A simple rule for setting interest rates with a view to keeping inflation stable.
After the suppression or Revolt of 1857, British Crown took direct responsibility for Indian affairs and policy of subordinate union towards princely states started. Now the princes inherited the rest of power not as a matter of right but as a gift from the paramount power, because the fiction of Indian States standards in a status of equality with the crown as independent , sovereign states ended with the queen adopting the title of ‘Queen Empress of India’. The paramount supremacy of the crown presupposed and implied the subordination of states. The British Government exercised the right to interfere in the internal spheres of States. According to the Butler Commission in 1927, for the purpose of international relations, state territory is in the same position as British territory and state subjects in the same position as British subjects.
In the policy of subordinate isolation princely states were supposed to cut in super domes cooperation with the British Government and acknowledge its supremacy. State surrendered all forms of external sovereignty and retained full sovereignty in internal administration. British residents were transformed from diplomatic agents of a foreign power to executive and controlling officers of a superior government.
Thus shift took place because in subordinate isolation princely state had at least semblance of sovereignty but once the British Crown and lost all sovereignty. Thus was because of shift of power from company to British Crown.
Also the shift from subordinate isolation to subordinate, union took place because of states’ loyalty during the 1857 revolt and their potential use as breakwaters in political storms of the future. Thus their isolation was removed and they were taken under direct subordinate position under British Crown.
In policy of ‘ Subordinate Isolation’, Princely states were in isolated position, so at to enjoy at least a semblance of sovereignty but once the power was shifted from company to crown, there was no scope for them remaining as sovereign. Now princely states came under one ‘union’ under the overall sovereignty of British Crown.