Chapter 3 – Ruling from Countryside

The Company Becomes the Diwan

On August 12, 1765, the Mughal emperor officially appointed the East India Company as the Diwan (chief
financial administrator) of Bengal. Though the actual event was a modest affair, it was later depicted in
grand paintings commissioned by Robert Clive to mark it as a significant moment in British history. As
Diwan, the Company took control of the land revenue administration in Bengal, responsible for organizing
revenue to cover its increasing expenses while continuing its trade operations. Over time, the Company
realized it needed to govern with caution, acknowledging the local rulers who had traditionally held power
and prestige in the countryside. While these local authorities had to be controlled, they could not be
entirely removed, as pacifying them was essential for maintaining stability.

Revenue for the Company

The Company had become the Diwan, but it still saw itself primarily as a trader. The Company’s aim was to
increase revenue by buying fine cotton and silk cloth as cheaply as possible. Within a span of five years, the
value of goods bought by the Company in Bengal doubled. The Company, before 1865, purchased goods in
India by importing gold and silver from Britain. Now it was financed by the revenue collected in Bengal.
Artisanal production was in decline, and agricultural cultivation showed signs of collapse. Then in 1770, a
terrible famine killed ten million people in Bengal.

The need to improve agriculture

In 1793, the Company introduced the Permanent Settlement. By the terms of the settlement, the rajas and
taluqdars were recognised as zamindars, who were asked to collect rent from the peasants and pay
revenue to the Company. The amount to be paid was fixed permanently. This settlement 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.
The Problem
The Permanent Settlement created problems. Soon, the company officials discovered that the zamindars
were not investing in the improvement of land because the fixed revenue was very high, whoever failed to
pay the revenue lost their zamindari. By the first decade of the nineteenth century, the situation changed.
The prices in the market rose, and cultivation slowly expanded. Even then, the zamindars were not
interested 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.
In the villages, the cultivator found the system extremely oppressive. The rent they paid to the zamindar
was high, so they took a loan from the moneylender, and when they failed to pay the rent, they were
evicted from the land.
The new system is devised
Earl y nineteenth century, the Company officials decided to change the system of revenue. Holt Mackenzie
from Bengal Presidency devised the new system, which came into effect in 1822. 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, a new system was devised known as the ryotwar (or ryotwari). This
system was initiated by Captain Alexander Read and Thomas Munro and was implemented across South
India. 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. 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.
All was not well
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.
Crops for Europe
British 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 tried to expand the cultivation of opium and indigo.
The Company 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.
Does colour have a history?
The rich blue colour was produced from a plant called indigo. The blue dye used in the Morris prints in
nineteenth-century Britain was manufactured from indigo plants cultivated in India. India was the biggest
supplier of indigo in the world at that time.
Why the demand for Indian indigo?
Indigo plants grow in the tropics. In 13th century, Indian indigo was used by cloth manufacturers in Italy,
France and Britain to dye cloth. Small amounts of Indian indigo reached the European market, and its price
was very high. Therefore, European cloth manufacturers had to depend on another plant called woad to
make violet and blue dyes. Woad was more easily available in Europe. It was grown in northern Italy,
southern France and in parts of Germany and Britain.
Indigo produced a rich blue colour, whereas the dye from woad was pale and dull. By the seventeenth
century, European cloth producers persuaded their governments to relax the ban on indigo import. The
French began cultivating indigo in St Domingue in the Caribbean islands, the Portuguese in Brazil, the
English in Jamaica, and the Spanish in Venezuela.
By the end of the eighteenth century, the demand for Indian indigo grew further. Britain began to
industrialise, and its cotton production expanded dramatically, creating an enormous new 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.
Britain turns to India
In Europe, the demand for indigo was high, so the Company in India looked for ways to expand the area
under indigo cultivation. 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.
Gradually, the indigo trade grew, so commercial agents and officials of the Company began investing in
indigo production. The Company officials were attracted by the prospect of high profits, numerous
Scotsmen and Englishmen came to India to become indigo planters. Those who had no money to produce
indigo could get loans from the Company.
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.
The problem with Nij cultivation
The planters found it difficult to expand the area. Indigo could only be cultivated on fertile lands and these
were all already densely populated. Planters attempted to lease land around the indigo factory and evict
the peasants from the area, this always led to conflicts and tension. Nij cultivation on a large scale also
required many ploughs and bullocks.
Investing on purchase and maintenance of ploughs was a big problem. Nor could supplies be easily got
from the peasants since their ploughs and bullocks were busy on their rice fields, again exactly at the time
that the indigo planters needed them.
Till the late nineteenth century, planters were therefore reluctant to expand the area under nij cultivation.
Less than 25 per cent of the land producing indigo was under this system.
Indigo on the land of Ryots
The planters, under the ryoti system, were forced to sign a contract, an agreement (satta), 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. The planter provided the seed and
the drill, while the cultivators prepared the soil, sowed the seed and looked after the crop.
When the harvested crop was delivered to the planter, a new loan was sanctioned, and the cycle started all
over again. Peasants soon realised how harsh the loan system was. The planters usually insisted that indigo
be cultivated on the best soils in which peasants preferred to cultivate rice. Indigo 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
The Blue Rebellion of 1859 was a significant uprising by indigo peasants (ryots) in Bengal who refused to
grow indigo and pay rents to exploitative European planters. The rebellion spread rapidly, with ryots
attacking indigo factories using traditional weapons, while women joined the fight with household items.
Those collaborating with planters were socially boycotted, and the planters’ agents collecting rent were
often beaten. The ryots vowed to no longer take advances for indigo cultivation nor tolerate intimidation
by the planters' enforcers.

The rebellion was fueled not only by the oppressive indigo system but also by the belief that the ryots had
support from local zamindars and village headmen, many of whom resented the planters’ growing power
and forced land leases. These local leaders mobilized peasants and resisted planters’ agents, strengthening
the rebellion.

Additionally, the ryots believed the British government would support them, especially after the 1857
Revolt. The Lieutenant Governor’s visit and a notice by magistrate Ashley Eden, indicating that ryots would
not be forced into indigo contracts, gave the peasants hope and encouragement. This official action was
seen as government backing for the peasants’ cause.

As the rebellion grew, intellectuals from Calcutta highlighted the peasants' plight and condemned the
planters' harsh practices. The government, alarmed by the unrest, deployed the military to protect the
planters and set up the Indigo Commission. The Commission found the planters guilty of coercion, declared
indigo cultivation unprofitable for peasants, and allowed ryots to refuse indigo cultivation in the future
while insisting on honoring existing contracts.
The Blue Rebellion was a landmark in organized peasant resistance against colonial economic exploitation
and marked a critical moment in the struggle against British policies.