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Regulating Act of 1773 - Important Provisions for Civil Services!

Background :

The act was passed by the British to control the possessions of the East India Company majorly in India. There was widespread corruption in the company. Its own officials were pocketing in huge profits but the company did not do well financially due to this corruption. This introduced a situation of bankruptcy and the government had to interfere with the affairs of the Company to regulate it. This was done by first centralising the power and later decentralising it. The act was the first step towards the centralisation of power.

This act is really important for competitive exams like banking PO, SSC, state civil services exams and other government exams.

Through this act, the British government started to control and regulate the functioning of East India Company. It was the first time when the British cabinet was given the right to exercise control over Indian Affairs.

The directors of the company were required to report revenue affairs and all matters regarding Civil and Military administration to British Government.

In Bengal, The governor-general was provided with a council of 4 members, to carry out the administration. The whole setup worked according to the majority party rule. ie A majority was needed among 5 members to pass a resolution. Warren Hastings became the 1st Governor-General of Bengal.

A supreme court was to be established in Bengal with original and appellate jurisdiction where all subjects could seek redressal.

The governor-general was given superior status with respect to other governors-general of Bombay and Madras.

Under the act, the “Parliament of Great Britain” restricted the company dividends to only 6% and limited four-year terms for the Court of Directors. It refused the employees of the company to accept any kind of gift or bribery from the native population or engage in personal trade.

Some of the defects in the act:

  1. No veto power to Governor-General

  2. Corruption did not stop

  3. Supreme court's powers were not well-defined

  4. The parliamentary control that was sought in the activities of the company proved to be ineffective as there was no mechanism to study the reports sent by the Governor-General in Council.

Here is the summary of the main points to learn Regulating act of 1773 :

  1. Governor General was made Governor-General of Bengal.

  2. Warren Hastings became the 1st Governor-General of Bengal

  3. Governor General of Madras & Bombay was made subordinate.

  4. Prohibited servants of the company from engaging in private trade

  5. Directors of the company were to report Civil, Military and Revenue affairs to British Government. Therefore for the 1st time, the British cabinet was given the right to exercise control over Indian affairs.

  6. The Supreme court was to be established

  7. Introduced the element of centralised administration. Hence centralisation started with this act


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