There were two main systems of indigo cultivation – nij and ryoti . Nij: the planter produced indigo in lands that he directly controlled. He either bought the land or rented it from other zamindars and produced indigo by directly employing hired labourers. Ryoti system: the planters forced the ryots to sign a contract, an agreement (satta). Those who signed the contract got cash advances from the planters at low rates of interest to produce indigo.
When the crop was delivered to the planter after the harvest, a new loan was given to the ryot, and the cycle started all over. The price they got for the indigo they produced was very low and the cycle of loans never ended. The planters usually insisted that indigo be cultivated on the best soils in which peasants preferred to cultivate rice. Indigo, moreover, had deep roots and it exhausted the soil rapidly. After an indigo harvest, the land could not be sown with rice.
In 1859 thousands of ryots in Bengal refused to grow indigo. As the rebellion spread, ryots refused to pay rents to the planters and attacked indigo factories. Even zamindars were unhappy with the increasing power of the planters so they supported ryots. Worried by the rebellion, the government brought in the military to protect the planters from assault, and set up the Indigo Commission to inquire into the system of indigo production.
It declared that indigo production was not profitable for ryots. The Commission asked the ryots to fulfil their existing contracts but also told them that they could refuse to produce indigo in future. After the revolt, indigo production collapsed in Bengal.
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