1.2.3 - Modern Indian History Notes 13

Elaborate Notes

The Treaty of Allahabad (1765)

The Treaty of Allahabad refers to two separate agreements signed on 12th and 16th August 1765, following the decisive victory of the English East India Company (EIC) at the Battle of Buxar (1764). The treaty was negotiated by Robert Clive on behalf of the EIC with the Mughal Emperor Shah Alam II and Shuja-ud-Daulah, the Nawab of Awadh. This treaty is a landmark event, as it formally established the EIC as a political power in India, laying the legal groundwork for British rule.

Provisions and Impact on Bengal:

Grant of Diwani: The first treaty, signed with Mughal Emperor Shah Alam II, granted the EIC the Diwani rights—the authority to collect revenues and administer civil justice—for the provinces of Bengal, Bihar, and Orissa. In return, the EIC agreed to pay the Emperor an annual tribute of 26 lakh rupees and cede the districts of Kora and Allahabad to him.
Establishment of Dual Government (1765-1772):
- This grant of Diwani led to the establishment of a “Dual System of Government” or Dyarchy in Bengal. Under this arrangement, the EIC held the real power through its control over revenue (Diwani), while the administrative and judicial responsibilities (Nizamat) theoretically remained with the Nawab of Bengal, Najm-ud-Daulah.
- In practice, this created a system of ‘power without responsibility’. The EIC controlled the finances but was not directly accountable for governance. The Nawab, conversely, had the responsibility for administration but lacked the financial resources or military power to enforce it effectively.
- To manage the revenue collection, the EIC appointed two Indian Deputy Diwans: Mohammad Reza Khan for Bengal and Raja Shitab Rai for Bihar. Significantly, Mohammad Reza Khan was also appointed as the Deputy Subadar, effectively controlling the Nizamat on behalf of the Nawab, which gave the Company indirect control over the entire administration.
- Consequences: Historian Percival Spear in The Oxford History of Modern India, 1740-1975 (1978) described this system as an “institutionalized plunder.” It led to administrative breakdown, severe oppression of the peasantry through exorbitant revenue demands, and a decline in agriculture and trade. The devastating Great Bengal Famine of 1770, which wiped out an estimated one-third of the population, is widely considered to have been exacerbated by the exploitative policies of the Dual Government.
- The system was abolished by Warren Hastings in 1772, who brought the administration of Bengal, Bihar, and Orissa under the direct control of the Company.

Provisions and Impact on Awadh:

The second treaty was signed with Shuja-ud-Daulah, the Nawab of Awadh.
- He was forced to pay a war indemnity of 50 lakh rupees to the EIC.
- He had to cede the districts of Allahabad and Kora to the Mughal Emperor Shah Alam II.
- A mutual defence alliance was signed, making Awadh a buffer state for the EIC’s territories in Bengal. Under this agreement, the EIC was obligated to provide troops for Awadh’s defence, for which the Nawab would pay.
- A British Resident was stationed at the Nawab’s court in Lucknow, marking the beginning of the EIC’s political influence in the state’s internal affairs.
- The Company was also granted duty-free trading rights in Awadh.
The ‘Ring Fence’ Policy: Clive’s arrangement with Awadh is seen as the genesis of the ‘Ring Fence’ policy, a strategy later perfected by Warren Hastings. This policy aimed to protect the Company’s core territories by creating a ring of allied, buffer states around them. The defence of Awadh was, in effect, the defence of Bengal, but at Awadh’s expense. This treaty was a precursor to the Subsidiary Alliance, as it involved a subordinate military relationship and the payment of a subsidy.

Subsidiary Alliance

The Subsidiary Alliance system was a policy of indirect rule perfected by Lord Wellesley, the Governor-General of India from 1798 to 1805. While the practice of providing military assistance for a subsidy was used by predecessors like Dupleix and Clive, Wellesley transformed it into a systematic tool for establishing British paramountcy over Indian states without the costs and complications of direct annexation.

Context and Justification:

Pitt’s India Act (1784): The Act had explicitly forbidden the Company from pursuing “schemes of conquest and extension of dominion,” reflecting the British government’s desire to consolidate gains rather than engage in costly wars.
Wellesley’s Imperial Ambition: Wellesley was a staunch imperialist who sought to expand British influence and eliminate French competition in India.
The Napoleonic Threat: Wellesley masterfully used the perceived threat of a French invasion of India as his primary justification. Napoleon’s campaign in Egypt (1798) and his communications with Tipu Sultan of Mysore were presented as evidence of an imminent danger. Historians like Edward Ingram, in his work Commitment to Empire: Prophecies of the Great Game in Asia (1981), have argued that Wellesley deliberately exaggerated this threat to persuade the authorities in London to sanction his aggressive policies.

