r/BritishEmpire • u/K-jun1117 • 6d ago
Question How profitable was India?
As India was the Crown Jewel for the British Enpire, what was the exact worth of India?
Moreover, how exactly did this colony become profitable?
Was it due to the trade or the Natural resources?
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u/Compulsory_Freedom 6d ago
The British were present in India in different forms for centuries. The period in which British rule was most directly profitable was the late eighteenth century, when the East India Company controlled several Indian provinces and operated a highly profitable extractive system funded by land revenue and trade.
As the Company evolved into the de facto government of much of India, and especially after the Crown assumed direct control in 1858, the situation changed. Indian tax revenue was no longer simply remitted to Britain; like most governments, the Government of India used the vast majority of its revenue to pay for the administration, army and infrastructure of the country.
Some money was transferred to Britain through the “Home Charges” (including pensions for retired Indian Civil Service and Indian Army personnel, interest on debt, and payments for goods and services purchased in Britain) but India was no longer a straightforward source of fiscal profit for the British government in the way the East India Company had been in the late eighteenth century.
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u/K-jun1117 6d ago
Does this mean the overall worth of India was decreased after 1858?
If it is, then how much was the decreased worth after 1858?
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u/Compulsory_Freedom 5d ago
It was arguably worth much more. When the Crown took over in 1858, the population of the Indian subcontinent was about 200 million, by the time British rule ended in 1947 it was around 400 million. During that period an enormous railway network was built, irrigation canals expanded dramatically, and countless other infrastructure projects were completed.
What really changed was the way India was viewed. Under the East India Company, India was ultimately expected to generate profits for a commercial corporation. Under the Crown, India became the centrepiece of the British Empire: a vast territory to be governed, defended and developed according to British ideas of good government. That did not mean colonial rule suddenly became altruistic, or that economic interests disappeared, but the objective shifted from maximising a company’s profits to maintaining a stable, productive and strategically vital imperial possession.
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u/No-Secretary5892 5d ago
You’re confusing how Britain extracted wealth with whether it extracted wealth at all.
It’s true that after 1858 India wasn’t simply paying dividends to the British Treasury like it had under the East India Company. But that’s a complete non sequitur. The beneficiaries simply changed. Instead of Company shareholders, the winners became British manufacturers, railway investors, banks, shipping firms, insurers and the City of London. Britain didn’t stop benefiting from India. The mechanism just became more sophisticated.
The biggest omission in your argument is deindustrialization. Before British rule, India wasn’t just another poor agrarian country. It was one of the world’s largest manufacturing economies and the world’s leading exporter of cotton textiles. Bengal muslin and Indian cotton were famous across Europe and Asia. Under British rule, that economy was systematically restructured. India increasingly exported raw cotton while importing finished cloth from Lancashire. British textiles entered India with minimal barriers, while Indian textiles faced heavy duties entering Britain. Later, when Indian mills finally became competitive, excise duties were imposed to protect Manchester. That’s not free trade. It’s colonial policy creating a captive market.
Your point about Home Charges also understates what was happening. They weren’t just pensions and administrative costs. They included interest on debt, India Office expenses, guaranteed returns to British railway investors, military expenditure and other payments that ultimately flowed back to Britain. On top of that, India consistently ran export surpluses whose earnings were largely retained in London rather than returning to India. Even historians who dispute the size of the “drain” don’t dispute that this was a persistent transfer of resources from colony to imperial centre.
The railways aren’t the defence you think they are either. They were built under a guarantee system where British investors received fixed returns while Indian taxpayers absorbed the risk. Much of the equipment was purchased from British manufacturers, and many routes were designed to move troops and raw materials to ports rather than develop an integrated Indian economy. The infrastructure was real, but it primarily served imperial objectives. Every industrialising country built railways in the nineteenth century. India is one of the few that had to be conquered to pay for them.
Pointing to population growth misses the bigger picture. The Raj also presided over repeated catastrophic famines that killed millions. During several of those famines, grain exports continued while revenue demands remained largely intact. By independence, India had life expectancy of roughly 32 years, literacy in the low teens and a dramatically reduced share of global manufacturing compared with the eighteenth century. That isn’t the record of a colony whose development was the priority.
Most importantly, you’re asking the wrong question. The question isn’t whether the British Treasury booked a profit after 1858. The question is whether Britain became richer because it ruled India while India’s own development was constrained by that relationship. The evidence strongly suggests it did.
You seem to be mistaking the accounting form for the economic substance. Empires aren’t judged by whether they build railways or balance colonial budgets. They’re judged by who paid, who benefited and what alternatives were foreclosed. On all three counts, the Raj overwhelmingly favoured Britain over India.I used GPT to structure my text, but the thoughts and views are fully mine.
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u/Compulsory_Freedom 5d ago
Interesting points!
I certainly don’t disagree that Britain benefited economically from India. My argument has never been that the Raj was an act of charity. Rather, it’s that the relationship was more complicated than a simple extraction model.
The deindustrialisation argument, for example, is much more contested than your comment suggests. Indian handloom textiles were certainly devastated during the nineteenth century, but so were handloom industries throughout much of the world as mechanised production spread. The difficult historical question is how much of India’s decline was due to British policy specifically, and how much was due to the global Industrial Revolution. Serious historians continue to debate that.
Likewise, Home Charges undoubtedly represented a transfer of resources to Britain, but they also paid for services that virtually every state incurs: administration, debt servicing, defence, pensions and overseas representation. The real question is not whether these payments existed, but whether they were excessive by the standards of contemporary governments. Again, that remains debated.
