The Drain Theory

Of all the national movements in colonial countries, the Indian national movement was the most deeply and firmly rooted in understanding the nature and the character of colonial domination and economic exploitation. This exploitation in the country started with the entry of the Company in 1757. Better late than never, this exploitation was realised by 1860. The period 1875-1905 became a period of intellectual unrest and spreading national consciousness. The main reason for India’s poverty was identified as the drain of wealth to England.

The nationalists undertook a vigorous agitation to get rid of this evil. They used all forms of public communication such as speeches, letters to the British newspapers, articles in journals, correspondence with officials, evidence before official commissions and committees, private correspondence etc; to communicate this message to a wider spectrum of people. It is no doubt due to the efforts of that men that we realised “the financial, political and intellectual drain” we were subjected to.

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They felt that what British can do is to lend India back it’s wealth to develop it’s resources. They say that drain is not only loss of wealth but also loss of capital. Drain not only cut current national savings but even diminished the existing stock of inherited national capital. They felt that drain also hindered industrial development, india’s way to economic salvation. The nationalists laid emphasis on the question ‘What was this drain due to? ’ and found out the following sources of drain. Inordinate employment of europeans in indian administration, army and railways * Home charges/expenses of the Indian government in Britain:

These constitute the payment of interest on indian public debt, guaranteed railways, the cost of military and other stores supplied to india, and the civil and military charges paid in England on account of India, including the cost of secretary of states establishment at the indian office and the payments of pensions and allowances to european officials of Indian government. * Foreign capital invested in trade or industry in india Negative balance of trade (excess of exports over imports) Then, ‘How was this drain to be reduced? ’ The nationalists also suggested the following remedies to curb this drain. * Indianisation of services * Curtailment of home charges 1. Burden of public debt can be reduced by raising it in india rather than in england 2. Burden of railway debt can be reduced by cutting down the speed of railway construction 3. By purchasing government stores in india itself 4. Fair apportionment of charges between india and england * Reducing the import of foreign capital * Promoting indian industry, so no dependence on imports

The Britishers argued that the view, excessive employment of english-men as a source of drain, was very narrow and proved the shallowness of drain theory. They felt that our nationalists were ignorant in economic matters as they forgot the fact that without the home charges, there would be no British rule in India. They commented on no evidence of ‘ surplus revenue transfer ’ from India to Britain. They told that the rapid growth of foreign trade and the rapid construction of railways are indication of India’s economic development. They tried to highlight the benefits of British rule in India such as: * Invisible imports: . Shipping services 2. Insurance charges on imports and exports

3. Expenditure incurred by indian students and travellers abroad 4. Heavy imports of gold and silver * Advantages of foreign capital: 1. Railways are constructed; Irrigation was developed 2. Establishment and development of plantation and other industrial enterprises * India’s political connection with England enabled it to borrow from the world’s cheapest market * Dedicated British officials and non-economic reform in the form of 1. Peace and order 2. Modern administration 3. Security against external aggression 4.

Good government They felt that India got an administration favourable to economic evolution cheaper than she could provide it to itself. The nationalists, dissatisfied with the British arguments, struggled to show proof of this ‘continuous and ceaseless drain’ with their counter arguments. They did not agree with the manipulative concept of invisible imports. Indian leaders didn’t object the employment of foreign technicians in indian factories (or) qualified teachers in the universities and they actively campaigned for increasing expenditure on the education of indian students.

They agreed that this useful drain is essential. Military and civil services were for British interests but not for India’s benefits. They felt that the accumulation of foreign capital suppressed the indigenous capital, which when developed can help the Indian industry better. They said that the speedy construction of railways is unnecessary and it resulted in useless drain. They felt that because of drain there not only incurred direct loss but also the secondary injury of losing trade relations with other foreign countries.

On the plane of law and order, India was not properly protected. Moreover British itself was left free to exploit it. The non-economic reforms from truly economic point of view are nothing but drain. Europeanisation of services left oun skilled labour jobless and led to irrepairable loss of knowledge and wisdom leading to our economic backwardness. Nationalists felt that the drain was much larger than it was anticipated to be. They felt that it is something more than excess balance of trade. They held the the East India Company responsible for the origin of public debt.

The public debt was brought into existence during the rule of Company to meet the expenses of the wars leading to the British conquest of India and to enable India to pay the company’s dividends. Compensation paid for the shareholders for the transfer of power from Company to the Crown, cost of suppression of 1857 revolt , the cost of wars etc; all burden was laid on common man in the name of public debt. The nationalists also demanded the treatment of India as other British colonies such as USA. USA gave away interests for borrowed capital and kept profits for itself.

It was paying the excess export surplus for the loans it had taken in the past, indicating that it once had import surplus. But, India had no import surplus in the past. It is paying British for no reason which is a strange phenomenon and stand still example of our exploitation. All the nationalists struggled for the impeachment of this taboo. The most famous of these men was Dadabhai Naoroji. Dadabhai Naoroji, the Grand Oldman of India, dedicated his entire life for economic analysis of the deplorable drain. He felt that drain is the natural economic result of foreign rule.

It is the burden of millions and millions that are drained year after year. He says that the British must have a return for their services rendered to India, but it must let Indians have the means to pay for it. He was not in favour of political association between India and England. He always stressed on ‘the material and moral drain’ caused by the British rule in India. He condemned that if India is to be regenerated by the British, it must pay the price. He quotes ‘the romance is the beneficence of British rule, the reality is the bleeding of British rule.

He says the whole British rule is moving in a wrong, unnatural and suicidal groove. He felt that replacing indigenous capital with foreign capital stood for exploitation, impoverishment and despoliation. For all these remarks, he was regarded as ‘disloyal, extremist’ by the British authorities. But, the people of Gandhian era held him in high respect and called him ‘The Father of Indian Nationalism’. He urged his fellow-men, especially the one’s belonging to anti-drain theory school of thought, not shift the focus from drain theory as all other economic issues are only red-herrings drawn across this path.

He wanted drain theory to be the central concept of nationalist propaganda and agitation. It is this man who arrived at an inevitable conclusion that India must be politically free if this deliberate plunder and destruction is to be checked. He raised the slogan of ‘Swaraj (or) Self-government’. His qualitative leap from a belief in the lasting nature British rule over India to the demand fo independence raised tremors in the nationalist circles. It changed the political outlook of entire nation and finally led us to independence.

By reviewing all this, I came to know India’s struggle for independence and the role drain theory played in leading us to this marvellous event. For any theory the British were able to suggest remedies, but not for drain theory. The speciality of drain theory is that it is so simple to understand and can be communicated very easily from a nationalist to any lay person. Our money is draining away from our land is something that anybody can understand and this made the people of our nation to raise the slogan of ‘No Drain’ and filled us with the spirit for freedom struggle.


* The Rise and Growth of Economic Nationalism in India, Bipan Chandra; People’s Publishing House, New Delhi, 1966. * The Economic History of India in the Victorian Age, Vol-2 : From the Accession of Queen Victoria in 1837 to the Commencement of the Twentieth Century, Romesh Chandra Dutt; Published in Great Britain by Kegan Paul, Trench and Trubner, 1904. * India’s Struggle for Independence (1857-1947), Bipan Chandra; Penguin Books

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