Which economic theory, formulated by Dadabhai Naoroji, argued that British…

Concept

Colonial economic critique examines whether a ruling power extracts resources from a subject economy without equivalent compensation or reinvestment.

An unrequited transfer of income and resources can reduce domestic capital formation and deepen poverty in the subject economy.

Application

Dadabhai Naoroji argued that mechanisms such as Home Charges, officials' remittances, pensions, and payments from Indian revenues transferred wealth to Britain without an adequate economic return to India.

He developed this argument in works including Poverty and Un-British Rule in India; the argument became known as the Drain of Wealth Theory.

Contrast

• Safety Valve Theory: a proposed explanation for the founding of the Indian National Congress as an outlet for political discontent.

• Doctrine of Lapse: an East India Company annexation policy concerning princely states without a recognized natural heir.

• Subsidiary Alliance: a diplomatic-military system that placed Company troops in an Indian ruler's territory and restricted the ruler's external relations.

Cross-check

NIOS history material states that Dadabhai Naoroji in particular propounded the 'drain theory' and describes the flow of Indian wealth to England, matching both the mechanism and the conventional name.

Result

The answer is the Drain of Wealth Theory.