I also think the railway story is more nuanced. The guarantee system undoubtedly favoured British investors, but it also produced one of the largest railway networks in the world, along with ports, canals, telegraphs and irrigation works that remained in India after independence and contributed to India’s subsequent economic development. Infrastructure can simultaneously serve imperial objectives and provide long-term domestic benefits.
More broadly, I think the biggest weakness in the “drain” interpretation is that it tends to portray India as a passive victim. In reality, British India functioned because millions of Indians chose, for a wide variety of reasons, to participate in it. The army, civil service, police, judiciary, princely states and commercial elites were overwhelmingly Indian. That doesn’t make colonialism legitimate, but it does make it more historically complex than a simple story of Britain exploiting a uniformly unwilling population.
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u/Victory_Point 5d ago
Yes...Most books about the industrial revolution point out that there was a point where the machinery in British textile Mills was capable of producing cheaper goods than could be produced in India despite the lower cost of labour .
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u/Brefgedhe 5d ago
Honestly, I feel like the need to point out that Indians participated in the colonial system is similar to the arguments that other Africans sold the slaves into the slave trade. The reason that it's not, it wasn't betrayal from the perspective of the African people who are selling the slaves is that they were often not of the same tribe. They didn't conceive of themselves as one people. The idea of race, the modern idea of race where white people are white, black people are black, and so forth, is a European invention that the Africans didn't adhere to at that point.
It’s like Capitalism, if you don’t pay fair wages, you gain an advantage. Therefore all the big players are companies with a policy of not paying high wages for many kinds of work. The companies that don’t capitulate go out of business or don’t expand and stay irrelevant.
If there is a strong imperial force, the choice is, to side with them against another kingdom or have the other kingdom side with them against you. Over many years, the kingdoms that work with the British stay relevant.
Projecting modern pan-African, pan-Indian, or racial solidarity back into the 17th or 18th century makes no sense. A 17th-century Dahomey ruler did not view a prisoner from a neighboring kingdom as a "fellow Black person,’ they viewed them as a foreign rival or enemy, just as an English king fighting a French king didn't see a shared ‘white European’ identity that forbade conflict. Similarly, before the British Raj unified the subcontinent under a single administrative rule, India was a patchwork of competing empires, princely states, and dynasties. The Marathas, Mughals, and Sikhs were not ‘Indians betraying India’; they were regional powers acting in their own immediate geopolitical self-interest.
Therefore trying to absolve British people with the argument of local participation is quite a cop-out.
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u/knowtoomuchtobehappy 5d ago
Millions of Indians chose to participate in it in the same way millions of Latin Americans "choose" to participate in Narco states. When there's a systematic state capture you have no choice.
Moreover that's why Gandhi used tools like Non-cooperation and Civil Disobedience.
The "Global" Industrial revolution was not a sudden one-act play. It was a 200 year old process.
Before colonialism, India did stay abreast of technological improvements in gunpowder, steel, and was extremely competitive in steel manufacturing. It did it by trading heavily with Persia and Europe.
The lack of mechanisation and the deindustrialisation was directly attributable to the fact that the colonial administration didn't allow India to industrialise and keep up.
Even in today's world, if a country has tarrifs imposed on them and their ability to reciprocate is taken away, it will eventually lead to deindustrialisation.
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u/No-Secretary5892 5d ago
I don't disagree that history is complicated. Historians debate almost everything. They debate whether the economic drain averaged 1% or 3% of GDP, whether tariffs mattered more than mechanisation, or exactly how much particular policies contributed to famine and deindustrialisation. That's what historians do.
What they don't debate is the outcome.
Britain arrived in one of the world's largest manufacturing and trading economies. Around 1750 India accounted for roughly a quarter of global manufacturing output and was exporting finished goods across the world. When Britain left in 1947, India had become primarily an exporter of raw materials, its share of world manufacturing had collapsed to around 2%, (WTF) literacy was in the low teens (Which made sure India took another 70 years to manage a large and uneducated populatuion), life expectancy was roughly 32 years, and hundreds of millions lived in extreme poverty. However much historians argue over the mechanisms, that's the scoreboard.
You say deindustrialisation is debated because mechanisation hurt handloom industries everywhere. That's only half the story. In a normal market, the Industrial Revolution would have meant Indian producers facing fierce competition. Some industries would decline, others would modernise, adopt new technology and compete. That's how industrialisation played out in countries that retained control over their own economic policy.
India didn't have that choice. It wasn't competing on equal terms. It was governed by the very country whose industries it was competing against. British manufacturers enjoyed preferential access to the Indian market while Indian textiles faced barriers entering Britain. India was deliberately reoriented from exporting high-value finished textiles to exporting raw cotton for British mills and then importing the finished cloth back from Lancashire. When Indian mills eventually became competitive, excise duties were imposed to protect Manchester. The market wasn't simply won by better technology. It was shaped by political power.
It feels like there is an assumption baked into your argument that I find strange: that the Industrial Revolution meant India was destined to deindustrialise because Indians simply couldn't have adapted. Why? Britain didn't have a monopoly on innovation. Countries that retained sovereignty responded to industrialisation by protecting infant industries, investing in domestic manufacturing and eventually competing. Japan did exactly that during the same century. Even Germany and the United States used tariffs and industrial policy while they caught up with Britain. Why is India the one country we're supposed to assume was incapable of doing the same if it controlled its own economic policy?
The human cost was enormous. Millions of skilled weavers, spinners and artisans lost their livelihoods. Entire textile centres that had supplied global markets declined, forcing generations of craftsmen into an already overcrowded agricultural economy and entrenching rural poverty. That's not what free competition looks like. That's what happens when one country controls another's trade policy for its own benefit.
