The first evidence of famine in the northern districts of Bengal began to emerge in November 1769 arresting official attention.

The month of April 1770 witnessed calamities like drought, crop failure, disease and death griping all of Bengal, Bihar and Orissa. It was later estimated that ten million Indians had perished in the terrible outbreak. Even thirty years later, one-third of the land lay fallow. The loss of so much of the weaving population greatly reduced the production of cloth available for purchase by the British East India Company. In the summer months of 1770, Bengal officials estimated a short fall of two million rupees in revenue collections due to the massive famine.

In 1769, the British Government named Sir John Lindsay (1737-1788) as a Crown Plenipotentiary (a diplomat who is fully authorised to represent his or her government) in the Indian Ocean. This represented the first step to the establishment of a permanent non-Company representative to India. His instructions read as if he was to act as a "mole" (a counterspy) in the Company`s affairs. Lindsay arrived in Bombay in July 1770 and for all the hue and cry, he was largely ignored by the Madras Council.

On 28th August 1771, the Company directed that it would assume the direct administration of Bengal. This meant the direct governance of Bengal, Bihar and Orissa to include political administration, justice, and revenue collection.

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