Taxation in Early British Period

This chapter covers taxation during the East India Company administration in India, focussing on Robert Clive, Warren Hastings and Charles Cornwallis as designers of tax policy from mid-1700s to early 1800s, followed by British sovereign rule from 1857. Heavy impositions began in 1757 with the victory of Clive in a battle with the Nawab of Bengal, continuing replacements on the throne and war reparations therefrom. Taxation pressure was not any lighter during famine when, in 1770, under Warren Hastings, half the labouring and working people had died. The Company rigorously enforced tax collection while increasing revenue assessments. Hastings commented that tax collections ‘violently kept up to their former standards’. A Permanent Settlement on land was introduced by Cornwallis in 1793 whereby absolute rights were given to landowners provided they paid a pre-designated land tax in perpetuity. Unless paid punctually, the land was sold to someone else, with half the estates changing hands in the ensuing decades. After 1857, the Indian economy functioned to ensure an Indian market for British manufacturers, remittances to Britain and high returns on British investment. GDP stagnated. Per-capita income declined. Under such conditions, extraction of heavy taxes overburdened all producers—agricultural and non-agricultural—in the economy.