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Drain of Wealth of India

The British rule in India resulted in the drain of wealth of India to England. Dadabhai Naoroji in his work Poverty and UnBritish Rule in India exposed the exploitation of Indians by the British. Drain of wealth means the continuous flow of wealth from one nation to the other without any adequate returns in the form of either cash or service or material.

The sources of the drain of wealth are by remittances to England made through salary to thousands of Englishmen who occupied high positions in civil, military and railway services in India. Expenditure incurred in England on behalf of the British Indian government. Another major source of the drain was the profits of private capital invested in trade, industry, plantation, banking, finance, insurance and other areas by the British citizens in India.

Results of the Drain of Wealth

  1. The most important consequence of the drain of wealth was that India became a poor country.
  2. The impact of the drain of wealth on income and employment within the country was harmful.
  3. The drain of wealth was mainly paid out of land revenue; it hit the peasantry the most and made them poor.
  4. The drain of wealth produced shortage of capital in the country. This affected industrial development in the country.

Uniform System of Administration

The British introduced a uniform system of administration in the country. This helped to establish uniform legal system. The Rule of Law placed all Indians on the same footing, irrespective of caste and religion. Unified civil service and efficient police created internal stability.

Economic Impact

The Industrial Revolution in England affected the Indian industries. After the Industrial Revolution, the British exported raw materials from India and imported finished goods from England and sold them in the Indian markets at cheaper rates. The Indian manufacturers could not compete with the cheap machine-made goods from England. This ruined the Indian industries and caused unemployment and starvation to millions.

Land Revenue Policy

The imperialistic rule in India brought several economic changes due to which the pattern of an agrarian society was completely changed. The British introduced three types of land revenue settlements in India. They were as follows:
The Permanent Settlement It was difficult for the East India Company to directly collect the revenue from thousands of peasants spread over vast territories. Governor General Cornwallis introduced Permanent Settlement in Bengal. The former revenue collectors were recognised as permanent owners of the land and they were made to pay an amount fixed by the government. The zamindars ruthlessly collected the tax even during famines and the peasants led a miserable life. This system was introduced in Bengal, Bihar and Uttar Pradesh.

The Ryotwari Sytem It was introduced by Thomas Munro. Under this system, land was measured, and taking into account its fertility and irrigation facilities, the revenue was fixed. This system was introduced in southern and western India. This system recognised the rights of the cultivator over his land permanently.

Mahalwari System The Mahalwari referred to the revenue settlement which was made village by village or estate by estate (mahal literally means taluk or estate) between the English company and the landlords or heads of families of the village or the estate. It was introduced in the Ganga valley, the northwest provinces and parts of central India and Punjab.

Effects of Land Revenue Settlements
  1. It created a class of loyal landowners with legal rights to help British in India.
  2. Land was made saleable and mortgageable. This was done to protect the company’s revenue.
  3. Many landlords shifted from food crops to commercial crops like cotton, jute, groundnut, sugarcane, etc. to increase their income.
  4. The British encouraged growing of commercial crops such as cotton, tea, jute, indigo and opium instead of food crops. This resulted in shortage of food.


The British rule in India had an impact on the Indian education system. Charles Grant, one of the Directors of the Company, took interest in introducing English education in India. By the Charter Act of 1813, an amount of rupees one lakh was allotted for the revival of education in India.

The intention of the British to introduce education was not to educate the Indians or improve the conditions prevailing in India. They wanted to create a class of people who could serve them in the revenue and commercial departments as clerks in the East India Company.

Raja Ram Mohan Roy strongly advocated English education in India. On the advice of T. B. Macaulay, Governor General Lord William Bentinck introduced English education in India in 1835.

In 1854, Sir Charles Wood, the president of the Board of Control prepared a despatch on the scheme of education to be introduced in India. It became famous as the ‘Magna Carta of English Education in India’. On the advice of Charles Wood in 1854, the Department of Public Instruction was created. The dispatch of Charles Wood also stressed the importance of vernacular and female education in India. As a result, universities were established at Calcutta, Bombay and Madras.

Western education created a new middle class. This class of people was imbibed with the spirit of western ideas of democracy and liberalism. The new middle class took leadership in the cultural renaissance and in the national movement. English served as the link language for the whole country and created a large number of like-minded Indians.

With the study of English literature, similar forms of literature grew in Indian regional languages. The art of writing prose developed in Marathi, Hindi, Tamil, Kannada and other regional languages.

Transport and Communication

Governor General Bentinck planned to have all season trunk roads all over the country. Governor General Dalhousie founded the Public Works Department in 1854 and laid the first railway line between Bombay and Thane in 1853. The Calcutta-Ranigunj railway line was laid in 1854. Soon the railway lines connected various parts of India.

Dalhousie established the system of post office and laid telegraph lines for a length of 800 km. Roads and waterways were developed and bridges were constructed across the rivers. The railways connected the ports to the hinterland.

Growth of Journalism

The first printing machine was introduced in India in 1556 in Goa. The first newspaper Bengal Gazette was started from Calcutta in 1780. After the introduction of English education, newspapers in English and in various regional languages were published.

Many political leaders started newspapers and they used them as weapons during national movement. The newspapers created awareness and fostered a sense of nationality among the Indians. The early newspapers in India were The BengalThe Indian MirrorAmrita Bazaar PatrikaThe Bombay ChronicleThe Hindu PatriotThe Maratha,The Subodh PatrikaKesari, etc. The first Kannada newspaper was Mangalura Samachara started by Moegling, a missionary, in 1843.

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