Question

Consider the following statements and select the correct answer from the code given below the statements:

Assertion (A) : Generally, India had a favourable balance of trade during the British rule.

Reason (R) : The drain of wealth took the form of unrequired exports.

• A. Both (A) and (R) are true, and (R) is the correct explanation of (A).
• B. Both (A) and (R) are true, but (R) is not the correct explanation of (A).
• C. (A) is true, but (R) is false.
• D. (A) is false, but (R) is true.

Answer 1

Answer:

A. Both (A) and (R) are true, and (R) is the correct explanation of (A).

• The constant flow of wealth from India to England for which India did not get an adequate economic, commercial or material return has been described by national leaders and economists as 'drain' of wealth from India. Before 1813 company had a recurring surplus which accrued from (a) profits from oppressive land revenue policy (b) profits from its trade resulting from monopolistic control over Indian markets and exactions (c) made by the company's officials. All this surplus was used by the Company as an ''investment'' , i.e. for making a purchase of exportable items in India and elsewhere. Against the exports of goods made out of this investment, India did not get anything in return. This system was brought to an end by the charter act of 1813. From 1813 onwards economic drain took the form of 'unrequired' exports. Baring a few exceptional years, a favourable balance of trade had been the normal feature of our foreign trade till the outbreak of world war II. Therefore, it is clear that (A) and (R) both are correct and (R) is the correct explanation of (A). Dadabhai Naoroji described the drain of wealth as the ''evil of all evils'' and the leading cause of Indian poverty.