Page 1
Fig. 1 – Robert Clive
accepting the Diwani
of Bengal, Bihar and
Orissa from the Mughal
ruler in 1765
The Company Becomes the Diwan
On 12 August 1765, the Mughal emperor appointed the East
India Company as the Diwan of Bengal. The actual event most
probably took place in Robert Clive’s tent, with a few Englishmen
and Indians as witnesses. But in the painting above, the event
is shown as a majestic occasion, taking place in a grand setting.
The painter was commissioned by Clive to record the memorable
events in Clive’s life. The grant of Diwani clearly was one such
event in British imagination.
As Diwan, the Company became the chief financial
administrator of the territory under its control. Now it had to think
of administering the land and organising its revenue resources.
This had to be done in a way that could yield enough revenue to
meet the growing expenses of the company. A trading company
had also to ensure that it could buy the products it needed and
sell what it wanted.
Ruling the Countryside 3
chap 1-4.indd 26 4/22/2022 2:49:47 PM
Reprint 2024-25
Page 2
Fig. 1 – Robert Clive
accepting the Diwani
of Bengal, Bihar and
Orissa from the Mughal
ruler in 1765
The Company Becomes the Diwan
On 12 August 1765, the Mughal emperor appointed the East
India Company as the Diwan of Bengal. The actual event most
probably took place in Robert Clive’s tent, with a few Englishmen
and Indians as witnesses. But in the painting above, the event
is shown as a majestic occasion, taking place in a grand setting.
The painter was commissioned by Clive to record the memorable
events in Clive’s life. The grant of Diwani clearly was one such
event in British imagination.
As Diwan, the Company became the chief financial
administrator of the territory under its control. Now it had to think
of administering the land and organising its revenue resources.
This had to be done in a way that could yield enough revenue to
meet the growing expenses of the company. A trading company
had also to ensure that it could buy the products it needed and
sell what it wanted.
Ruling the Countryside 3
chap 1-4.indd 26 4/22/2022 2:49:47 PM
Reprint 2024-25
RULING THE COUNTRYSIDE 27
Over the years, the Company also learnt that it had to
move with some caution. Being an alien power, it needed
to pacify those who in the past had ruled the countryside,
and enjoyed authority and prestige. Those who had held
local power had to be controlled but they could not be
entirely eliminated.
How was this to be done? In this chapter we will see how the
Company came to colonise the countryside, organise revenue
resources, redefine the rights of people, and produce the crops
it wanted.
Revenue for the Company
The Company had become the Diwan, but it still saw itself
primarily as a trader. It wanted a large revenue income but
was unwilling to set up any regular system of assessment and
collection. The effort was to increase the revenue as much as it
could and buy fine cotton and silk cloth as cheaply as possible.
Within five years, the value of goods bought by the Company
in Bengal doubled. Before 1765, the Company had purchased
goods in India by importing gold and silver from Britain. Now
the revenue collected in Bengal could finance the purchase of
goods for export.
Soon it was clear that the Bengal economy was facing a deep
crisis. Artisans were deserting villages since they were being
forced to sell their goods to the Company at low prices. Peasants
were unable to pay the dues that were being demanded from them.
Artisanal production was in decline, and agricultural cultivation
showed signs of collapse. Then in 1770, a terrible famine killed
ten million people in Bengal. About one-third of the population
was wiped out.
Fig. 2 – A weekly market
in Murshidabad in Bengal
Peasants and artisans
from rural areas regularly
came to these weekly
markets (haats) to sell
their goods and buy what
they needed. These markets
were badly affected during
times of economic crisis.
chap 1-4.indd 27 4/22/2022 2:49:47 PM
Reprint 2024-25
Page 3
Fig. 1 – Robert Clive
accepting the Diwani
of Bengal, Bihar and
Orissa from the Mughal
ruler in 1765
The Company Becomes the Diwan
On 12 August 1765, the Mughal emperor appointed the East
India Company as the Diwan of Bengal. The actual event most
probably took place in Robert Clive’s tent, with a few Englishmen
and Indians as witnesses. But in the painting above, the event
is shown as a majestic occasion, taking place in a grand setting.
The painter was commissioned by Clive to record the memorable
events in Clive’s life. The grant of Diwani clearly was one such
event in British imagination.
