Explanation:

•  Both statements are correct
• Economic Drain  The term ‘economic drain’ refers to a portion of national product of India which was not available for consumption of its people, but was being drained away to Britain for political reasons and India was not getting adequate economic or material returns for it.
• The drain theory was put forward by Dadabhai Naoroji in his book Poverty and Un-British Rule in India.
• The major components of this drain were salaries and pensions of civil and military offi cials, interests on loans taken by the Indian Government from abroad, pro fi ts on foreign investment in India, stores purchased in Britain for civil and military departments, payments to be made for shipping, banking and insurance services which stunted the growth of Indian enterprise in these services.  The drain of wealth checked and retarded capital formation in India while the same portion of wealth accelerated the growth of British economy. The surplus from British economy re-entered India as fi nance capital, further draining India of its wealth. This had immense effect on income and employment potential within India.