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What led Dadabhai Naoroji to formulate the “drain of wealth” theory, and hold the British Raj responsible for India’s crippling poverty and devastating famines

Dadabhai Naoroji
  • The book “Naoroji: Pioneer of Indian Nationalism” by Dinyar Patel is the definitive biography of Dadabhai Naoroji, the nineteenth-century activist who founded the Indian National Congress, was the first British MP of Indian origin, and inspired Gandhi and Nehru.

  • This book charts the life of Dadabhai Naoroji, the first Asian to sit in the House of Commons and a towering figure that represented anti-imperialism before the arrival of Mahatma Gandhi.

  • This is the first comprehensive study that examines the extraordinary life of this foundational figure in India’s modern political history.

  • Read an excerpt from Dinyar Patel’s book “Naoroji: Pioneer of Indian Nationalism” below.

Between 1867 and 1880, Dadabhai Naoroji expounded upon the drain of wealth from India through a series of detailed papers and published statistics. He presented most of these papers in London, before British audiences. This was no mere coincidence: Naoroji felt duty-bound to change the tone of Indian policy debate in the capital of the empire. To this extent, in late 1866 he established the East India Association, a forum for discussion of Indian affairs that, in London as well as in a branch society in Bombay, drew a large cross section of bureaucrats, politicians, students, and intellectuals.

It is difficult to say why, precisely, Naoroji chose the late 1860s to launch into sustained discussion of Indian poverty and the drain. No letters or papers survive to explain his rationale. Quite likely, however, Naoroji was moved to action by twin crises unfolding in the subcontinent at the time. The American Civil War prompted the first crisis. Opening volleys from Fort Sumter’s cannons brought to a halt the South’s cotton trade with Britain, causing a spike in the price of Indian cotton. This benefited a handful of Indian cotton merchants, including Naoroji, while wiping out the last remaining weavers in the Indian countryside, who were no longer able to purchase raw materials. Once peace returned to the United States, the price of Indian cotton cratered. Indian merchants faced economic ruin—this was the reason Dadabhai Naoroji & Co. was forced to declare bankruptcy and temporarily shutter its London office. For India, the American Civil War was a one-two punch that sent financial shudders through both city and countryside, demonstrating the precariousness of the colonial economy.

The second crisis was far graver. In 1865, following a capricious monsoon, famine began stalking India’s eastern shores. Panic spread through the region of Orissa after the colonial governor coolly refused to intervene and provide emergency supplies of grain. By 1867, as much as one-third of Orissa’s population was dead. The Orissa famine was, for Naoroji, a stark example of India’s perilous economic and political position. It prompted him to investigate how mass famine had been a hallmark of British rule in India—and how the specter of starvation and disease had significantly worsened in the past decade. “What an appalling, what a sad picture we have before us!” he concluded upon tabulating recent death figures. “Have all the wars of the past 100 years destroyed as many lives and property as the famines of the past eight years?” From the East India Association’s lectern, Naoroji began speaking with urgency about Indian poverty, mass famine, and the drain of wealth as interconnected phenomena. He first sought to establish the gravity of Indian poverty in order to highlight the country’s inability to bear further outflows of its meager resources and finances. Naoroji’s immediate task, therefore, was political in nature: urging swift policy changes that would acknowledge and rectify the drain.

When Naoroji began speaking about poverty and the drain, however, he confronted a Himalayan obstacle. It was extraordinarily difficult to convince British audiences, both policymakers and the general public, that India was a fundamentally impoverished country. During the second half of the nineteenth century, this notion went against conventional wisdom in the United Kingdom—in spite of grim headlines emanating from the latest famine-stricken districts. How was poverty possible in a land that had produced the British nabobs of the previous century, one that continued to buoy the fortunes of the City of London, the empire’s financial heart, and fill British docks and warehouses with luxury goods of every sort? Could India really be a poor country when, year after year, an increasing number of Indian professionals, princes, and wealthy merchants streamed into London, consorting with the commercial and political elite of Britain and the empire? And wasn’t Naoroji—educated, Anglicized, and relatively wealthy by the mid-1860s—himself an example of imperial beneficence? As naive as these observations might seem today, they were important components of British imperial imagination. They were premised on the common belief that India, precisely because of its abundant wealth, was the linchpin of the empire’s prosperity and political, economic, and military strength. Famine was a bizarre aberration, the result of Indian laziness or fecundity rather than systemic poverty.

The British Indian government did not make Naoroji’s task any easier. Each year, mandarins in the India Office in Whitehall assembled the Moral and Material Progress Report, deploying official statistics to claim significant social and economic progress in the subcontinent. Many of these statistics, however, were simply wrong. In 1871, Naoroji addressed London’s Society of Arts, mentioning a recent India Office report given to Parliament. As proof of the “General Prosperity” of India, the report cited a “ great excess of exports above imports,” a stunning 188 percent increase in exports during the 1840s and 1850s, and a 227 percent increase in imports in the same period. These were, an incredulous Naoroji stated, “fallacious statements.” And they were also symptomatic of a much larger problem. “I am constrained to say, after my residence in this country for fifteen years, that the knowledge of the public here about India is not only imperfect, but in some matters mischievously incorrect,” he declared. Due in part to such reports and statistics, there was “the almost universal belief that India is rich and prosperous, when it is not so.”

Naoroji’s attempts to hammer away at this universal belief were hampered by many factors other than ignorance, bad information, and rosy official pronouncements. There were, for example, particular derisory attitudes among Britons toward Indians. One irate Anglo-Indian, writing to the London Review in response to some of Naoroji’s opinions about Indian poverty, complained that Naoroji was simply repeating “the common native argument that the English have drained India of its treasure and reduced it to misery.” But what truly outraged the writer was that an Indian had the audacity to make these claims before an audience of eminent Britons—current and former officials and “many practical men”—and then publish his paper for distribution, something that suggested “a most mischievous character.”

Such were the attitudes that greeted Naoroji’s first forays into discussion of Indian economic matters. On May 2, 1867, he inaugurated the East India Association in London by delivering a paper titled “England’s Duties to India.” The title sounded innocuous enough. But before an audience that included eminent members of the India Office, men who helped compose the annual Moral and Material Progress Report, Naoroji detailed the horrific dimensions of the Orissa famine. The famine forced Naoroji to weigh the advantages and disadvantages of British colonial rule. “Security of life and property we have better in these times [under the British], no doubt,” he stated, “but the destruction of a million and a half lives in one famine is a strange illustration of the worth of the life and property thus secured.” While he lavished praise upon the British for granting India several supposed boons—“law and order,” “the enlightenment of the country” through Western education, and a “new political life”—Naoroji grappled with a fundamental tension between, on one hand, piecemeal social and political advancement and, on the other, unfathomable impoverishment.

Excerpted with permission from Naoroji: Pioneer of Indian Nationalism, Dinyar Patel, Harvard University Press. Read more about the book here and buy it here.


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