The following items consist of two statements, Statement I and Statement II Examine these two statements carefully and select the correct answer using the code given below: Statement I: Dadabhai Naoriji argued that what was being drained out was 'potential surplus' that could generate more economic development in Indian if invested in India Statement II: Imperialists believed that India was brought into the large capitalist world market and that was in itself progress towards modernization Correct Answer Both the statement are individually true but Statement II is NOT the correct explanation of Statement I The correct answer is option 2 Dada Bhai Naoroji The Grand Old Man of India gave drain wealth theory. The "drain of wealth" depicts the constant flow of wealth from India to England for which India did not get an adequate economic, commercial or material return. The colonial government was utilizing Indian resources- revenues, agriculture, and industry not for developing India but for its utilization in Britain. In this theory, he mentioned that the wealth that was being drained out was a potential surplus, that could generate more economic development in India if invested in India. Hence statement I is correct. He also mentioned it in his book Poverty and Un-British rule in India. During the British Rule, many imperialists believed that if India comes into large capitalist’s world, then this will take India towards modernization. Hence statement II is correct.