Economic drain in India

A snapshot on economic drain in India. Basic postulates and basic findings.

1. Date: 08/01/2022 ECONOMIC DRAIN A post Plassey affair 1

2. Concept of the drain The concept of drain is a post-Plassey affair. The central point of the drain theory is that a portion of India's national product was not available for capital formation or consumption by her own people but was drained away to England for political reasons. The drain took the form of an excess of exports over imports and was a unilateral transfer of wealth from India to England. 2

3. Constituents of drain Broadly the drain constituted an internal drain and an external drain. In order to meet the external drain, commodities such as food grains and raw materials were exported from the rural areas by oppressive land revenue, irrigation rates, salt tax and other levies which compelled the cultivators to sell their crops which were then exported. During the depression of 1930s a large quantity of Distress gold flowed from the rural to the urban areas from where it flowed out to England again. The above comprised the internal drain. Whereas the external drain comprised of unrequited exports, non-commercial exports which brought no equivalent return in the form of imports from Britain to India. In addition to the external and internal drain there was a moral drain which implied the loss of skills and experience in administration and knowledge of high scientific and learned professions when Englishman possessing them retired to England. 3

4. Constituents of the drain The transfer of wealth mainly constituted of the home charges and the unrequited exports. Drain is illustrated with reference to what was called home charges which referred to the expenditure incurred in England by the secretary of state on behalf of India. The crux of the drain theory was of course the concept of unrequited exports which produced to no equivalent returns. 4

5. Extent of the drain Estimates of the drain differ from person to person and also from here to here because firstly the drain itself was increasing from year to year and secondly different people use different methods of calculation. Dadabhai Naoroji's estimates of the drain was £50 million. According to RC Dutt on an average one fourth of all revenues derived in India was annually remitted to England. He further estimated that of a total revenue of £647 million was remitted from India to England. 5

6. Critics The drain theory as enunciated by nationalist clearly expose the character of the British rule. Indian nationalists criticise that the drain was a remarkable illustration of the operation of imperialism and it exposed nothing else but the exploitative nature of the British rule. Imperil apologists like, Montgomery Martin and Morrison believed that the British capital used to construct railways, irrigation, tea plantation, jute mills was definitely productive in the sense that this foreign capital raised national income and made long-run economic growth possible. They added that, rather than complaining about a drain, Indians should be grateful to British investors for making good the deficiency in India's domestic capital enabled it to borrow from the world's cheapest capital market. Nationalists however strongly objected to this hypothesis. 6

7. Findings The East India company captured power in 1757, the Indian economy was basically feudal. In the period there was a massive drain of wealth from India to England which resulted in pauperisation of India. The upshot of the above discussion is that the British government stretched its arm of injustice to the people of India for Empire building in and outside India. England's fortune of having a modern industrial structure was largely built upon the ruins of Indian industries. It was the Indian loot - the drain of wealth from India by the East India company - that helped financing British industries in its initial stages of industrialisation. Economic drain is the most fitted term for this phase of colonial exploitation. 7