between 1868–69 and 1882–83, and above 20 per cent thereafter. This consti-
tuted around 3 per cent of the national income of British India and half of
domestic savings (Bagchi, 1982; Habib, 2006). The problem with these meas-
ures of ‘drain’ from Indonesia or India is that investment is generally value-
creating, so generating an excess of profit over initial investment does not
necessarily indicate an absolute drain.
Debates related to the drain of surplus have been revived in recent decades,
especially after the beginning of the debt crisis in the early 1980s. The Jubilee
Debt Campaign estimated that in 2011 the poorest 36 countries in the world (with
GDP per capita below $975) had external debts of $133 billion and total external
debt for all developing countries was $4.9 trillion. During that year developing
countries paid $620 billion servicing those debts (www.jubileedebtcampaign.
org.uk). In 2011 the OECD estimate that members of their Development
Assistance Committee (DAC) provided net aid to developing countries of
$133.5 billion, a 2.7 per cent reduction over the previous year.
Colonialism and deindustrialization
A long-standing critique of colonialism is that of deindustrialization. There is
widespread evidence that the proportion of people working in Indian manufac-
turing fell after the late eighteenth/early nineteenth century (Bagchi, 1976),
and that many established industries, such as Kashmiri shawls, Bengali silk
and handloom jute weaving disappeared (Habib, 2006:98). This occurred
alongside the tightening grip of British colonialism after the 1750s. The rail-
way system and other infrastructure was, according to this critical view, less
about promoting development, and more about facilitating extraction by
converting India into a market for British manufactured exports and extracting
raw materials for British industry. During the eighteenth century calicoes and
other manufactured textiles had represented 60–70 per cent of India’s total
exports,but by 1820 13 million square metres of cloth were imported into
India,rising to 2,050 million in 1890. Raw cotton accounted for 12.04 per cent
of exports in 1849–50 and 36.36 per cent in 1869–70. In 1862 India supplied
75 per cent of all cotton imported into Britain (Kohli,2004; Habib, 2006).
The traditional view is that this deindustrialization was a deliberate policy
by the British colonial state: while English textiles could enter the Indian
market with no duties payable, Indian textile exports were subject to very high
tariffs in the UK. The decline of the Indian hand paper industry has been
blamed on the requirement from the 1860s that all paper required for govern-
ment purposes was imported from Britain (Habib, 2006:98). A more realistic
argument is that that policy was overwhelmed by the impact of industrializa-
tion and technological change in Britain. By 1830 the productivity of an
English worker using modern equipment was 10 to 14 times higher for an aver-
age yarn and 200 to 300 times higher for fine yarn than Indian or other tradi-
tional workers (Bairoch, 1993:54). The traditional arguments also tend to
focus on the welfare losses to Indian producers. It is often forgotten that these
Colonialism 199