Lord Lytton was a nominee of the conservative Government of Benjamin Disraeli, who was entrusted with the charge for the developments in central Asia. Though Lord Lytton refused to accept the post of viceroy initially he was later made to accept the office of viceroy of India. Lytton, though did not have any idea about the Indian administrative set up, yet he was a diplomat who served the British foreign office in many capacities. He was appointed the governor of Bengal at a very crucial time when the colonial government was determined to implement the India Act of 1919 and the Indian National Congress was determined to get this unacceptable Act annulled. However Lytton's rule in India constituted an important epoch in political history of British India.

Free trade was flourished among the ruling class of industrially advanced England during the 19th century. The new cotton mils emerging in India during that time, posed a threat to the free trade of the British. In order to prevent the prosperity of the Indian trade, the conservative Government levied the import duties on the cotton goods of India. However the import duties levied on the cotton gods of India, greatly affected the financial condition of India. Lord Salisbury, the Secretary of State for India passed a resolution seeking the repeal the import duties on the cotton goods. Notwithstanding the poor financial condition caused by famine in India, Lord Lytton abolished the import duties on twenty-nine articles. However in 1879, the duties on the coarser kind of cotton goods were removed. The viceroy had to use his constitutional powers to overrule the majority of Council. Lord Salisbury, the secretary of State approved of the Viceroy's action, although the Indian Council was equally divided. Thus under Lord Lytton, the claims of Indian administration were subordinated to the necessities of English politics.

The policy of financial decentralization initiated during the period of Lord Mayo was still continuing. Under Lord Lytton, the Provincial government was given the control of expenditure upon all ordinary provincial services including the land revenue, excise, stamp, law and justice, general administration etc. For the discharge of the newly transferred services, the provincial governors were not given any increase in their fixed grants but handed over some specified sources of revenue from the respective provinces. According to the financial reforms adopted by Lytton, it was provided that any surplus above the estimated income was to be shared equally with the Central Government. It was presumed that the system would give the provinces an effective inducement to develop the revenue resources collected in the provinces. This system in this way improved the financial condition of the government as a whole. Sir John Starachey, the Finance Minister of the Viceroy's Council also adopted measures to equalize the rates of salt duties in the British provinces. Moreover he also negotiated with the Indian princes to surrender their rights of manufacture of salt in return of the compensation. Thus the inter-state salt smuggling came to an end and the salt duties began to yield more revenue to the government. Thus the financial reforms of lord Lytton undoubtedly strengthened the financial condition of the central government in India.

A severe famine ravaged India during the 1876-78, when Lord Lytton used to be the viceroy of India. The areas worst affected were Bombay, madras, Mysore, Hyderabad and some parts of Central India and Punjab. Many villages were deserted and a large tract of area went out of cultivation. Though the Government of India adopted steps to help the famine stricken, yet it was half-hearted yet unsuccessful. The government famine machiaenery was inadequate and ineffective. In 1878, a Famine Commission was appointed under the presidency of Richard Starchey to enquire the causes of the famine and to grant the famine relief. The Commission provided the able bodied person with employment on the basis of daily wage. Moreover it approached for the creation of the famine Fund in every province. The commission also recommended the construction of railway and the irrigation works. In this way the Indian government under Lord Lytton laid the subsequent famine policy.

The British parliament passed the Royal Titles Act investing queen Victoria with the title of Kaiser-I-hind or the Queen empress of India. However a grand Durbar was held at Delhi on 1st January 1877 to announce the Queen's assumption of title. Unfortunately the durbar was held during the time when several parts of India were stricken with famine. The government of Lytton spent a million, when millions of Indians were dying in poverty and starvation. This induced hatred among the Indians against the government of Lytton. The historians have opined that the durbar marked the beginning of the movement, which filed the educated Indian with the idea of obtaining a rightful place in the Empire. The educated Indians began to assert themselves. It was after that vast assemblage of 1877 that S.N Bannerjee thought to organize an association of the Indians to voice out their grievance. Thus the policies adopted by the government of Lord Lytton indirectly awakened the nationalist tendencies in India.

The unpopular policies of Lord Lytton and the growing apathy of the Government to the suffering of the people drove discontent among the common mass. In the Bombay Presidency, the agrarian riots were followed by gang robberies and attacks on the moneylenders. The common discontent came to surface and the government policies began to be openly criticized in the vernacular press. The government of Lytton got alarmed with the seditious activities of the Vernacular press. Hence he decided to repress the freedom of Press. In March 1878, the Vernacular Press Act was put into practice. The Act IX of 1878 empowered a magistrate to call upon the printer and the publisher of all the vernacular newspaper to sign an agreement. According to the agreement, the vernacular press would not publish anything, which was likely to excite the feeling of disaffection against the government. The Agreement also proposed that the vernacular newspapers also did not publish anything that could arise the antipathy between the persons of various races, caste or religion among her Majesty's subjects. It was also declared that the reoccurrence of the same offence would be punished. No appeal against the magistrate's action could be approached in the Court of law. In this way Lord Lytton suppressed the freedom of the Press in order to continue the repression and oppression of the British Government.

Indian Arms Act was the important event of the repressive administrative policy of Lord Lytton. The Arms Act XI of 1878 declared that the keeping, bearing and trafficking in arms without the license would be considered as a criminal offence. The penalties for the contravention of Act were imprisonment for a term, which may extend to three years with fine. However in case of concealment or an attempt of concealments of a term resulted into the imprisonment of seven years with an amount of fine. The worst feature of the Arms Act passed by Lord Lytton was the racial discrimination introduced with the law. Europeans, Anglo-Indians and some categories of the government officials were however exempted from the operational jurisdiction of this act.

The charter Act of 1833 had declared all offices in India were open to merit irrespective of the nationality and color. Again the charter Act of 1853 had provided for the holding of the competitive examination in London for the recruitment to the higher services under the company. In 1864, Satyentdranath Tagore was the first Indian to qualify the covenanted service. However lord Lytton proposed a straightforward course of closing the Civil Services to the Indians. However the Home Authorities in England did not favorably grant the idea of Lytton. Lord Cranbrooke, the secretary of state thought of legislation to separate the black from the white. Lytton then proposed for the plan of the Statutory Civil Service in 1878-79. According to the rules laid by the statutory Civil Services the Government of India could employ some aristocratic Indians to the statutory Civil Service on the recommendations of the provincial governments and subject to the confirmation of the secretary of State. The Act of 1879, also proposed that the number of such appointments would not exceed one sixth of the total appointments made to the Covenanted services.

The Statutory Civil Service did not have the same status and salary like the Covenanted services. The statutory Civil Service did not prove popular among the Indian subjects and had to be abolished eight years later. The Secretary of state did not agree to Lytton's proposal of closing the covenanted Service to the Indians. However the steps were adopted to discourage Indians for competing by reducing the statutory Civil Service age limit of the examination from 21 to19 years.

Apart from the unpopular policies of Lord Lytton, the worst event of the reign of lord Lytton was the second Afghan War. Lytton provoked a senseless war with the Afghans with a view to establish a "scientific frontier" towards the northwest. However the adventure proved failure. Lytton was undoubtedly a man of ideas. It was Lytton who for the first time dreamt of forming a separate northwestern Frontiers province under the direct supervision of the Central Government. Lytton's plan for the formation of the privy council of the Indian princes subsequently endorsed by the Montford scheme of reforms. However the reign of Lytton in India was a period of repression and oppression. Thus Lytton was judged as a failure ruler in India.