English East India Company established the colonial rule in Bengal. Under Permanent Settlement, introduced in Bengal in 1793, Company fixed the land revenue demand. Permanent Settlement was expected to ensure regular flow of revenue to the Company. A group of rich peasants emerged at the end of 18th century, as a powerful group inside the villages of North Bengal – Jotedars. They exercised immense power inside the villages than the zamindars. According to the travel accounts of Buchanan, Paharias were living in the hills of Rajmahal and subsisted on forest produce. Paharias practised shifting cultivation. They also raided the agriculturists settled in the plain areas during the years of scarcity. British extended the frontiers of settled agriculture. This sharpened the conflict between hill folk and settled cultivators. British adopted a policy of brutality in 1770's. They killed many Paharias.

David Ricardo, an economist from England, influenced economic theories of the Company, which incorporated his ideas in the settlements introduced in 1820s in Maharashtra. Initial revenue demand was very high and the peasants were unable to pay. In 1840s, the British revenue demand became moderate. After 1845, agricultural prices recovered. When American Civil War broke out in 1861, in Bombay, cotton merchants visited the cotton districts to assess supplies and encourage cultivation. Cotton prices soared from 1860s, but fell drastically after the end of American Civil War. Money lenders were no longer ready to lend money since prices of cotton had come down. British also increased the revenue demands by 50 to 100 per cent. When the riots spread to Bombay and the Deccan, the Deccan Riots Commission was established to inquire into the matter.

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