Q. What was the specific financial instrument issued by the Secretary of State for India in London that British merchants used to buy Indian export goods, serving as a key mechanism for executing the "Drain of Wealth"?
Answer: Council Bills
Notes: Council Bills were the financial mechanism used to transfer wealth from India to Britain. British merchants wanting to buy Indian goods went to the India Office in London and bought Council Bills using sterling. They sent these bills to India, where the colonial government cashed them out in rupees from the Indian treasury. This arrangement allowed the Secretary of State to collect Indian revenues directly in London in the form of gold and sterling (to cover Home Charges), while Indian goods were shipped out without India receiving any actual gold or currency back in return. Hundis were native credit instruments used by Indian bankers (Shroffs). Treasury Bills are short-term government borrowing tools. Sovereign Bonds are long-term debt securities issued by a national government.