What were the expenses for which India's export surplus was used under colonial rule?

Both 1 and 3

The correct answer is Option 4: Both 1 and 3

The export surplus was not used for India’s own development or essential domestic needs. Instead, it was largely utilised for invisible payments such as administrative costs, interest payments, and other services, along with expenses of the British government in Britain and war expenditures. This led to a drain of wealth from India.

NCERT: "Throughout the colonial period, the most significant characteristic of India's foreign trade was the generation of a substantial export surplus. However, this surplus came at a tremendous cost to the country's economy. Essential commodities like food grains, clothes, and kerosene were scarce in the domestic market. Additionally, this export surplus did not result in the inflow of gold or silver into India. Instead, it was utilized to cover expenses incurred by a colonial government office in Britain, expenses related to wars fought by the British government, and the import of invisible items. All these factors contributed to the draining of Indian wealth."