From 1757 onwards, the East India Company emerged as a political power in Bengal. But for the Company, economic condition of Bengal was extremely hopeless and frustrating. At the same time, the Company needed money to invest in trade, to meet the cost of administration of Bengal and to meet the expenses of wars of expansion.
The company got the right to control the revenue of Bengal, Bihar and Orissa by grant of Dewani in 1765. Consequently the Company had to collect land revenue from the occupied territory. In the beginning the Company continued with the traditional system of revenue collection through intermediaries like Zamindars, muqdams, etc. From 1773 onwards the Company took the responsibility of collecting revenue directly.
It introduced annual action system investing the right to collect revenue with the highest bidders. The auction system proved to Bengal a failure and the Company faced lot of problems in making budget. Annual auction system was replaced by five years’ auction system and this method of collection failed. Peasants were oppressed by revenue collectors and cultivation declined day by day. The Company was forced to revert to annual auction system again.
At this time, Lord Cornwalls took the office of Governor General in 1786. There was much discussion about the solution of the problem permanently. Sir John Shore proposed for a ten-year’ settlement of land revenue with the Zamindars. Finally, Cornwallis decided in favour of fixing the land revenue permanently. Hence, Permanent Settlement was introduced in 1793 in Bengal and Bihar.
Provisions of Permanent Settlement:
First, settlement for land revenue was concluded with the Zamindars and revenue collectors who were recognized as the landlords or proprietors. They were elevated to the status of revenue collectors and land owners.
Their rights over land were made hereditary and transferable. Secondly, the amount of land revenue was fixed in perpetuity and it could not be increased and decreased in future. Thirdly, the Zamindars had to fix up the rent with the peasants and they were required to issue the patter or agreement to the tenants clearly mentioning the area of land and amount of land rent to be paid. Fourthly, the Zamindars were required to pay the fixed revenue at the treasury within the fixed date failing which they had to forfeit their rights over land. The Zamindars were to deposit 10/11th of the rent in the treasury and to retain 1/11 that for themselves.
The Permanent Settlement has many positive aspects. Firstly, the Permanent Settlement lessened the burden of the Company by transferring the responsibility of collection of revenue to the Zamindars. Secondly, the company avoided the cumbersome process of revenue assessment by fixing the land revenue permanently.
Thirdly the Zamindars, being conversant with the land system, were expected to perform their duties properly. They were also to look for the improvement of agriculture and the peasants. Fourthly, it created a new class in the Indian society ever loyal to the British Government. Practically, the Zamindars remained faithful to the British permanently. Fifthly, it created a sense of security among the landlords and the peasants.
So long the Zamindars paid revenue to the Government and peasants to the Zamindars, no one could dispose them of their rights over land. The tenants knew the area of land and amount of revenue to be paid. The sense of security among the peasants was a novel feature of the Permanent Settlement. Lastly, it simplified the revenue collection and helped the Company in preparing the budget as amount of revenue was fixed.
On the other hand, the Permanent Settlement comes under severe criticism for its harsh treatment for peasants. Firstly, the settlement was concluded with the zamindars who were not actual owners of land. The English misread the Indian land system and mistook the zamindars as the owners. Also it is said that the British intentionally settled land revenue with the Zamindars to create political friends in them.
The peasants were made sub-ordinate to the Zamindars and left at their mercy. Secondly, land revenue was fixed at excessively high rate. Sometimes it was found beyond the paying capacity of the tenants.
Thus interests of the peasants were never considered while fixing revenue. Thirdly, the Zamindars alienated themselves from the tenants. Since the revenue was fixed permanently, any extra-collection of revenue due to the enhancement or agricultural extension was a profit for the Zamindars.
The Zamindars, sometimes, enhanced revenue and exploited the poor illiterate peasants. On the other hand, the Zamindars never tried to improve agriculture. Fourthly, for the peasants, agricultural extension meant additional revenue burden.
Therefore, they also refrained from agricultural extension and improvement. In spite of provisions, the poor peasants never dared to knock the door of law against the Zamindari oppression. Finally, while fixing the revenue productivity or fertility of the land was never taken into account. Both good and bad lands were assessed in the same scale.
In spite of all these defects, the permanent settlement was the first scientific and systematic attempt to maintain land records, to assess land revenue and to control land administration.