The Structure of Government and the Economic Policies of the British Empire in India (1757-1857)

Learning Outcomes:

1. Understand the administrative evolution and control strategies of the British in India.
2. Examine the commercial and economic policies enforced by the British Empire.
3. Analyze the impact of British policies on India’s socio-economic structure.
4. Explore the development of infrastructure under British rule and its underlying motives.

The Structure of Government

The East India Company acquired control over Bengal in 1765 with no intention of administrative innovation. The Company’s primary objectives were:

1. Profit Maximization – The focus was on maximizing profits for the Company and its British stakeholders.
2. Trade and Taxation – Trade operations continued with Indian officials under British oversight, aiming at collecting taxes for remittance to England.
3. Dual Government System – Indian officials had responsibility without power, while British officials wielded power without responsibility, leading to corruption and inefficiency.

By 1772, the Dual Government was abolished, and Bengal’s administration was directly controlled by Company servants. However, the Company’s transition from a commercial entity to a political power led to several administrative challenges, as its governance model, initially designed for commerce, struggled with the complexities of ruling millions of people.

British Control and Administrative Issues

The governance model posed three major challenges:

1. Company-State Relations – Defining the relationship between the Company’s Indian possessions and the British government.
2. Control Over Officials – Managing a large number of British officials and soldiers stationed far from England.
3. Centralized Control in India – Establishing a single control center in India for British possessions spread across Bengal, Madras, and Bombay.

The most pressing issue was the Company’s immense wealth and influence, which bred jealousy and rivalry among British merchants and manufacturers excluded from Indian trade. The Company’s monopoly on trade and the wealth amassed by its officials, often derogatorily termed as ‘nabobs’, attracted criticism and opposition from various sections of British society.

Legislative and Administrative Reforms

To address these challenges, the British Parliament passed significant acts:

1. Regulating Act of 1773 – This act altered the constitution of the Court of Directors and subjected their actions to British government supervision. However, it proved ineffective in giving decisive control to the British government.
2. Pitt’s India Act of 1784 – This act established the Board of Control, giving the British government supreme control over the Company’s affairs in India. The Governor-General, supported by a Council, was vested with substantial authority, marking the beginning of a new phase of British conquest in India.

British Economic Policies in India (1757-1857)

Commercial Policy

Before 1757, the East India Company primarily functioned as a trading corporation, importing goods into India and exporting Indian textiles and spices abroad. This trade was mutually beneficial until the Industrial Revolution in Britain. The success of Indian textiles in Europe led to:

1. Jealousy Among British Manufacturers – Indian textiles became so popular in Britain that they threatened local industries. Laws were passed to restrict the use of Indian textiles, imposing heavy duties on imports.
2. Change Post-Plassey – After 1757, the Company used its political power to dominate Indian trade and production, dictating terms to weavers, compelling them to sell at loss-making prices, and monopolizing trade, which stifled Indian industries.

With the advent of the Industrial Revolution in Britain, the relationship between Britain and India transformed:

1. Rise of British Industry – British manufacturers sought raw materials from India and pushed their manufactured goods into Indian markets. This led to a shift where India became a supplier of raw materials and a consumer of British products.
2. Impact on Indian Handicrafts – Indian industries faced unequal competition from British machine-made goods, leading to their gradual extinction.

Drain of Wealth

A significant aspect of British rule was the economic drain from India, where wealth was exported to Britain without any material return to India. This drain began after the Battle of Plassey in 1757, where British officials extracted immense wealth, which was sent back to England.

1. Revenue Exploitation – The Company directly organized the drain through revenue collections and exports, leading to a significant outflow of wealth.
2. Impact on India’s Economy – The drain was a unique feature of British rule, as even the worst Indian rulers reinvested revenue within the country. However, the British, being foreign rulers, used Indian revenues for their benefit, contributing to Britain’s capitalist development at the cost of India’s economy.

Development of Transport and Communication

The British realized that an efficient transport system was crucial for:

1. Flow of British Manufactures – Facilitating the import of British goods into India and exporting Indian raw materials.
2. Railway Development – The construction of railways began in the mid-19th century, primarily funded by British capital. Railways were used to link raw material-producing areas with ports, serving British economic interests.

The introduction of railways, steamships, and telegraph systems in India primarily served British imperial interests, enabling more efficient administration and control over the country.

Land Revenue Policy

The East India Company relied heavily on Indian revenues for various purposes, leading to the imposition of steep taxes on Indian peasants. This revenue was essential for:

1. Financing Conquests – The Company used Indian revenue to finance wars and the administration of its expanding empire.
2. Permanent Settlement (1793) – Introduced by Lord Cornwallis, this settlement converted zamindars into landlords with fixed revenue obligations. However, it placed immense pressure on peasants, leading to widespread poverty.

Ryotwari and Mahalwari Systems

The Ryotwari Settlement in the Madras and Bombay Presidencies recognized cultivators as landowners, but high land revenue demands made it difficult for peasants to sustain themselves. The Mahalwari System, introduced in the Ganga valley and Punjab, was a modified version of the zamindari system, with revenue settlements made village by village.

Important Note:
The British land revenue policies fundamentally altered India’s traditional land systems, introducing private land ownership that destabilized rural society and led to widespread economic hardship among Indian peasants.

MCQ

Which act established the Board of Control, giving the British government supreme control over the East India Company’s affairs in India?

• A) Regulating Act of 1773
• B) Pitt’s India Act of 1784
• C) Charter Act of 1813
• D) Charter Act of 1833

Answer: B) Pitt’s India Act of 1784