Why India should not forget the cost of Colonisation

Official British-era records show that as late as 1922, defence expenditure accounted for 70.7% of India’s total budgetary expenditure.

(Sanghnomics is a weekly column that tracks down and demystifies the economic world view of Rashtriya Swayamsevak Sangh (RSS) and organisations inspired by its ideology.)

As ‘decolonisation’ has taken centre stage in Indian public discourse over the last few years, it is important to understand the impact of colonisation on India, especially in the context of the state of the economy.

To explore the colonial impact on the Indian economy, the Rashtriya Swayamsevak Sangh (RSS)-inspired publishing house Samvit Prakashan has released a detailed study titled Roots of Underdevelopment: A Peep into India’s Colonial Past. It explores the root causes of India’s underdevelopment and how the Indian economy was ravaged by Britain.

Initially conducted in the 1980s by Kusumlata Kedia and Aruna Sinha, the study did not receive the attention it deserved. Now, an updated version has been published in 2025, which may reignite debate on British exploitation and loot in India as part of the wider discourse on the ‘decolonisation of India’.

The study presents some astonishing figures based on British official papers and records. According to the authors, the key heads under which this plunder can be categorised include: exactions referred to as ‘tribute’ by the British; home charges; payments to British officials in the form of salaries, allowances, and pensions; excess of exports over imports; public debt; sterling debt; and remittance of interest, profits, and dividends, among others.

According to William Digby’s figures in Prosperous British India, the money exacted between Plassey and Waterloo (1757–1814) amounted to one billion pounds — termed as ‘tribute’ by the British. Digby noted, “We can hardly realise the enormity of this sum when we allow for the purchasing power of money in those days.”

Digby’s figures, based on British official papers, refer to that period of crude exploitation, which was later “polished, streamlined and modified” through more rapacious yet less direct methods, observed Kedia and Sinha in their study.

Writing in 1859, George Wingate explained this ‘tribute’ as a payment made by one country to another as a consequence of subjection: “It is a transfer of a portion of the annual revenue of the subject country to the ruling country without any material equivalent being given in exchange.”

Wingate estimated that between 1814 and 1831, no less than 70 million pounds were sent from India to England by way of tribute, private remittances, transfers, and surplus of exports over imports (including bullion).

Another key piece of evidence cited by the study is the testimony of Montgomery Martin before a British parliamentary committee in 1840. Martin stated, “It is a curious calculation, that estimating the sums of money drawn from British India for the last thirty years at three million pounds per annum, it amounts at 12% (the Indian rate of interest) compound interest to £729,997,971; or if we calculate it as two million pounds per annum for 50 years, the abstraction of fructifying capital from Hindustan amounts to the incredible sum of £8.4 billion.”

The study concludes that it was with the help of this enormous wealth that Britain was able to implement its expansionist colonial policy in Asia, Ceylon, Aden, Hong Kong, Singapore, Rangoon, and Africa. According to Wingate, “The first China war, the Afghan war, the Burmese and Persian wars, were chiefly fought with the revenues of our Indian empire — but in pursuance of a British policy, with which the interests of India were but remotely concerned.”

Official British-era records show that as late as 1922, defence expenditure accounted for 70.7% of India’s total budgetary expenditure.

Anecdotal Evidence

The study also offers some vivid anecdotes highlighting the extent of economic drain. It claims, for example, that even the cost of milk for Queen Victoria’s cat was debited to India. When the Sultan of Turkey visited London in 1868, an official ball was held in his honour at the India Office, and the entire bill was charged to India. Expenses for running a lunatic asylum in Ealing, gifts to members of a Zanzibar mission, and the costs of English consular and diplomatic establishments in China and Persia were all billed to India.

The entire cost of laying the telegraph line from England to India was also borne by the Indian treasury. Between 1857 and 1870, British revenue from India surged from £33 million to £52 million annually.

The study also refutes the common claim that India saw significant development under British rule. In the 1935–36 budget, Rs 1,322 million were spent on unproductive heads — including military services, debt servicing, and maintenance of law and order (jails, police, judiciary) — whereas only Rs 220 million were allocated to productive heads. Of this, more than 50% (Rs 122 crores) went towards education, primarily to ensure a steady supply of clerks to administer the British colonial apparatus.

Earlier Sanghnomics columns can be read here.