Though India reportedly had the world’s largest economy during the years 1 AD and 1000 AD [1], due

to the vagaries of history, India’s economy had plunged during British rule. Though industrialisation

proceeded rapidly in Britain, the British had different policies for the regions under its rule. However

the economic impact of British imperialism in India is still being debated. On the one hand, the British

established a good network of railways, laid out a telegraph system for communication and established

a legal system. The other view is that the infrastructure was established to facilitate the exploitation of

natural resources, for example, in shipping gold, spices, and other raw materials from India to Britain

and other markets. The political and social leader Dadabhai Naoroji, in his work on economics, sought

to prove that Britain was draining money out of India and described six factors which resulted in the

external drain [2]. This is called as “External Drain Theory”.

The worldwide Great Depression of 1929 had a relatively minor impact on India. Some sectors were

hurt by falling prices. [1] But overall India remained underdeveloped economically; the British

economist Angus Maddison argues that “India 's share of the world income went from 27% in 1700

(compared to Europe 's share of 23%) to 3% in 1950” [3]. At the time of India’s independence in 1947,

the Indian economy had reached its nadir.

When Nehru became India’s 1st Prime Minister,