Drain Theory

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  • Dadabhai Naoroji: ‘Poverty in India’ (1876)
  • He claimed that the drain of wealth and capital from the country which started after 1757 was responsible for absence of development in India.
  • Drain was done through trade, industry and finance
  • Two elements of the drain
    • That arising from the remittances by European officials of their savings, and fro their expenditure in England
    • Arising from remittance by non-official Europeans
  • India has to export much more than she imported to meet the requirements of the economic drain
  • In 1880 it amounted to 4.14% of India’s national income
  • Consequences of the Drain
    • Prevented the process of capital formation in India
    • Through the drained wealth, the British established industrial concerns in India owned by British nationals
    • It acted as a drag on economic development

 

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