**Causes of the Rebellion of 1857 **: To characterize the Revolt of 1857 as merely a Sepoy Mutiny is incorrect as it is evident from recent evidences that a large mass of people in North India took part in the Revolt. Yes, it was instigated by the rebellion of the Sepoys of the Bengal Army but a large mass of people and several Indian Rulers and Zamindars soon threw their weight behind the Revolt. One important evidence in this regard was that soon after Revolting the sepoys in Meerut (a town 100 miles North of Delhi) marched towards Delhi and Declared The Mughal Emperor Bahadur Shah Zafar as the Emperor of India. Thereafter orders across the various centers of revolt were proclaimed in His name thus transforming it from a mere Mutiny to an unsuccessful Political Overthrow of the British.

The causes of the Revolt and the Sepoy Rebellion were intermingled:

Economic:

Decline of the Indian Manufacturing: One of the prime industries of Pre-Colonial India was Textile Manufacturing as Indian textile products were famed across the world. With the advent of the Industrial Revolution in Britain and the abolition of the English East India Company's Monopoly over trade in India (by the Charter Act of 1813 British Goods flooded the Indian market (The Company did nothing to protect the weavers from this external competition, as any indigenous ruler would have done) . This drove the Indian weavers out of competition who were already distressed due to the high tariffs imposed by the company on everything from purchase of Raw Materials to Transport of Goods as well as high tariffs imposed on the Indian Textile goods on import to England. This was not helped with the simultaneous defeat of the Indian Rulers at the hands of the Company denying the weavers the patronage they received from the Indian Rulers. Since there was no alternate source of employment (Modern Industries) the weavers shifted to Agriculture causing great pressure on the Land and drove these weavers into becoming Landless Laborers and Tenants.

Distress of Peasants : The English East India Company charged a high rate of revenue from the peasants to finance its extensive expenditure on the Army as well a maintaining Law & Order. This was done by using an intermediary(Zamindar) who collected the revenue on behalf of the Company(There were other methods of collecting Revenue but this practice was more prevalent in the areas of the revolt). The rate of revenue was very high and was more often than not assessed arbitrarily. The company collected revenue even in the years of Drought and Famine. Moreover since the revenue had to be given before a fixed date the Peasant had little bargaining power against the Grain Merchant(The grain merchant knowing that since the peasant was compelled to sell the grain before the date of collection of Revenue could charge any rate that pleased him.) The decline of textile manufacturing also robbed the Peasants of additional Income that it provided.

Fall of the Indian States: The conquest of various Indian States hurt the employment prospects of the Town Dwelling Indian Middle Class (this I am referring to the Middle Class of the 19th century who were educated in Indian Languages not English) who were employed by the Rulers as Administrators, Judges and other High Level Bureaucratic Posts. Those pursuing cultural activities like the poets and qawwals were now out of patronage.

Political

The annexation of various Indian Kingdoms on arbitrary pretexts and the regular overriding of the Treaties and pledges made the Indian Rulers Suspicious of the British. Awadh was annexed on pretext of Misrule on part of the Nawab, Peshwa Baji Rao II was denied his pension and exiled to Kanpur(A city in North India on the banks of the ganges) from his seat in Pune( A city near Bombay on the West Coast) the Kingdom of Jhansi was annexed on the basis of the much hated [Doctrine of Lapse] (http://en.wikipedia.org/wiki/Doctrine_of_lapse). The Mughals it was announced would have to leave the Red Fort after the death of the Ruler Bahadur Shah Zafar.

The zamindars were also frequently disposed of their lands on non paying of the Revenue turning several against the British.

The British defeat in the First Anglo Afghan War also broke the myth of the Invisibility of the British Forces.

Social

Activities of the Missionaries: Initially the British kept a distance from infringing upon the Socio-Religious practices of their Indian Subjects but with the rising Evangelic thought this practice was slowly abandoned. By the Charter Act of 1813 the Christian Missionaries were allowed to preach in India. These were actively supported by the British Administrators and Military Officers who came under the increased influence of Evangelism. The missionaries preached openly in bazaars, barracks and were able to convert several (influential) people into Christianity. The open ridiculing of both Hindu and Islamic practices (which in India were highly influenced by each other) thus causing a General Suspicion that the Company aimed to convert the whole of India into Christianity. The passage of several acts to allow widow remarriage and enforce a ban on the practice of Sati upset the orthodox elements. The passage of the Lex Loci Act which allowed converts to Christianity to inherit property made the matter worse.

Foreignness of the British: Unlike the British officials of the 18th century([White Mughals] (http://en.wikipedia.org/wiki/White_Mughals)) those of the 19th century frequently intermingled with Indians and had a great distaste for any Indian practice. Partly due to the rise of Evangelism which portrayed India as a land of heathen savages and partly due to the inflated ego of the British Conquerors. Unlike every other invader in Indian history the British themselves were never able to Indianize themselves and were only interested in the welfare of Britain. This great distance(one which remained till the end of the British Rule) was one of the reason that the British failed to anticipate such a great uprising was going to happen.

Discontent Among the Sepoys: All credit in sparking the revolt goes to the Sepoys of the Bengal Army whose mutiny sparked a General Uprising. The primary reason for this discontent was the general oppression of the people at the hands of the British. As the sepoy was nothing but a "Peasent in Uniform" who was not insulated from the misery of his fellow Indians.

The general condition of the Sepoys were pretty bad as compared to their English counterparts with lesser pay no chance of attaining higher military ranks and constant ridiculing and ill treatment by some of the British Officials(growing gap between the English and Indians as already stated). The denial of the foreign service allowance for those who served in Afghanistan and Burma Campaigns eroded the loyalty of the sepoys.

The passage of General Service Enlistment Act of 1856 which required every recruit to have atleast one tenure of foreign service(this was prohibited as according to the customs High Caste Hindus would lose their Caste once when crossing the Sea) instilled the belief that the company was converting all of them into Christianity. The incident of the greased cartridges was the spark which lighted the powder keg of all the above discontent.

EDIT:

Sources:

India's Struggle for Independence by Bipin Chandra, Mridula Mukherjee, Aditya Mukherjee, Sucheta Mahajan and K.N.Pannikar

History of Modern India by Bipin Chandra

The Last Mughal by William Dalrymple