As Diwan, the Company became the chief financial
administrator of the territory under its control. Now it had to think
of administering the land and organising its revenue resources.
This had to be done in a way that could yield enough revenue to
meet the growing expenses of the company. A trading company
had also to ensure that it could buy the products it needed and
sell what it wanted.
Ruling the Countryside 3
chap 1-4.indd 26 4/22/2022 2:49:47 PM
Reprint 2024-25
RULING THE COUNTRYSIDE 27
Over the years, the Company also learnt that it had to
move with some caution. Being an alien power, it needed
to pacify those who in the past had ruled the countryside,
and enjoyed authority and prestige. Those who had held
local power had to be controlled but they could not be
entirely eliminated.
How was this to be done? In this chapter we will see how the
Company came to colonise the countryside, organise revenue
resources, redefine the rights of people, and produce the crops
it wanted.
Revenue for the Company
The Company had become the Diwan, but it still saw itself
primarily as a trader. It wanted a large revenue income but
was unwilling to set up any regular system of assessment and
collection. The effort was to increase the revenue as much as it
could and buy fine cotton and silk cloth as cheaply as possible.
Within five years, the value of goods bought by the Company
in Bengal doubled. Before 1765, the Company had purchased
goods in India by importing gold and silver from Britain. Now
the revenue collected in Bengal could finance the purchase of
goods for export.
Soon it was clear that the Bengal economy was facing a deep
crisis. Artisans were deserting villages since they were being
forced to sell their goods to the Company at low prices. Peasants
were unable to pay the dues that were being demanded from them.
Artisanal production was in decline, and agricultural cultivation
showed signs of collapse. Then in 1770, a terrible famine killed
ten million people in Bengal. About one-third of the population
was wiped out.
Fig. 2 – A weekly market
in Murshidabad in Bengal
Peasants and artisans
from rural areas regularly
came to these weekly
markets (haats) to sell
their goods and buy what
they needed. These markets
were badly affected during
times of economic crisis.
chap 1-4.indd 27 4/22/2022 2:49:47 PM
Reprint 2024-25
28 OUR PASTS – III
The need to improve agriculture
If the economy was in ruins, could the Company be certain
of its revenue income? Most Company officials began to
feel that investment in land had to be encouraged and
agriculture had to be improved.
How was this to be done? After two decades of debate
on the question, the Company finally introduced the
Permanent Settlement in 1793. By the terms of the
settlement, the rajas and taluqdars were recognised
as zamindars. They were asked to collect rent from the
peasants and pay revenue to the Company. The amount
to be paid was fixed permanently, that is, it was not to be
increased ever in future. It was felt that this would ensure
a regular flow of revenue into the Company’s coffers and
at the same time encourage the zamindars to invest in
improving the land. Since the revenue demand of the state
would not be increased, the zamindar would benefit from
increased production from the land.
The problem
The Permanent Settlement, however, created problems.
Company officials soon discovered that the zamindars
were in fact not investing in the improvement of land.
The revenue that had been fixed was so high that the
zamindars found it difficult to pay. Anyone who failed
to pay the revenue lost his zamindari. Numerous
zamindaris were sold off at auctions organised by
the Company.
By the first decade of the nineteenth century, the
situation changed. The prices in the market rose and
cultivation slowly expanded. This meant an increase in
the income of the zamindars but no gain for the Company
since it could not increase a revenue demand that had
been fixed permanently.
Even then the zamindars did not have an interest
in improving the land. Some had lost their lands in
the earlier years of the settlement; others now saw the
possibility of earning without the trouble and risk of
investment. As long as the zamindars could give out the
land to tenants and get rent, they were not interested in
improving the land.
Fig. 3 – Charles Cornwallis
Cornwallis was the Governor-
General of Bengal when the
Permanent Settlement was
introduced.
Colebrook on
Bengal ryots
In many villages of
Bengal, some of the
powerful ryots did not
cultivate, but instead gave
out their lands to others (the
under-tenants), taking
from them very high
rents. In 1806, H. T.
