Drain of Wealth Theory by Dadabhai Naoroji

Dadabhai Naoroji, a prominent Indian leader, introduced the Drain of Wealth Theory in the 19th century.

1. Theory Explanation

• Naoroji argued that British colonial rule was draining India’s wealth to Britain. The British extracted resources through taxation, trade policies, and exploitation of India’s raw materials, while paying little for Indian goods.

2. Economic Impact

• He believed that wealth generated in India was being sent to Britain, leaving India economically impoverished. This led to widespread poverty and underdevelopment in India. For example, the remittances to Britain from Indian agriculture and industry were a significant drain on India’s economy.

3. Legacy

• Naoroji’s theory became a foundation for the Indian independence movement, highlighting the economic exploitation of India under British rule.