UPSC General Studies Sample Paper General Studies Sample Paper-5

  • question_answer
    Which of the following statements about the 'Economic Drain' of India by the British is incorrect?

    A)  It disturbed the precarious balance between food supply and population in the country by forcing it to export foodgrains.

    B)  It resulted in turning the balance of trade totally against India and in utilisation of Indian resources for the growth of the colonial economy

    C)  It kept down the rate of India's capital formation and thereby hold up her industrial progress

    D)  It cost India an amount of 15 million pounds per annum

    Correct Answer: D

    Solution :

    [d] The term 'economic drain' refers to a portion of national product of India which was not available for consumption of its peoples, but was being drained away to Britain for political reasons and India was not getting adequate economic or material returns for it. The drain theory was put forward by Dadabhai Naoroji in his book 'Poverty and UN British Rule in India'. The major components of this drain were salaries and pensions of civil and military officials, interests on loans taken by the Indian Government from abroad, profits on foreign investment in India, stores purchased in Britain for civil and military departments, payments to be made for shipping, banking and insurance services which stunted the growth of Indian enterprise in these services. The drain of wealth checked and retarded capital formation in India while the same portion of wealth accelerated the growth of British economy. The surplus from British economy re-entered India as finance capital, further draining India of its wealth. This had immense effect on income and employment potential within India. So, the options [a], [b], [c] are correct in this regard and [d] is incorrect because of precise/necessary data it is difficult to quantify the Economic Drain with any exactness.

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