Colebrook described
the conditions of these
under-tenants in Bengal:
The under-tenants,
depressed by an
excessive rent in
kind, and by usurious
returns for the cattle,
seed, and subsistence,
advanced to them,
can never extricate
themselves from
debt. In so abject a
state, they cannot
labour in spirit, while
they earn a scanty
subsistence without
hope of bettering
their situation.
Activity
?
Why do you think Colebrook is concerned with the
conditions of the under-ryots in Bengal? Read the
preceding pages and suggest possible reasons.
Source 1
chap 1-4.indd 28 6/14/2022 2:39:26 PM
Reprint 2024-25
Page 4
Fig. 1 – Robert Clive
accepting the Diwani
of Bengal, Bihar and
Orissa from the Mughal
ruler in 1765
The Company Becomes the Diwan
On 12 August 1765, the Mughal emperor appointed the East
India Company as the Diwan of Bengal. The actual event most
probably took place in Robert Clive’s tent, with a few Englishmen
and Indians as witnesses. But in the painting above, the event
is shown as a majestic occasion, taking place in a grand setting.
The painter was commissioned by Clive to record the memorable
events in Clive’s life. The grant of Diwani clearly was one such
event in British imagination.
As Diwan, the Company became the chief financial
administrator of the territory under its control. Now it had to think
of administering the land and organising its revenue resources.
This had to be done in a way that could yield enough revenue to
meet the growing expenses of the company. A trading company
had also to ensure that it could buy the products it needed and
sell what it wanted.
Ruling the Countryside 3
chap 1-4.indd 26 4/22/2022 2:49:47 PM
Reprint 2024-25
RULING THE COUNTRYSIDE 27
Over the years, the Company also learnt that it had to
move with some caution. Being an alien power, it needed
to pacify those who in the past had ruled the countryside,
and enjoyed authority and prestige. Those who had held
local power had to be controlled but they could not be
entirely eliminated.
How was this to be done? In this chapter we will see how the
Company came to colonise the countryside, organise revenue
resources, redefine the rights of people, and produce the crops
it wanted.
Revenue for the Company
The Company had become the Diwan, but it still saw itself
primarily as a trader. It wanted a large revenue income but
was unwilling to set up any regular system of assessment and
collection. The effort was to increase the revenue as much as it
could and buy fine cotton and silk cloth as cheaply as possible.
Within five years, the value of goods bought by the Company
in Bengal doubled. Before 1765, the Company had purchased
goods in India by importing gold and silver from Britain. Now
the revenue collected in Bengal could finance the purchase of
goods for export.
Soon it was clear that the Bengal economy was facing a deep
crisis. Artisans were deserting villages since they were being
forced to sell their goods to the Company at low prices. Peasants
were unable to pay the dues that were being demanded from them.
Artisanal production was in decline, and agricultural cultivation
showed signs of collapse. Then in 1770, a terrible famine killed
ten million people in Bengal. About one-third of the population
was wiped out.
Fig. 2 – A weekly market
in Murshidabad in Bengal
Peasants and artisans
from rural areas regularly
came to these weekly
markets (haats) to sell
their goods and buy what
they needed. These markets
were badly affected during
times of economic crisis.
chap 1-4.indd 27 4/22/2022 2:49:47 PM
Reprint 2024-25
28 OUR PASTS – III
The need to improve agriculture
If the economy was in ruins, could the Company be certain
of its revenue income? Most Company officials began to
feel that investment in land had to be encouraged and
agriculture had to be improved.
How was this to be done? After two decades of debate
on the question, the Company finally introduced the
Permanent Settlement in 1793. By the terms of the
settlement, the rajas and taluqdars were recognised
as zamindars. They were asked to collect rent from the
peasants and pay revenue to the Company. The amount
to be paid was fixed permanently, that is, it was not to be
increased ever in future. It was felt that this would ensure
a regular flow of revenue into the Company’s coffers and
at the same time encourage the zamindars to invest in
improving the land. Since the revenue demand of the state
would not be increased, the zamindar would benefit from
increased production from the land.
The problem
The Permanent Settlement, however, created problems.
Company officials soon discovered that the zamindars
were in fact not investing in the improvement of land.
The revenue that had been fixed was so high that the
zamindars found it difficult to pay. Anyone who failed
to pay the revenue lost his zamindari. Numerous
zamindaris were sold off at auctions organised by
the Company.
