Introduction

The Mughal Emperor appointed the East India Company (EIC) as Diwan of Bengal on 12th August 1765. As a result, the EIC became the chief financial administrator with the primary motive to generate revenue even if it meant redefining the rights of people. However, the British soon learned that by simply exerting power, they could face rebellion from the Indians. Learning from experience, they knew that they had to control the local heads but could not eliminate them. They developed specific strategies through which they continued ruling the countryside.

Revenue for the Company

• The Company though primarily being Diwan, functioned as a trader. It’s sole motive was to produce, buy and sell products on their terms and prices
• Before 1865, the EIC imported gold and silver from Britain to buy goods from India. Thereafter, it used the revenue collected in Bengal to purchase goods for export
• This exploitation drove the underpaid artisans and farmers away from their villages and led to an economic collapse resulting in the infamous Bengal famine (1770) that killed ten million people (one third of the population).

Permanent Settlement 1793

Since EIC needed revenue to improve agricultural practices. Thus, it introduced the Permanent Settlement (1793) which held the rajas and taluqdars responsible for collecting rents from peasants to generate a pre-decided revenue by and for the Company. It was assumed that this arrangement would interest the zamindars in looking after and improving the land. Exactly the opposite ended up happening.

The key problem 

• Due to the high revenue, the zamindars could not invest and found no profit in improving the land. However, by the 19th century market prices had risen and led to considerable improvement in cultivation. Nevertheless, since the Company had pre-decided the revenue, it could not reap the benefits. Meanwhile, the zamindars aimed to earn more without undertaking the risk of investment. On the other hand, the cultivators had to take loans to afford the land rent. Failure to do so led to their eviction from the land. 

The Solution

• Fixed revenue system was leading to revenue loss for the EIC. They had to meet their administration and trade expenses if they wanted to rule the countryside. 

They then came up with two new systems.

Mahalwari Settlement 1822

• In the North-Western Provinces of the Bengal Presidency, Holt Mackenzie introduced the Mahalwari Settlement in 1822. 
• Collectors were sent to inspect villages and lands, measure the fields, and record different groups’ customs and practices. 
• Accordingly, the revenue for each plot that the village (mahal) had to pay was estimated.  
• This time, the village headmen were the collectors instead of the zamindars and the revenue was to be revised periodically. 

The Ryotwari/Munro System 

• In the Southern British territories, Captain Alexander Read devised a new system called the Ryotwari System and tried it on a small scale
• Later it was developed by Thomas Munro and extended all over south India
• Here, settlements were made directly with the cultivators (ryots). After carefully inspecting and surveying their fields, the EIC estimated the revenue. 

However, the new systems did not work well either. Blinded by greed for higher income, the revenue decided by the British was far too high for the cultivators. Soon tired of the exploitation, the ryots fled and deserted many regions, leading to the downfall once again. Ruling the countryside was proving to be difficult and expensive for the EIC. 

Crop Cultivation

By the later half of the 19th century, the British understood that instead of just yielding revenue, Indians could also grow crops. They decided to expand the cultivation of indigo and opium. They forced peasants to grow several other crops like tea in Assam, jute in Bengal, rice in Madras, cotton in Maharashtra and Punjab, sugarcane in Uttar Pradesh etc. To understand the enforcement of this expansion, it is essential to know the context of indigo cultivation.

 The indigo cultivation

• There was a high demand for Indian indigo
• At this point, India was the leading producer of indigo, a rich blue colour. Owing to numerous reasons, the production of indigo declined in the West Indies and America
• Between 1783 and 1789, the production of indigo in the world fell by half. All eyes turned to India demanding indigo. In 1788 only 30% of the indigo in Britain was from India, but by 1810 it rose to 95%
• Since indigo attracted high profits, the Company began looking for ways to expand its cultivation.

How was indigo cultivated?

There were two systems:

1. Nij System: indigo was produced by planters who directly rented or bought the land from zamindars. It could be cultivated only on fertile lands but they were all densely populated. Additionally, a larger plot required more bullocks and laborers who were otherwise busy with rice plantations. The problems of supplies and maintenance dissuaded planters from expanding their land. Less than 25% of the land producing indigo was under this system.
2. Ryoti System: The planters were forced to sign an agreement (satta), which gave them cash advances at low-interest rates to produce Indigo. Once the crop was handed over, a new loan was created, becoming an endless loop. Moreover, the peasants were given low rates for the produce but they were also forced to grow Indigo on the best soils in which they preferred to cultivate rice. Soon, they realized the unjust system and refused to cultivate Indigo. 

The Blue Rebellion 

• In March 1859, thousands of ryots decided to stop growing indigo. Several zamindars and village headmen joined the rebellion and it rapidly spread across
• After the Revolt of 1857, the British government was worried about another large-scale rebellion. Thus, they set up the indigo Commission to inquire into the malpractices of the indigo production systems
• The Commission held the planters guilty. Along with it, the ryots were asked to complete their existing contracts and later stop cultivating if they so wished. As a consequence, after the revolt of 1857, indigo production collapsed. 

Conclusion

From being proclaimed as the Diwan in 1765 to its collapse in 1873, the East India Company came a long way. As traders, they exploited the Indian peasants with numerous systems concerned only with generating more revenue. The Bengal Famine in 1770, Permanent Settlement, Mahalwari System, one by one led to a gradual weakening of the EIC. Finally, after the Revolt of 1857, they were forced to give up.