Dual Government in Bengal

The system of Dual Government in Bengal was introduced by Robert Clive following the Treaty of Allahabad in August 1765. The decisive victory of the British East India Company in the Battle of Buxar (1764) over the joint forces of Mir Qasim, Shuja-ud-Daulah, and Shah Alam II established British political dominance over eastern India. Mughal Emperor Shah Alam II granted the Diwani (right to collect revenue and administer civil justice) of Bengal, Bihar, and Orissa to the Company in exchange for an annual tribute of Rs 26 lakh. Simultaneously, the Company secured control over the Nizamat (criminal justice, police, and defense functions) from the Nawab of Bengal, Najm-ud-Daulah.

Core Structure of the System

The Dual Government, known locally as Doyoidh Sashan, divided power and responsibility into two separate authorities in Bengal between 1765 and 1772.

Distribution of Authority

• The East India Company: Held complete control over the Diwani functions. The Company controlled the revenue sources and financial assets of Bengal without maintaining any obligation toward civil governance or welfare.
• The Nawab of Bengal: Retained the Nizamat functions. The Nawab remained responsible for law and order, police, public safety, and criminal justice, but lacked military strength and financial independence.
• Power Dynamics: The system separated power from responsibility. The Company possessed ultimate power without administrative accountability, while the Nawab held full administrative responsibility without financial resources.

Appointment of Naib Diwans

To collect revenue without establishing a direct British administrative presence, Robert Clive created the post of Naib Diwan (Deputy Diwan). These Indian officials collected revenue on behalf of the Company and managed judicial administration under British supervision.

• Mohammad Reza Khan: Appointed as Naib Diwan for Bengal. He also served as Naib Subahdar to oversee Nizamat functions.
• Raja Shitab Rai: Appointed as Naib Diwan for Bihar.
• Rai Durlabh: Appointed as Naib Diwan for Orissa.

Institutional Framework

Socio-Economic Impacts

Drain of Wealth

Prior to 1765, the East India Company imported silver bullion from Britain to buy Indian commodities. After obtaining the Diwani, the Company used Bengal’s land revenue to buy Indian textiles and raw silk for export to Europe. This process transformed local revenue into private capital, launching a continuous drain of wealth from Bengal.

Agricultural and Judicial Decay

Revenue collection rights were auctioned to the highest bidders, known as Amils or revenue farmers. These contractors extracted maximum taxes from peasants without offering land security or investment in irrigation. The division of judicial authority caused local law enforcement to collapse, leading to widespread banditry across rural districts.

The Famine of 1770

The predatory taxation policy combined with drought triggered the Great Bengal Famine of 1770. Nearly ten million people, representing one-third of Bengal’s population, perished. Despite mass starvation, the East India Company violently collected land revenue, reporting higher revenue yields in 1770 than in previous years.

Abolition of the Dual System

The widespread economic ruin of Bengal combined with widespread corruption among Company servants led the British Parliament to intervene. In 1772, the Court of Directors sent Warren Hastings as Governor of Bengal with explicit orders to abolish the Dual System.

Key Reform Measures

• Direct Revenue Administration: Warren Hastings dismissed Mohammad Reza Khan and Raja Shitab Rai, ending the posts of Naib Diwans.
• Relocation of Treasury: The provincial treasury moved from Murshidabad to Calcutta, making Calcutta the administrative capital of British Bengal.
• Introduction of Collectors: British officers termed “Collectors” were appointed in each district to oversee revenue collection directly.
• Regulating Act of 1773: Parliament passed the Regulating Act to supervise EIC administration, creating the position of Governor-General of Bengal.

Key Historical Facts

The Treaty of Allahabad was signed on 16 August 1765 between Lord Clive and Mughal Emperor Shah Alam II. A separate treaty signed in February 1765 with Nawab Najm-ud-Daulah forced the Bengal Nawab to surrender control of the army and top administrative appointments to the Company. The original Persian text of the Treaty of Allahabad was drafted by diplomat Mirza Sheikh I’tisam-ud-Din. Under the treaty terms, the Company paid an annual tribute of Rs 26 lakh to Emperor Shah Alam II and allocated Rs 53 lakh annually to the Nawab for maintaining the Nizamat. The Bengal Famine of 1770 wiped out approximately one-third of the local population and ruined one-third of the cultivated lands. Despite this catastrophe, the Company collected full revenue targets through strict coercion. Warren Hastings officially terminated the Dual System in 1772 by establishing a Board of Revenue at Calcutta. This move brought Bengal under direct British territorial and economic control, setting the foundation for Company Rule across India.