Indian National Movement was most firmly and deeply rooted in an understanding of the nature and character of colonial economic domination and exploitation. Three names stand out who carried out the economic analysis of British rule during 1870-1905, i.e. Dadabhai Naoroji, the Grand Old Man of India, Justice MG Ranade and Romesh Chandra Dutt, a retired civil servant.
These three leaders along with G.V. Joshi. G.K. Gokhale, G. Subramaniya Iyer, Prithws Chandra Ray and a host of others raised basic questions regarding the nature and purpose of British rule. For them, the essence of British imperialism lay in the subordination of the Indian economy to the British economy.
They were able to see that colonialism no longer functioned through crude tools of plunder and tribute and mercantilism but operated through the disguised and complex mechanism of free trade and foreign capital investment, by transforming India into a supplier of food stuffs and raw material to the metropolis and making India a market for the metropolitan manufacturers. Ever since the 1840s, the British economists, officials had seen the investment of foreign capital, along with law and order, as the major instrument for the development of India, an argument the early Indian nationalists vehemently refuted.
They argued that instead of encouraging and augmenting Indian capital, foreign capital replaced and suppressed it which led to the drain of capital from India and further strengthed the British hold over the Indian economy. They also highlighted the progressive decline and ruin of India's traditional handicrafts in the interest of British manufacturers. The political consequences of such policies were no less harmful and which led to India's political subjugation.
After years of hesitation, in which year the drain theory was officially adopted by Indian National Congress and proclaimed that the famines and the great poverty of India were brought about by the drain of wealth?
