The Great Loot: How Britain Stole $45 Trillion From India & Pakistan

India was formerly termed as the “golden bird”,  which was fairly accurate; at that time, India accounted for approximately 25% of global net wealth. India transitioned from a prosperous nation to a poor, impoverished one until the end of the British Raj in 1947.

Britain, on the other hand, continues to be unwilling to accept responsibility. According to a 2014 YouGov poll, over half of British citizens continue to feel colonization benefited colonies but harmed Britain. Historian Niall Ferguson and former British Prime Minister David Cameron endorsed this notion. They assert that colonizing India was unreasonably expensive, which is why Britain was compelled to make a big financial investment.

All of their assertions are based on a book titled White Man’s Burden. Based on this book, half of the British population still believe that Britain established colonies to transform an uncivilized society into a civilized society.

We will examine Britain’s moral claim and I will also attempt to clarify Britain’s primary goal, which was to plunder and loot India & Pakistan.

Background

Utsa Pattnaik, a renowned economist from India, wrote a research article in Columbia University Press in 2018. This research paper categorically refuted British moral assertions. Patnaik concluded that Britain plundered almost $45 trillion from India between 1765 to 1938, based on nearly two centuries of precise tax and trade data. This amount is almost 17 times the current combined GDP of Britain and India.

Later, India’s foreign affairs minister S.jaishankar took up the issue. Additionally, in 2015, former United Nations Under-Secretary-General Shashi Tharoor requested reparations from the UK government for this heist during an Oxford University lecture. I’ll include a link to it at the bottom.

Subsequently, Shashi Tharoor wrote a book titled Inglorious Empire in which he detailed every instance of British plunder. He referred to former British Prime Minister Winston Churchill as one of the “worst genocidal dictators.” Additionally, he claimed Churchill was to blame for the deaths of thousands of Indian troops during WWII.

In 2015, Indian Prime Minister Modi lauded Shashi Tharoor and endorsed the reparations demand. Moving forward in that context, let us examine how the British actually looted India.

Exploitative Trade System

In the 1600s, the East India Company showed up in India and fought the Dutch and Portuguese; they landed in Surat in 1608. They subsequently began the construction of their factories. They initially established factories in major Indian coastal cities such as Surat, Bombay, Madras, Masulipatnam, and Bengal. These cities served as a trading center for the East India Company.

At first, they used silver and gold to purchase textiles and rice from Indian producers and then sold them on the European market at a higher price. Initially, this trade benefited both the indigenous Indian market and the British.

However, the East India Company (EIC) intended to do something else. After the victory in the battle of Buxar in 1764, the EIC acquired revenue collection rights in Bengal first, thereafter got it extended across the sub-continent systematically. Later, they used 1/3rd portion of the tax revenue to purchase goods, instead of investing it in India-This was the first loot.

Once they grasped revenue collection, they used revenue generated by Indian companies exclusively to purchase Indian goods, resulting in widespread exploitation of Indians. This was a scam; previously, they would purchase Indian goods in exchange for gold and silver; now, they are taking it for free and earning a 100% profit.

For a long time, Indian producers were unaware of this because the tax collection and goods production departments were administered by two distinct authorities.

The British used the massive profit gained by EIC to buy strategic raw materials such as Iron and timber to fuel their own industrial revolution back in Britain.

Thus, we may state categorically that Britain’s industrial revolution was predicated on the theft of the East India Company from India.

Apart from that, when the British monarchy officially acquired control of India in 1858, they abolished the EIC monopoly and permitted Indian producers to directly export their products. However, this was also a British ruse to confuse the Indians.

After EIC’s monopoly ended, Indian producers began exporting their products as well. However, rather than gold and silver, the British dealer used to pay Indian exporters in “Special Council Bills.” SCBs functioned similarly to checks, allowing Indian manufacturers to withdraw funds from colonial offices. However, British officers played a trick here by paying the money using funds collected from India’s tax revenue.

The objective of this policy was to prevent any outward flow of gold or other financial resources from Britain to India.

According to UN data, India’s merchandise exports were the second highest in the world between 1900 to 1928, trailing only the United States. However, rather than becoming a trade surplus nation, India remained a trade deficit nation as a result of Britain’s dishonest and unethical policies.

Using this on paper deficit British economists claim that colonizing India was detrimental for Britain.