Key Features of a Subsidiary Treaty:

British Protection: The EIC would assume responsibility for protecting the allied Indian state from all external and internal threats.
Permanent British Force: To provide this protection, a contingent of the Company’s army, known as the “subsidiary force,” would be permanently stationed within the state’s territory.
Subsidy Payment: The Indian ruler had to pay an annual subsidy for the maintenance of this force. If the ruler failed to make the payment, a portion of their territory would be ceded to the Company in lieu of the subsidy.
British Resident: A British Resident would be stationed at the ruler’s court, acting as a diplomatic channel but in reality, being the instrument of British control and interference.
Control over Foreign Policy: The Indian state was forbidden from engaging in diplomatic negotiations or warfare with any other state without the consent of the Governor-General.
Expulsion of Other Europeans: The ruler could not employ any Europeans in their service other than the British without prior permission.
Promise of Non-Interference: The EIC pledged not to interfere in the internal affairs of the state. This promise was almost universally violated.

Impact on Indian States:

Economic Ruin: The subsidies were exorbitant and often arbitrarily increased, leading to a massive drain of wealth from the state’s treasury. Cession of territories, like the Nizam of Hyderabad ceding the ‘Ceded Districts’ in 1800 and the Nawab of Awadh ceding half his kingdom (including Rohilkhand and Gorakhpur) in 1801, crippled their economies.
Political Subjugation: The states lost their sovereignty, independence, and control over foreign relations. The ruler was reduced to a figurehead, with the British Resident becoming the de facto power centre.
Military Demobilization: The states were forced to disband their own armies, leading to widespread unemployment among soldiers, who often turned to plunder (e.g., the Pindaris). This also stripped the states of their ability to defend themselves.
Administrative Decay: Protected by British arms from both internal rebellion and external invasion, rulers often became complacent and neglectful of their administrative duties and the welfare of their subjects, leading to accusations of “maladministration” which the British later used as a pretext for annexation (e.g., Awadh in 1856). Karl Marx noted that this system rendered Indian princes completely subservient tools of British policy.

Major States under Subsidiary Alliance:

Nizam of Hyderabad (1798): The first to accept, seeking protection against the Marathas and Mysore.
Mysore (1799): Imposed on the Wodeyar dynasty after the defeat and death of Tipu Sultan in the Fourth Anglo-Mysore War.
Awadh (1801): Forced to cede vast territories as permanent payment for an increased subsidy.
Peshwa Baji Rao II (1802): Signed the Treaty of Bassein to regain his position after being ousted by the Holkars, a move that precipitated the Second Anglo-Maratha War.
Bhonsle of Nagpur & Scindia of Gwalior (1803): Forced to sign after their defeat in the Second Anglo-Maratha War.
Travancore (1805): Accepted after the company helped suppress a military mutiny.

Prelims Pointers

Treaty of Allahabad: Signed in August 1765.
Parties: Robert Clive (EIC), Shah Alam II (Mughal Emperor), Shuja-ud-Daulah (Nawab of Awadh).
The EIC received Diwani (right to collect revenue) for Bengal, Bihar, and Orissa.
The Mughal Emperor received an annual pension of 26 lakh rupees and the districts of Kora and Allahabad.
The Nawab of Awadh paid a war indemnity of 50 lakh rupees.
Dual Government in Bengal: 1765-1772.
Key Indian Officials in Dual Govt: Mohammad Reza Khan (for Bengal), Raja Shitab Rai (for Bihar).
The Dual Government system was ended by Warren Hastings in 1772.
Ring Fence Policy: Associated primarily with Warren Hastings, but its origins lie in Clive’s treaty with Awadh. It aimed to create buffer states around EIC territory.
Subsidiary Alliance System: Systematized and perfected by Lord Wellesley (Governor-General, 1798-1805).
First state to accept Subsidiary Alliance: Nizam of Hyderabad (1798).
Treaty of Bassein (1802): A subsidiary treaty signed between the EIC and Peshwa Baji Rao II. It was a major cause of the Second Anglo-Maratha War (1803-1805).
Chronological Order of states accepting Subsidiary Alliance (Major ones):
1. Hyderabad (1798)
2. Mysore (1799)
3. Awadh (1801)
4. Peshwa (1802)
5. Bhonsle & Scindia (1803)
Lord Wellesley was recalled in 1805 due to the high financial cost of his expansionist wars and policies.

