In 1859, Lord Canning established a Military Finance Commission under Colonel George Balfour (1809-1894) to establish economical reforms. He also established a Civil Finance Commission to examine non-military accounts.
In December, James Wilson (1805-1860) took up his duties as the first Financial Member of the Viceroy's Executive Council. Wilson's reform plan for India's debt embraced an increase in customs duties, a small licence tax on traders, the use of an income tax for five years and a reduction in expenses. Wilson also created a series of reliable accounting statements of expenditures and for future projections of income to construct a foundation for future financial control.
On 10th May 1860, Lord Canning sacked Sir Charles Trevelyan (1807-1886), Governor of Madras, for his attack on Wilson's reform measures. Trevelyan had found the income tax to be particularly objectionable.
The following year, in July, the Government of India passed the Act XIX, which called for the withdrawal of bank currencies and for the issue of government notes. The provision authorised the issue of four million pounds of currency in notes of 10, 20, 50, 100, 500 and 1000 rupees. The new currency retained full bullion backing.
In the same year, 1860, a considerable portion of the North-West Provinces and a portion of Punjab suffered famine from the failure of monsoons. Colonel Richard Baird Smith (1818-1861) directed the relief measures which touched approximately 80,000 Indians. Smith emphasised the use of railways and roads to distribute grain abundant in neighbouring districts. This methodology proved a harbinger of future relief programmes.
With the months of March to October, as Commander in Chief of the China Expedition, Lieutenant-General Sir James Hope Grant (1808-1875) deployed two divisions, one European and one Indian and a cavalry brigade. He captured the forts of Taku and destroyed the Summer Palace of the Chinese Emperors at Peking. On October 24th, a convention was signed concluding the hostilities.
The new Indian financial reforms were being amplified even further, with the introduction of fresh regulations and acts. On 31st March, the Government of India passed the Act X, which enforced the execution of legal contracts established for the growth of indigo and named a commission of inquiry to study the problems of growing indigo. By July, peasant disorders had grown throughout Bengal in opposition to the growth of indigo. These stray incidents led to the now legendary movement of the Bengal Indigo Cultivators Revolt, 1860. In August, the Indigo Commission reported that the planters were at fault for the disturbances due to their abusive relations with the peasants related to a system of debt from which the peasant could never escape.
On 30th April, Lord Canning announced the new policy of the Government of India regarding a liberalised policy of adoption in the Native States, thus replacing Dalhousie's "doctrine of lapse". On 26th July, Sir Charles Wood (1800-1885) authorised the issuance of sanads, which provided the right of adoption to all sovereign Indian princes under British protection.
On 17th August, the Government of India appointed a Police Commission which proposed the development of a civil constabulary distinct from the military and subordinate to the civil government. From these proposals, the Police Act of 1861 was passed, which outlined an organisation from the Inspector-General to the common constable.
In September, Charles J. Wingfield (1820-1892), Chief Commissioner of Oudh, issued his Record of Rights circular. The circular, in effect reduced all occupants of the land to the status of tenants at will. As a result, the 'taluqdars' of Oudh regained nearly complete ascendancy. In November, Dr. Archibald Campbell (1801 1884), British Superintendent at Darjeeling accompanied by a force of 160 men, successfully repelled the rulers of Sikkim. In consequence, Ashley Eden (1831-1887), Special Commissioner, supervised an expedition of 2600 troops to Tumlong, capital of Sikkim, where he negotiated a satisfactory commercial treaty.
The Indian Army, in 1861, underwent reorganisation on the basis of the "irregular system". A typical irregular regiment possessed six British officers with the remaining staff positions filled by Indians. British officers had to be volunteers, had to serve with the regiment for three years and were required to pass a test in the Hindustani language. Wood's reforms to the Indian Army also included the creation of the Indian Staff Corps for each Presidency town. The Staff Corps represented a pool of European career officers from which assignments to the Political Survey and other departments were made. Service on the frontier or in non-regular provinces was also covered by the Staff Corps.
On 23rd February, the Home Government developed a new order, the Star of India, to be awarded to twenty-four Europeans or Indians for noticeable acts supportive of British interests. The Viceroy served as its Grand Master. The first investure ceremony occurred in Allahabad on November 1, 1861. In 1866 the honour was expanded to three grades. In November, the Government of India created the Central Provinces as an administrative unit governed by a Chief Commissioner. The new province consisted of Sagar, Narbada and Nagpur territories.
In 1862, the issue of the "doctrine of lapse" regarding a throne in an Indian State loomed large as the time of the Indian Sepoy Mutiny. By the end of Lord Canning's tenure as Viceroy, he had issued one hundred and fifty sanads authorising adoption of heirs in the Indian States. In the process, Canning assured smooth transition between princely rulers.
On 1st January, Lord Canning created the administrative entity of British Burma with Colonel Arthur Phayre (1812-1885) as its Chief Commissioner. On 12th March, Lord Elgin (1811-1863) assumed the duties of viceroy of India.
On 9th July, the Government of India committed itself to a policy of permanent settlement of assessment and land revenue collection in India. The Madras and Bombay governments refused to comply, stating their adherence to the ryotwari settlement. Hence, the concept of permanent settlement found its broadest application in the Central Provinces and Oudh. Here, long-term assessments and settlements proved more prosperous and provided greater agricultural productivity. Men in turn also served as a hedge against famine.
In 1863, the British completed the organisation of military forces in India. The plan provided for 62,000 British and 125.000 Indian troops. The introduction of the new Lee-Enfield rifle was completed by 1870. Indian Financial Reforms had eventually come to a full circle, with the initiations of innovative English measures to bring India to a fresh stance. All military artillery fell to the control of the British, except for a few mountain batteries. All units of the Indian Army could be assigned anywhere in the world.