Question

How did the assumption of Diwani benefit the East India Company?

Answer 1

The Diwani right to the East India Company benefitted it in several ways:

(i) The Diwani allowed the Company to use the vast revenue resources of Bengal.

(ii) The East India Company monopolized trade and began direct plunder of India’s wealth.
(iii) Revenues from India financed Company expenses. These revenues were used to purchase cotton and silk textiles in India, maintain Company troops, and meet the cost of building the Company fort and offices at Calcutta.
(iv) The company used its political power to monopolize trade & dictate terms. They could impose their own prices that had no relation to the costs of production.
(v) The company used revenue of Bengal to finance exports of Indian goods.

Answer 2

This was a major breakthrough for the Company because Diwani allowed it to use the vast revenue resources of Bengal. The Company could use the revenue to finance its trade and other expenses. It could also use the revenue to strengthen its military power.