The British exported to Britain part of India’s wealth and resources for which India got no adequate economic or material return. This ‘economic drain’ was peculiar to British rule. Even the worst of previous Indian governments had spent the revenue they extracted from the people inside the country.
Whether they spent it on irrigation canals and trunk roads, or on palaces, temples and mosques, or on wars and conquests, or even on personal luxury, it ultimately encouraged Indian trade and industry or gave employment to Indians.
This was so because even foreign conquerors, like the Mughals, soon settled in India and made it their home. But the British remained perpetual foreigners.
Englishmen, working and trading in India, nearly always planned to go back to Britain, and the Indian government was controlled by a foreign company of merchants and the government of Britain.
The British, consequently, spent a large part of the taxes and income they derived from the Indian people not in India but in Britain, their home country.
The drain of wealth from Bengal began in 1757 when the Company’s servants began to carry home immense fortunes extorted from Indian rulers, zamindars, merchants and the common people. They sent home nearly £6 million between 1758 and 1765.
This amount was more than four times the total land revenue collection of the Nawab of Bengal in 1765. This amount of drain did not include the trading profits of the Company which were often no less illegally derived. In 1765 the Company acquired the Diwani of Bengal and thus gained control over its revenues.
The Company, even more than its servants, soon directly organised the drain. It began to purchase Indian goods out of the revenue of Bengal and to export them. I here purchases were known as ‘Investments’.
Thus, through ‘Investments, Bengal’s revenue was sent to England. For example, from 1765 to 1770, the Company sent out nearly £4 million worth of goods or about 33 per cent of the net revenue of Bengal. By the end of the eighteenth century, the drain constituted nearly 9 per cent of India national income.
The actual drain was even more, as large part salaries and other incomes of English officials and the trading fortunes of English merchants also found their way into England.
The drain took the form of an excess of India’s exports over its imports, for which India got no return. While the exact amount of the annual drain has not been calculated so far and historians differ on its quantum, the fact of the drain, at least from 1757 to 1857, was widely accepted by British officials.
Thus, for example, Lord Ellen borough, Chairman of the Select Committee of the House of Lords, and later Governor-General of India, admitted in 1840 that India was “required to transmit annually to this country (Britain), without any return except in the small value of military stores, a sum amounting to between two and three million sterling”.
And John Sullivan, President of the Board of Revenue, Madras, remarked: “Our system acts very much like a sponge, drawing up all the good things from the banks of the Ganges, and squeezing them down on the banks of the Thames.”
The drain went on increasing after 1858, though the British administrators and imperialist writers now began to deny its existence.
By the end of the nineteenth century it constituted nearly 6 per cent of India’s national income and one-third of its national savings.
The wealth drained out of India played an important part in financing Britain’s capitalist development, especially during the eighteenth century and the beginning of the nineteenth century, that is, during the period of Britain’s early industrialisation.
It has been estimated that it constituted nearly two per cent of Britain’s national income during that period. The figure assumes importance if it is kept in view that Britain was at that time investing in industry and agriculture about 7 per cent of its national income.
Calcutta to Delhi was begun in 1839 and completed in the 1850s Efforts were also made to link by road the major cities, ports and markets of the country. But real improvement in transport only came with the advent of the railways.
The first railway engine designed by George Stephenson was put on the rails in England in 1814. Railways developed rapidly in that country during the 1830s and 1840s.
Pressure soon mounted for their speedy construction in India. The British manufacturers hoped thereby to open the vast and hitherto untapped market in the interior of the country and to facilitate the export of Indian raw materials and foodstuffs to feed their hungry machines and operatives.
The British bankers and investors looked upon railway development in India as a channel for safe investment of their surplus capital.
The British steel manufacturers regarded it as an outlet for their products like rails, engines, wagons and other plant and machinery.
The Government of India soon fell in step with these views and found additional merit in the railways: they would enable it to administer the country more effectively and efficiently and to protect their regime from internal rebellion or external aggression by enabling rapid mobilisation and movement of troops.
The earliest suggestion to build a railway in India was made in Madras in 1831. But the wagons of this railway were to be drawn by horses.
Construction of steam-driven railways in India was first proposed in 1834 in England. It was given strong political support by England’s railway promoters, financiers, and mercantile houses trading with India, and textile manufacturers.
It was decided that the Indian railways were to be constructed and operated by private companies who were guaranteed a minimum of five per cent return on their capital by the Government of India. The first railway line running from Bombay to Thana was opened to traffic in 1853.
Lord Dalhousie, who became Governor-General of India in 1849, was an ardent advocate of rapid railway construction. In a famous note, written in 1853, he laid down an extensive programme of railway development.
He proposed a network of four main trunk lines which would link the interior of the country with the big ports and interconnect the different parts of the country.
By the end of 1869 more than 6,000 kilometers of railways has been built by the guaranteed companies; but this system proved very.