In 1765, the East India Company was appointed as the Diwan of Bengal, marking a critical shift in its role from a mere trading company to a major administrative authority. This transformation necessitated effective revenue management to support trade operations while simultaneously controlling local power structures. The Company faced severe economic challenges, such as the 1770 famine that devastated Bengal's population.
The introduction of the Permanent Settlement in 1793 aimed to stabilize revenues by recognizing zamindars as collectors. However, this led to distress among peasants due to high tax demands and led to economic decline. In the early 19th century, new systems like the Mahalwari and Ryotwari were proposed to collect revenues, emphasizing sustainable agricultural practices. Additionally, the need for crops like indigo led to increased cultivation, but often at the cost of the ryots' welfare.
The drying up of indigo production due to exploitative practices culminated in widespread protests, including the Indigo Rebellion of 1859. This rebellion revealed the deep grievances of the ryots, as they were pressured into growing indigo, which often drove them into debt. Ultimately, these events signified not just the economic exploitation of India but also set the stage for broader resistance against colonial rule.