British Empire was not a benign empire. British had no cultural or historical affinity towards Indians and they controlled India only for their commercial and geopolitical interests. Despite the promise of dominionhood, British would have never granted India an Australia or a Canada like status because unlike them we weren't their kith and kins and both parties knew it very well.

There was thus a limitation on the degree to which British could have devolved power in to the hands of the Indians. They could not for example allow Indians to form a representative government and expect the empire to continue existing and it's interests to remain secure. They weren't stupid enough to fall in to such delusions.

1935 India act was the maximum extent to which the British could have devolved power in India. Any further devolution would have left the imperial interests in jeopardy. Hence this act was the last ditch effort by the British to contain Indian frustrations and legitimize their rule. Beyond this they had no recourse left but to turn India into a police state and use the threat of violence to control the country which was anyways always present in the background but now it would have become the only alternative. Earlier whenever the popular frustration soared as it often did, British used the promise of reform to calm them down but after '35 act in which they had used all their tricks, they had given separate electroplates to every community imaginable including dalits, their legal options were non-existent. Thus imperial framework was pushed to the limits but the Raj could only exist as an empire as it was rotted in commercial interests and not in any altruistic motives.

So the election happened in the year 36-37, and the congress won the election and formed the government in most provinces. Despite British expectations, Indians turned out be good at administration and very often were better at it than British officials. Indian people too felt a stake in the government as unlike in the past they were allowed to freely interact with the their heads in a language both knew and have a free access to their offices. The overwhelming success of a short lived congress government earned it a lot of goodwill and popularity and solidified it's position both in British and international eyes, as a responsible player in Indian politics to which the control of India can be granted.

But the success of '35 India act was only to remain short lived. As the war began in Europe, India was made to participate in the war without consulting Indian opinions. This irked Congress leadership which began to see the promise of autonomy by the British as complete farce. Congress government resigned and the popular protests followed. This time British had no alternative other than to use police and intelligence sabotage and hope the protest would die down which didn't happen.

Around '38-39 when the war in western Europe was still slow and Nazis had still not started blitzkrieging London. Nehru had made a trip to England where he had met with the leader of labour party Atlee who was then in the opposition. He is said to have promised India complete freedom once he comes to the power. And when Attlee did come to the power, he did free India. So it seems to me that the key to India's freedom lies not in the damage the war did to the British economy and small scale revolts which happened in the aftermath of the war but as we see the plot was set much before it. British had failed to contain ambitions of elite Indians and frustrations of Indian masses within the imperial framework and it became the victim of it's own internal contradiction which was by the way chief strategy of Indian Independence movement

India was also losing it's commercial allure too. British industries had moved away from the cotton and it was now dominated with automotives. British export to India was continuously drooping and it had ceased to remain the coveted market for cheap British products that it once was. Meanwhile the political pressure in India and the increasing public debts of the Raj had led to the imposition of certain tariffs on the imports which protected Indian business from undue competition.

All of this led to the freedom of India.