By the first decade of the nineteenth century, the
situation changed. The prices in the market rose and
cultivation slowly expanded. This meant an increase in
the income of the zamindars but no gain for the Company
since it could not increase a revenue demand that had
been fixed permanently.
Even then the zamindars did not have an interest
in improving the land. Some had lost their lands in
the earlier years of the settlement; others now saw the
possibility of earning without the trouble and risk of
investment. As long as the zamindars could give out the
land to tenants and get rent, they were not interested in
improving the land.
Fig. 3 – Charles Cornwallis
Cornwallis was the Governor-
General of Bengal when the
Permanent Settlement was
introduced.
Colebrook on
Bengal ryots
In many villages of
Bengal, some of the
powerful ryots did not
cultivate, but instead gave
out their lands to others (the
under-tenants), taking
from them very high
rents. In 1806, H. T.
Colebrook described
the conditions of these
under-tenants in Bengal:
The under-tenants,
depressed by an
excessive rent in
kind, and by usurious
returns for the cattle,
seed, and subsistence,
advanced to them,
can never extricate
themselves from
debt. In so abject a
state, they cannot
labour in spirit, while
they earn a scanty
subsistence without
hope of bettering
their situation.
Activity
?
Why do you think Colebrook is concerned with the
conditions of the under-ryots in Bengal? Read the
preceding pages and suggest possible reasons.
Source 1
chap 1-4.indd 28 6/14/2022 2:39:26 PM
Reprint 2024-25
RULING THE COUNTRYSIDE 29
On the other hand, in the villages, the cultivator
found the system extremely oppressive. The rent he paid
to the zamindar was high and his right on the land was
insecure. To pay the rent he had to often take a loan
from the moneylender, and when he failed to pay the
rent, he was evicted from the land he had cultivated
for generations.
A new system is devised
By the early nineteenth century, many of the Company
officials were convinced that the system of revenue
had to be changed again. How could revenues be fixed
permanently at a time when the Company needed
more money to meet its expenses of administration
and trade?
In the North Western Provinces of the Bengal
Presidency (most of this area is now in Uttar Pradesh),
an Englishman called Holt Mackenzie devised the
new system which came into effect in 1822. He felt
that the village was an important social institution
in north Indian society and needed to be preserved.
Under his directions, collectors went from village to
village, inspecting the land, measuring the fields,
and recording the customs and rights of different
groups. The estimated revenue of each plot within a
village was added up to calculate the revenue that
each village (mahal) had to pay. This demand was
to be revised periodically, not permanently fixed. The
charge of collecting the revenue and paying it to the
Company was given to the village headman, rather
than the zamindar. This system came to be known as
the mahalwari settlement.
The Munro system
In the British territories in the South, there was a similar
move away from the idea of Permanent Settlement. The
new system that was devised came to be known as the
ryotwar (or ryotwari). It was tried on a small scale by
Captain Alexander Read in some of the areas that were
taken over by the Company after the wars with Tipu Sultan.
Subsequently developed by Thomas Munro, this system
was gradually extended all over south India.
Read and Munro felt that in the south there were
no traditional zamindars. The settlement, they argued,
had to be made directly with the cultivators (ryots) who
had tilled the land for generations. Their fields had to
be carefully and separately surveyed before the revenue
assessment was made. Munro thought that the British
Mahal – In British
revenue records, mahal
is a revenue estate which
may be a village or a
group of villages.
Fig. 4 – Thomas Munro, Governor
of Madras (1819–26)
chap 1-4.indd 29 4/22/2022 2:49:49 PM
Reprint 2024-25
Page 5
Fig. 1 – Robert Clive
accepting the Diwani
of Bengal, Bihar and
Orissa from the Mughal
ruler in 1765
The Company Becomes the Diwan
On 12 August 1765, the Mughal emperor appointed the East
India Company as the Diwan of Bengal. The actual event most
probably took place in Robert Clive’s tent, with a few Englishmen
and Indians as witnesses. But in the painting above, the event
is shown as a majestic occasion, taking place in a grand setting.
The painter was commissioned by Clive to record the memorable
events in Clive’s life. The grant of Diwani clearly was one such
event in British imagination.
As Diwan, the Company became the chief financial
administrator of the territory under its control. Now it had to think
of administering the land and organising its revenue resources.
