Salar Jung I made major money moves to better the economic situation of Hyderabad. His unelected reign saw consorted efforts toward combating graft, raising necessary cash for operations, beefing up the out-of-date monetary system, and building an efficient tax apparatus all to assure smoother payments to the treasury.
1. Replacement of Revenue Farmers with Paid Collectors (1855)
To reduce corruption and prompt tax collection, Salar Jung appointed paid Collectors in districts to do the job of Talukdars—contracted revenue farmers—who had been removed from the scene. This reform meant that the district administration no longer had to work through revenue farmers, who were known for their corrupt practices. Instead, the district administration had a more transparent and accountable revenue system.
2. Expansion of Credit Facilities and Debt Reduction
Credit facilities at reasonable interest rates were introduced by Salar Jung to reduce the State’s enormous debts. He reclaimed and brought under government control, lands mortgaged to the government, which consequently added greatly to the State’s revenue.
To standardize the currency and eliminate the private minting of coins, Salar Jung introduced the state’s currency, the Hali Sicca, in 1857. He established a government mint in Hyderabad and abolished all private mints, which allowed him to enforce control over the state’s financial system and ensure that its coins were uniformly made and could consequently be trusted.
3. Establishment of an Accountant General’s Office
A committed office of the Accountant General was set up to handle and uphold the accounts of the state, ensuring a methodical registering of the incoming and outgoing funds. This brought about improved financial clarity and responsibility in the business of administering the state.
4. Nationalization of Land Under Tax Farmers
In the past, tax farmers controlled many kinds of lands, which caused revenue leakage and inefficient collection. Salar Jung took back these lands and put them under direct government control, which resulted in increased government revenue and stabilized land taxation.
5. Introduction of the Ryotwari System for Tax Collection
Salar Jung erased the ancient practice of collecting taxes from whole villages, who had to pay as they were then. Instead, he introduced the Bombay model of the Ryotwari system, which was a direct tax system, where taxes were paid directly by the farmers (Ryots) who worked the land.
This reform:
1. Eliminated the middlemen associated with the old revenue system.
2. Improved the revenue intake of the government, which was now collecting taxes directly.
3. Empowered the farmers, who now had rights of nearness to land, as the system was operating in their favor.
6. Land Survey and Settlement Reforms
An establishment was set up to somewhat accurately measure lots of land that was in the way of private possession. This was a necessary first step toward granting individual rights to the would-be owners of such lots. When we talk of establishing rights to private lands in the American way, we mean in a roughly equal manner and in a way that the law can understand. That’s what surveying is for, and then all sorts of taxes can be established and collected in a way that doesn’t raise too many hackles.
Impact of Financial Reforms
The economy of Hyderabad underwent a sea change and became transparent, efficient, and remarkably stable. Salar Jung was the first to realize that revenue as well as the income of the state could increase only if taxes were uniform and were also paid by everyone. He introduced direct tax collections and he was also the first to introduce a survey measure of land in the dominion—a kind of revenue that was long overdue.
