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Drain Theory – Economics Notes – For W.B.C.S. Examination.
ড্রেন তত্ত্ব – অর্থনীতি নোট – WBCS পরীক্ষা।
During the last quarter of the 19th century a great controversy arose over the question of ‘The Drain’ between the nationalist leaders of India and the Protagonists of Britain. Indian nationalist thinkers developed the theory of Drain mainly for analysing main cause of poverty in India.Continue Reading Drain Theory – Economics Notes – For W.B.C.S. Examination.
The main agreement that was advanced in this respect was that “a significant portion of India’s national wealth was transferred to England without any quid pro quo.” The experts described such ‘Drain’ on India’s resources as the transfer of resources from India to England either by getting nothing in return or getting only disproportionately a smaller part of such transfer of resources.
The person who first raised this issue of drain of resources from India to England was Dadabhai Naoroji in his book “Poverty and Un-British Rule in India” published in the year 1871. Dadabhai Naoroji tried to explain in his book the causes of drain, to measure the extent of such drain and to find the consequences of such drain.
Thus the British siphoning system adopted to take away India’s resources and wealth has been termed as ‘The Economic Drain’ by economists like R.C. Dutt, Dadabhai Naoroji and others.
Causes of the Drain:
Dadabhai Naoroji in his book observed, “The drain consists of two elements the first, arising from the remittances by European Officials of their savings, and for their expenditure in England for their various wants both there and in India ; from pensions and salaries paid in England; and the second that arising from remittances by non-official Europeans.”
This indicates that in order to meet the requirements of the economic drain, India had to export much as compared to its imports.
Dadabhai Naoroji observed that the following factors were responsible for the economic drain from India:
I. Remittances to England by European employees for supporting their families and education of their children—which may be considered a feature of colonial system of government.
2. Remittances of savings by the employees of the East India Company as they preferred to invest at home.
3. Remittances for purchasing British goods demanded by British employees as well as purchasing British goods in India.
4. Government purchase of stores manufactured in Great Britain.
5. Interest charges on public debt held in Britain (which excluded interest payment on railway loans and other debts incurred for productive works).
As a result of political, administrative and commercial connections established between India and England, the Government of India had to make huge payments to the people of England. All these payments were known as ‘Home Charges’.
Home charges were consisting of interest on public debt raised from England, annuities on account of railways and irrigation works and payments to British employees, employed in India as well as pensions to retired employees worked in India.
Versa Anstey made an estimate of these Home Charges to the extent of 35 million pounds annually. Moreover, the British rulers realised the cost of battles they fought with native rulers from India by raising loans.
Estimate of the Drain:
Although it was impossible to make a correct estimate of the extent of drain from India in the form of resources and gold bullion flowed from India to Great Britain, during the British rule, however some estimates were made on the extent of such drain.
Verelst estimated that during the period of five years just after Battle of Plassey, total volume of drain from India in terms of goods and bullion was 4, 94, 16, 11 pounds sterling. S.B. Saul also made an estimate of such drain based on balance of payments alone and his figure for the year 1880 alone amounted to 4.14 per cent of India’s national income.
Dadabhai Naoroji also made an estimate of drain which was around Rs 8 million. Later on, the volume of drain estimated by Naoroji was Rs 12 million in 1870, Rs 25 crore in 1893. In 1897, Naoroji made another estimate of drain for the ten year period of 1883-92 and found the total drain at Rs 359 crore. In 1905, total amount of drain calculated by Naoroji was Rs 51.5 crore.
Another estimate was made by G.V. Joshi for the period 1834 to 1838 and total amount of drain from India during this period was estimated at nearly 600 million sterling.
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