British East India Company Rule in India | Revenue Generation Methods

The Company had become the Diwan of Bengal in 1765, 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 1865, 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. 

The need to improve agriculture
After two decades of debate on how to improve the situation, the Company finally introduced the Permanent  Settlement in 1793.  Cornwallis was the Governor General of India when the Permanent Settlement was introduced. 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 with Permanent Settlement
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.

A new system in place - Mahalwari settlement
By the early nineteenth century many of the Company officials were  convinced  that   the system of   revenue had to be changed again. 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 effec t   in 1822.  He  felt   that the village was an important social institution in north Indian society and  needed to be preserved. Un d e r his directions, collectors went from village to village, inspecting the land, measuring the fields, and estimated the revenue for each plot. The village(mahal) had to pay the combined revenue for all plots in the village. 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 Munro system, the settlement 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 should act as paternal father figures protecting the ryots under their charge. But 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 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 along with opium and indigo.

Indian indigo
The indigo plant grows primarily in the tropics. When Britain began to industrialise, and its cotton production expanded dramatically, creating an enormous demand for cloth dyes. While the demand for indigo increased, its existing supplies from the West Indies and America collapsed for a variety of reasons. Between 1783 and 1789 the production of indigo in the world fell by half. Faced with the rising demand for indigo in Europe, the Company in India looked for ways to expand the area under indigo cultivation. From the last decades of the eighteenth century indigo cultivation in Bengal expanded rapidly and Bengal indigo came to dominate the world market. In 1788 only about 30 per cent of the indigo imported into Britain was from India. By 1810, the proportion had gone up to 95 per cent. As the indigo trade grew, commercial  agents and officials of the Company began investing in indigo production. Over the years many Company officials left their jobs to look after their indigo business. 

How was indigo cultivated?
There were two main systems of indigo cultivation –  nij and ryoti. Within the system of nij cultivation, the planter produced indigo in lands that he directly controlled. He either bought the land or rented it from other zamindars and produced indigo by directly employing hired labourers. Less than 25 per cent of the land producing indigo was under this system. The rest was under an alternative mode of cultivation – the  ryoti system. Under the  ryoti system, the planters forced the ryots to sign a contract. At times they pressurised the village headmen to sign the contract on behalf of the  ryots. Those who signed the contract  got cash advances from the planters at low rates of interest to produce indigo. But the loan committed the  ryot to cultivating indigo on at least 25 per cent of the area under his holding. The planter provided the seed and the drill, while the cultivators prepared the soil, sowed the seed and looked after the crop.
When the crop was delivered to the planter after the harvest, a new loan was given to the ryot, and the cycle started all over again. Peasants who were initially tempted by the loans soon realised how harsh the system was. The price they got for the indigo they produced was very low and the cycle of loans never ended. There were other  problems too. The  planters usually insisted that indigo be cultivated on the best soils in which peasants preferred to cultivate rice. Indigo, moreover, had deep roots and it exhausted the soil rapidly. After an indigo harvest the land could not be sown with rice. 

The “Blue Rebellion” and After
In March 1859 thousands of  ryots in Bengal refused to grow indigo. As the rebellion spread, ryots refused to pay rents to the planters, and attacked indigo factories. As the rebellion spread, intellectuals from Calcutta rushed to the indigo districts. They wrote of the misery of the ryots, the tyranny of the planters, and the horrors of the indigo system. Worried by the  rebellion, the government  brought in  the military  to protect   the planters  from assault , and set up the Indigo Commission to enquire into the system of indigo production. The Commission held the planters guilty, and criticised them for the coercive methods they used with indigo cultivators. It declared that indigo production was not profitable for  ryots. The Commission asked the ryots to fulfil their existing contracts but also told them that they could refuse to produce indigo in future. 

When Mahatma Gandhi returned from South Africa, a peasant from Bihar persuaded him visit Champaran and see the plight of the indigo cultivators there. Mahatma Gandhi’s visit in 1917 marked the beginning of the Champaran movement against the indigo planters.

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