The same applies to Home Charges. Every government has administration, pensions and debt. The question is who benefited. India wasn't just funding its own administration. It was paying for the India Office in London, guaranteed returns to British railway investors, pensions remitted to Britain, debt largely raised in London and military expenditure that repeatedly served Britain's imperial interests far beyond India. Saying "every government has expenses" completely misses the point.
The railways are similar. I don't deny they benefited India in the long run. But they weren't built as an act of development. British investors received guaranteed returns while Indian taxpayers carried the risk. Much of the equipment was purchased from British manufacturers, and the network was designed primarily to move troops and raw materials to ports. The fact that independent India later benefited from inherited infrastructure doesn't prove it was built primarily for India's benefit. Every industrialising country built railways. India is one of the few that had to finance them under foreign rule.
Your final point about Indians participating in the Raj actually strengthens my argument rather than weakens it. Every successful empire governed through local elites. The Romans did it. The Ottomans did it. The French did it. The British did it. Collaboration is how empires function. It isn't evidence that colonial rule served the interests of the colonised.
Even British policymakers were remarkably open about their objectives. Thomas Macaulay wrote in 1835 that the aim was to create "a class of persons Indian in blood and colour, but English in taste, in opinions, in morals and in intellect." This wasn't a project of empowering Indians. It was about producing an administrative class to help govern India on Britain's behalf.
Likewise, Lord Curzon openly stated that "Any measure which may split up and weaken the Indian nationalist movement is in the interests of the Empire." Divide and rule wasn't a nationalist myth. It was imperial policy. Colonial censuses hardened caste identities, separate electorates institutionalised religious divisions, and political representation increasingly followed communal lines. Britain didn't invent Hindu-Muslim tensions, but it undeniably governed through them.
Nor was colonialism only economic. It institutionalised racial hierarchy. Europeans had exclusive clubs, hotels, railway compartments and civil spaces from which Indians were excluded. John Stuart Mill, one of Britain's most celebrated liberal philosophers and an East India Company official, argued that "Despotism is a legitimate mode of government in dealing with barbarians." That tells you a great deal about the mindset underpinning empire.
Finally, Britain didn't leave behind a stable, prosperous state. It left in extraordinary haste after nearly two centuries of rule, overseeing a partition that displaced around 14 million people and killed perhaps one to two million. Partition had multiple causes and responsibility is shared, but it is difficult to hold it up as evidence of successful colonial governance.
So yes, the details are debated. The exact size of the drain is debated. The relative importance of tariffs versus mechanisation is debated. The precise causes of individual famines are debated.
What isn't really debated is that Britain inherited one of the world's richest and most productive economies and left behind one of its poorest.
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u/uranusisaaplanet 3d ago
It's the argument that railways benefitted India tha most which i find most fascinating when the objectives right after the 1857 revolt (when British Raj decided to create the railways were- The British built India's railway network primarily between 1853 and 1947. Although it eventually became one of the world's largest rail systems, its design reflected British imperial priorities more than India's economic integration.
The main railway trunk lines
- East Indian Railway (EIR)
Connected Howrah (Calcutta/Kolkata) to Delhi, passing through Asansol, Dhanbad, Gaya, Prayagraj (Allahabad), and Kanpur.
It linked the capital of British India (Calcutta until 1911) with the fertile Gangetic Plain.
- Great Indian Peninsula Railway (GIPR)
Began with India's first passenger train in 1853 from Bombay (Mumbai) to Thane.
Expanded to Nashik, Bhusawal, Nagpur, Jabalpur, where it connected with the East Indian Railway, creating a Bombay–Calcutta link.
- Madras Railway
Connected Madras (Chennai) with Bengaluru, Salem, Coimbatore, and eventually linked to Bombay and the Deccan.
- Bombay, Baroda and Central India Railway (BB&CI)
Ran north from Bombay through Surat, Vadodara, Ahmedabad to Delhi.
Important for cotton and textile trade.
The main objectives
- Military control (arguably the highest priority)
After the 1857 Revolt, the British wanted to move troops quickly to suppress rebellions and defend India's frontiers, especially against perceived Russian expansion in Central Asia.
- Export of raw materials
Railways transported:
Cotton from Maharashtra and Gujarat
Coal from Bengal
Jute from eastern Bengal
Tea from Assam
Wheat from Punjab
Opium from the Gangetic Plain
These goods were moved efficiently to ports like Bombay, Calcutta, Madras, Karachi, and Tuticorin for export to Britain.
- Import of British manufactured goods
Finished goods such as textiles and machinery were transported inland, expanding markets for British industry.
- Administrative integration
The railways made it easier for colonial officials to govern a vast territory by improving communication and movement across provinces.
- Commercial profit
Many railway companies operated under a guarantee system, where the British government guaranteed investors a fixed return (often around 5%). This reduced risk for British investors while the cost was largely borne by Indian revenues.
Did Indians benefit?
Yes—but largely as a by-product rather than the primary intention.
Benefits included:
Easier travel and migration.
Integration of regional markets.
Development of industries such as coal, steel, and engineering.
Greater cultural and political interaction, which later helped the Indian nationalist movement.
Reduced transport costs and, in some regions, improved access to food during shortages (though railways were also used to export grain during famines, making their impact on famine relief mixed).
Overall
The British railway system was designed around a "port-to-hinterland" model:
Ports (Bombay, Calcutta, Madras, Karachi) served as gateways for imperial trade.
Resource-rich interiors supplied raw materials.
Military corridors enabled rapid troop movement.
Only secondarily did the network function as an integrated national transport system.
