The system of separate Diwan and Nizam is called Dual Administration. It was the brainchild of Lord Clive.
- The Diwani (Fiscal) was carried out by the company so Company was Diwan.
- The Nizamat (territorial) jurisdiction was carried out by these decrepit Indians so they were Nizam. The real authority though was East India Company.
In the Dual government, the company enjoyed power without any responsibilities.
The Nawab, on the other hand, was burdened with the responsibility of administration without the resources necessary.
In the first place, the abuse of the private trade reached a greater height than ever:
The Officials of the British East India Company such as Lord Clive became extremely rich due to the clandestine private trade.
The Company was on the verge of bankruptcy while the servants of company were flourishing. Rampant corruption was prevalent among the servants of the company. In fact it was this greed of the servants of the company that eventually led to its downfall.
British kept enjoying the duty free trade while the Indian merchants were to pay around 40% of the revenue. The biggest fall out of this system was that the Indian Merchants were reduced to beggars.
In the second place, the demands of the Company for the increase led to gross oppression of the peasantry:
The peasants were now under the British revenue collection. The British left no stone unturned to extract each penny. There was zero activity in the name of development so Peasants started turning beggars.
The new confusing administrative machinery which was not properly set up created chaos.
Undoubtedly this dual system of government was a failure from the outset. The rules varied for different people and it was bound to create inequality, discontent.
This was the beginning of the Economic loot from India, which made England the wealthiest country in the world in the 19th and 20th century. While the consequence of this steady drain upon the production of the country soon began to be felt.
In 1772, Warren Hastings became the Governor -General of Bengal Presidency. He observed that the financial position of the British East India Company became worse and the difficulties were intensified by famine. Hence, he abolished the dual system of administration that was introduced by Robert Clive.