Mains Insights

Treaty of Allahabad: The Foundation of British Sovereignty

Transition of EIC’s Role: The treaty marked the pivotal moment when the EIC transitioned from a commercial entity to a de facto sovereign power. By acquiring the Diwani, it gained control over the vast revenues of India’s richest province, which it then used to finance its trade, administration, and military expansion, effectively using Indian money to conquer India.
The ‘Masked’ System of Rule: The Dual Government was a shrewd political move by Clive. He avoided the responsibilities of direct rule, which the Company was ill-equipped to handle at the time. It also served to ‘mask’ the Company’s sovereignty, preventing a united backlash from other Indian powers and avoiding the scrutiny of the British Parliament.
Consequences of Power without Responsibility: This system institutionalized irresponsibility. Company officials, focused on maximizing revenue for personal gain and for the Company, had no incentive to invest in administration or public welfare. The result was a catastrophic failure of governance, leading directly to the Bengal Famine of 1770 and exposing the deeply exploitative nature of early colonial rule.

Subsidiary Alliance: An Instrument of Imperialism

Evolution of British Policy: The Subsidiary Alliance represents a significant evolution from the more defensive ‘Ring Fence’ policy. While the Ring Fence sought to create buffers for security, the Subsidiary Alliance was an offensive mechanism for establishing political dominance and economic control. It was the crucial step towards the policy of ‘Subordinate Isolation’ under Lord Hastings, where every state was forced to accept British paramountcy.
Historiographical Debate (Wellesley’s Motives):
- Imperialist School: Historians like P.E. Roberts justified Wellesley’s actions as a necessary defensive response to the threat posed by Napoleonic France and intransigent Indian rulers like Tipu Sultan. They view it as a strategy that brought stability to a fragmented India.
- Nationalist/Revisionist School: Historians such as Bipan Chandra and Edward Ingram argue that the ‘French threat’ was a pretext for a pre-planned policy of aggressive expansionism driven by Wellesley’s personal ambition and the economic interests of the EIC. They see the system as a primary tool for the political and economic subjugation of India.
Cause and Effect Relationship:
- Cause: Political fragmentation in post-Mughal India, inter-state rivalries (e.g., Hyderabad vs. Marathas), Wellesley’s imperialist drive, and the pretext of the French threat.
- Effect: Systematic dismantling of Indian states’ sovereignty, economic drain through subsidies, creation of a vast British-Indian army funded by Indian states, widespread social dislocation due to demobilization of local armies, and the establishment of undisputed British paramountcy by the early 19th century. This laid the foundation for the political grievances that later culminated in the Revolt of 1857.

Previous Year Questions

Prelims

Who among the following Governor-Generals created the Fort William College at Calcutta? (UPSC CSE 2021 - Modified for context) (a) Lord Cornwallis (b) Lord Wellesley (c) Lord William Bentinck (d) Warren Hastings

Answer: (b) Lord Wellesley. Fort William College was established in 1800 by Lord Wellesley to train civil servants of the EIC in Indian languages and culture, reflecting his vision of a more structured and permanent British administration in India.
With reference to the history of India, the term ‘Banian’ refers to: (UPSC CSE 2020 - Paraphrased) (a) An officer in charge of the state treasury. (b) An Indian agent or middleman for the East India Company. (c) A designated revenue payer to the State. (d) A member of the British Resident’s staff.

Answer: (b) An Indian agent or middleman for the East India Company. Banians were crucial intermediaries in the EIC’s commercial and political operations in 18th-century Bengal, the period when the Dual Government was established.
Consider the following statements regarding the Subsidiary Alliance system:
1. It was first introduced by Robert Clive in Bengal.
2. The Nizam of Hyderabad was the first Indian ruler to accept it.
3. Under the system, the Indian state could not enter any alliance without British permission.
Which of the statements given above is/are correct? (a) 1 and 2 only (b) 2 and 3 only (c) 3 only (d) 1, 2 and 3

Answer: (b) 2 and 3 only. Statement 1 is incorrect; while Clive’s treaty with Awadh had similar elements, the systematic policy of Subsidiary Alliance is credited to Lord Wellesley. Statements 2 and 3 are correct descriptions of the policy and its application.
The main purpose of the ‘Ring Fence’ policy of Warren Hastings was to: (a) Annex the neighbouring states to expand the empire. (b) Establish British paramountcy over all Indian rulers. (c) Defend the Company’s borders by strengthening the frontiers of their allies. (d) Extract maximum revenue from the allied states through subsidies.

