Nationalist Critique of Colonial Economy

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  • Dadabhai Naoroji, theory of economic drain in Poverty and UnBritish Rule in India include Justice Mahadeo Govind Ranade, Romesh Chandra Dutt, Gopal Krishna Gokhale, G. Subramaniya Iyer and Prithwishchandra Ray.
  • Transformation of India into a supplier of foodstuffs and raw-materials to the metropolis, a market for metropolitan manufacturers and a field for investment of British capital.
  • Britain and the development of an independent economy based on modern industries.
British Policies Making India Poor
  • Industrialisation was to be based on Indian and not foreign capital because, according to the early nationalists, foreign capital replaced and suppressed instead of augmenting and encouraging Indian capital.
  • Causes Economic Drain & strengthening British hold over India.
Growth of Trade and Railways to Help Britain
  • Pointed out that the pattern of foreign trade was unfavourable to India.
  • Relegated India to a position of importer of finished goods and exporter of raw materials and foodstuffs.
  • Development of railways & commercial rather than an industrial revolution.
  • "Expenditure on railways should be seen as an Indian subsidy to British industries"
One-Way Free Trade and Tariff Policy
  • Ruining Indian handicrafts industry, exposing it to premature, unequal and unfair competition, while tariff policy was guided by British capitalist interests.
  • Serve colonial needs only, development and welfare were ignored.
Effect of Economic Drain
  • More than the total land revenue, or
  • Half the total government revenue, or
  • One third of the total savings
Economic Issue a Stimulant to National Unrest
  • India was poor because it was being ruled for British interests.
  • Agitation was one of the stimulants for intellectual unrest and spread of national consciousness during the moderate phase of freedom struggle (1875-1905)—the seed-time of national movement.
  • Till the end of the 19th century, demanding some share in political power and control over the purse. First decade of the 20th century, started demanding self-rule.

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