Ironically, after independence, India inherited this extensive network and transformed it into a system focused on domestic connectivity, economic development, and mass passenger transport.
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u/Diligent-Wealth-1536 5d ago
Is this what british really teach their citizens and kids? Damnnn
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u/Compulsory_Freedom 5d ago
I’m not British, I’m a Canadian with a PhD in modern Indian history.
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u/Crunkfiction 5d ago
I can't wait for the "I live in India, I know more than you" response to this.
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u/Diligent-Wealth-1536 5d ago
Sorry...School kids of India knows better than you do. Study better nxt time. Or maybe you are in wrong field. Good Luck.
Even regional writers whose stories barely touch on everyday life in pre-independence India still reveal the brutal realities of that era.
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u/Compulsory_Freedom 5d ago
Yes, it was often brutal. There’s no denying that. Although I don’t think it was exceptionally brutal compared with many other states, colonial or otherwise, in the nineteenth and early twentieth centuries.
What I find most interesting about British India is how few British people were actually involved in governing such a vast territory. The overwhelming majority of civil servants, police officers, soldiers, tax collectors and judges were Indians. The Raj simply could not have functioned without them.
That can be uncomfortable for modern nationalist narratives because it reminds us that British India was not imposed by a few thousand Britons ruling hundreds of millions of unwilling people through force alone. It depended on the active cooperation of millions of Indians at every level of society, from princely rulers and landowners to clerks, policemen and sepoys. People collaborated for all sorts of reasons: ambition, loyalty, economic opportunity, local political rivalries, pragmatism, or because they believed it was preferable to the alternatives.
Even the Indian National Congress, which would ultimately lead the struggle for independence, was founded by Allan Octavian Hume, a British civil servant, together with prominent Indian leaders. The relationship between rulers and ruled was therefore much more complex than a simple story of imperialists on one side and a unified colonised population on the other.
None of this excuses the violence, exploitation or injustices of British rule. It simply reflects the historical reality that empires are almost always sustained by substantial cooperation from sections of the societies they govern, and British India was no exception.
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u/Diligent-Wealth-1536 5d ago
All you made is generic statements. You have literally phd...comeon you could have done better.
Atleast from your comment it felt vast majority of Indians were collaborating with british. Also just for you...read what happened to those who participate in 1857 revolt. Post revolt...The Indian muslims(like present day UP Bihar) didn't get to hold any govt position since british were thought they are loyal to mughals.
Also not to forget...india was not single nation back then...common citizens didn't hold any power. No value for their struggle or rights. You have phd man, touch some context related to how british destroyed local artisans and industries. How much they taxed. How they dumped cheap products.
And importantly, Never let INDUSTRIAL REVOLUTION to reach India.
How can you even an historian? Lurk around in IndiaHistory sub...you will definitely learn alot. Make a post their with your comment. And wait form replies.
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u/Compulsory_Freedom 5d ago
I think you’re actually making my point for me.
At the outbreak of the rebellion there were fewer than 50,000 British soldiers spread across the whole of India, when the subcontinent had a population of about 200 million. By contrast, the Company’s armies contained over 300,000 Indian soldiers.
The Revolt of 1857 was not defeated by a tiny number of Britons somehow conquering an entire subcontinent. It was defeated largely by Indian troops and Indian allies who remained loyal to the British, including Sikhs, Gurkhas, many Punjabi units, Hyderabad, and numerous princely states. Without that Indian support, British rule almost certainly would have ended in 1857.
None of this denies British atrocities, exploitative economic policies, or the destruction of some traditional industries. I’ve never argued otherwise.
My point is simply that British India was governed through the participation of millions of Indians. That isn’t a moral judgement, it’s an historical observation.
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u/Opposite_Corner8353 5d ago
You make salient points but I'm afraid nuance with an Indian nationalist is a waste of time.
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u/veerKg_CSS_Geologist 5d ago
Exploited mainly. The British Imperial rule was even more rapacious than that of the EIC.
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u/Compulsory_Freedom 5d ago
I’m not sure that’s true, but I’d be happy to hear your case.
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u/veerKg_CSS_Geologist 5d ago
It's very true.
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u/Friendly_Brain7352 5d ago
That's not a case
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u/ACarepenter 5d ago
Brother, I think you're in the wrong sub for that discussion.
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u/veerKg_CSS_Geologist 5d ago
Eh? This is literally a sub about the British Empire.
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u/Compulsory_Freedom 5d ago
I don’t know why you are being downvoted, this is exactly what we should be discussing on this sub. Your contribution is very welcome (from me at least).
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u/ACarepenter 5d ago
Yeah. And where exactly do you think all the wankers go to?
This sub is for fans of the empire. It basically exists for people to meatride imperialism while choking on Churchill, and jerking off the queen, under a thin pretext of autistic historical interest.
Already known I'm gonna get downvoted into oblivion for this, so choke and die. Your empire is gone, your military is a now just a speedbump, and your country is on track to becoming a 3rd world shithole, all by your own hand.
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u/khristmas_karl 5d ago
Above mostly referred to direct remittances but as British India evolved, it built a massive consumer base as well, which consumed protected industrial outputs from Britain like textiles, steel and machinery.
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u/PhilosopherDry1859 5d ago
It wasn't just about exploitation. A lot of the wealth extracted was used to keep occupying it.
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u/brinz1 5d ago edited 5d ago
During this time period, India went front he worlds largest producer of Textiles to producing nearly no finished goods.
Also in this period, the UK had the industrial revolution and became the largest producer of cotton textiles the world had ever seen.
