Prof Utsa Patnaik in this interesting paper discusses Keynes’role in Bengal Famine in 1943-44. This year marks the 75th anniversary of the disaster.
Prof Utsa says Keynes’ profit inflation idea/policy was the key to the famine:
During World War II, six million persons were put to death in Europe under fascist terror. But, the death of three million civilians in undivided Bengal in India during a shorter sub-period of the war, 1943 to 1944, has gone unnoticed in the international literature. This paper argues that these deaths were the direct result of the Keynesian policy of profit–inflation deliberately followed at that time by the British and colonial governments with a very specific purpose, to raise resources from the Indian population by curtailing mass consumption, in order to finance the Allies’ war in South Asia with Japan.
Keynes himself was given the brief of advising the British government on Indian financial matters during the war. Because the policies followed were of demand management, which are always opaque to the general population, and remain opaque to this day even to the educated elite, the extreme compression of mass demand to raise forced savings that led to three million civilian deaths could be successfully camouflaged as a simple famine and attributed variously to natural phenomena like cyclone, or to food shortage, or to speculation and hoarding, or to not importing food in time, or a combination of these factors.
Keynes had coined the term “profit inflation” to describe a situation where in wartime, output prices are deliberately raised faster than wages, in order to redistribute incomes away from wages and towards profits, and ensure substantial reduction of the consumption of wage-earners. It can be applied equally to a situation where other than wage-earners, a large part of the working population comprises self-employed petty producers like artisans, fisherfolk, small peasants and so on who have to buy food staples from the market since they produce either no food at all, or not enough to meet their needs. Without deliberate state policy of curtailing mass consumption, over £1,600 million of extra resources could not have been extracted from Indians during the war, with the bulk of this enormous burden falling on the population of Bengal since the Allied forces were located in and operated from that province. The state policy was to induce a very rapid profit inflation which redistributed incomes away from the working population, towards capitalists and companies, which were then taxed. The colonial state directly spent, in every war year after 1941, a multiple of its normal revenues by printing money—an extreme measure of “profit inflation.”
Keynes was closely associated with Indian affairs from an early period of his life. He served in the India Office in London, leaving it when 25 years of age, and used the experience gained there to write and publish Indian Currency and Finance (1913) five years later. He was a member of or gave evidence to successive commissions set up to deliberate on Indian finance and currency (the Chamberlain, Babington–Smith, and Hilton Young Commissions, and for a while the Indian Fiscal Commission). He wrote articles on India and reviewed books on the Indian economy for the Economic Journal which he edited (such as T Morison’s “The Economic Transition in India” that discussed the drain of wealth). Keynes also gave lecture courses to students in Cambridge for many years on Indian monetary affairs.
In 1940, in view of the unusual financial situation arising from war, the British government appointed two economic advisors to the Chancellor of the Exchequer, an ex-banker, Lord Catto, and Keynes. Indian financial and monetary matters were specifically entrusted to Keynes given his expertise in the area. Keynes was the most influential figure at the Bretton Woods Conference in 1944 where the repayment of sterling owed by Britain to India was discussed by him with the Indian delegation.
Keynes’s four-decade-long India connection, his interest in the Indian monetary system, and his part in policies followed in India during World War II have been neglected by his biographers (Minsky 1975; Moggridge 1995; Skidelsky 2001). His biographers appear to have had little interest in or understanding of the financial and monetary mechanisms underpinning colonial rule that concerned Keynes, and they show no insight at all into India’s role sustaining the international gold standard even though literature on this was available (Saul 1960; De Cecco 1984). The severe impact on the colonies of the large forced loans Britain took from them is not mentioned, though Britain’s refusal to honour its promise to repay debt immediately at the end of the war is discussed albeit cursorily.
That Keynes participated directly in formulating wartime policies in India cannot be in doubt as he was specifically given the brief of advising on Indian financial and monetary matters by the British government. Moreover, the war financing policies implemented in India were uniquely Keynesian in nature, and were in most respects a textbook replication of policies he had advocated for raising resources in ATreatise on Money: The Applied Theory of Money referring to the problem of financing the first war, and in How to Pay for the War referring to the second war. This paper will first briefly discuss the specificity of the Indian fiscal and monetary system arising from the drain of wealth to Britain. Looking next at what Keynes had to say about war financing, his ideas will then be related to the main measures undertaken in India to finance war expenditure.
Had little idea about this. Need to read the piece and the sources..
Mostly Economics 
October 22, 2018 at 9:50 pm
I too had little idea about this.
February 9, 2023 at 7:24 am
It’s a fake story by a Marxist economist. Read the truth history about Bengal famine by economist Peter Bowbrick. He wrote ‘falsehood and myths of famine research.