Treaty Of AllahabadEdit
The Treaty of Allahabad (1765) stands as a pivotal moment in the transition from a fragmented, aristocratic polity in large parts of India to a centralized, bureaucratic authority guided from Calcutta under the auspices of the East India Company. Negotiated in Allahabad after the decisive Battle of Buxar (1764), the agreement granted the East India Company the Diwani—the right to collect revenue and oversee civil administration—for the provinces of Bengal, Bihar, and Orissa. In return, the Mughal emperor Shah Alam II and the Nawab of Awadh retained nominal sovereignty and received support from the Company, effectively converting imperial authority into a framework that could be managed and tax funded by the Company’s administrators. The treaty therefore marked the point at which the Company’s commercial power became the core of political power in key Indian territories, with far-reaching consequences for governance, agriculture, and commerce in the region. The arrangement also set the stage for the long arc of British governance in Bengal and beyond, culminating in the establishment of a formal revenue system and a gradual expansion of British political influence across the subcontinent.
Background
The late 17th and early 18th centuries saw the Mughal Empire decline in central authority, creating a power vacuum in eastern and northern India. Local leadership and new commercial powers filled the gap, often with the backing of outsiders who offered military protection and a favorable fiscal environment.
The Battle of Buxar (1764) brought together the forces of the East India Company and the combined interests of the Mughal Empire under Shah Alam II, the Nawab of Awadh (Shuja-ud-Daulah), and the rival strategic concern of other locally powerful actors. The result reinforced Company leverage in the region and created a pathway to formalized political and financial arrangements.
In this context, the British sought a stable revenue base and predictable governance as a foundation for commercial activity. The East India Company presented an argument that centralized administration and standardized taxation would reduce chaos, standardize tax collection, and improve security for both trade and local populations.
Shah Alam II, while restored to a shadow of regal authority, relied on British protection and financial arrangements to sustain his court and his capacity to project legitimacy. The Nawab of Awadh, likewise, navigated a shifting balance of power that favored a legal and fiscal framework compatible with Company interests.
Terms of the treaty
The core provision granted the East India Company the Diwani—the right to collect taxes and administer civil justice—in the provinces of Bengal, Bihar, and Orissa. This gave the Company direct control over most of the revenue streams and the administrative apparatus of those regions.
In return, the Mughal emperor and the Nawab of Awadh retained ceremonial recognition and a limited, clearly defined role within a British-assisted hierarchy. The arrangement was framed as a mutual alliance, but the practical effect was to subordinate traditional sovereignty to a new, bureaucratic authority centered on Calcutta.
The Company also committed to providing ongoing subsidies and stipends to sustain the Mughal court and its official apparatus. These payments helped stabilize the imperial prestige while Western-style bureaucratic governance took root in the territories under Company administration.
The legal and administrative changes under the treaty paved the way for a more standardized system of governance, including codified revenue collection and legal procedures that could be managed by Company agents and local collaborators.
The settlement did not instantly displace all traditional structures; rather, it embedded British fiscal and administrative practices within the existing political framework, creating a hybrid system that emphasized order, predictability, and revenue security for the Company.
Aftermath and significance
The treaty anchored the Company’s revenue power in Bengal, Bihar, and Orissa, making those provinces the financial backbone of British operations in India for years to come. The ability to tax and administer these territories provided the resources necessary for expanding commercial and political influence.
In the longer run, the Allahabad arrangement contributed to the evolution of British governance through a sequence of administrative and fiscal reforms, culminating in the Permanent Settlement of 1793. That reform, led by Lord Cornwallis, sought to stabilize land revenue, create a predictable tax base, and align local incentives with imperial objectives.
The treaty helped establish a model of governance in which British bureaucrats, supported by local collaborators, managed revenue, law, and administration—an approach that produced relative short-term stability and a durable framework for state-building, even as sovereignty remained formally vested in Indian rulers.
The territorial and fiscal realignments that began with Allahabad affected agricultural policy, landholding patterns, and tax collection methods across eastern Bengal and adjacent provinces. The result was a more centralized and bureaucratic system, which, while designed to safeguard commercial interests, also reshaped local governance in ways that echoed beyond the immediate terms of the agreement.
Controversies and debates
Supporters of the arrangement argue that, after years of political fragmentation and internecine conflict, the treaty offered a practical route to order, security, and economic development. By providing a clear framework for taxation and governance, the Company reduced predatory chaos and created a more predictable environment for agriculture, trade, and the rule of law.
Critics contend that the treaty marked a significant erosion of native sovereignty. By transferring the key fiscal and administrative functions to a foreign corporation, many Indians perceived a shift from imperial patronage and traditional governance to a commercial, bureaucratic authority that treated revenue extraction as its primary objective. The long-term consequence, critics assert, was a transfer of political power into hands largely unaccountable to local populations.
The balance between stability and autonomy remains a central theme in historiography. Proponents of the practical state-building view emphasize that the period laid the groundwork for more mature governance and the rule of law, even if it meant subordination to a distant imperial power. Critics highlight the coercive dimensions of tax collection, the disruption of traditional landholding patterns, and the eventual primacy of imperial interests over local welfare.
In debates about the moral and political character of colonial rule, some scholars point to the Bengal famine of 1770 and related episodes as illustrations of how revenue-focused governance could lead to hardship for ordinary people when extraction overwhelmed agrarian resilience. Defenders of the treaty response stress that such famines arose from a broader set of factors, including geography, climate, and the evolving global economy, while acknowledging the imperfections of early colonial administration.
Contemporary critics of imperial historiography often label arrangements like Allahabad as episodes in which a commercial power engineered political sovereignty. Proponents of a more conservative interpretation stress that the institutional innovations that followed—codified laws, a unified tax system, and professional administration—contributed to a more predictable and legitimate governance structure in the long run, despite the costs to traditional authority.