Essay on the Permanent Settlement in India 1757-1857 made by the East India Company

We have seen that in 1765, the East India Company acquired the Ditvani, or control over the revenues, of Bengal, Bihar and Orissa.

Initially, it made an attempt to continue the old system of revenue collection though it increased the amount to be collected from Rs 14,290,000 in 1722 and Rs 18,180,000 in 1764 to Rs 23,400,000 in 1771.

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. Though the amount of revenue was pushed high by zamindars and other speculators bid each other, the actual collection varied from year to year and doom came up to official expectations.

This introduced instability the Company’s revenues at a time when the Company was hard for money. Moreover, neither the riot nor the zamindar would 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.

It was at this stage that the idea first emerged of fixing the land revenue at a permanent amount. Finally, after prolonged discussion and debate, the Permanent Settlement was introduced in Bengal and Bihar in 1793 by Lord Cornwallis.

It had two special features. First, 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 riot but also to become the owner’s of the entire land in their zamindaris.

Their right of ownership was made hereditary and transferable. On the other hand the cultivators were reduced to the low status of mere tenants and were deprived of long-standing rights to the soil and other customary rights.

The use of the pasture and forest lands, irrigation canals, fisheries, and homestead plots and protection against enhancement of rent were some of the rights which were sacrificed. In fact, the tenant of Bengal and Bihar was left entirely at the mercy of the zamindars.

This was done so that the zamindars might be able to pay in time the exorbitant land revenue demand of the Company. Second, 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.

If the rental of a zamindar’s estate increased owing to extension of cultivation and improvement in agriculture, or his capacity to extract more from his tenants or any other reason, he would keep the entire amount of the increase. The state would not make any further him.

At the same time, the zamindar had to pay his revenue rigidly on the due date even if the crop had failed for some “on otherwise his lands were to be sold nearly doubled.

John Shore, the man who planned the Permanent Settlement and later succeeded Cornwallis as Governor-General calculated that if the gross produce of Bengal be taken as 100.

The government claimed 45, zamindars and other intermediaries below them received 15, and only 40 remained with the actual cultivator One result of this high and impossible land revenue demand was that nearly half the zamindari lands were put up for sale between 1794 and 1807.

It was later generally admitted by officials and non-officials alike that before 1793 the zamindars of Bengal and Bihar did not enjoy proprietary rights over most of the land.

The question then arises: why did the British recognise them as such? One explanation is that this was in part the result of a misunderstanding. In England, the central figure in agriculture at the time was the landlord and the British officials made the mistake of thinking that the zamindar was his Indian counterpart.

It is, however, to be noted that in one crucial respect the British officials clearly differentiated between the positions of the two. The landlord in Britain was the owner of land not only in relation to the tenant but also in relation to the state.

But in Bengal while the zamindar was landlord over the tenant, he was himself subordinated to the state. In fact he was reduced virtually to the status of a tenant of the East India Company.

In contrast to the British landlord, who paid a small share of his income as land tax, he had to pay as tax 10/11th of his income from the land of which he was supposed to be the owner; and he could be turned out of the land unceremoniously and his estate sold if he failed to pay the revenue in time.

Other 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 factors were three. The first arose out of clever statecraft: 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 India.

This argument had immediate importance as there were large numbers of popular revolts in Bengal during the last quarter the eighteenth century.

So they brought into existence a wealthy privileged class of zamindars which owed its existence to British which would, therefore, be compelled by its own basic interests support it.

This expectation was, in fact, fully justified later when his zamindars as a class supported the foreign government in position to the rising movement for freedom. Second, and perhaps the predominant motive, was that of financial security.

Before 1793 the Company was troubled by fluctuations in its chief source of income the land revenue. The Company was faced with a constant financial crisis as Bengal revenue had to finance its army engaged in wars of expansion, the civil establishment in Bengal, Madras and Bombay, and the purchase of manufactures for export.

The Permanent Settlement guaranteed stability of income. The newly created property of the zamindars acted as a security of this.

Moreover, the Permanent Settlement enabled the Company to maximise its income as land revenue was now fixed higher than it had ever been in the past.

Collection of revenue through a small number of zamindars seemed to be much simpler and cheaper than the process of dealing with lakhs of cultivators. Third, 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.

The Permanent Zamindari Settlement was later extended to Orissa, the Northern Districts of Madras, and the District of Varanasi.

In parts of Central India and Awadh the British introduced a temporary zamindari settlement under which the zamindars were made owners of land but the revenue they had to pay was revised periodically.

Another group of landlords was created all over India when the government started the practice of giving land to persons who had rendered faithful service to the foreign rulers.

That settlement should, therefore, be made directly with the actual cultivators. They also pointed out that under the Permanent Settlement the Company was a financial loser as it had to share the revenues with the zamindars and could not claim a share of the growing income from land.

Moreover, the cultivator was left at the mercy of the zamindar that could oppress him at will. Under the system they proposed, which is known as the Rotary Settlement the cultivator was to be recognised as the owner of his plot of land subject to the payment of land revenue.

The supporters of the Rotary system claimed that it was a continuation of the state of affairs that had existed in the past. Munro said: “It is the system which has always prevailed in India.”

The Rotary Settlement was in the end introduced in parts of the Madras and Bombay Presidencies in the beginning of the nineteenth century.

The settlement under the Rotary system was not made permanent. It was revised periodically after 20 to 30 years when the revenue demand was usually raised.

The Rotary Settlement did not bring into existence a system of peasant ownership. The peasant soon discovered that the large number of zamindars had been replaced by one giant zamindar the state and those they were mere government tenants whose land was sold if they failed to punctually pay land revenue.

In fact, the government later openly claimed that land revenue was rent and not a tax. The riot’s rights of ownership of his land were also negated by three other factors:

1. In most areas the land revenue fixed was exorbitant; the riot was hardly left with bare maintenance even in the best of seasons. For instance, in Madras the government claim was fixed as high as 45 to 55 per cent of gross production in the settlement. The situation was nearly as bad in Bombay.

2. The government retained the right to enhance land revenue at will.

3. The riot had to pay revenue even when his produce was partially or wholly destroyed by drought or floods.