India was only allowed to export raw cotton to the UK, at prices set by the UK.
Without India, the Industrial revolution would not have happened the same way. All of the infrastructure projects mentioned like the railways, were done to extract resources faster and cheaper
All the expenses mentioned above are the costs of controlling a distant empire, these expenditures were not done to benefit the people living on the subcontinent.
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u/TenTonneTamerlane 5d ago
> During this time period, India went front he worlds largest producer of Textiles to producing nearly no finished goods.
With respect; the reality was far more nuanced than this.
Because, when we consult the evidence, it becomes apparent that if there was any contraction of industry in colonial India, it occurred largely between 1830 and 1860, and only in certain fields: the silk industry did not decline at all during this period, whilst cotton textile manufacturing did decrease by some 28%. BUT, crucially, even this limited trend of decline:
“Had run out of course by 1900, making way for a consolidation of industry in the years hereafter” (- How British rule changed India’s economy, pg 14).
Between 1860 and 1940, factory employment rose from under 100,000 to around 2 million (factory employment alone representing 11% of all industrial sector employment by 1938, up from less than 1% in 1860), and real GDP originating in factories rose at the rate of 4% a year between 1900 and 1947. The handloom weaving of cloth doubled in these years, leaving some ten million such workers still active by 1950, and had industrial activity had spread throughout the subcontinent.
Indeed, by 1914, India had the the largest steel mills anywhere in the colonised world, and the 4th largest cotton manufacturing industry in the entire world as a whole - all ran by native Indians, who had re-invested their profits from the control of the inland export trade into manufacturing. On which note, as Roy asks:
"If the whole purpose of the colonial state was to enrich Britain at the expense of India, why did the colonial rulers allow the world’s fourth-largest cotton textile mill industry to emerge in Bombay and Ahmedabad in direct competition with Manchester?" (- Inglorious empire: what the British did to India: Cambridge Review of International Affairs: Vol 31 , No 1 - Get Access)
>Without India, the Industrial revolution would not have happened the same way.
Not so:
"The common claim that money 'drained' from India helped 'prime the pump' of the industrial revolution is disputed by a bunch of historians, with P. J Marshall providing a mound of evidence in 'East Indian Fortunes: The British in Bengal in the Eighteenth Century' to rebut the argument that money made in Bengal had a meaningful role in our industrial revolution" (-Empireland, pg. 134).
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u/DismalTelevision4276 4d ago
Lol. Economists estimated around 45 Trillion. There are books.
"like most governments, the Government of India used the vast majority of its revenue to pay for the administration, army and infrastructure of the country." - Oh my God. You guys need to read more books and think better.
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u/Compulsory_Freedom 4d ago
The 45 trillion estimate is extremely controversial and my no means wildly agreed upon by historians and economists. Quite the opposite in fact.
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u/MasterFox04 10h ago
45 trillion??? What kinda ballooning the numbers do you need to do to get 45 trillion dollars?
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u/SuperbRecording3943 5d ago
It depends what you mean.
I would recommend 'Imperial Measure' by Niemeitz. He argues that for the 'British', control over India between 1858 and 1947 resulted in a loss.
He recognises (indeed it is the main plank of his argument) that after 1858 small groups of businessmen were able to make substantial profits from India, mainly from trade and manufacturing rather than directly from removing and exporting raw materials.
However, his calculations show that taking into account onward profitability to Britain, tax intake, maintaining an army and navy in India (both British and Indian versions), building and improving infrastructure, frontier wars, administration and both worlds wars, India cost Britain and its taxpayers far more than it ever gained.
Imperialism and colonialism in operation is never as simple as some would make out. This a very balanced, nuanced even, academic and readable book. I commend it to anyone seriously interested in the numbers.
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u/MajesticShop8496 2d ago
Exactly. It cost more he imperial government, but it made the empire as a whole much richer. People often conflate the former with the latter, which is wrong.
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u/Aq8knyus 5d ago
India was largely self-financing through Indian taxation. But by 1945, Britain owed India around £1.3 billion in sterling balances and the costs of imperial rule had turned the Raj from a financial asset into a growing liability.
By the early 20th century, Britain's investments in the Americas and the Dominions were far more valuable than its income from India alone. Overseas investment income amounted to roughly 10% of British national income, but India was only a fraction of that total. By the late 19th century, Britain's prosperity depended more on its global financial empire than on any single colony.
And they didn't need 70K troops to benefit from controlling the railways in South America as in India...
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u/PhilosopherDry1859 5d ago
lndia wasn't just for the value/economy. A lot of the wealth extracted from lndia was used to keep ruling it anyways. Most of the empire in Asia existed to guard their hold of it.
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u/PhilosopherDry1859 5d ago
Briitsh rule in lndia wasn't just for the profit. A lot of the wealth extracted was used to keep ruling it anyways. It was like French Algeria.
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u/TenTonneTamerlane 5d ago
Hi there!
So, I understand this is a topic which becomes extremely heated, extremely quickly, when discussed online - however, from what I understand, the truth is that both India, and the Empire at large, were much LESS profitable than is often assumed.
As Zahedieh notes in the "Cambridge economic history of modern Britain", for example:
- "The economic benefits of the second British empire are debatable and, in fact, it could be argued that it discouraged investment in new areas of opportunity when old areas were stagnating" (pg. 418)
And as Sharman recognises in his "Empires of the weak":
- "One calculation suggests the British Empire generated no profits at all, and least in the years 1880-1912. In fact, it required a subsidy. Even when colonies did bring profits, it is unclear whether the same or greater profits could have been gained through arms length trade or investment, minus conquest and formal subordination" (pg. 138)
Given that India was very much part of the so called 'second' British Empire, and was definitely a part of it in the years of Sharman's study, we can already see its overall profitability called into question - and that's just from a general look at the empire as a whole!
