The Regulating Act of 1773 was the initial law that the British parliament enacted to check the running of the East India Company in India. It was enacted as a result of Company-rule-related crises that were propagated through financial mismanagement and corruption and famine. The Act provided the status of the Governor-General of Bengal position as well as established the Supreme Court in Calcutta. It was the onset of British political control over Indian governmental affairs. But, its loose provisions resulted into administrative confusion that was amended in 1781.

Key Points for RAS Mains

History of the Regulating Act, 1773

• Financial Crisis: The East India Company was suffering from corruption and inefficiency causing bankruptcies.
• Bengal Famine (1770): Millions died and the efficacy of the dual government system was out in the open.
• Dual Government System: This is what Robert Clive introduced whereby Diwani (revenue) remained to Company and Nizamat (law and order) to Nawabs hence welfare was ignored.
• Parliamentary Pressure: The company was controlling a lot of political power, unaccountably, which needed to be regulated by the British Parliament.
• Rotting Tea Stocks: The Company was saturated with unsold tea in Britain as well as huge debts. This caused political rattles in London.

Highlights of the Regulating Act, 1773

• Political Reforms
  • Constitution of Governor-General of Bengal (starting with: Warren Hastings).
  • With the help of a 4-member Executive Council.
  • Majority decision-making.
• Centralisation of Power
  • Governors of Bombay and Madras were transformed into subordinates to the Governor General of Bengal.
  • The previous model of independent presidency was over.
• Reforms in Judicial System
  • Institution of the Supreme Court at Calcutta (1774).
  • 1931 First Chief Justice Sir Elijah Impey.
  • 3 other judges - all Britishers
  • Jurisdiction: Only to British subjects (not Indians).
• Financial Reforms 
  • The company was not allowed to pay more than 6 percent in dividend until debt to the Crown was repaid.
  • The Company directors had the obligation of reporting the Company revenue, civil and military affairs to the British Government.
  • Terms of directors not more than 4 years.
• Corruption Control
  • Placement of prohibition of company members to do personal trade and giving bribes.

Significance of the Regulating Act, 1773

Drawbacks of the Regulating Act, 1773

Amending Act of 1781 (Act of Settlement)

To address the failures of the Regulating Act, the Amending Act of 1781 was introduced. Key changes:

Conclusion for RAS RPSC

The Regulating Act of 1773 was used in history to change the control of India through corporate into parliamentary. Though it formed the basis on which the British government was established, it was affected by vagueness and ineffectiveness. Even its flaws had to be repaired with the help of the next Amending Act of 1781 and the India Act of 1784 by Pitt to strengthen British control even further.

Also Read: Rajasthan Right to Hearing Act, 2012