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Drain of Indian Weaitn, a Sa, , as to the economic Ee of colonial rule in India that, - early nationalists. They described the con inuoUs One Way flow, en mite Pant for which India received e a ae of wealth, of, One of the earliest propagators of the drain of wea ' : rae A : fabhai Naoroji,, In 1867, he put forward the idea that the colonial rule wes, ceive oleeding India of, its wealth, He lamented that the perversion of economic laws in India by the British rule, was draining India of its prosperity and destroying the nation., , , , Drain of wealth theory pertair, , 24.1 Channels of Drain of Wealth ; / : ., In his book Poverty and Un-British Rule in India, Dadabhai Naoroji brought, , attention to the draining of India's wealth into Britain. In it he explained his Wealth drain, theory. Through his work in economics, Naoroji sought to prove that Britain was, draining money out of India., , His work focused on the drain of wealth from India to Britain during the colonial, rule. One of the reasons that the drain theory is attributed to Naoroji is his pioneering, effort to estimate the national income of India, [I] and by extension, the effect that, colonisation had on the country., , Naoroji described the following six factors which resulted in the external drain., , 1. India was governed by a foreign government., , India did not attract immigrants which could have brought labour and capital for, economic growth., , India paid for Britain's civil administration and occupation army., , India bore the burden of empire building in and out of its borders., , Opening the country to free trade was actually a way to exploit India by offering, highly paid jobs to foreign personnel., , The principal income-carners in India bought outside of India or lefi with the money, as they were mostly foreign personnel., , Another form of movement of wealth away from India was the financial capital !:, included the money paid to banks, insurance companies, shipping companies etc. in, Britain for the services they rendered in India., , Yet another mode of drain was the remittances which the Company made to Britain., This included: (a) salaries and pensions paid to the employees of the ‘Company back in, Britain, (b) interest amount on loans raised by the Company in Britain, (c) dividends paid, to the sharcholders of the Company, (d) salaries and pensions paid to the British civilian, and military personnel posted in India which, in turn, were remitted by them to Britain, , Ur te bo Ww, , s, , uit,
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Drain of Indian Wealth, , and (€) store purchases, , made j;, Government of India for th, , 161, Britain by the, , as Secretary of §, ai d t, c © Civilian and Military departmental need HC on behalf of, Such remittances by the Company later came t S., British Parliament took over, , .e 9 be known, administrat;, , ‘ ges When the, M India, Though the am, In the Fange of | to, , OuNt remitted, , crore Tupees per annum,, road was itically Sensitive item of the, the £0vernment Paid to Britain a sum, Me charges? jn the Nineteenth ce, War year: isted of debt, , an army, , as the hone char, varied every year, it was estim, , To quote, “Government, balance of payments, Every year,, sterling, which was called the ‘ho, the home charges in the preimportant item was payment fo, component was pension pay, Britain. India Office expense, These payments, Indi, economy to gener;, drain”. [2], , Naoroji estimated a 200-300 milli Of India’s revenue to Britain that, Was not returned. Naoroji described th; iri money being a metaphor for, blood, which humanised India and Britain's actions as monstrous., , When referring to the drain, Naoroji_ stated that he believed some tribute Was, necessary as payment for the services that Bri, , tain brought to India such as the railways,, , However, the money from these Services was being drained out of India. —_—, > 7 1 1 ,], , For instance, the money being earned by the railways did not belong to India, whic, , ia was givi 5 ritain. India was aving, supported his assessment that India was giving = ma (0 Bria vie las! mB, i i t bringing profit to 3 ctly. Instead, eb len cet hi | other uae did, India was paying for services, porta eo » seatie é the ilway being already profitable for Britain. This, rendered despite the operation of the 6 ilies 2 ll, Eritine Was woes, gi Ob destorstas etpeaeited af es : work that they did in India. or trade that, ae ees that ware mt ee ae iad goods. Englishmen were encouraged, ia’ Vvervalued o g00ds. Eng ed them to ekes, f ia's goods and o ne rment allowed them to ta, Cee et ae jobs in India, and the British government a, 0 take on high paying ua, ;, Portion of their income back to ee ee was given by R C., r men _ equated the drain of wea, Set Stel koi rie Uiteony of India, Dutt had —, oe Me caraevied, i pals ilize the lands in England. n, Dutt. In his work Economic venga ta tacit lands in fs la al, Moisture being sucked out o A dia was so severe that it had impe imal es Wie, i i mole ‘ a was, mit the economic wield : earth. He lamented that Se fatti., fi atta a eH widespread and fatal as a resu, ‘amines which were requent,, , of Money in, tury. About half of, ice. The second most, and marine force. A thir, S who had served Indi, ased were the other item, argued, reduced the, estment, an, , sery, ir, , Maintenance of, Ments for official, S and stores purch,, an nationalists, ate savings and iny, , d major, ‘a and retired to, S of expenditure,, Capacity of the domestic, argument that became known as the, , attempted to show, , , , 24.2 Reasons for the Drain of wee positi, , Drain of wealth was facilitated ie Pirie, Company initially had a dual role to pla taxes such as la, which had the power to levy and collect ta, , ae ia C mpany. The, . y East India Cor ., enjoyed by Eas! ‘5 ent entity, on enje hinetioned as a government ¢ _, hot d onue. On the other hand, it als, ind revenue,
