Drain of Wealth Theory

Abstract

Till the Battle of Plassey, the European traders imported bullion into India in return for the exports of Indian cotton and silt goods which had a flourishing market in the west. But the situation was soon reversed after the conquest of Bengal when East Indian Company not only stopped importing bullion into India, but began to purchase goods from the surplus revenues of Bengal and profits made from duty free inland trade. Thus began the plunder of Bengal and by the close of 18^th century almost the whole of the country became “a playground of plunder” by the British¹. This process of “Continuous plunder” of India’s raw materials, resources and wealth by Britain to enrich itself at the cost of India’s growing poverty, led to the formulation of theory of “Drain of wealth” by the nationalist like Dada bhai Naoroji. M G. Ranade and others.