Impact of British Rule on Economic Fate of Bengal

Describe the Impact of the British rule in economic fate of Bengal.

Fraudulent Trading Practices and Monopolization of Internal Trade

The English were given some special tax benefits ("dastaks*") in terms of import and export trade i.e. they enjoyed concessionary tariff in foreign trade. However, they abused that facility and used that in internal trade fraudulently. As a result, the English and some native traders (who purchased "dastaks" from the English to avoid tax in internal trade) could amass huge amount of money at the cost of the nawabs` reduced revenue and  damaged livelihood of other native traders.

Moreover, the servants of the East India Company oppressed the native merchants which also severely damaged internal trade. They and their  allied local merchants used to compel other native traders to buy (sell) goods at significantly high (low) prices.   

Such evidence can be found in a letter written by Mir Qasim to the company's governor to draw attention to the situation:

“They forcibly take away the goods…for a fourth part of their value; and by way of violence and oppressions, they oblige the ryots to give five rupees for goods which are worth but one rupee.”

New Trade Pattern and Decline of Industry

Indian industry was virtually destroyed by the different actions taken by the English. 

During British rule two major famines took place: one in 1770 and the other in 1943. These famines cost millions of death.

Sources

Economic Impact of Early British Rule on Indian Trade

* Explanation of Terms

Dastak, in 18th-century Bengal, a permit exempting European traders, mostly of the British East India Company, from paying customs or transit duties on their private trade. ... Free dastaks for private trade were finally abolished by Warren Hastings, governor of Bengal (1775).

Dadni System

During the 17th and 18th century, the bulk of cotton textiles production was organised on the basis of agreement among the merchants, merchant-middlemen and weavers, specifying details such as the quantity, the quality, the price and the date of delivery. A substantial part of the final value of the contract was usually offered in advance to weavers to purchase raw materials and to maintain his family expenditure during the period of production. Advances were made either in cash or in raw materials. This system of production organisation is termed as DADNI or CONTRACT or ADVANCE SYSTEM. Dadni system was an all India phenomenon except Madras. Its origin can perhaps be traced to the ideas of Islamic law. Dadni was paid in installments and often paid in cash and only a part of it by bills of debt. European companies too paid dadni to secure their investments.