Biased Trade Policy

Apart from organized looting, the British’s discriminatory trade policies contributed to the De-industrialization of the Indian economy. India’s textile industry suffered significantly as a result of this policy.

The Indian textile industry thrived till the late 17th century. Demand for Indian handwoven textiles was quite strong around the world, including the United Kingdom. However, as a result of the industrial revolution in the United Kingdom, they can now make cheaper machine-made clothing.

To promote British clothing, Britain put high tariffs on imported Indian textiles, effectively rendering them uncompetitive in the UK in comparison to British clothing.

As a result of the Indian textile industry’s inability to compete, low-cost machine-made clothes arrived in the country, reducing demand for domestic hand loom clothes and eventually resulted in the downfall of the Indian textile industry.

The unfair trade practice of Britain destroyed the Indian traditional textile sector and caused the ‘De-industrialization’ of the Indian economy. De-industrialization not only destroyed the Indian economy but also placed a heavy load on the previously saturated agricultural industry.

Indian Resources to Finance War

Britain used Indian revenues to accomplish colonial ambitions rather than using them for Indian development. For instance, in the 1840s, Britain utilized Indian money to finance China’s invasion campaign, and also to suppress the Indian rebellion in 1857.

According to Ustasav Patnaik, ‘almost every battle that Britain waged after colonizing India, was financed by Indian taxpayers.’ Additionally, they exploited the revenue gained from India to expand their capitalist agenda in Europe, Canada, and Australia.

Thus, we can state unequivocally that the industrialization of the western world was dependent on money looted from India.

The economic drain of $45 trillion from India to Britain is merely an ‘Indicative amount,’ since it does not account for the British’s rampant exploitation of India’s human resources through the use of ‘Indentured laborers.’

The British also sent Indian troops to fight on the Allied side during WWI and WWII. Indian soldiers had no desire to fight in this war but were compelled to do so by the British monarch.

According to Sashi Tharoor, approximately one-sixth of British soldiers were of Indian origin, and nearly 54,000 Indian soldiers were killed in action during WWI alone. The total cost of India’s coerced support for Britain during World War II has been estimated at £100 million.

The British Justification

Despite these facts, an influential segment of the British population continues to assert that Britain colonized India to develop it. So let’s see what Britishers have to say in support of these claims.

Trade Deficit
The British economist asserts British losses based on a fictitious ‘paper-trade deficit.’ As I mentioned previously, this on-paper deficit benefited Britain on the ground because they received free Indian goods and made a 100% profit.

De-Industrialization of Indian Economy
British historians also assert that the Indian economy was already deindustrializing before the arrival of the British, owing to the decline of the Mughal empire.

The theory of ‘pre-industrialization of the Indian economy’ is partially correct. However, it is also true that the British hastened the process further through their exploitative and unethical trade policies.

Additionally, the Britishers can’t explain how India became a trade ‘deficit’ country despite having the world’s second-largest merchandise export.

Introduction of Modern Education

The third argument advanced by British apologists is that the British were instrumental in India’s development by introducing modern education, railways, the postal system, and a modern bureaucracy. This was really beneficial to India.

However, because India was the richest colony, the British needed to improve communication and establish a proper bureaucratic system to fully exploit its potential. Given that these were introduced primarily to advance ‘British Interests’ and not India’s development agenda, the British cannot claim a moral victory.

The British introduced modern education in response to the need for people with western education in the British bureaucracy. The primary objective of education was to produce lower-level clerks.

What Lies Ahead?

The British monarchy asserted that they colonized India to develop it. However, during the entire 200-year period of British colonialism, the Indian economy continued to contract. In the second half of the nineteenth century, India’s national income nearly halved. Between 1870 and 1920, the average life expectancy decreased by a fifth.

British policy also resulted in multiple massive famine in India, the most severe of which was the Bengal famine of 1943, which killed nearly 3 million people.

If India, like Japan, had been able to invest its own tax revenues and foreign exchange earnings in development, who knows how history might have turned out differently. India could have developed into a global power, averting centuries of pain and suffering.

What does this imply for the United Kingdom today? Apologies? Absolutely. Reparations? Perhaps — but the reality is that Britain is not in the position to pay $45 trillion in reparations.

Britain didn’t develop India. On the contrary, as Patnaik’s work demonstrates, India contributed to the development of Britain.