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Revenue for the Company

1.The East India Company was primarily a trading company and its interests lay basically in trading.
 

2. The company collected huge revenue from the state and invested this in buying fine cotton and silk cloth.
 

3. These goods were exported to European countries where they were sold at a very high price.
 

4. The value of goods bought by the company doubled in five years.


5. The Company stopped importing gold from England, as the revenue collected as the Diwan of Bengal was enough for the company to purchase goods.


As the Company established itself, there were a lot of changes in Bengal

  • The Bengal economy faced a deep crisis.
     
  • Artisans moved away from the villages as the prices offered by the British for their goods was very low and they were not able to pay the huge revenue demanded by the Company.
     
  • As the Artisans left the region production of goods and agricultural products decreased.

Famine of Bangal

In 1770 a terrible famine killed ten million people in Bengal.

The Bengal famine of 1770 affected the lower Gangetic plain of India. The famine is estimated to have caused the deaths of 10 million people.

A partial shortfall in crops occurred in 1768 and was followed by more severe conditions in 1769. By the end of 1769 there was a severe drought and rural distress.

By early 1770 there was starvation, and by mid 1770, deaths from starvation started occurring on a large scale.

Smallpox and other diseases further took their toll on the population. Later in 1770, good rainfall resulted in a good harvest and the famine abated.

As a result of the famine large areas were depopulated and turned into jungles for decades to come, as the survivors migrated in mass, in search for food. Many cultivated lands were abandoned.

The Aftermath of the Famine


The Famine played havoc with the economy of Bengal. The company was not getting enough revenue due to this economic crisis. So the Company had to resort to new policies to improve agriculture.

  • Company officials wanted to increase investment in land and consequently increase agricultural production.

  • The Company introduced the Permanent Settlement Act in 1793.

  • According to the Permanent Settlement Act the ‘rajas’ and ‘taluqdars’ were recognised as zamindars.

  • As ‘zamindars’ they could collect rent from the peasants and pay revenue to the Company.

  • The amount to be paid as revenue was fixed permanently by the company.

  • This was an incentive for the zamindars to increase agricultural production and still pay the same revenue to the Company.

  • This Act encouraged the zamindars to invest more money and improve the lands and increase production.

  • Since the revenue demand of the state would not be increased, the zamindars would benefit from increased production from the land.

It was during the tenure of Charles Cornwallis that the Permanent Settlement Act was introduced.


Charles Cornwallis
 

In 1786, Charles Cornwallis became the Governor-General of India (1786-1793). He made reforms in the civil and military service and personally led the campaigns that won British victory in the Third Mysore War. He distinguished himself in campaigns against Tipu Sultan. His ‘Cornwallis Code’ of legal and administrative reforms served the country well for many years, and for this he was elevated to Marques Cornwallis in 1792, and in 1793 he was promoted as a General.

The Permanent Settlement Act had its pros and cons.

Though the Act increased agricultural production there were also problems.

Let us look at the problems created by the introduction of the Permanent Settlement Act

  • The revenue fixed by the Company was very high, though it was fixed permanently.

  • The zamindars were not able to pay the high revenue and consequently they were not able to invest in the improvement of their lands which resulted in poor production, which meant they could not pay the revenue. It was indeed a vicious cycle.

  • The Company confiscated the land from the zamindars who did not pay the revenue.

  • The zamindaris confiscated by the Company were sold in auctions.

The scene changed during the beginning of the nineteenth century.

  • The prices in the market rose and cultivation slowly expanded.

  • The zamindars saw an increase in the income they got from their land.

  • As the Permanent Settlement Act states that the company cannot increase the revenue, the zamindars stood to gain from the increase in agricultural production.

  • The zamindars now rented out the land to peasants and were not interested in improving the land.

  • The peasants who rented out the lands from the zamindars found it very difficult to pay the rent and suffered immensely.

  • If the peasants failed to pay the rent they were driven out from their land. The peasants who usually borrowed money from money-lenders to cultivate their land faced immense hardship.

All this resulted in the introduction of a new system of ‘revenue collection’ by the Company.


Problems created by the Introduction of the Permanent Settlement Act


Let us look at the problems created by the introduction of the Permanent Settlement Act

  • The revenue fixed by the Company was very high, though it was fixed permanently.

  • The zamindars were not able to pay the high revenue and consequently they were not able to invest in the improvement of their lands which resulted in poor production, which meant they could not pay the revenue. It was indeed a vicious cycle.

  • The Company confiscated the land from the zamindars who did not pay the revenue.

  • The zamindaris confiscated by the Company were sold in auctions.

  • The scene changed during the beginning of the nineteenth century.

    • The prices in the market rose and cultivation slowly expanded.

    • The zamindars saw an increase in the income they got from their land.

    • As the Permanent Settlement Act states that the company cannot increase the revenue, the zamindars stood to gain from the increase in agricultural production.

    • The zamindars now rented out the land to peasants and were not interested in improving the land.

    • The peasants who rented out the lands from the zamindars found it very difficult to pay the rent and suffered immensely.

    • If the peasants failed to pay the rent they were driven out from their land. The peasants who usually borrowed money from money-lenders to cultivate their land faced immense hardship.

    All this resulted in the introduction of a new system of ‘revenue collection’ by the Company.





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