The Drain of Wealth theory was developed by nationalist thinkers and economists. Dadabhai Naoroji put forward the Drain of Wealth Theory. The first railway line was opened in 1853.

Dadabhai Naoroji stated that Britain was completely draining India in his theory. He mentioned this theory in his book.

The Drain of Wealth

During the end of the 19th century, a great controversy arose over the Drain of Indian wealth. Indian nationalist thinkers developed the Drain of Wealth Theory for analyzing the main cause of poverty in India.

Do you know, who was the first person who raised the issue of the drain of resources?

The first person who raised the issue of the drain of resources from India to England or Britain was Dadabhai Naoroji in his book �Poverty and Un-British Rule in India� published in 1871. He tried to explain the causes of drain and to find the consequences of such a drain.

The Drain of Wealth from India to England started after 1757 (Battle of Plassey) when the company acquired political power. The wealth was transferred in the forms of remittances. The British spent a large part of the taxes and income derived from Indian people not in India but Britain.

Do you know, when did drain of wealth begin from Bengal?

The drain of wealth from Bengal began in 1757 when the company�s servants began to carry home immense fortunes extorted from Indian rulers, zamindars and the common people. In 1765, the Company acquired the Diwani of Bengal and thus gained control over its revenues. The Drain also resulted in huge investments in England agriculture.

The huge drain of resources from India to England had resulted in disastrous effects on the Indian economy and its people. By the end of the 18th century, the drain constituted nearly 9 per cent of India�s national income. The drain went on increasing after 1858. By the end of the 19th century, it constituted nearly 6 per cent of India�s national income and one-third of its national savings.

Drain of Wealth Theory - Question

1. Who among the following was the first who raised the issue of �Drain of Wealth� in his book?
a) Lala Lajpat Rai
b) RC Dutta
c) M.G. Ranade
d) Dadabhai Naoroji

2. In which year, the East India Company acquired the �Diwani of Bengal�?
a) 1764
b) 1768
c) 1760
d) 1765

3. The book �Poverty and Un-British Rule in India� was written by ________
a) Sardar Patel
b) Mahatma Gandhi
c) Madan Mohan Malviya
d) Dadabhai Naoroji

4. When did drain of wealth begin from Bengal?
a) In 1754
b) In 1750
c) In 1758
d) In 1757

5. By the end of the 18th century, the drain constituted nearly how much per cent of India�s national income?
a) 6
b) 5
c) 4
d) 9

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