Prosperous India-8

Economic Drain during British Rule

Evidences show that for most of the time in history, India remained a wealthy nation in the world. The sad part of it, however, was that the nation’s wealth was continuously looted for a long period of time over the centuries by the invaders, aliens and colonial rulers. Gold and other precious metals that India had saved in plenty due to her superior economic performance were taken away by the invaders in hordes, while destroying temples, villages and cities and disrupting the socio-economic life of the peaceful citizens. Indian wealth remained a major attraction for many of those marauders who wanted to loot the country since the olden days.

But in spite of all these losses and scars, which were enormous even by conservative estimates, India remained prosperous as her people re-built their lives and the economies around them quickly after each calamity. There were innumerable difficulties and disturbances after each strike. They were not just economic. But the people stood up with pains all over their bodies and faced the situation boldly. As a result India remained to be a wealthy country even in the eighteenth century, in spite of disturbances to her societies, culture and civilization. India Reform 1853 noted: “India had gradually declined in civilization from the date of invasion of Alexander up to the time of the first Mussulman conquest; but we have abundant testimony to prove that, at that date, and for centuries before it, here people enjoyed a high degree of prosperity, which continued to the breaking up of the Moghul Empire early in the eighteenth century.”

So when the Europeans came here, they saw a very rich country, the kind of which they had not seen earlier in their life-times elsewhere. The East India Company through which they entered trade in the seventeenth century earned very high rates of profits for them, as they used all means to extract the maximum from the country. But they were not satisfied with their earnings through trade and business alone. They saw more opportunities in the country and using every trick, ultimately became the rulers of India. The British rule, to use Naoroji’s words, was “the greatest curse with which India has been ever afflicted.”

Dadabahi Naoroji, a nationalist economist, better known as the ‘Grand Old Man of India’, spent about forty years of his life analyzing the Indian economy in detail and exposing the atrocities of the British. His two long essays titled “Poverty of India” appeared in 1876. Later in 1901, his book titled “Poverty and Un-British Rule in India” was published. Many people including Gandhiji acknowledged that they came to understand the extent of poverty of India as a consequence of the misrule of the British only through Naoroji’s works and speeches. He calculated that the national income of British India was rupees 3.4 billion for a population of 170 million for the year 1867-68, thereby showing to the world the per capita income of Indians was just 20 rupees. He compared the per capita income of different countries and showed that India was “the poorest country in the civilized world.”

With the result, the condition of Indians became pitiable and their consumption was meagre. Naoroji underlined this in 1900: “The fact was that Indian natives were mere helots. They were worse than American slaves, for the later were at least taken care of by their masters, whose property they were.” The natives did not even have small sums to celebrate festivals or other important occasions in their lives. Even if they managed it occasionally with whatever little they had, they were accused as spendthrifts by the British. The accusation went to the extent of saying that the major reason for the pathetic condition of the natives was their habit of sharing with near and dears.

What was the reason for India, the country that maintained her superior economic prosperity for the longest period in human history in spite of disturbances over many centuries, becoming a very poor country in a comparatively shorter span of time during the British domination? How did India which was seen as a country of “riches” when the Europeans set their foot here, became one of the poorest on the earth? While summing up the findings of the survey of the conditions of people in the provinces of Bengal and Behar during the early nineteenth century, the British official Montgomery Martin noted in 1835: “It is impossible to avoid remarking two facts as peculiarly striking – first, the richness of the country surveyed; and second, the poverty of its inhabitants?” What was the reason for this paradox? One of the major reasons for Indians becoming poor was the “economic drain.”

Naoroji believed that “the drain was the principal, basic cause of the poverty of the people”. He developed the “drain theory” which emphasized that Britain was extracting wealth from India every year out of the revenues that rightfully belonged to the Indians. Naoroji explained: “This drain consists of two elements - first, that arising from the remittances by European officials of their savings, and for their expenditure in England for their various wants both there and in India; from pensions and salaries paid in England; and from Government expenditure in England and India. And the second, that arising from similar remittances by non-official Europeans.”

How did the drain affect the Indian economy? In the words of Naoroji : “ As the drain prevents India from making any capital, the British by bringing back the capital which they have drained from India itself, secure almost a monopoly of all trade and important industries, and thereby further exploit and drain India, the source of the evil being the official drain.” How much was drained out of India? Naoroji calculated the average drain during 1870-72 was worth 27,400,000 pound sterling. Later in 1905, he declared that about “34 million sterling or Rs.515 millions were being drained out of India every year.” He estimated that during a period of just 38 years between 1835-1872, England must have benefited to the extent of 500 million pound sterling. But these were not the only benefits to the British. The goods that the Englishmen and their industries needed were exported from India out of compulsion, depriving the country the benefits that would have accrued otherwise in the normal circumstances. The effect of the drain was manifold. Naoroji pointed out that “the drain not only cut into the current national savings but even diminished the existing stock of inherited capital.”

Dadabhai noted that no British capital was invested in India during their rule. “India was, throughout, because of the drain, an exporter of capital. Only a part of the drained out capital was brought back in the form of foreign investment.” As revenues were being continuously drained out, there was no addition to the capital existing in India. To quote: “Mainly because India was a net exporter of capital, there was no augmentation of or addition to Indian capital”. While writing about the drain, the noted historian James Mill mentioned: “It is an exhausting drain upon the resources of the country, the issue of which is replaced by no reflex; it is an extraction of the life blood from the veins of national industry which no subsequent introduction of nourishment is furnished to restore.”

It may be relevant to quote the words of Will Durant, who used the strongest of words, to describe the attacks on the Indian economic system by the British. He wrote in 1930: “British rule in India is the most sordid and criminal exploitation of one nation by another in all recorded history. ….. This evidently was not a minor civilization, produced by inferior people. It ranks with the highest civilizations of history, and some, like Keyserling, would place it at the head and summit of all. ……. Those who have seen the unspeakable poverty and physiological weakness of the Hindus today will hardly believe that it was the wealth of eighteenth century India which attracted the commercial pirates of England and France.”

References

1. Dadabhai Naoroji, Poverty and Un-British Rule in India, Second Edition, Ministry of Information and Broadcasting, Government of India, May 1996

2. Will Durant, The Case for India, Simon and Schuster, New York, 1930

(PROSPEROUS INDIA – 8:)(Yuva Bharati, Vol.38, No.6, Vivekananda Kendra, Chennai, January 2011