Colonial Rule: Economy and Administration

After Plassey, Bengal's revenue began to finance England's Indian imports — tribute labelled trade. Dadabhai Naoroji, in Poverty and Un-British Rule in India (1901), named the mechanism 'the drain of wealth': the unrequited export of India's surplus as Home Charges, dividends and the Company-bureaucracy's remittances — the first scientific critique of colonial economics. R.C. Dutt's Economic History of India supplied the statistics; the drain became the cornerstone of nationalist economic thought.

The Raj re-founded Indian agriculture on three revenue systems. The Permanent Settlement (1793) of Cornwallis fixed Bengal's land revenue forever with zamindars, creating a landlord class loyal to the Raj but ruining the peasantry it made tenants-at-will. The ryotwari system of Munro and Read (Madras, Bombay, Bombay Deccan) settled directly with the cultivating ryot; and the mahalwari system (North-Western Provinces, Punjab) settled with the village community (mahal). Everywhere the assessment was heavy, payable in cash, and enforced by sale of land — driving peasants into the grip of the moneylender.

Colonial conquest inverted India's trade: Dhaka's muslin, once the wonder of the world, died as machine-made Lancashire cloth flooded a market whose tariffs Britain controlled; William Bentinck's minute remarked that 'the bones of the cotton-weavers are bleaching the plains of India'. India became an exporter of raw materials — cotton, jute, indigo, opium — and an importer of manufactures.

Yet the Raj also built the skeleton of modern India: the railways from 1853 (Bombay–Thane), canals and telegraph, a unified legal-administrative frame, and English education from Macaulay's Minute (1835) — created, in Macaulay's words, for 'a class of persons, Indian in blood and colour, but English in taste'. Nationalists learned to weigh both ledgers: the railways that moved troops and grain-to-ships also carried Indians to each other and made a nation thinkable, even as nineteenth-century famines killed tens of millions in its valleys.