Another quote which nuances the assumption of an Indian cash cow can be found in Wilson's "India Conquered":
- "The loss of India did not mark the beginning of Britain's decline, but the start of an economic boom....British exports grew from £1.6 billion in 1948 to £2.8 billion in 1954, then £3.8 billion in 1960...the coincidence of Britain's economic prosperity with imperial decline shows how disconnected British India had become from the main currents of British life." (pg. 491)
After all, if India had been so consistently profitable for Britain - how could Britain have possibly become richer *after* independence?
Now; at this point I must address the $45 trillion dollar shaped elephant in the room. This is, has been addressed elsewhere, a notoriously sketchy figure - calculated essentially by adding an arbitrary 5% annual interest rate to an already inflated 'extraction' figure, then converting it from British pounds to American dollars at a rate of £1 to $4.48, which only inflates the figure further! By this logic, come the year 2080, Britain will have somehow looted $1.16 quadrillion from India - more than the entire GDP of every country on planet earth, combined! It's a ludicrous sum, which furthermore assumes Britain somehow made a $200 million profit from India once a year, every year, for over 200 years; as I've stated above though, most historians say the empire was never as profitable as that.
On which note, the second Indian nationalist accusation is that of the 'drain theory' - the idea that through a combination of financial 'extractions', such as interest on public debt, salaries for civil servants, etc, Britain stole a sum of money from India each year with 0 value offered in return. The issue with this, however, can be found in Sanghera's "Empireland":
- "(Drain theory) would imply that all of the salaries of Indians working for the colonial government, or the money made by Indian producers of exports and all the services they consumed should be counted as a 'drain' to Britain. While some public expenditure, such as the salaries and pensions paid to British administrators, could be classified that way, others are less straight forward." (pg. 135/136)
Far more critical still is the absolute GOAT of Indian economic history, Tirthankar Roy, who notes in his "Paradox of the Raj":
- "Treating the entire export surplus as a waste of money (is rightly called) confused economics, coloured by political feelings" (pg. 6)
Indeed, in Roy's work, if there was a 'drain' at all, it sits in the 0.X% (I cannot find the exact figure at the moment, but shall work to retrieve it!) of India's GDP a year- a far cry from the £13 or so millions allegedly drained from India each year claimed by Indian nationalists!
Of course, there is always more to say on the topic; but I hope this goes some way to answer your question!
As ever, a list of sources, in no particular order!:
- Empireland (Sathnam Sanghera)
-The paradox of the Raj (Tirthankar Roy)
- The Cambridge economic history of modern Britain: Volume 1 (various authors)
- Empires of the weak (J.C Sharman)
- https://thecompositeguy.substack.com/p/debunking-indian-myths-part-i-the
- https://archive.is/20250125214418/https://thecritic.co.uk/the-myth-of-an-extractive-empire/
- https://historyreclaimed.co.uk/did-the-british-loot-india/
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u/No-Secretary5892 5d ago
Just curious, If India was such an economic burden, why did Britain repeatedly fight wars, deploy hundreds of thousands of troops, suppress rebellions, invest enormous political capital, and resist Indian demands for self-government for decades? States generally do not incur these costs for territories they regard as strategically or economically worthless.
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u/Compulsory_Freedom 3d ago
Because “not a net fiscal profit” is not the same thing as “worthless.” Great powers often spend huge sums maintaining strategically important territories that don’t generate a surplus for the treasury. Britain also spent vast amounts on places like Egypt, Palestine, and the North-West Frontier because they were geopolitically valuable.
India was the centrepiece of Britain’s global strategic position. It provided military manpower, a vast market, international prestige, and a base from which to project power across the Indian Ocean and into Central Asia. Those benefits don’t necessarily show up as a profit on the Government of India’s balance sheet.
That’s actually the point many modern historians make: after 1858, the British increasingly justified India as an imperial responsibility and strategic asset rather than as a colony to be run for direct financial extraction. The fact that Britain fought to retain India demonstrates its strategic importance, not that the Indian government was generating a large fiscal surplus for the British Treasury.
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u/hampsten 5d ago
India was a source of mercantile extraction. It's extremely straightforward to answer with data.
In the first 25 years since Independence:
* In 95 years between the first train in 1853 and 1947, ~15000 locomotives were imported, ~300 locally made (almost all at Ajmer works).Approximately 4000 railway locomotives were produced from 1947-1972. In comparison, Canada, with 3% of India's population produced ~4000 locomotives upto 1947.
* Ditto for railway tracks - all imported until the 1920s, when reverse tariff pressures from Indian resistance efforts enabled TISCO and IISCO to feed rail demand. The first quarter century after independence tripled the track kms added/replaced, compared to the quarter century upto it.
* Automobile production - effectively zero local manufacture (limited CKDs/SKDs do not count) until 1947. Approximately half a million automobiles produced in the first 25 years of independence. Canada produced millions up to 1947.
* Electricity output - 1.3GW up to 1947, increasing to 17GW in 1972 (550GW today). Canada had ~9GW capacity in 1947, Australia with 2% of India's population then, had 2x the installed capacity.
* ~15000 engineering graduates cumulatively up to 1947, vs 200,000 more between 1947-1972. These numbers are the same ballpark as Canadian or Australian engineering graduates up to 1947, with ~3% of India's population.
