📖 PART 1: The Company Becomes the Diwan

On 12 August 1765, the Mughal emperor appointed the East India Company as the Diwan of Bengal. 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 safely.
• Before 1865, the Company purchased goods in India by importing gold and silver from Britain. After gaining the Diwani, the revenue collected in Bengal could finance the purchase of goods for export (no more gold imports).
• Economic Ruin of Bengal: Artisans deserted villages because they were forced to sell goods at low prices. Peasants couldn't pay dues. Famine in 1770 killed 10 million people in Bengal (one-third of the population perished).

💰 PART 2: The Need to Improve Agriculture (Revenue Systems)

If the economy was in ruins, the Company could not be certain of its revenue income. So, they introduced new land revenue systems to ensure a regular flow of income.

1. The Permanent Settlement (1793)

• The amount to be paid was fixed permanently (it was not to be increased ever in the future).
• Goal: The Company thought this would guarantee regular income, and since the revenue demand wouldn't increase, the zamindar would invest to improve the land to earn extra profit.
• Problems: The revenue fixed was ridiculously high. If a zamindar failed to pay, his zamindari was auctioned off. Also, the zamindars did NOT invest in improving the land. Later, as cultivation expanded, zamindar income grew, but not the Company's. For the cultivator, the system was extremely oppressive—rent was high, and if they couldn't pay, they were evicted.

2. The Mahalwari Settlement (1822)

• By the early 19th century, Company officials felt the revenue system had to change—they needed more money.
• In the North Western Provinces of Bengal Presidency, an Englishman named Holt Mackenzie devised a new system.
• He felt the village was a crucial social institution. Collectors went from village to village to inspect the land, measuring fields, and recording 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 was given to the village headman, rather than the zamindar.

3. The Munro System / Ryotwari Settlement

• In the southern territories, there were no traditional zamindars. So a system was devised by Captain Alexander Read and Thomas Munro.
• The settlement had to be made directly with the cultivators (ryots) who had tilled the land for generations. Their fields were carefully surveyed before the revenue assessment was made.
• Result of all systems: Driven by the desire to increase income, revenue officials fixed the revenue demand too high. Peasants could not pay, ryots fled the countryside, and villages became deserted.

🌿 PART 3: 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 18th century, the Company was expanding the cultivation of opium and indigo.

• They also forced cultivators in various parts to produce other crops: Jute in Bengal, Tea in Assam, Sugarcane in UP, Wheat in Punjab, Cotton in Maharashtra/Punjab, Rice in Madras.

Why the Demand for Indian Indigo?

• By the 13th century, Indian indigo was being used in Italy, France, and Britain. Since only small amounts reached Europe and the price was very high, European dyers had to depend on another plant called woad to make violet/blue dyes. Woad produced a pale, dull blue, while indigo produced a rich blue.
• Cloth manufacturers persuaded European governments to relax the ban on indigo imports.
• But between 1783 and 1789, the production of indigo in the world fell by half. So, Britain turned to India for its indigo needs.

🚜 PART 4: How was Indigo Cultivated in India?

1. The Nij System

• In this system, the planter produced indigo on lands that he directly controlled (bought or rented). He hired forced labourers (coolies) to work it.
• The Problem: Indigo could only be cultivated on fertile lands, which were already densely populated. It required large areas in compact blocks to operate profitably. It required many ploughs and bullocks (1 bigha needed 2 ploughs) which were difficult to buy/maintain and busy with rice cultivation exactly when indigo needed them.

2. The Ryoti System

• Under this system, the planters forced the ryots to sign a contract (satta) or an agreement. Those who signed got cash advances from planters at low interest rates.
• The Trap: The loan committed the ryot to cultivating indigo on at least 25% of his land. The planter provided the seed and drill; the ryot cultivated, weeded, and harvested. When the crop was delivered to the planter, the price paid was incredibly low. A new loan was immediately given, starting an endless cycle of debt.
• Indigo also exhausted the soil rapidly. After an indigo harvest, the land could not be sown with rice.

😠 PART 5: The "Blue Rebellion" and After

• Why did they rebel? The system was intensely oppressive. They got support from the local zamindars and village headmen who were angry at the increasing power of the planters.
• In 1859, the Lieutenant Governor toured the region. The magistrate Ashley Eden issued a notice stating ryots would not be compelled to accept indigo contracts. Word spread that Queen Victoria had declared indigo didn't need to be sown.
• Worried by the rebellion, the government brought in the military and set up the Indigo Commission.
• The Result: The Commission found the planters guilty of using coercive methods. It declared that indigo production was not profitable for ryots. They were told to fulfill existing contracts but could refuse to produce indigo in the future.
• Indigo production collapsed in Bengal. Planters shifted their operation to Bihar (Champaran), where Gandhi would later lead a movement against them in 1917.