Statement I : Dadabhai Naoroji argued that what was being drained out was ‘potential surplus’ that could generate more economic development in India if invested in India Statement I : Imperialists believed that India was brought into the large capitalist world market and that was in itself a progress towards modernization

Statement I is true as Dadabhai Naoroji’s 'Drain Theory' argued that a significant portion of India's national product was transferred to Britain without adequate return [2]. He specifically characterized this drain as a loss of 'potential investible capital' or social surplus that, if retained, could have been invested in India to generate economic development and increase productive capacity [4]. Statement II is also true; imperialist and colonial administrators justified British rule by arguing that integrating India into the global capitalist market was a progressive step toward modernization and civilization. While both statements are historically accurate, Statement II does not explain Statement I. Instead, they represent two diametrically opposed viewpoints: the nationalist critique of economic exploitation versus the imperialist justification of colonial 'modernization' through market integration [3].

Sources

1. [1] Rajiv Ahir. A Brief History of Modern India (2019 ed.). SPECTRUM. > Chapter 28: Economic Impact of British Rule in India > Economic Drain > p. 548
2. [2] History , class XII (Tamilnadu state board 2024 ed.) > Chapter 1: Rise of Nationalism in India > 1.6 Naoroji and his Drain Theory > p. 12
3. [4] https://mcrhrdi.gov.in/group1-2019/Reading%20Material/History/History%20part%203(m).pdf
4. [3] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 6: Indian Economy [1947 – 2014] > 6.1 Impact of British Rule on Indian Economy > p. 201