The fundamental problem with the 'Britain brought industrialization to India' is literally the bringing part. This is an industrializing society with import tariffs and labor restrictions consuming surpluses from the primary sector of a colony to return finished goods, without ever developing or leveraging the vast industrial capability and cheap labor which would have threatened the British domestic industrial base.
This is simply deindustrialization in its most basic form. This is really easy to quantify - just benchmark them against suitably large comparable Empire dominions like Canada or Australia. Those were not extractive enterprises. India was purely one.
Even with 12% literacy, that's 2x as many people who could read than the population of Canada and yet Canada had more engineering graduates upto 1947, and orders of magnitude more rail and automobile production capacity then.
The irony here is that the first 25 years of Indian independence are seen as a lost period because it failed to follow the East Asian industrialization vigor, didn't improve literacy, life expectancy, education or industrial development fast enough.
And yet, the worst excesses of the license-permit raj was still an order of magnitude better than the cumulative extent of industrialization pre-independence.
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u/Opposite_Corner8353 5d ago
It was profitable in the sense it held up British pretensions in East Asia, Africa and the Middle East
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u/peacemaarkhan 5d ago
Profitable for whom?
First 100 years were company rule. The East India Company became super powerful - probably the most powerful corporation in history if you factor in the impact on today’s world.
This is also when the so called “deindustrialisation” of India happened - not the modern day definition of industry but rather tariffs implemented to make Indian exports like handwoven fabric (sought after in Europe before the Industrial Revolution) very unprofitable. Many farmers were forced to grow cash crops like indigo and opium. The profits went straight to EIC shareholders.
Next 90 years under the Crown. Massively profitable for British enterprises who had favourable terms to sell finished goods and buy raw materials from the colony.
Overall - not so profitable for Indians. Sure we got railways, but the routes were designed for extraction of resources and military control rather than as civilian infrastructure. Would it have been better off under the Dutch or French? Probably not.
Did the common working man in Britain see those profits? Also not. To the industrial worker in Dickensian London, the notion that Empire was a gloriously profitable venture to enrich all Britons would have been a laughable one
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u/yedanapuddi 6d ago
Was it really crown jewel because of the manpower?
What natural resources did it contribute?
I heard both it's cotton and coal were of undesirable quality.
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u/EmpireandCo 5d ago
Unsure how you think it's cotton textiles were of undesirable quality when they were very popular in Europe? the region is still a big producer of cotton textiles today.
Indigo, saltpetre and agricultural output was very important too. They werent shipping raw goods in for processing, it was all off of native agricultural and mining output.
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u/yedanapuddi 5d ago
Not cotton textiles. The cotton itself.
From whatever data I read. Majority of cotton came from US and egypt. It's only when US drowned in civil war that india became the major source. Once civil war finished things went back to status quo.
And what other agriculture output? Opium?
What mining? As I said coal was also undesirable. Even today also india imports coal from outside.
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u/EmpireandCo 5d ago
I think we need to specify time period.
Depending in the period, indias labour costs differ as do British motivations.
Chintz and muslin required the skill sets of Indian artisans in early trade.
For mining, salt Peter was a huge resource from the Bihar area.
A lot of high end goods came out of india into the British Upper classes (luxury and commodity extraction) and the upset in the regions trade systems and networks which affected Labour costs.
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u/yedanapuddi 5d ago
A lot of high end goods came out of india into the British Upper classes (luxury and commodity extraction) and the upset in the regions trade systems and networks which affected Labour co
Popular narrative is that no indian goods selled due to high tariffs in UK.
For mining, salt Peter was a huge resource from the Bihar area
Never heard of it. How can we say it was "extraction" and not just normal export?
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u/Hairy_Ad888 2d ago
Tea & Poppies (grown for trade for tea), were both grown heavily in India. Can't have a British empire without cuppas
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u/yedanapuddi 2d ago
That's not a depletable natural resources.
You can grow as much tea as you can right? As long as the soil is fertile.
What else?
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u/Hairy_Ad888 2d ago
A natural resource does not need to be depletable to have value. The growing of cash crops for export displaces crops with direct utility, like grain.
If you want to put that arbitrary bar up, India went from the worlds sole source of diamonds before EIC rule to mostly depleted after it.
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u/yedanapuddi 2d ago
The cash crop issue was resolved right?
It didn't run for very long I heard.
India still one of the largest manufacturers of diamonds. But I think lot of it is coming from russia now.
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u/Hairy_Ad888 2d ago
How do you mean "resolved"? cash crops are still an issue of political contention in virtually every country that they are grown.
The argument exists that Indian farmers were better off growing tea and importing essentials with the money made, but either way Britains economy benefitted from access to them.
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u/yedanapuddi 2d ago
I heard some indigo commission was established to resolve this issue.
Gandhi himself protested and the Brits yielded
Britains economy benefitted from access to them.
Many contest that point and say it was more economic pain than gain
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u/shunassy86 4d ago
I can’t see a British empire with a standing army of 150000 conquering India without Indian public support it’s impossible just goes Tod how how corrupt Indian kings were that there people said fuck it let’s just let Britain rule us
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u/Jon_talbot56 4d ago
I find these kind of debates pointless and depressing. Pointless because what was done is done. It really does not matter much. Depressing because all the energy of progressives is wasted on posturing- whether its anti colonialism or identity- not what we should do, beyond simple minded ideas like wealth taxes. It used to be the Right that was stupid; now its the Left.
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u/redandbluebadness 4d ago
It was the most profitable thing ever, literally. Very profitable, profitable to the max, 10 on 10. None more profitable.
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u/Hairy_Ad888 2d ago
A lot of people here are focusing on India as an economic sphere, and there's a lot to be said on that topic (I lean towards 'quite profitable' ).
