why did East India company incur financial burden
Answers
Answer:
Explanation:
The East India Company was awarded with the Lordship of Bengal once they won the Battle of Buxar in 1764. Soon they started looking for trained administrators.
The Company was under severe debt which prompted them to annex Bengal in order to fix their books. Inspite of attempts made by the Company to centralised revenue collection in 1772 and keep a check on corruption in 1773, collection of taxes were irregular in nature. This system made the Bengal famine situation in 1769-1770 and led to death of 7–10 million people. The situation went out of control and forced the Crown to follow direct rule in 1858 .
The Company soon took upon the system (tax) followed by Mughal Empire. Under this system farmers were forced to take upon the maximum burden of tax. Out of the total revenue, one-third was collected for Crown or Company use. Most of the above revenue collected were spent for maintaining the Company’s private armed forces and also on the production of spices and tea.
The Company could not effectively administer India as it followed an outdated revenue system and debts.
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