Bengal as a Regional Power before British Rule

Bengal emerged as one of the most prosperous successor states following the decline of the Mughal Empire in the early eighteenth century. Blessed with fertile agricultural land, an extensive river network, and a dominant manufacturing sector, Bengal functioned as a major center of international trade. Its financial resources and geopolitical location made it the primary target for British colonial expansion in South Asia.

Autonomy Under the Nawabs of Bengal

The transformation of Bengal from a Mughal province (subah) into an autonomous regional state occurred under a series of capable rulers who reorganized its administration, land revenue, and external trade.

Murshid Quli Khan (1717–1727)

Murshid Quli Khan was appointed as the Diwan (revenue minister) of Bengal by Aurangzeb and was later elevated to the status of Nawab-Nazim by Farrukhsiyar in 1717.

• Administrative Shift: He transferred the provincial capital from Dacca (Dhaka) to Murshidabad to maintain better administrative control over trade routes.
• Revenue Reforms: He converted scattered jagir lands into crown lands (khalisa) and introduced the ijaradari (revenue farming) system to ensure regular tax collection.
• Financial Consolidation: He reorganized the land revenue system through the Mal Jasmani settlement, requiring revenue collectors to give personal security bonds.

Shuja-ud-Din and Sarfaraz Khan (1727–1740)

Shuja-ud-Din, the son-in-law of Murshid Quli Khan, annexed Bihar to the province of Bengal in 1733. His successor, Sarfaraz Khan, was killed at the Battle of Girdha in 1740 by his deputy governor of Bihar, Alivardi Khan.

Alivardi Khan (1740–1756)

Alivardi Khan seized power and regularized his position by sending a large bribe to Mughal Emperor Muhammad Shah ‘Rangeela’.

• Maratha Confrontation: Bengal faced repeated invasions by the Marathas under Raghuji Bhonsle of Nagpur between 1741 and 1751. Alivardi Khan settled the conflict in 1751 by ceding the revenue of Odisha and agreeing to pay an annual tribute (chauth) of 12 lakh rupees.
• Control over European Companies: He prevented European trading companies from fortifying their factories in Kolkata and Chandernagore, keeping commercial interests strictly subordinate to state sovereignty.

Socio-Economic Strength and Commercial Prosperity

During the eighteenth century, Bengal contributed nearly a quarter of India’s total industrial output. European merchants referred to the province as the “Paradise of Nations” due to its wealth.

Key Economic Indicators and Export Hubs

The Role of Banking Houses

Financial transactions and state credit were dominated by indigenous merchant houses. The banking house of Jagat Seth (headed by Manik Chand and later Fateh Chand) managed state tax remittances, minted currency, and extended large loans to both the Nawabs and European joint-stock companies.

Structural Weaknesses and Foreign Exploitation

Despite its commercial wealth, Bengal suffered from internal political and administrative vulnerabilities that allowed foreign conquest.

• Commercial Privilege Abuse: Mughal Emperor Farrukhsiyar issued an imperial farman in 1717 granting the British East India Company duty-free trade (dastak) in Bengal for a flat annual fee of 3,000 rupees. British private traders misused these passes to evade local tolls, causing direct financial losses to the provincial treasury.
• Court Factionalism: The accession of Siraj-ud-Daulah in 1756 triggered internal conspiracies involving court officials, army commanders, and wealthy bankers.
• Military Limitations: The Bengal army lacked modern European military organization, disciplined line infantry tactics, and light field artillery.

Key Fact File and Historical Trivia

In 1704, Murshid Quli Khan renamed the town of Muksudabad to Murshidabad, establishing it as the financial and political capital of Bengal. The imperial farman of 1717 exempted British imports and exports from custom duties, but the Nawabs consistently argued that this privilege did not extend to the private trade conducted by company officials in their personal capacities. During the Maratha raids (1741–1751), local inhabitants constructed a defensive earthwork around Kolkata known as the Maratha Ditch to protect their settlements from Maratha cavalry strikes. The house of Jagat Seth held the hereditary title “Banker of the World,” granted by Mughal Emperor Muhammad Shah in 1723 in recognition of its influence over the Indian economy. Siraj-ud-Daulah’s attack on Fort William in June 1756 and the subsequent conflict over company fortifications led directly to the Battle of Plassey in June 1757, marking the transition of Bengal from an autonomous regional power to a British territory.