On 12 August, 1765, the East India Company was granted the Diwani of Bengal and was now the chief financial administrator of Bengal. The company now had rights to collect revenues in Bengal.
Robert Clive, the governor of Bengal appointed native agencies who helped him collect the revenues on behalf of the Company. However, this system failed when Clive left India in 1767.
They hence forced the peasants to pay heavy dues as land taxes and forced artisans to sell their goods at very cheap rates. This drove the peasants and artisans away from their villages, which consequently led to a decline in the production of artisanal goods and agricultural crops. The economy of Bengal collapsed.
Bengal was struck by a terrible famine in 1770, which killed ten million people. The company therefore introduced many land revenue systems. In 1793, the Permanent Settlement system was introduced by Lord Cornwallis, the Governor-General of India.
Under this system, zamindars were given the responsibility of collecting rent from the peasants and in return paying revenue to the Company. This revenue would remain fixed throughout. However, the system failed.
Another system introduced by Captain Alexander Read was called the ryotwari. The system was further developed by Thomas Munro, the Governor of Madras and came to be known as the Munro system. In 1822, another revenue system called the ‘mahalwari’ system devised by Holt Mackenzie came into effect in the north western province of the Bengal Presidency. However, all the land revenue systems introduced by the company failed miserably.