On 12 August 1765, Robert Clive, on behalf of East India Company, accepted the Diwani of Bengal from the then Mughal ruler.
The Company became the chief financial administrator of the territory under its control, and so the company had to think and plan the organisation of Bengal in a such a way that it could earn maximum profit out of the territory, profits that could be used to finance their businesses and wars.
As a foreign power, the Company realised that it needed to manage the local rulers in India's villages, because they were respected by the locals and removing them might anger the common people.
Revenue for the Company
Although the Company had become the ruler of Bengal, it continued to work like a trader and did not set up any regular system of assessment and collection. So by 1770, within 5 years of it become the ruler of Bengal, the prices of goods bought by the Company doubled.
This brought great profits for the Company; earlier it had to import precious metals such as gold and silver from Britain to buy goods from India for export to Europe, but after it became the Diwan of Bengal, it started using the revenues from Bengal to buy its goods.
But the economy of Bengal suffered deeply. Peasants were unable to pay the dues, and artisanal production fell because the Company bought the artisans' goods at low prices by force. As a result of such exploitative practices and high prices, there was a famine in Bengal in 1770 that killed 10 million people, a third of Bengal's population.
The Need to Improve Agriculture
The Company knew that most Indians practise agriculture, and if it did not improve agriculture then it cannot continue to earn big revenues.
So the Company introduced the Permanent Settlement in 1793, whereby the zamindars were asked to collect rent from peasants and pay revenues to the Company. The plan was that the Permanent Settlement will ensure a regular income for the Company, and that it will also encourage zamindars (rajas and talukdars) to improve lands in their territories because better lands will give them better revenues, while the amount they had to pay to the Company was fixed permanently.
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1. Introduction
What will I learn in this lesson?
2. Comics
A story of ruling the countryside
3. Key Concepts
The Company Becomes the Diwan
Crops for Europe
The Blue Rebellion and After
4. Quiz
Quiz
5. Did You Know?
Dateline
Some Facts
Classroom Activities
Finish LessonHelp
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Ruling the Countryside
Our Pasts - III
The Company Becomes the Diwan
On 12 August 1765, Robert Clive, on behalf of East India Company, accepted the Diwani of Bengal from the then Mughal ruler.
The Company became the chief financial administrator of the territory under its control, and so the company had to think and plan the organisation of Bengal in a such a way that it could earn maximum profit out of the territory, profits that could be used to finance their businesses and wars.
As a foreign power, the Company realised that it needed to manage the local rulers in India's villages, because they were respected by the locals and removing them might anger the common people.
Revenue for the Company
Although the Company had become the ruler of Bengal, it continued to work like a trader and did not set up any regular system of assessment and collection. So by 1770, within 5 years of it become the ruler of Bengal, the prices of goods bought by the Company doubled.
This brought great profits for the Company; earlier it had to import precious metals such as gold and silver from Britain to buy goods from India for export to Europe, but after it became the Diwan of Bengal, it started using the revenues from Bengal to buy its goods.
But the economy of Bengal suffered deeply. Peasants were unable to pay the dues, and artisanal production fell because the Company bought the artisans' goods at low prices by force. As a result of such exploitative practices and high prices, there was a famine in Bengal in 1770 that killed 10 million people, a third of Bengal's population.
The Need to Improve Agriculture
The Company knew that most Indians practise agriculture, and if it did not improve agriculture then it cannot continue to earn big revenues.
So the Company introduced the Permanent Settlement in 1793, whereby the zamindars were asked to collect rent from peasants and pay revenues to the Company. The plan was that the Permanent Settlement will ensure a regular income for the Company, and that it will also encourage zamindars (rajas and talukdars) to improve lands in their territories because better lands will give them better revenues, while the amount they had to pay to the Company was fixed permanently.
GIVE THANKS = TAKE THANKS
Explanation:
The east India company becomes the Diwan by still a trader.
The company was still continued to work like a trader and did not set up any regular system of assessment and collection.