East India Company Responsibilities
The famine occurred due to the British East India Company's policies in Bengal.
As a trading body, the first remit of the company was to maximise its profits and with taxation rights, the profits to be obtained from Bengal came from land tax as well as trade tariffs. As lands came under company control, the land tax was typically raised fivefold what it had been – from 10% to up to 50% of the value of the agricultural produce. In the first years of the rule of the British East India Company, the total land tax income was doubled and most of this revenue flowed out of the country. As the famine approached its height in April 1770, the Company announced that the land tax for the following year was to be increased by a further 10%.
Sushil Chaudhury writes that the destruction of food crops in Bengal to make way for opium poppy cultivation for export reduced food availability and contributed to the famine. The company is also criticised for ordering the farmers to plant indigo instead of rice, as well as forbidding the "hoarding" of rice. This prevented traders and dealers from laying in reserves that in other times would have tided the population over lean periods.
By the time of the famine, monopolies in grain trading had been established by the company and its agents. The company had no plan for dealing with the grain shortage, and actions were only taken insofar as they affected the mercantile and trading classes. Land revenue decreased by 14% during the affected year, but recovered rapidly. According to McLane, the first governor-general of British India, Warren Hastings, acknowledged "violent" tax collecting after 1771: revenues earned by the Company were higher in 1771 than in 1768. Globally, the profit of the company increased from fifteen million rupees in 1765 to thirty million in 1777. Nevertheless, the company continued to suffer financially, and influenced Parliament to pass the Tea Act in 1773 to lift import duties on tea shipped to the American colonies, which ultimately lead to the American War of Independence in April 1775.
Read more about this topic: Bengal Famine Of 1770
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