Dadabhai Naoroji's Drain of Money Theory - General Knowledge of Modern India

Dadabhai Naoroji's Drain of Money Theory - General Knowledge of Modern India

The British rulers used to force Indians to export many goods to Europe (except Britain). This export brought in a lot of income as more and more goods were exported. But with this extra income, the British merchants used to buy a lot of goods and send them to England and other places. Thus the British were getting property from both sides. India did not get any money from these trades. Simultaneously, the British going from India to England also took a lot of money with them. The employees of the company used to collect enough money in the form of salary, allowances, pension etc. to take them to England. This money was not only in the form of goods, but also in the form of metals (gold, silver) substantial money was sent to England. Considering the expulsion of this money as an 'indirect gift', England every year accepted it with full authority from India.

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There is no account of how much money was taken from India to England because according to the official figures (British figures) very little money was taken from India. Nevertheless, due to the expulsion of this money, there was a very bad effect on the economy of India. The major sources of money laundering were identified as follows:

• Salary, Allowances and Pension of Employees of the East India Company
• Salary and allowances of Board of Control and Board of Directors.
• All liabilities of the company after 1858.
• Gift money.
• Profits derived from private business.
• The Indian army was used for the expansion of imperialism, due to which the burden of the defense budget fell on India (this defense budget had gone up to 52 percent by the beginning of the 20th century).
• Giving fixed profits to capitalists who invest money in industries like railways etc.

Two Views Among Historians

• Side effects of money laundering
• As a result of the drain of wealth 'capital accumulation' could not take place in India.
• The standard of living of the people kept on deteriorating. Poverty increased.
• Due to the expulsion of wealth, the burden of taxes on the public increased greatly.
• With this came the destruction of cottage industries.
• The pressure on the land increased and the number of landless agricultural laborers kept on increasing.