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  • This was passed by the British Parliament to reform the administration of East India Company which had become unruly and chaotic.
  • The system of dual administration in Bengal was not favoured to continue anymore. The Company was reeling under financial distress.
  • Since 1768 they were unable to pay £ 400,000 per year to the British government to maintain monopoly over Indian trade. Its tea sales to America had dropped as more than 85% of tea in America was being smuggled by the Dutch.                                    REGULATING ACT OF 1773
  • It was under debt of both Bank of England and the British Government. Hence, in spite of opposition from strong shareholders lobby, the Regulating Act was passed.

Its provisions were –

  1. The Act limited Company dividends to 6% until it repaid a £1.5M loan. It restricted the Court of Directors to only four-year terms.
  2. It prohibited the servants of Company from engaging in any private trade or accepting presents or bribes from the natives.                    REGULATING ACT OF 1773
  3. The Act elevated Governor of Bengal, Warren Hastings to Governor-General of Bengal and subsumed the presidencies of Madras and Bombay under Bengal’s control.
  4. The Act named four additional men to serve with the Governor-General on the Calcutta Council. These councillors were commonly known as the “Council of Four”.
  5. A Supreme Court was established at Fort William at Calcutta. British judges were to be sent to India to administer the British legal system that was used there.
  • Warren Hastings was authorised to dismantle the whole fabric of dual government and overhaul the administrative structure. He proved equal to these challenges. He was also known for wars with the Marathas and Mysore.                                REGULATING ACT OF 1773
  • Hastings adopted the Policy of Ring Fence which continued from 1765 till 1813. This policy aimed at having a buffer zone between the states at war and the Company frontiers.
  • The Marathas and Afghan invaders were the major threat to the company (Mysore too posed a challenge but it wasn’t large and powerful enough).
  • By this policy, the company safeguarded itself by organizing the defence of Awadh.                REGULATING ACT OF 1773

Modern History

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