Answer: (c) Defend the Company’s borders by strengthening the frontiers of their allies. The Ring Fence policy was primarily defensive, aiming to create buffer states (like Awadh for Bengal) whose defence would protect the Company’s own territories, with the cost borne by the ally.
Which one of the following was a direct consequence of the Treaty of Bassein (1802)? (a) The First Anglo-Maratha War (b) The Fourth Anglo-Mysore War (c) The Second Anglo-Maratha War (d) The annexation of Awadh

Answer: (c) The Second Anglo-Maratha War. The Treaty of Bassein, a subsidiary alliance signed by Peshwa Baji Rao II, was seen by other major Maratha chiefs like Scindia and Bhonsle as a surrender of Maratha independence. Their opposition to this treaty led directly to the outbreak of the Second Anglo-Maratha War in 1803.

Mains

Why did the armies of the British East India Company – mostly comprising of Indian Soldiers – win consistently against the more numerous and better equipped armies of the then Indian rulers? Give reasons. (UPSC CSE 2022)

Answer Outline:
- Introduction: Briefly state that the EIC’s military success was not merely due to superior numbers or equipment (which was often not the case) but a combination of superior military discipline, strategy, stable financing, and the exploitation of Indian political disunity.
- Reasons for British Success:
  - Superior Discipline and Training: The Company’s army, though composed of Indian sepoys, was drilled and trained according to modern European methods, emphasizing discipline, coordinated firing (volley fire), and infantry tactics.
  - Stable Financial Support: The acquisition of Diwani of Bengal provided a steady and vast source of revenue. The Subsidiary Alliance system further allowed the British to maintain a large standing army at the expense of Indian states, ensuring soldiers were paid regularly, which boosted morale and loyalty.
  - Effective Leadership: The Company employed a series of brilliant and ruthless military commanders like Robert Clive, Eyre Coote, Arthur Wellesley, and Lord Lake who were masters of strategy and diplomacy.
  - Technological and Strategic Edge: While Indian rulers also had access to modern artillery, the British had better command and control structures, superior military intelligence, and often a more mobile artillery.
  - Indian Political Disunity: Indian rulers were deeply divided by mutual jealousies and rivalries. The British expertly exploited these divisions through diplomacy and alliances (like Subsidiary Alliance), preventing the formation of a united front against them.
- Conclusion: Conclude by summarizing that the British victory was a result of a multi-faceted superiority in military organization, financial management, and political maneuvering, which allowed a small foreign power to dominate the subcontinent.
The 1857 Uprising was the culmination of the recurrent big and small local rebellions that had occurred in the preceding hundred years of British rule. Elucidate. (UPSC CSE 2020)

Answer Outline:
- Introduction: Acknowledge that the 1857 Revolt was not a sudden event but the explosive outcome of a century of accumulated grievances stemming from the political, economic, and socio-religious policies of the EIC.
- Political Causes: Mention the series of aggressive expansionist policies. The Subsidiary Alliance of Wellesley reduced powerful rulers to dependents, causing resentment. The loss of sovereignty and the constant interference of British Residents created deep animosity among the ruling class.
- Economic Causes: Discuss the economic drain caused by high subsidy demands under the Subsidiary Alliance, which led to high taxation and peasant oppression. The disbanding of native armies led to unemployment and social instability. British economic policies ruined traditional industries.
- Administrative and Social Causes: Mention the resentment caused by British arrogance and racial discrimination. The constant interference in the internal affairs of subsidiary states, often leading to accusations of maladministration and eventual annexation (e.g., Awadh in 1856), created a sense of betrayal and fear.
- Link to Pre-1857 Uprisings: Provide examples of earlier uprisings (e.g., Vellore Mutiny of 1806, rebellions in Travancore, etc.) that were often linked to the terms of subsidiary treaties or British interference. Show how these were localized expressions of the same discontent that became widespread in 1857.
- Conclusion: Conclude that the policies initiated by figures like Clive and Wellesley, particularly the Subsidiary Alliance, systematically dismantled the old political and economic order, creating widespread discontent across various sections of society, which culminated in the great revolt of 1857.
Critically examine Lord Wellesley’s policy of Subsidiary Alliance. How did it contribute to the establishment of the British Empire in India?

