ABSTRACT
The battles of Plassey and Buxar enabled the English East India Company to establish its sway over eastern India comprising the present day eastern Uttar Pradesh, Bihar, Bengal and Orissa. In effect, the colonial economy had to be subservient to the metropolitan economy. The economy of Bihar was primarily characterized by the export of saltpetre to Europe and opium to China and the Southeast Asia. The change in the attitude of the traders followed the growth of the Western system of education in Bihar in the second half of the nineteenth century. Industrial capitalism in the colonial context made a negative impact. Instead of imbuing Biharis with the spirit of entrepreneurship and inspiring them to take up trade and industry as legitimate economic activities they put more value on jobs with assured income, involving no manual labour and very little risk of total failure.