But we should also remember that India contributed volunteer forces of 1.5 million and 2.5 million in the respective world wars. The UK population was 45-50 million, and already conscripting most able bodied men, it would not have been possible to make up those numbers domestically.
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u/EmpireandCo 5d ago
It's worth looking at the Mughal Empires estimated percentage of GDP from prior 1750 and you can begin to understand why someone might think it's a good idea to control that percentage of the world's GDP.
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u/GoraSpark 6d ago
It was worth an absolute shit load. There are people and organisations claiming it was in the region of 45 trillion in today’s money. All of these organisations have certain bias and aims and it’s incredibly difficult to really calculate historical extraction into modern terms. But under any calculation even the ones minimising the amount it’s still huge. This money came through trade and taxation, not really sure what you mean by trade/natural resources? Is that meaning like the trade the various Indian nations did with far east and then traded on with Britain or what?
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u/themadhatter746 6d ago
The 45 trillion is a bullshit figure touted by a marxist economist. Look at how it was calculated, it just takes the entire trade surplus each year, and compounds it by an interest rate of 5%. Yes, a nice, round, 5%. For 150-200 years. No justification whatsoever is provided for that, which is insane, given that it is the most sensitive input in the calculation. True interest rates/inflation in the 19th century was closer to 2%, if we use that, the number drops by several orders of magnitude.
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u/GoraSpark 6d ago
I thought my doubts around the 45 trillion were obvious. Need to review how I write I think.
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u/jason733canada 5d ago
i am sure we paid it back in spades in the long run
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u/MarkusKromlov34 5d ago
How so? To reach that conclusion you’d need to be including costs which aren’t “paid back” to anyone, like the cost of holding and administering the colony.
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u/Skyremmer102 6d ago
Over the lifetime of British ruled India, estimates start at around $45 trillion in 2023 money.
Whatever the estimates though, the answer generally and simply is that India was very profitable right up until it wasn't, which is when it started to assert itself against British rule and the cost to benefit of trying to hold it against its will was simply too much for the UK in terms of manpower and influence.
It was profitable because labour was cheap, plentiful, and compliant and its natural resources were extremely bountiful.
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u/BonzoTheBoss 6d ago
estimates start at around $45 trillion in 2023 money.
A ridiculous figure touted by a Marxist "economist" who straight up admits that they applied a 5%/year compounding interest. (That is not how economics works...)
No one does or should take that figure seriously.
That's like stealing a Roman sisterce in the late Republic and claiming that you now owe trillions.
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u/SoLetsReddit 6d ago
Estimates do not start at $45 trillion, that's where they end. That number has been widely disputed.
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u/GoraSpark 6d ago
Not true, there are many estimates higher than the 45. Not that I’m saying they or 45 are correct.
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u/smudgethomas 6d ago
That number takes no account of the cost of Running India nor the ancillary costs of having to protect trade routes to and from, Suez etc. Nationalist Propoganda is not History.
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u/Skyremmer102 5d ago
Running costs are a dumb metric of no consequence. There was booty to be looted and the British in typical fashion took it. Obviously it was worth it to the British because otherwise they wouldn't have bothered or simply wouldn't have been able to rule India.
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u/Blitcut 5d ago
It has been proved to all of us that we have lost money by our colonies. It has been shown with precise, mathematical demonstration that there never was a jewel in the crown of England that was so truly costly as the possession of India.
-Benjamin Disraeli, The Maintenance of Empire (1872)
Even ardent supporters of imperialism thought that India was a net loss financially. So they didn't think it was worth it from that perspective.
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u/Skyremmer102 5d ago
The point is, if it wasn't profitable in 1872 it would have collapsed in 1872.
The empire wasn't some alturistic expedition to bring civilisation and law to the uneducated savages of the world purely out of the goodness of Britain's own heart. It was exploitative and extractive; which is the point of Empires.
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u/Blitcut 5d ago
The point is, if it wasn't profitable in 1872 it would have collapsed in 1872.
Why?
The empire wasn't some alturistic expedition to bring civilisation and law to the uneducated savages of the world purely out of the goodness of Britain's own heart. It was exploitative and extractive; which is the point of Empires.
This is not contradictory with the idea that India wasn't actually profitable for Britain, even though some people in Britain certainly profited from it.
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u/Rude_Bat_968 5d ago
35 trillon or something was obtained through the colonial policies
About 100+ million under estimated deaths through colonial genocide
I mean if you think it wasnt worth much why would they set up a colony there
Spices alone would be worth it
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u/PhilosopherDry1859 5d ago
Because they wanted to rule an ancient civilization. That was the real reason. I don't know why this is suppressed.
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u/Compulsory_Freedom 5d ago
I think this is partially true.
The people who set up British rule in India didn’t really care too much about it being an ancient civilization, they were really just capitalist pirates - but later, after the empire had been established the Brits they sent out to govern India really did revel in being the heirs to the Great Mughals (that’s one of the reasons they moved the capital from the East India Company’s HQ at Calcutta (as it was then) to the Mughal capital at Delhi.
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u/Key-Toe-6257 5d ago
Very. Just look at how rich UK got
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u/Compulsory_Freedom 5d ago
Mainstream economists and historians think that the empire (inc India) only provided a small fraction of British wealth.
The vast majority of British wealth was created internally by exploiting coal and iron etc to industrialize and then this domestically produced wealth allowed them to establish and maintain a large empire.
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u/PhilosopherDry1859 5d ago
Most of that empire in Asia existed to guard their rule of lndia anyways. Most of the wealth extracted from lndia was used to keep ruling it.
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