DADABHAI NAOROJI: The Drain Theory and India's Economic Struggle.pptx

Dadabhai Naoroji: The Drain Theory and India’s Economic Struggle

This presentation explores the economic ideas of Dadabhai Naoroji, the Father of Indian Nationalism, focusing on his Drain Theory, which highlighted the systematic wealth transfer from India to Britain during colonial rule.

Key topics include:
- National Income Calculation – First Indian to estimate India’s per capita income.
- Taxation & Military Expenditure – Criticism of British fiscal policies and economic exploitation.
- The Problem of Poverty – Analysis of economic disparity under British rule.
- Drain of Wealth – The impact of colonial exploitation on India's economy.

Naoroji’s work laid the foundation for India's economic awakening and nationalist movement, influencing future leaders in the fight for independence.

1. DADABHAI NAOROJI: THE DRAIN THEORY AND INDIA’S ECONOMIC STRUGGLE DEEPTHI JAGDISH

2. DADABHAI NAOROJI THE GRAND OLD MAN OF INDIA 4 September 1825 – 30 June 1917 2

3. 1847- appointed as the prime minister of Baroda 1892- elected as member of the house of commons 1886-1906 – President of INC Economic ideas contained in “ poverty and Un-British rule in India. First Indian to estimate national income. Also known as Father of Indian Nationalism 3

4. ECONOMIC IDEAS

5. NATIONAL INCOME OF INDIA First Indian to calculate it Acc. to him, national income estimates and figures published in THE INDIAN ECONOMIST were incomplete. He demanded that per capita income estimates for British India should be published every yr On the basis of official figures, he calculated the per capita income for the Bombay presidency during the years 1867-70 at rs.20. He calculated that the requirement for meeting the basic needs of an ordinary Indian was about Rs.34. The high and the middleclass get a larger share, while the poor masses did not get enough for their basic necessities of life. 5

6. TAXATION,MILITARY EXPENDITURE AND PUBLIC DEPARTMENTS A example of exploitation of Indian resources and discrimination of Indians is the taxation policy adopted by the British Government. In England, Income tax-8% while in India-15%. Criticised the then Indian government for abolishing duties on cotton imports from Manchester as it was harmful to the newly established Indian factories. The main cause of India’s poverty was excessive expenditure on European services, interest paid on public debts. In 1893 military expenditure of India was alarming. Naoroji suggested that the military expenditure should be limited. England should pay her share for maintenance of British army in India and for other military services 6

7. The problem of poverty Acc. To him the poverty of the Indian people was the main problem The main reason for India’s poverty was the exhaustion of her previous wealth and excessive expenditure on European service and public debt. He pointed out every war which they fought after 1858, beyond the frontiers of India was clearly and mainly for safeguarding the imperial and European interests of Britain. Indian money was used for the home establishments of railway directors and government superintendents. Another large portion went by way of salaries and allowances to large European staff. Only small portion went to Indian, as they were employed on low paid jobs. 7

8. DRAIN THEORY In 19 th , he presented a the first estimation of national income of India He claimed that there was a drain of wealth from India to Britain Wrote a book about it “poverty and Un-British rule in India” “Was drain of wealth a reality?” 8

9. In 1983 Paul Bairoch presented a detailed study through his book “ Economics and World History: myths & paradoxes” In 1750 India’s share of global GDP – 25% Combined share of Britain & US – nearly 2% In 1900 Share of Britain in world GDP – 25% India’s share of world GDP – 2% 9 INDIA UK UK INDIA

10. Western world did not accept this study The organisation for economic cooperation and development (OECD) appointed Angus Maddison to investigate Paul’s claim. Maddison affirmed that India & China were the biggest economies in the world for almost all the past 2000 years. His figures affirmed that India had 32% share of world GDP in the first 1000 years and 28-24% in second millennium till 1700 After colonisation, India’s share dropped to 20% by 1800 and fell to 2% by 1900 Drain of wealth did take place. 10

11. 11 COUNTRY A POOR TECH B MODERATE TECH C SOPHISTICATED TECH STAGES OF PRODUCTION IRON ORE STEEL STEEL PRODUCTS (JET,ENGINES, SUBMARINES ) REVENUE Rs 1000 Rs 4000 ( 4x ) Rs 100,000( 25x )

12. CONCLUSION He was the first economic thinker who provided the pattern of economic thought for modern India. He emphasized on material concept of wealth and the circulation of National income, i.e. influenced by physiocratic school. He was the first Indian to calculate national income and per capita income. As an economist he gave a concept that the national income depends on the productive efficiency of factors of production He has been recognized as a father of Indian nationalism 12

13. 13 THANK YOU