What do you understand by "Drain of Wealth Theory"? Also examine its impact on Indian economy.

Answer: After 1860’s, early Indian Nationalists started carefully analyzing the British economic policies and put forward "Economic Drain Theory". Under which they argued that, Indian self-sufficient economy transformed into colonial economy serving colonial interest.

  • They said, substantial national product are not available for domestic consumption rather are being drained away from India, in the form of salaries and pension for civil and military professionals, payment of interest on loan taken by British India from abroad, store purchased in Britain for civil and military department, payment of services like ship-building, insurance, etc.
  • On the basis of the above observation, they argued ....
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