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Drain theory and Economic Nationalism


"A country cannot be said to have economically speaking improved so long as the conditions of the toiling majority in that country have not improved." This statement was made by Bal Gangadhar Tilak in the latter half of the 19th century, in context to the economic state of India at that time.

Even under the most brutal of regimes, there have been certain individuals or groups who have profited and prospered from the existing system. Similar circumstances existed during the British Raj in India. Many rajas, maharajas, nawabs, zamindars, talukdars, mahajans, and sahukars lived their lives entirely content and without so much as a little hint of worry. But was the country as a whole content and successful? Clearly not, as the majority were suffering under poor working conditions, few rights and inadequate wages, despite a few classes enjoying themselves. It was economic appeasement for a niche particular sect. The nation needed an atmosphere of economic nationalism, where the entire country could reap the rewards of prosperity and productivity.

One of the most prominent nationalist figures who sparked and promoted economic nationalism was Dadabhai Naoroji. The most tangential in this regard has been the theory of drain. ‘The Grand Old Man of India’, as he is affectionately called, was the first person of Indian origin to have been elected to the British House of Commons in the year 1892. He was also a prominent mathematician and economist. One of his major contributions was the Drain Theory, through which he managed to bring about a sense of economic nationalism among his countrymen.


The Drain of Wealth idea was first put out by Dadabhai Naoroji in 1867. R.P. Dutt, MG Ranade, and others have further analysed and refined it. The "economic imperialism" argument suggested that British economic policies were completely draining India. He makes a reference to this theory, often known as the "Drain Theory," in his book Poverty and Un-British Rule in India. While many leaders had alluded to the fact that British rule had crippled India’s economy, it was Naoroji who expanded on this and backed it with hard research, statistical data and facts. He criticised the fact that almost one-fourth of the revenues collected in India are sent to England, a fact that proved to be the biggest contributor to India's poverty. He also researched extensively on the famines during the time (in which over a million people lost their lives), and estimated that uptill 1867, the British rule had resulted in the transfer of some 1.6 billion pounds. The drain continued unabated, and the British managed to siphon off an estimate of 33 million pounds every year from India. The per capita income of an average Indian around this time was 27 to 40 shillings, about 25 times lesser than that of the average British.


The drain had an impact on the country's chances for employment, income, and general economic growth. When the taxes paid by the people are used to benefit its citizens, the money spreads throughout society, fostering the development of businesses, industries, and farms that eventually benefit the general population. However, when money is transported outside of the nation, it does not directly support trade industries or directly benefit the populace; it also does not support the local economy. India's productive capital was really taken from it by the capital flight to England, and the resulting capital constraint stymied considerable industrial growth. This stifled the process of capital production and directly contributed to India's impoverishment. Due to the drain's primary source of funding—land revenue—the peasantry became increasingly impoverished. The wealth of India served as a source of funding for the Industrial Revolution in England and also as the primary reason as to why India did not witness its own industrial revolution.

Dadabhai devoted all of his energies to advancing the idea of drain. After years of conciliation efforts and persuasion of British authorities, he was dissatisfied by the lack of any reform on the part of British rulers, and as a result, the feeling of disloyalty crept into him, which is fully demonstrated in his speeches of 1904 and 1905, in which he stated that self-government is the only solution to India's misery. "Without self-government the Indians can never be free of their current drain, and the attendant impoverishment, suffering, and devastation," he claimed in his address to the Indian National Congress meeting in Benares. Thus, he was guided from economic nationalism to political nationalism, and that the former could not be achieved without the latter. Prior to his demise in 1917, Naoroji had fought for this cause for the following 12 years. However, the revolutionary spirit he instilled in the Indian masses continued to inspire people till India achieved independence in 1947, forcing the sun of the British Empire to set in the east.


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