•   Dadabhai Naoroji was the first man to say that internal factors were not the reasons of poverty in India but poverty was caused by the colonial rule that was draining the wealth and prosperity of India.

•   In 1867, Dadabhai Naoroji put forward the ‘drain of wealth’ theory in his book Poverty and Un-British Rule in India.

•   In this theory he stated that the Britain was completely draining India.

•   The drain of wealth was the portion of India’s wealth and economy that was not available to Indians for consumption.

•   Dadabhai Naoroji gave six factors that caused external drain:

o  External rule and administration in India.

o  Funds and labour needed for economic development was brought in by immigrants but India did not draw immigrants.

o  All the civil administration and army expenses of Britain were paid by India.

o  India was bearing the burden of territory building both inside and outside India.

o  India was further exploited by opening the country to free trade.

o  Major earners in India during British rule were foreigners and the money they earned was never invested in on the other hand, they left India with that money.

•   Three types of drains were highlighted by Naoroji in this book:

o  The remittance to England as a percentage of salaries, incomes, and savings by civil and military employees of British Government.

o  The military budget of colonial India.

o  The interest on loans for the building and maintenance of public works like railways, irrigation works, and so on.

•   On the footsteps of Dadabhai Naoroji, R. C. Dutt also promoted the same theory by keeping it as a major theme of his book Economic History in India.

•   Romesh Chunder Dutt was an Indian civil servant, economic historian, writer and translator of Ramayana and Mahabharata.

•   He was one of the prominent proponents of Indian economic nationalism.

•   He entered the Indian Civil Service as an assistant magistrate of Alipur in 1871 and later became the first Indian to attain the rank of divisional commissioner.

•   He retired from the ICS in 1897.

•   He was a major economic historian of India of the nineteenth century and had written a thesis on de-industrialization of India under the British rule.

•   He wrote several books of which ‘The Literature of Bengal’ is well known.

•   Lakshmi Kant Jha was a member of the 1936 batch of the Indian Civil Service.

•   After Independence he had served as secretary in the Ministries of Industries, Commerce and Finance and Secretary to the Prime Minister of India, Lal Bahadur Shastri (1964–66) and Indira Gandhi (1966–67) prior to his appointment as Governor of RBI

•   He later became the 8^th Governor of the Reserve Bank of India from 1 July 1967 to 3 May 1970.