History & Civics
What is meant by Drain of wealth? How was India's wealth drained to Great Britain?
Answer
The transfer of wealth from India to England for which India got no proportionate return, is called the Drain of Wealth.
India's wealth drained to Great Britain in the following ways:
- High Rate of Land Revenue — Huge Land Revenue was collected by unjust revenue systems like the Ryotwari system, the Mahalwari systems and Permanent Settlement. A part of it was transferred to England.
- Payment to the British Government — In 1767, a law was passed, according to which a sum of £400 lakhs was to be paid annually to the British government by the Company.
- Money spent on the British Army — A huge sum of money was spent on the British army staying in India to fight with Myanmar and Afghanistan. The Indian rulers paid a heavy price under the Subsidiary system, according to which English army were to stay in the state to control its administration and man its defence.
- Payment to the Civil servants — The Civil Servants and company's officials were paid high salaries. A large part of it was also sent to England
- Bribes and Gifts — The Company's officials collected wealth through bribes and gifts given by Indian rulers and businessmen which was sent to England. For example, when Clive returned to England, he had amassed wealth and property which yielded £40,000 interest every year.
- Investment — After getting the Diwani of Bengal in 1765, the Company collected huge revenue from Indian rulers and used it to purchase and export Indian goods to Britain, free of export duty.
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