Question

What led to the economic crisis in the Bengal???

Answer 1

The Company becomes the Diwan
 The Mughal emperor appointed the East India Company as the Diwan of Bengal on 12 August, 1765.
 The Company became the chief financial administrator of the territory under its control.

 Revenue for the Company

 After becoming the Diwan, the Company aimed at increasing revenue as much as possible and buying silk cloth and fine cotton as cheaply as possible.
 In five years, the value of goods bought by the Company in Bengal doubled.  
 Now, the cost of goods purchased for export was paid from the revenue collected in Bengal.
 Bengal started facing deep economic crisis and artisans started deserting the villages.
 Peasants were unable to pay their dues, artisanal production declined and agricultural cultivation collapsed.
 In 1770, one-third of the population of Bengal was wiped out due to a terrible famine.