This paper examines the structural impact of British colonial economic policies on India's long-term developmental trajectory and modern regional wealth inequality. Utilizing historical synthesis and institutional analysis, it traces how colonial taxation systems, forced deindustrialization, selective infrastructure development, and revenue extraction transformed pre-colonial India from a global manufacturing hub into a primary exporter of raw materials. By examining land revenue policies such as the Permanent Settlement alongside trade restrictions, this study demonstrates how imperial extraction created persistent regional disparities that outlasted colonial rule in 1947. Furthermore, the paper engages with the historiographical debate surrounding colonial modernization and links colonial-era agrarian debt, industrial decline, and administrative priorities to contemporary economic divergence among Indian states.