The long history of India is dotted with diverse cultural interactions. Attitudes to wealth varied from pre-colonial to colonial
times. The clearest distinction was that between the pre-
colonial "Asian" rulers and the British who became masters after the middle of the 18th century. In the galaxy of those who ruled India the British stand apart. Unlike their Mughal predecessors India's wealth was not meant to be recycled and redistributed within the country. Instead its ultimate destination was London. British notion of power was based on the appropriation and drain of the maximum possible revenue and labour surplus from India to sustain their larger Empire. As "drain of wealth" came to characterise British power the worst causality was Indian economy and society.
The acknowledged theoretician of the drain theory was the famous 19th century
nationalist Dadabhai Naoroji .It was he who first put forward the idea that Britain was extracting wealth from India “as the price of her rule in India” that “out of the revenue
This theory gathered speed and reached its climax and found near universal acceptance with the nationalists of the country.
Over a period of time the drain theory wads officially adopted by the Indian National Congress at its Calcutta session when it proclaimed that the poverty of Inida was due to the drain of wealth by the britshers.Many leaders tried to compute the amount of the drain.Dadbhai’s calculations are believed to be the most intricate. In 1867 the amount of drain commuted was £8 million and in 1870 ¤ 12 million. According to V.C. Joshi, Inida had bee drained of nearly 660 million ¢ during the period 1834 to 1888.
However it would be naïve to think that the drain theory did not attract its detractors. One of the first attacks as accepted came from the British and began simultaneously with its enunciation. It was one Theodore Morison who in 1911 in his article The Economic Transition in India gave the most detailed point of view of the critics. Morison defined the ‘drain’ as the amount of India’s exports in goods or money for which in the year she receives no material equivalent.
According to the critics the first drawback of the drain theory was that the Indians had exaggerated the drain and did not make the necessary deductions. They didn’t take factors like shipping services, insurance charges on imports and exports and expenditure incurred by Indian students and travellers abroad. The critics all said that Inida received adequate economic equivalents for the excess exports; the biggest part of the drain arose on account of interest on borrowed capital which in turn represented economic development and not impoverishment.
Thus the drain theory was the anvil on which the hammer of Indian nationalism was to be made to strike with all its concentrated energy. The drain theory incorporated all the threads of the nationalist critique of colonialism for the drain denuded Inida of the productive capital its agriculture and industries so desperately needed. The drain theory was the high water mark of the nationalist, comprehensive, inter-related and integrated economic analysis of the colonial situation. Through the drain theory the nationalist were able to call into question in an uncompromising manner, the economic essence of imperialism.