Drain of Wealth: Exploitation of India’s Economy, British Policies, and Impact on Prosperity

Drain Of Wealth: Unjust Economic Policies in British India

The Drain Of Wealth theory refers to the continuous transfer of India’s National wealth to England without any adequate economic, commercial or material benefit to India in return. It was an integral feature of British economic policy in India. 

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Components Of Drain Of Wealth: British Exploits in India

• Salaries and pensions of civil and military officials employed by Britishers in India
• The amount of Interest on loans taken by the government of India from abroad
• Profits on foreign investment in India
• The Stores purchased by the colonial government in Britain for civil and military departments, 
• Payments made by British officials for shipping, banking and insurance services 
• Remittances sent by European employees for the support of their families in England

Estimate Of Drain Of Wealth: Leaders Assess British Exploitation

Different Indian leaders had varied estimations of the amount of wealth from India. A few of them are as follows:

• Dadabhai Naoroji: He claimed that every year approximately one-fourth of the money which amounted to nearly $12 million per year went to England.
• Romesh Chandra Dutt: According to his estimation around £20 million in the early 20th century flew out of India. He also talked about the economic system of India since the battle of Plassey in his book “The Economic History of India”.
• M G Ranade: In his book “Essay on Indian Economics”, he claimed that more than one-third of Indian wealth was drained by Britishers to England. 
• William Digby: As per his calculations, the annual drainage from India was £30 million. 

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Impact Of Drain Of Wealth: India’s Struggle for Prosperity

The government debt and interest payments caused an increase in the tax burden on people, especially peasants.

• No capital formation: The surplus generated in India could result in capital formation. This deprived India of growth whereas Indian wealth pushed growth in England.
• Economic stagnation: The drain of wealth led to economic stagnation in India in the 18th and 19th centuries as all the sectors of the economy suffered heavily.
• Increased poverty: Increased tax burden and lack of growth pushed Indian peasants, artisans and others into the vicious circle of poverty.
• Decreased income and employment opportunities: It resulted in the loss of income and employment opportunities for Indians.

Conclusion

The Indian Economists argued that the main aim of British economic policy in India was to turn India into a supplier of raw materials for British industries and a market for finished goods from Britain. The Wealth theory aimed at finding the root cause of poverty in India. This theory unveiled the true exploitative and selfish nature of British policies in India.

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