This had to be done in a way that could yield enough revenue to
meet the growing expenses of the company. A trading company
had also to ensure that it could buy the products it needed and
sell what it wanted.
Ruling the Countryside 3
chap 1-4.indd 26 4/22/2022 2:49:47 PM
Reprint 2024-25
RULING THE COUNTRYSIDE 27
Over the years, the Company also learnt that it had to
move with some caution. Being an alien power, it needed
to pacify those who in the past had ruled the countryside,
and enjoyed authority and prestige. Those who had held
local power had to be controlled but they could not be
entirely eliminated.
How was this to be done? In this chapter we will see how the
Company came to colonise the countryside, organise revenue
resources, redefine the rights of people, and produce the crops
it wanted.
Revenue for the Company
The Company had become the Diwan, but it still saw itself
primarily as a trader. It wanted a large revenue income but
was unwilling to set up any regular system of assessment and
collection. The effort was to increase the revenue as much as it
could and buy fine cotton and silk cloth as cheaply as possible.
Within five years, the value of goods bought by the Company
in Bengal doubled. Before 1765, the Company had purchased
goods in India by importing gold and silver from Britain. Now
the revenue collected in Bengal could finance the purchase of
goods for export.
Soon it was clear that the Bengal economy was facing a deep
crisis. Artisans were deserting villages since they were being
forced to sell their goods to the Company at low prices. Peasants
were unable to pay the dues that were being demanded from them.
Artisanal production was in decline, and agricultural cultivation
showed signs of collapse. Then in 1770, a terrible famine killed
ten million people in Bengal. About one-third of the population
was wiped out.
Fig. 2 – A weekly market
in Murshidabad in Bengal
Peasants and artisans
from rural areas regularly
came to these weekly
markets (haats) to sell
their goods and buy what
they needed. These markets
were badly affected during
times of economic crisis.
chap 1-4.indd 27 4/22/2022 2:49:47 PM
Reprint 2024-25
28 OUR PASTS – III
The need to improve agriculture
If the economy was in ruins, could the Company be certain
of its revenue income? Most Company officials began to
feel that investment in land had to be encouraged and
agriculture had to be improved.
How was this to be done? After two decades of debate
on the question, the Company finally introduced the
Permanent Settlement in 1793. By the terms of the
settlement, the rajas and taluqdars were recognised
as zamindars. They were asked to collect rent from the
peasants and pay revenue to the Company. The amount
to be paid was fixed permanently, that is, it was not to be
increased ever in future. It was felt that this would ensure
a regular flow of revenue into the Company’s coffers and
at the same time encourage the zamindars to invest in
improving the land. Since the revenue demand of the state
would not be increased, the zamindar would benefit from
increased production from the land.
The problem
The Permanent Settlement, however, created problems.
Company officials soon discovered that the zamindars
were in fact not investing in the improvement of land.
The revenue that had been fixed was so high that the
zamindars found it difficult to pay. Anyone who failed
to pay the revenue lost his zamindari. Numerous
zamindaris were sold off at auctions organised by
the Company.
By the first decade of the nineteenth century, the
situation changed. The prices in the market rose and
cultivation slowly expanded. This meant an increase in
the income of the zamindars but no gain for the Company
since it could not increase a revenue demand that had
been fixed permanently.
Even then the zamindars did not have an interest
in improving the land. Some had lost their lands in
the earlier years of the settlement; others now saw the
possibility of earning without the trouble and risk of
investment. As long as the zamindars could give out the
land to tenants and get rent, they were not interested in
improving the land.
Fig. 3 – Charles Cornwallis
Cornwallis was the Governor-
General of Bengal when the
Permanent Settlement was
introduced.
Colebrook on
Bengal ryots
In many villages of
Bengal, some of the
powerful ryots did not
cultivate, but instead gave
out their lands to others (the
under-tenants), taking
from them very high
rents. In 1806, H. T.
Colebrook described
the conditions of these
under-tenants in Bengal:
The under-tenants,
depressed by an
excessive rent in
kind, and by usurious
returns for the cattle,
seed, and subsistence,
advanced to them,
can never extricate
themselves from
debt. In so abject a
state, they cannot
labour in spirit, while
they earn a scanty
subsistence without
hope of bettering
their situation.
