Company Raj to Debt Raj—I Civilisation, Plassey & political economy of conquest

How does a trading corporation become a sovereign? The question is not antiquarian. It goes to the heart of how power moves when commerce, credit, military force and political weakness begin to reinforce one another.

A recent discussion of William Dalrymple’s The Anarchy revives the puzzle. In 1757, the East India Company (EIC) was still formally a private commercial corporation. Its European establishment in Bengal was tiny, while the army on which its power depended was overwhelmingly Indian. Within eight years, however, the Company had acquired the right to collect the revenues of Bengal, Bihar and Orissa. The NewsGram discussion is useful as a contemporary point of departure.

The transformation was not simply “Britain defeating India”. Nor was it a collision between two coherent civilisations. It was a political economy of fragmentation, finance and collaboration. That distinction matters because South Asian history is still too often written through civilisational mythology.

A recent article by Pakistan’s federal minister for planning, development and special initiatives is a useful illustration. It presents civilisation as a sequence in which identity creates purpose, purpose generates institutions and “Islamic civilisation” rises or declines according to the strength of that organising consciousness. The aspiration to knowledge and good governance is unobjectionable. The historical compression is not. The article exemplifies a much wider tradition of treating religion, civilisation, empire and modern national identity as one continuous historical category.

Religion, civilisation and empire are not interchangeable categories. Marshall Hodgson confronted this difficulty in The Venture of Islam. He used “Islamic” more narrowly for matters relating to the faith and coined “Islamicate” for the broader social and cultural world historically associated with Muslim societies. The distinction matters because a mosque, a philosophical text, a court culture and a cavalry campaign cannot all be assigned the same religious meaning merely because they occurred under a Muslim ruler. Encyclopaedia Iranica’s account of Hodgson explains the conceptual intervention.

Richard M. Eaton performs a similar service for the Subcontinent. His India in the Persianate Age: 1000–1765 moves beyond the old description of almost eight centuries as a homogeneous “Muslim period”. 

Persianate and Sanskritic worlds interacted, competed, borrowed and transformed one another. Political authority shifted continuously; cultural boundaries did not map neatly onto religious ones. The University of California Press description captures this more complex history.

Arab, Turkic, Afghan and Mughal military expansion should be studied as empire and state formation. Muslim rulers patronised major achievements in architecture, literature, science, administration and commerce. Their societies produced enduring forms of cultural synthesis. None of this converts territorial conquest into the territorial advance of a religion.

The Qur’anic text itself makes such a conflation difficult. Verse 2:190 permits fighting against those who fight while warning against transgression. Verses 22:39–40 speak of those wronged and expelled from their homes and refer to the protection of monasteries, churches, synagogues and mosques. Verse 4:75 invokes the cause of oppressed men, women and children.

Later jurists developed differing doctrines concerning warfare and political expansion. That history must be acknowledged. What cannot responsibly be done is to read every conquest undertaken centuries later by a Muslim dynasty backwards as the execution of a Qur’anic civilisational programme.

The same caution is essential when we reach eighteenth-century India. Bengal did not fall because one civilisation suddenly demonstrated superiority over another. The EIC learned instead to operate inside an existing political order, exploit its fractures and make itself useful to powerful local actors.

The Mughal imperial system weakened substantially after Aurangzeb’s death in 1707. Nader Shah’s sack of Delhi in 1739 exposed that decline. Regional powers strengthened. Court factions competed. European trading companies fought one another. Indian merchants and financiers remained indispensable to the circulation of credit. Political allegiance was not organised around twentieth-century nationalism.

This is why indigenous finance belongs at the centre of the story. Research on Asian merchants in Bengal and on indigenous credit in eighteenth-century western India shows how deeply European companies depended upon local commercial networks. Sushil Chaudhury’s work on Bengal’s Asian merchants and Lakshmi Subramanian’s study of indigenous credit and imperial expansion place Company power inside South Asian financial history rather than outside it.

This does not reduce Indian financiers or political actors to a morality tale of “collaborators”. They acted within a fractured political order in which survival, profit, court access and protection were immediate concerns. The historical lesson is more unsettling. External domination becomes easier when powerful domestic groups can rationally pursue short-term interests without bearing the full long-term cost of diminished collective autonomy. That mechanism belongs to political economy, not civilisational destiny.

The same point applies to the Company’s Indian soldiers. They were not an incidental appendage to British power. They were central to it. A private corporation could project force on a continental scale because it learned to organise local manpower, local credit and local political grievances within a disciplined corporate structure. Empire, in other words, was assembled from resources already present in the society being subordinated.

Plassey on June 23, 1757 cannot be understood as a simple battlefield triumph of a technologically superior foreign force. Siraj ud-Daulah possessed the larger army. His commanders did not act as a unified political instrument. 

Mir Jafar and others withheld effective support. Banking, court and commercial interests had their own calculations. Robert Clive turned those divisions into victory.

The Company then installed Mir Jafar as nawab. Vast transfers of wealth followed. Company officials enriched themselves. Commercial privilege produced political leverage, and political leverage produced further commercial advantage.

Plassey opened the gate. It did not complete the conquest. The decisive change would come at Buxar in 1764 and, more importantly, with the grant of the Diwani in 1765. That is where commerce became revenue and revenue began to transform a corporation into a state. Part II will examine that transition—and why it remains relevant to any serious discussion of fiscal sovereignty today.

References

1. William Dalrymple, The Anarchy: The Relentless Rise of the East India Company, Bloomsbury, 2019. 
2. NewsGram, “How Did a Private Corporation Establish British Rule in India? Historian William Dalrymple Explains the Rise of East India Company”, September 13, 2026. 
3. Marshall G. S. Hodgson, The Venture of Islam; see also the discussion of “Islamic” and “Islamicate”. 
4. Richard M. Eaton, India in the Persianate Age: 1000–1765, University of California Press. 
5. Sushil Chaudhury, “The Asian merchants and companies in Bengal’s export trade, circa mid-eighteenth century”, in Merchants, Companies and Trade. 
6. Lakshmi Subramanian, “Banias and the British: the Role of Indigenous Credit in the Process of Imperial Expansion in Western India in the Second Half of the Eighteenth Century”, Modern Asian Studies 21(3), 1987. 
7. Ahsan Iqbal, “Who, why, how of civilisation”, The News International, September 15, 2026. 

[To be continued]

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Dr. Ikramul Haq, Advocate Supreme Court, writer, literary critic, Adjunct Faculty at Lahore University of Management Sciences (LUMS), member Advisory Board and Visiting Senior Fellow of Pakistan Institute of Development Economics (PIDE), holds an LLD in tax laws. He was full-time journalist from 1979 to 1984 with Viewpoint and Dawn. He also served Civil Services of Pakistan from 1984 to 1996.