• The East India Company was in severe financial crisis and had asked a loan of 1 million pounds from the British government in 1772.
  • Allegations of corruption and nepotism were rampant against company officials.
  • There was a terrible famine in Bengal where a huge population perished.
  • The Dual form of administration instituted by Robert Clive was complex and drawing a lot of complaints. According to this system, the company had Diwani rights (obtained after the Battle of Buxar) in Bengal and the Nawab had Nizamat rights (judicial and policing rights) as secured from the Mughal Emperor. In reality, both powers were were vested with the company. The farmers and the general population suffered as their improvement was neglected and the company was only concerned with maximising revenue.
  • Lawlessness increased in Bengal.
  • The defeat of the company against Mysore’s Hyder Ali in 1769.