Dadabhai Naoroji and Drain Theory — Definition

Definition

Dadabhai Naoroji's drain theory explained Indian poverty partly through an outward transfer of resources under colonial rule for which India did not receive an equivalent economic return. It directed attention to payments such as salaries, pensions and other charges associated with an externally controlled administration.

The argument was not simply that importing goods is harmful or that every international payment is a drain. Its force lay in connecting the character of colonial government to a persistent transfer of income and resources.

Naoroji developed this criticism over time, including in Poverty and Un-British Rule in India, published in 1901.