The Economy of the Marathas Part II: Rise and Fall of the Peshwai

Peshwa Baji Rao I (Wikipedia Commons)

With the death of Chhatrapati Shivaji, a period of uncertainty had hit the Maratha kingdom. The Mughals under Aurangzeb’s leadership had left no stone unturned in hitting the Marathas hard. Shivaji’s son Sambhaji was taken captive, and the torture leading to his death eventually has been well documented. His brother Rajaram ascended the throne in order to stabilize the sinking confidence of the Maratha power, though for all practical purposes it was Rani Tarabai who held the reigns of the throne, given how ill Rajaram was. Sambhaji’s son Shahu ji was still a prisoner of Aurangzeb at the time when Rajaram passed away, and Tarabai officially took over the regency. To keep the jagirdars loyal to the throne in this delicate political time, Shahu ji scrapped the key provision of not making jagirdari and other offices hereditary. When Shahu declared himself the king of the Marathas at Satara in 1708, he had to recognize these Maratha chieftains as his hereditary jagirdars. Moreover, his own generals invaded and captured some territories in the Deccan and Gujarat, and were recognized as his feudatory states such as the Bhonsles of Nagpur (Fukazawa 1987). This had a direct bearing in the stabilization and the future expansion of the state post Aurangzeb’s death, with the Peshwas or the hereditary Prime Ministers of Chhatrapati seizing the initiative and expanding the borders and influence of the Maratha gerua flag with the swallow symbol on it far and wide. However, there were significant economic results of the same – the economy of the Maratha empire shifted centers from Satara, the seat of the Chhatrapati, to Poona, the seat of power of the Peshwas. The diarchy resulted in significant impoverishment of the Maratha court, evidenced by the records of the court of that time. 

The Peshwas or Prime Ministers of the Maratha empire gained significant influence ever since Chhatrapati willed away the rule of the empire to them. The Peshwas, particularly under Bajirao I had managed to gain the support of the Maratha feudatory chieftains, with the rise of the Shindes or Scindias, the Bhonsles, the Holkars and the Gaekwads in central and western India. The might of the confederacy rested entirely on the military might of the Peshwas, who had the best cavalry of the world at that time. However, since the jagirdaris were now under the feudal lords with only Poona being under the administrative control of the Peshwas, a way had to be found out to keep the darbar running and for sustaining the military strength that gave the Peshwas their influence in the first place. Ranade (1900) had shown using the Peshwa daftari archives how all the great Maratha leaders, including Bajirao I, were in a constant uphill battle on raising monies required for their great expeditions. In the case of Balaji Baji Rao, the Diaries show that the debts contracted by him between 1740 and 1760 had reached a total of a crore and a half rupees of public debt. The strain represented by this amount will be better understood when it is mentioned that the Peshwa’s Government had to pay from 12 to 18 per cent, interest on these loans. Even Madhavrao Peshwa the Elder is known to have had a debt of twenty-four lakh rupees (Ranade, 1900), a direct result of the loss of the Marathas in Panipat. The revenue system was effectively developed only after Bajirao I’s time, when Balaji Baji Rao, Madhavrao and Nana Fadnavis truly re-stabilized the debt management system. However, one can note from the archives that the Maratha state, particularly the Peshwa’s zone of influence, seemed to have experienced several droughts and natural disasters in addition to military encounters, as evidenced by several orders to reduce the revenues and taxes collected by the state, and the crop share taken under the bataidari. While Shivaji’s rule saw the cultivator’s share between two and three fifths of the total output, the Peshwas had put it at one third to one half, a significant jump from the Chhatrapati rule. Of course, one can see that the administration was trying to be sensitive with the public. Moreover, there were new revenue management systems that kept coming in with the changing Peshwas- kamavishi, ijara systems for maintaining revenue were also going nowhere, as they were proving to be more of placation measures for borrowers to whom the Peshwa darbar owed significant sums (Fukazawa, 1987) – as it is, revenue was collected in good years and only on good lands, and remissions were offered in bad years. It is not that the Peshwa court had not tried to expand its sources of revenue – we know that the Poona government made extensive public expenditure in building infrastructure like tanks, ghats and reservoirs, and also encouraged farming on lands otherwise considered waste through tax concessions. However, such measures added more to the ever inflating expenditure of the state. There were several other taxes levied by the state to compensate - on houses and shops, on tobacco import, even on buffaloes. There were also customs and ferry charges among other things; however, widespread corruption of the Maratha empire on record clearly indicates malpractices of the officials. Interestingly, as Ranade (1900) shows, land customs were far more successful than sea customs. For instance, the daftaris show that The Kalyan and Bhivandi Subhas yielded in Balaji's time a sum of Rs. 55,030, and it developed to 3,00,000 Rs. towards the close of the century, and the income of the Poona Subha increased from 35,000 Ra. to nearly a lakh (Ranade, 1900). Even though Nana Phadnavis took Herculean efforts with significant success in trimming down the Peshwai debt, there was also considerable weakening of the military power that accompanied in the same period. Subsequently, the debts of the Peshwai post Fadnavis kept rising, and the Maratha chieftains stopped responding to the Peshwai, who also had to suffer defeats from them and the British, with the disposition of Peshwa Baji Rao II that marked an ignonimous end to a powerful institution. This was also a result of the the British replacing completely ed the Marathas in the military market of Hindustan (Subramanian, 2005). The British East India Company by this time had entered into financial arrangements with bankers in Benaras and Bombay, and ensured that they did not switch sides through deft placatory moves periodically.