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162 Economic History of India: 1857-1947, , functioned as a commercial entity and invested the revenues collected in India to expand its, business and trade. The revenues going to the Company have been termed by historians asa, political tribute. This was so because the political power enjoyed by the Company Was the, reason for its ability 10 generate revenues out of Indian territories. It was a tribute in the sense, that India did not get anything in return for paying such revenues. It was essentially a, , political trade instead of trade in the normal sense of the term. er, In addition to the revenues of the Company, the drain also included the movemeny of, , private funds to Britain. This had happened primarily by means of bills of exchange Which, could be purchased in India using money raised in India. These bills could be exchanged jn, currency. Some of the private funds that were accumulated also included the, , , , Britain for loc: f f C, earnings of Englishmen from plunders during wars, bribes received from the native States,, , and the wealth accumulated from fraudulent business deals with Indian merchants., , 24.3 Consequences of Drain of Wealth, The huge amount of drain of resources from India to Britain created serious adverse, , impact on the economy of India. Conversely, it had favourable effects on the economy of, Britain. Such consequences of drain were studied in detail by various Indian economists, like Dadabhai Naoroji, M.G. Ranade, R.C. Dutt and G.K. Gokhale., , Drain of wealth impoverished all sections of Indian society with peasants being the, worst victims. They bore the brunt of taxes raised by the Company and later by the, Government of India in the form of land revenue. It drained India of its precious capital, which could have otherwise been invested in industrialization and modernization of, agriculture in India. The drain of Indian wealth became a major source of financing the, industrial revolution in Britain) /pso facto it also became the reason as to why such, revolution did not take place in India. ,, , The drain theory was instrumental in countering the reason given by the British for, their colonial rule in India (i.e. India’s well-being is white man’s burden). It became, evident that the colonial rule in India was undoubtedly exploitative., , The economic criticism of British rule helped in shattering the myth of benevolence of, British administration in India. While the colonial rulers had justified their control over India, as means for India's economic development, Indian nationalists were able to counter this by, asserting that India was economically backward precisely because of the British rule., , Drain theory was instrumental in laying the foundations for the demand for Swaraj, which was raised by leaders such as B.G. Tilak. The demand for Swaraj, mentioned in, the 1906 session of the Congress at Benaras, can be seen as a direct outcome of the drain, theory. Moreover, it was successful in capturing the imagination of peasants for whom, the drain was an easy concept to comprehend. It was, thus, helpful in expanding the mass, base of the freedom struggle. Drain theory highlighted the mercantile character of British, rule in India that was inherently exploitative., , 24.3.1 Impact of Drain on Britain: A huge volume of drain of resources and capital, from India to Britain resulted in an improved standard of living in Britain. It also resulted, in massive investments in British agriculture and industry after 1750. These investments
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Drain of Indian Wealth, , tially responsibl !, , were par : e for agri :, , Jso the industrial revolution aft = eke Tevolution in Britain ; 83, Britain attained the take-off Stage of Main in the 18th century and, , different ot ee the British econom S and also for bringi, responsible for laying foundations of tiohet, 74.3.2 Impact of Drain on Indi, 5 . ia: Hu ae, resulted in disastrous effects on the Kail drain of resources from India to Britain, , i i . econo} F, could have been invested in India were snat my and its people. Resources which, , , as ched and siphoned sa, rblic debt raised by the Goverment and the payment of meres heteon neces, necessitate, , enhanced tax burden, which was hi ena 4, Moreover, these tax proceeds were mea ee ae pias Pee of India., and not for any social services or welfare activities in India. This eee, proveeds from India impoverished agricultural, industrial and iets Caged oe, resulting in stagnant stage of its economy during the 18th and 19th seine a3 .en, Although the British undertook responsibility of maintaining law and order., centralised political and judicial administration, roads, railways. educational set up etc,, but the extent of draining out of resources was too excessive leading to poor and, miserable conditions for Indian masses. In short, the drain of resources was the major, cause of India’s poverty.)In fact, drain of resources resulted in loss of capital rather than, loss of wealth. It resulted in huge depletion of productive capital leading to fall in the, yolume of investable resources in the country., , 24.4 Measures Suggested to Reduce the Drain, In order to reduce the burden of the drain, nat, measures, the following being more prominent:, |. Indianisation of civil and military services, 1. cer i, personnel and increase in the number of Indian personnel to, Reduction of home charges realised from India., Bes ae was the main reason for the lack of capital, : ‘ned out capital to India and gradually set, ‘man by British ae, th Id secure neatly &, — ios, Resultant British, s in the form of regular, s vicious circle created a, , EB + i] 1947 and was also, dia til i the country.), , ionalist leaders suggested several, , n the number of British, a reasonable proportion., , , , , , , , , , 2.
