---
title: "Drain of Wealth Theory: Naoroji's Critique | Model Diplomat"
description: "The Drain of Wealth Theory explains how British colonial rule drained India's economic surplus, impoverishing the nation and impacting its development."
url: "https://modeldiplomat.com/learn/glossary/drain-of-wealth-theory"
---

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Model Diplomat Research Team · Last reviewed June 22, 2026

TL;DR

- The Drain of Wealth Theory holds that British colonial rule systematically transferred India's economic surplus to Britain without an equivalent return, impoverishing India.
- What exactly constituted the 'drain' under the theory?
- How did India's export surplus connect to the drain?
- How is the Drain of Wealth Theory different from the deindustrialization thesis?
- Is the theory accepted by modern economic historians?

[Civil Service & Diplomatic Exams](https://modeldiplomat.com/learn/civil-services/glossary)Updated June 22, 2026

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Example

In 1901, Dadabhai Naoroji published Poverty and Un-British Rule in India, quantifying the annual drain at roughly £30–40 million and presenting it to the Welby Commission as the structural cause of Indian famine and poverty.

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