Drain of Wealth
Dadabhai Naoroji in his Poverty and Un-British Rule in India explained how the English rulers were different from the earlier invaders. He said, in the case of former foreign invaders, they plundered and went back. They made, no doubt, great wounds, but India, with her industry, revived and healed the wounds. When the invaders became rulers of the country they settled down in it; whatever was the condition of their rule, there was at least no material or moral drain in the county. But with the English the case was different. There are the great wounds of the first wars in the burden of the public debt and those wounds are kept perpetually open and widening by draining away the lifeblood in a continuous stream. The former rulers were like butchers hacking here and there, but the English with their scientific scalpel cut to the very heart, and yet, there is no wound to be seen, and soon the plaster of the high talk of civilization, progress and what not covers up the wound.
Naoroji argued that a great deal of wealth was drained to England in the form of Home Charges. The following constituted the Home Charges:
- Incentive to the shareholders of the Company
- Savings and the salaries of European officials, European traders and Planters remitted to England.
- Pensions to those who retired from civil and military services.
- The salaries of the staff and the Secretary to Home Government, India Office at London
- Expenses on wars fought in India and interests for the loans obtained from the banks for the conduct of wars and for the building of railroads.
India’s loan to England was 130 million pounds in 1837. It increased to 220 million pounds, of this 18 percent was for conducting wars waged against Afghanistan and Burma. A government report of 1908 informed that on account of railways, India had incurred a debt of 177.5 million pounds. In order to give outlet to the saturated capital the British secured the capital from private enterprise in England. In the form of guaranteed interest of 5 percent, the Colonial state promised to repay the interest in sterling. There was a loss of 220 million pounds to India on this score.
Calling this as drain of wealth Dadabhai Naoroji lamented that had the money drained to England remained in the pockets of Indians, India would have economically progressed. Even Gazni Mahmud’s pillage stopped after eighteen times but the British plunder seemed to be unending, he quipped. R.C. Dutt estimated that during the last decade of the reign of Queen Victoria (1891-1901), of the total income 647 pounds, 159 million pounds drained to England. This worked to 44 percent of the total income of the country.