East India Company ( EIC ) won the battle of Plassey in 1757 and the battle of Bauxar in 1764. In a course of time, EIC became the de facto ruler of India.
When EIC became the ruler of India, it had allowed the old zamindari system to continue. But this old zamindari system could not function effectively as EIC had expected. So, EIC had snatched away zamindari rights from the old zamindars.
Now, these zamindari rights were auctioned by the EIC. When these zamindari rights were auctioned, the money-lending class in India had bought these zamindari rights and became the absentee landlord.
The question is raised, why did the Indian money lending class buy land rights and became landlords? The reason can be as follows. These Indian money-lenders had excess capital. But as India was experiencing the process of de- industralization because of the rule of EIC. So, there was the absence of effective demand for capital by industry.
Secondly, to possess the land, was supposed to enhance the social status of the person, in the society. So, by investing in the land, the Indian money lenders wanted to enhance their social status as money-lending was not supposed to be a good occupation.
To conclude, the process of de – industralisation and enhancing social status in society compelled the Indian money-lenders to buy agricultural land rights.