Answer Outline:
- Introduction: Define the Subsidiary Alliance as a system of indirect rule perfected by Lord Wellesley, ostensibly for defensive purposes but in reality, a powerful tool for imperial expansion.
- Critical Examination (Negative Impacts on Indian States):
  - Loss of Sovereignty: Detail how states lost control over their defence and foreign policy, becoming puppet regimes.
  - Economic Exploitation: Explain the ‘drain of wealth’ through exorbitant subsidies and territorial cessions.
  - Military Weakness: Discuss the forced disbandment of local armies, which destroyed their self-defence capability.
  - Administrative Collapse: Analyze how British protection made rulers unaccountable to their subjects, leading to misgovernance.
- Contribution to British Empire Building:
  - “Imperialism on the Cheap”: It allowed the EIC to maintain a large, powerful army at the expense of Indian states, using this army to further expand its empire.
  - Strategic Advantage: It gave the British strategic military positions across India by stationing troops in allied states. The system of Residents provided valuable intelligence.
  - Elimination of Rivals: The policy effectively isolated Indian states from each other and eliminated French influence from their courts.
  - Paving the Way for Annexation: It created conditions of weakness and misrule that were later used as justifications for direct annexation.
- Conclusion: Conclude that the Subsidiary Alliance was an ingeniously crafted policy that, under the guise of offering protection, systematically stripped Indian states of their power, wealth, and sovereignty, thereby playing a crucial role in transforming the EIC from a trading power into the paramount political authority in India.
What was the ‘Dual System of Government’ in Bengal? Analyze its impact on the administration and economy of the province.

Answer Outline:
- Introduction: Explain the Dual System (1765-1772) established by Robert Clive after the Treaty of Allahabad, where the EIC acquired the Diwani (revenue rights) while the Nawab retained nominal Nizamat (administrative responsibility).
- Mechanism of the System: Describe how it created a division between power and responsibility. The Company controlled the finances without accountability for governance, while the Nawab was responsible for administration without any control over the purse strings. Mention the role of Deputy Diwans like Mohammad Reza Khan.
- Impact on Administration:
  - Administrative Breakdown: The system led to a complete collapse of law and order as neither the Company nor the Nawab was genuinely in charge.
  - Widespread Corruption: Company officials engaged in private trade and extorted wealth, while Indian officials appointed by them also enriched themselves. The judicial system became a tool for oppression.
- Impact on Economy:
  - Oppression of Peasantry: Revenue demands were increased drastically, and collection was ruthless, leading to the impoverishment of cultivators.
  - Decline in Agriculture & Trade: The focus on revenue extraction at all costs led to a decline in agricultural investment and output. Traditional artisans and weavers were ruined by the Company’s monopolistic practices.
  - The Great Famine of 1770: Argue that while the famine was caused by drought, its devastating impact was greatly worsened by the administrative apathy and exploitative revenue policies of the Dual Government.
- Conclusion: Conclude that the Dual Government was an unmitigated disaster for Bengal, representing one of the darkest phases of early British rule. It was a system of institutionalized plunder that destroyed the province’s economy and administration, ultimately forcing the British to assume direct responsibility for governance in 1772.
Trace the evolution of British policy towards Indian states from the ‘Ring Fence’ policy to the ‘Subsidiary Alliance’.

Answer Outline:
- Introduction: State that British policy towards Indian states was not static but evolved according to the Company’s growing power and imperial ambitions, moving from a defensive posture to an aggressive one.
- Phase 1: Policy of the Ring Fence (c. 1765-1798)
  - Architect: Primarily associated with Warren Hastings.
  - Objective: Defensive. The main aim was to protect the Company’s own territories by defending the frontiers of its neighbours, creating buffer states.
  - Example: The relationship with Awadh, which served as a buffer for Bengal against Maratha incursions. The Company provided military aid for a price but did not seek to control the state’s internal affairs extensively.
- Phase 2: Policy of Subsidiary Alliance (c. 1798-1813)
  - Architect: Lord Wellesley.
  - Shift in Objective: From defensive to offensive and interventionist. The goal was not just to create buffers but to establish British paramountcy and eliminate all foreign (especially French) influence.
  - Mechanism: Explain the key features—permanent stationing of troops, subsidy, loss of sovereignty in foreign affairs, and the role of the British Resident.
  - Contrast with Ring Fence: Highlight the key differences. The Subsidiary Alliance was more intrusive, permanent, and aimed at political subjugation rather than just military alliance. It involved internal interference and a complete surrender of external sovereignty, which the Ring Fence policy did not necessarily entail.
- Conclusion: Summarize the evolution as a shift from a policy of a ‘state among states’ with a defensive perimeter to a policy of an aspiring paramount power actively subjugating its neighbours. The Ring Fence was a strategy for security, while the Subsidiary Alliance was a tool for empire-building.

GS Notes