This chapter discusses the British East India Company's establishment as the Diwan of Bengal, the resulting economic exploitation, the implementation of agricultural systems, and the cultivation of indigo, leading to significant social unrest.
This chapter focuses on the transition of the East India Company from a trading entity to a ruling power in rural India, particularly Bengal. The Company’s emergence as the Diwan (chief financial administrator) of Bengal on August 12, 1765, marked the beginning of its control over local governance and revenue management.
When the Mughal emperor appointed the East India Company as the Diwan, it symbolized a formal transfer of authority. Robert Clive played a crucial role during this transition, showcasing the significance of the event through art. The Company, however, primarily saw itself as a trading firm rather than a sovereign authority and lacked a systematic approach to revenue assessment and collection.
The major objective was to increase revenue to fund its growing expenditures and to acquire goods (such as silk and cotton) at minimal costs. This strategy, unfortunately, contributed to the economic decline of Bengal. Peasants and artisans faced significant hardship as the Company enforced low pricing on goods, leading to widespread rural distress.
By the late 1760s, it became increasingly clear that Bengal faced a profound economic crisis. Artisans were abandoning their crafts due to oppressive pricing, leading to agricultural and artisanal stagnation. The catastrophic famine of 1770, which resulted in the death of 10 million people, highlighted the dire consequences of the Company's revenue policies and its failure to consider social stability.
Faced with the crumbling economy, the Company recognized the necessity of enhancing agricultural productivity for sustained revenue. This prompted the introduction of the Permanent Settlement in 1793, recognizing zamindars (landlords) as the official revenue collectors from peasants. The fixed revenue meant that rent would not increase, theoretically creating incentives for zamindars to invest in land improvement.
However, in practice, zamindars frequently failed to invest in agricultural development and instead raised rents on the impoverished peasants. Increasing property taxes led many zamindars to bankruptcy, with their land sold off to cover debts. Consequently, this system often burdened the actual cultivators, who dealt with severe rent and financial instability.
To address the failures of the Permanent Settlement, alternative systems were introduced in the 19th century:
Both systems endeavored to increase efficiency in revenue collection but faced their own challenges, with continued oppression of peasant classes who could not meet high revenue demands.
The chapter also discusses the Company's shift towards promoting cash crops, like indigo, which were in demand in Europe for textile manufacturing. Despite the promise of profit, indigo production often led to exploitative practices, wherein ryots were coerced to sign contracts for indigo cultivation under harsh conditions. Their plight worsened as they were burdened by debts to planters, leading to social unrest.
This oppression culminated in the Indigo Rebellion of 1859 when ryots across Bengal rose against the exploitation. Emerging community support, particularly from zamindars and sympathetic officials, empowered the ryots to resist. Complaints about coercive contracts drew the attention of the British government, resulting in an inquiry into the indigo system and the subsequent release of ryots from their contracts.
By the end of the chapter, it becomes evident that the governance structure imposed by the Company not only aimed at financial gains but also resulted in significant socio-economic upheaval. This contributed to lasting tensions between the colonial administration and the Indian populace, shaping future movements for independence.