It naturally took some years for the East India Company to consolidate and stabilize its rule in the Telugu area, which came under its direct rule. In the initial stages, the Company had to counter strong resistance from the Zamindars in the coastal Andhra and the Palegars in the Rayalaseema districts, that were in existence from the ancient Hindu rulers or the medieval Muslim rulers. The Company decided to use the Zamindari system to its best advantage, entrusting the Zamindars only with collection of land revenue and taking away from them the executive and judicial powers. The Company also introduced the system of `Permanent Settlement’ in A.D.1802.
In Rayalaseema, the first Principal Collector, Thomas Munro, of the ceded districts suppressed all the Palegars and established a new mode of collection of land revenue directly from the tiller of the soil in A.D.1808. This system came to be known as `Ryotwari’ system.
The administrative measures taken by the Company in the rest of the Telugu land also led to similar changes in the Hyderabad State of which Telangana formed a major constituent. The famine of A.D.1777 and the devastating flood in the succeeding year greatly impoverished the State of Hyderabad and its economy was badly affected. The unwise policies of the rulers led the State on the verge of bankruptcy by neck-deep debts and the Nizam was harassed by Arab and Rohilla bankers. In such situation, the Company, through its Resident, intervened and saved the Nizam. Thus, the Nizam became a dependable friend of the Company and his support to the Company in the crucial
period of the War of Independence in A.D.1857 (otherwise called Sepoy Mutiny) turned out to be decisive factor in clinching the issue in favour of the Company’s rule in India. In A.D.1858 the British crown took over the reign in the entire India.
Thus, the British, who entered India in the early 17th century as a trading company, gained power as its ruler for over a century and a half.