Question

In which book did Dadabhai Naoroji present his 'drain of wealth' theory?
1. Economic Problems of India
2. British Rule and its Consequences
3. Poverty and Un-British Rule in India
4. India Today

Answer 1

Correct Answer - Option 3 : Poverty and Un-British Rule in India

The correct answer is Poverty and the Un-British Rule in India.

• Dadabhai Naoroji put forward the 'drain of wealth' theory in which he stated that Britain was completely draining India.
• He described the constant one-way flow of wealth from India to England for which India received no returns as 'Drain of Wealth'. This occurs when gold and silver flow out of a country as a result of an adverse trade balance. 

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• The consequence of the Drain of wealth was as follows:
  • It impoverished all the sections of Indian society particularly the peasants, who bore the brunt of the taxes raised by the Britishers.
  • It drained India of its precious capital, which could have otherwise been invested in the industrialization/ modernization of India.
  • The drain of Indian wealth was used for financing the Industrial Revolution in England and is also the reason why the industrial revolution did not take place in India.
  • The economic criticism of British rule had helped in shattering the myth of benevolence of British administration in India.
  • It was instrumental in laying the foundations for the demand for Swaraj and the ensuing freedom struggle.