collective Revenue (centre + provinces) went from Rs 180 crore in 39-40 to Rs 590 cr in 45-46. An increase of 3 times. Debt went from GBP 440 + Rs 450 in 39-40 to GBP 34 + Rs 2282 in 45-46. Basically the debt was all in worthless Indian currency.
Then the Brits got clever, they fixed prices at which they purchased raw materials but opened it up to the mARkET foRcES for general consumption. This meant the the empire purchased vital foodstuffs, raw cotton etc at costs lower than what the Indian populace had to pay for it.
Then to pay for all the Indian rupees debt, remember the one that went up 5 fold, the Raj simply printed notes. The result? Roaring inflation. In Aug 1939 Rs 179 crores of notes were in circulation. Dec 1945 this was @ Rs 1,200 crores. A 7 fold increase in notes
BUT we aren’t done here, the purchase by the Raj for the war effort sucked out all resources leaving a severe shortage married to a now worthless currency.
Now we come to taxation. Tax receipts of the Indian Govt went from Rs 50 cr in 39-40 to Rs 400 cr by 44-44, a whopping 8 fold increase in taxes. Let me repeat an 8 fold increase in taxes over 4 years. We now have Low supply of goods + worthless currency + obscene taxation.
War expenditure touched 57% of total expenditure in 41-42, averaging 42% from 42-46. WPI inflation hit 50% by Jan 43. Closing the war at 150% by 46 (compared to pre war prices from Sept 39). TLDR: Despite an 8x increase in taxation, only 55% of the vastly increased expenditure was funded by taxes and borrowings. Balance was done by deficit financing, notes by circulation increased by 400%, the price index increased 200%, inflation sky rocketed.
By comparison the UK itself saw an increase in paper currency by 180% and price index by 74%. Clearly the UK knew these were deeply inflationary measures and avoided these. One rule for the White man and another for the Brown coolies eh? Oh noes the Brit empire didn’t know about this, they were well meaning! Well, 20 leading Indian economists disagreed and published a warning to the Govt of India on April 12, 1943.