He was a great Indian nationalist leader. He was considered to be one of the major personalities who laid foundation for Indian freedom struggle. When the Dadabhai was just four years only, then his father Naoroji Palanji Dordi was died and all the responsibilities fell on his mother Maneckbai. His Education Dadabhai Naoroji was a bright student during his student life and had good grasp over English and Mathematics. Dadabhai was educated at Elphinstone Institute School.

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The economic ideas are: 1. National Income of India 2. Taxation, Military Expenditure and Public Department 3. Drain Theory 4. Criticism of British Administration. Economic Idea 1. National Income of India: Naoroji was not satisfied with the official estimates regarding the national income of India during the British rule. On the basis of the official data, Naoroji himself calculated the per capita income for the years at Rs.

On the other hand, the basic requirements of an ordinary labourer, as calculated by him was about Rs. He concluded that even for such food and clothing which was provided to a criminal, a good seasonal production was not enough.

The high and middle classes get a larger share, while the poor masses did not get enough for their basic necessaries of life. It was in this context of growing disparities of income that Naoroji spoke of two Indians one the prosperous and the other poor.

The prosperous India was the India of the British and the foreigners, while the poor India was the India of the Indians. ADVERTISEMENTS: But while calculating the per-capita income, Naoroji had equally apportioned the value of agricultural produce and manufactures among all the people without taking care of the actual number of persons employed in agriculture, industries and other professions.

Though the method adopted by Naoroji was criticised by F. Danvers, an employee of India office, Dr. Rao had supported the method adopted by Naoroji and paid a great tribute to him as a statistician. Replying to this criticism, Naoroji maintained that mere movement of goods by the railways did not add to the existing wealth of the country.

The railways in no way increased the material wealth of the country. Regarding the Government stock, he believes that it did not increase the material wealth of the country. For example, the interest paid on a government bond was made from the revenue of the country. Regarding the payment of salaries and pensions, Naoroji argued that these were paid out of the revenue of the country. Economic Idea 2. Taxation, Military Expenditure and Public Department: A glaring example of exploitation of Indian resources and discrimination of the Indians is the taxation policy adopted by the British Government.

While in England, taxes constituted 8 per cent of the income, in India it was about 15 per cent. He criticised the then Indian Government for abolishing the duties on cotton imports from Manchester as it was harmful to the newly established Indian factories. So Naoroji suggested that the military expenditure should be limited and England should pay her share for the maintenance of British army in India and for other military services. In the case of railways, Naoroji argues that the entire benefit was enjoyed by the Britishers, and the burden of foreign debts was borne by India.

Economic Idea 3. He developed this theory to explain the conditions of poverty in India. The drain theory emphasized the fact that the management and institutions of British India were prone to a mechanism of the economic drain. Naoroji felt that under the British rule, India had the costliest administration in the world.

It had a disastrous effect on the Indian economy. Naoroji estimated that the drain which was to the tune of 3 million pounds in the beginning of the 19th century increased to 30 million pounds at the end of the last century. The drain of wealth took place is several ways: 1. Large remittances were made by European officials of their savings in India. Large remittances were made in the form of salaries and pensions.

India had to pay for government expenditure in England also. Non-official Europeans made remittances from their business profits in India. The money which had gone out of India, to England came back as British capital and foreigners had monopolized trade and industry. It had once again resulted in the drain of wealth. Thus the drain became continuous and it had affected capital formation in India. Naoroji collected a lot of statistical data to prove his drain theory.

He examined the imports and exports between and and pointed out that the value of exports was greater than that of imports by million pounds. The drain would have been greater, if interest had been calculated on the amount. No country could bear such a drain upon its resources without sustaining very serious injury.

Further, when the railways were built in India, Indians had to spend large sums on salaries and allowances to European staff for all the top posts were manned by the Britishers. Thus while internal drain refers to the exploitation of poor regions or individuals by the rich within a country, external drain implies the exploitation of a poor country by the rich. T is a leakage from Y. On the expenditure side, the corresponding leakage is export surplus X-M , where X stands for the value of exports and M for the value of imports.

Export surplus is to be deducted from total expenditure E; C and Id, i. If X-M is insufficient to be equal to T, or if there is an exceptional rise in T, the gap had to be filled by sterling loans.

This inflow of capital in the form of loans produces adverse balance of trade in the borrowing country. Shore, J. Indians and Englishmen should be paid equal salary for the same type of job.

Regarding the Britishers employed in India and the Indians employed in England, he suggested that a fair and reasonable apportionment between the two should be made. Britishers were getting high salaries and so they should not be paid any pension. No country could invade India through the sea and so she should not be charged for the maintenance of the India navy. Indians should be given due representation in the government and foreign capital should come but not the foreign capitalist who took everything from India.

Economic Idea 4. The main attack was on the unjust, destructive and exploitative attitude of the East India Company. It was, on the one hand destroying the internal trade of the country and on the other hand, employing the imported labour in administration.

Thus Indians were denied their due share in the administration of the country. Critical Estimate: Naoroji was the first economic thinker who provided the pattern of economic thought for modern India. As he emphasized the material concept of wealth and the circulation of National income, we can say that he had been considerably influenced by the physiocratic school. He was the first Indian to calculate the per-capita and national income.

He believed that the economic phenomena were linked with the moral, social and political factors. The inductive method predominated his writings. His main contribution was the Drain theory. He gave a picture of the Indian economy in a realistic sense. No related posts.


Economic Ideas of Dadabhai Naoroji

Answered Jan 15, The Drain of Wealth theory was systemically initiated by Dadabhai Naoroji in and further analysed and developed by R. Dutt, M. G Ranade etc. The "drain of wealth" depicts the constant flow of wealth from India to England for which India did not get an adequate economic, commercial or material return.


Dadabhai Naoroji : Childhood | Career | Drain Theory | Death

Drain Theory: What do you mean by Drain Theory? Marginal contributions to the theory were also made by R. Dutt, G. Iyer, G. Gokhale and P.

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