The Company Becomes the Diwan
On August 12, 1765, the Mughal Emperor appointed the East India Company as the Diwan of Bengal, marking a crucial transition from acting as mere traders to becoming the chief financial administrators of a vast territory. Robert Clive accepted this appointment, signaling the Company’s new role in organizing revenue resources and the administration of land.
The initial focus of the Company remained on maximizing revenue without establishing a regular assessment system. The Bengal economy began to falter under pressure, leading to peasant distress and artisan decline. This economic turmoil culminated in the catastrophic famine of 1770, resulting in the deaths of ten million people.
Recognizing the need for agricultural improvement, the Company implemented the Permanent Settlement in 1793, which aimed to create a stable revenue system by fixing tax amounts indefinitely, empowering zamindars to collect rent from peasants. However, the system soon exposed significant flaws: zamindars often did not invest in land improvements, leading to widespread peasant hardships.
As economic demands evolved, new revenue systems like Mahalwari and Ryotwari replaced the Permanent Settlement, reflecting attempts to enhance revenue collection while addressing the issues arising from zamindar passivity. Despite these adjustments, peasants faced severe exploitation as British officials pressed for the cultivation of cash crops such as indigo, leading to significant unrest and eventual rebellions.
In summary, this section illustrates the complexities of colonial administration in Bengal, exploring how the Company’s tax policies and agricultural strategies greatly affected the local economy and peasantry.