Activity
?
Why do you think Colebrook is concerned with the
conditions of the under-ryots in Bengal? Read the
preceding pages and suggest possible reasons.
Source 1
chap 1-4.indd 28 6/14/2022 2:39:26 PM
Reprint 2024-25
RULING THE COUNTRYSIDE 29
On the other hand, in the villages, the cultivator
found the system extremely oppressive. The rent he paid
to the zamindar was high and his right on the land was
insecure. To pay the rent he had to often take a loan
from the moneylender, and when he failed to pay the
rent, he was evicted from the land he had cultivated
for generations.
A new system is devised
By the early nineteenth century, many of the Company
officials were convinced that the system of revenue
had to be changed again. How could revenues be fixed
permanently at a time when the Company needed
more money to meet its expenses of administration
and trade?
In the North Western Provinces of the Bengal
Presidency (most of this area is now in Uttar Pradesh),
an Englishman called Holt Mackenzie devised the
new system which came into effect in 1822. He felt
that the village was an important social institution
in north Indian society and needed to be preserved.
Under his directions, collectors went from village to
village, inspecting the land, measuring the fields,
and recording the customs and rights of different
groups. The estimated revenue of each plot within a
village was added up to calculate the revenue that
each village (mahal) had to pay. This demand was
to be revised periodically, not permanently fixed. The
charge of collecting the revenue and paying it to the
Company was given to the village headman, rather
than the zamindar. This system came to be known as
the mahalwari settlement.
The Munro system
In the British territories in the South, there was a similar
move away from the idea of Permanent Settlement. The
new system that was devised came to be known as the
ryotwar (or ryotwari). It was tried on a small scale by
Captain Alexander Read in some of the areas that were
taken over by the Company after the wars with Tipu Sultan.
Subsequently developed by Thomas Munro, this system
was gradually extended all over south India.
Read and Munro felt that in the south there were
no traditional zamindars. The settlement, they argued,
had to be made directly with the cultivators (ryots) who
had tilled the land for generations. Their fields had to
be carefully and separately surveyed before the revenue
assessment was made. Munro thought that the British
Mahal – In British
revenue records, mahal
is a revenue estate which
may be a village or a
group of villages.
Fig. 4 – Thomas Munro, Governor
of Madras (1819–26)
chap 1-4.indd 29 4/22/2022 2:49:49 PM
Reprint 2024-25
30 OUR PASTS – III
should act as paternal father figures protecting the
ryots under their charge.
All was not well
Within a few years after the new systems were imposed,
it was clear that all was not well with them. Driven by
the desire to increase the income from land, revenue
officials fixed too high a revenue demand. Peasants were
unable to pay, ryots fled the countryside, and villages
became deserted in many regions. Optimistic officials
had imagined that the new systems would transform
the peasants into rich enterprising farmers. But this
did not happen.
Crops for Europe
The British also realised that the countryside could
not only yield revenue, it could also grow the crops
that Europe required. By the late eighteenth century,
the Company was trying its best to expand the
cultivation of opium and indigo. In the century and
a half that followed, the British persuaded or forced
cultivators in various parts of India to produce other
crops: jute in Bengal, tea in Assam, sugarcane in
the United Provinces (now Uttar Pradesh), wheat
in Punjab, cotton in Maharashtra and Punjab, rice
in Madras.
How was this done? The British used a variety of methods
to expand the cultivation of crops that they needed. Let us
take a closer look at the story of one such crop, one such
method of production.
Does colour have a
history?
Figs. 5 and 6 are two
images of cotton prints.
The image on the left
(Fig. 5) shows a kalamkari
print created by weavers
of Andhra Pradesh in
India. On the right is
a floral cotton print
designed and produced
by William Morris, a
famous poet and artist
of nineteenth-century
Britain. There is one
thing common in the
Fig. 5 – A kalamkari print,
twentieth-century India
Fig. 6 – A Morris cotton print, late-
nineteenth-century England
Activity
?
Imagine that you are a
Company representative
sending a report back
to England about the
conditions in rural areas
under Company rule.
What would you write?
chap 1-4.indd 30 4/22/2022 2:49:53 PM
Reprint 2024-25
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