It is interesting to note that the Peshwa durbar was dependent on informal soldiers or Pindari who were not paid for by durbar but instead depended on the loot and spoils of their victories everywhere. There are instances noted in the Peshwa period where the Pindari battalions were actually larger and had a greater impact on the outcome compared to the formal army of the Peshwa, who used them far more effectively since the times of Shivaji, when they were roped in by the Marathas (Roy, 1973). The pindaris were not allowed to loot and plunder, nor were allowed to encamp with the Maratha forces; however, compensation of four annas a day per person was given to them in the initial days, which was also dispensed with. The Pindaris were asked to share their loot with the government, paying one fourth to the chieftain they were serving, besides paying the palpatti tax, i.e. a tax for getting permission to loot (Roy, 1973). The Maratha armies would unleash the Pindaris to create confusion and distraction, even as the Pindaris would get to carry on with their own primary motive of being plain and simple marauders. Pindaris were predominantly serving the Holkar and Scindia rulers, though many had after Baji Rao I, found their way back into the good books of the Peshwai. However, this carried significant reputational risk for the Marathas, as evidenced on several occasions. One particular instance of note was the ransacking of the Sringeri Matha by the pindari, who took away sacred objects of religious authority in the attack on Tipu Sultan’s Mysore in 1791 (Kulkarni, 2015). The Maratha polity had to subsequently make significant efforts to compensate and appease the Swami for nearly a year after the raid. With the weakening of the Peshwai, the Pindaris subsequently fell back to support the Holkars and the Scindias, thus killing off another stream of revenue of the Peshwa financial system.

With the finances always being on the edge, the practice of Chauth and Sardeshmukhi, which was willed to the Peshwas, was continued with. The zones of influence were spread far and wide, all the way to the Rajputana, Punjab and even the regions of Bundelkhand all the way to parts of Awadh region. The Marathas had already long been in contact with the Rajputana, given the record of facing Mughal forces which were mostly led by the Rajput kings. With the decline of the Mughal influence, there were several attempts within the Rajputana to assert independent control but was marred by significant internal conflict. The Marathas were also taking advantage of the Rajputana turmoil by continuously raiding the various Rajput territories – Sawai Jai Singh’s defeat at Mandsaur was testament to the growing influence to this. Mewar was already under constant harassment, and soon, the Marathas also started to play kingmakers in various internal disputes such as those of Bundi and Jodhpur. Even though Bajirao had taken significant steps to improve Maratha Raput relations, the Peshwas relapsed to old habits soon. Raghunath Rao and Holkar came to Mewar in 1755. This year Sadashiv Rao, Govind Rao and Kanhoji Jadhava realized money from Mewar. In August 1756, Durjansal had died. As he had no son, Ajit Singh stepped into his shoes. This was done without the prior permission of the Marathas. As a result of this, Ranoji Scindia came to Kota to realize the succession tax. The new ruler had no alternative but to pay forty lacs of rupees. This year also Holkar and Raghunath Rao came to Kota and realized seven thousand rupees. Raghunath Rao collected one lakh of rupees from Javad and after reaching Jaipur he demanded eleven lakh rupees from Madho Singh who had to pay seven lakh rupees immediately. Next year Jankoji Singh Sindhia visited Rajasthan and desired to collect thirty six lakh rupees from Jaipur. Money was collected from Mewar also and after reaching Kota, Maharao Ajit Singhas successor, Shatrushal, paid two lakh rupees in gift. Such was the bitterness generated by these experiences that the Rajputs did not even send forces to help the Marathas to fight against Ahmed Shah Abdali. During Maratha-Abdali confrontation Rajasthani rulers chose neutrality. With the weakening of the hold on North-west India, the chauth and sardeshmukhi revenues as well as several other taxes imposed on this part of the country literally dried up in the Peshwa court, with most of it landing in the hand of the now powerful Maratha rulers Holkars and Scindias instead. 

Thus, with the Peshwa system we see an ever expanding bureaucracy that caused the public finances to continue bloating. We also see signs of deep rooted corruption and heavy borrowing by the darbar which continued to worsen the finances of the state, and got compounded by inefficient efforts to increase revenue in the form of levies and customs that are difficult to implement. Moreover, public expenditure incurred in turn towards efforts were complicated by natural disasters as well as a continuing military situation, and this increased further the Maratha dependency on unstable money flows, that can harm the economy the moment they ebb. Moreover, the weak Peshwai and weakening Maratha power also reflected in their subsequent inability to raise money as against the rising power of the British East India company. This can be easily compared to higher yield rates on sovereign bonds issued by modern states, since the sovereign guarantee starts to lose its traction with interested investors.