The Permanent Settlement was a ‘bold, brave and wise measure’

In 1765, the East India Company acquired the Diwani, or control over the revenue, of Bengal, Bihar and Orissa. Initially, it made an attempt to continue the old system of revenue .collection though it increased the amount. In 1773, it decided to manage the land revenues directly.

Warren Hastings auctioned the right to collect revenue to the highest bidders. But his experiment did not succeed. This introduced instability in the company’s revenue at a time when the company was hard pressed for money.

Moreover, neither the ryot nor the zamindar would do anything to improve cultivation when they did not know what the next year’s assessment would be or who would be the next year’s revenue collector. The Permanent Settlement was introduced in Bengal and Bihar in 1793 by Lord Cornwallis. It had two special features.

Firstly, the Zamindars and revenue collectors were converted into so many landlords. They were not only to act as agents of the Government in collecting land revenue from the ryot but also to become the owners of the entire land in their zamindars.

Secondly, the zamindars were to give 10/11th of the rental they derived from the peasantry to the state, keeping only 1/11th for them. But the sums to be paid by them as land revenue were fixed in perpetuity. At the same time, the zamindar had to pay his revenue rigidly on the due date even if the crop had failed for some reason; otherwise his lands were to be sold.

Historians think that the decision to recognise the zamindars as the proprietors of land was basically determined by political, financial and administrative expediency. Here the guiding fetors were three. The first arose out of clever statement: the need to create political allies. The British officials realised that as they were foreigners in India, their rule would be unstable unless they acquired local supporters who would act as a buffer between them and the people of India.

Second, and perhaps the predominant motive, was that of financial security. The Permanent Settlement guaranteed stability of income. The newly created property of the Zamindars acted as a security of this.

Thirdly, the Permanent Settlement was expected to increase agricultural production. Since the land revenue would not be increased in future even if the Zamindar’s income went up, the latter would be inspired to extend cultivation and improve agricultural productivity as was being done in Britain by its landlords.