Background
•The economic policy of the British government led to a rapid transformation of India’s self-sufficient economy into a colonial economy.
•The nature and structure of colonial economy was determined by British needs.
•From 1600 –1757, the East India company’s role was of a trading corporation which brought goods or precious metals into India and exchange them for Indian goods like spices and textiles.
•After the battle of plassey, the company’s commercial relations underwent a qualitative change. The company now used its political control to push its Indian trade.
•Since the grant of diwani rights over Bengal, Bihar and Orissa in 1765, the major concern of the East India company’s administration in India was to collect as much revenue as possible.
•Agriculture was the main basis of the economy and the main source of income.
The Unsettlements
•In 1772, Warren Hastings introduced a new system known as the Farming System.
•Under this system, the revenue collecting right was given to the highest bidders.
•But the farming system ultimately failed to improve the situation of land revenue collection and agriculture.
•The farmers tried to extract as much as possible without any concern for the production process.
•After assuming control in different parts of India, the company followed a number of methods for their collection of land revenue depending on the local conditions.
•Mostly, it was in the form of revenue farming. The main aim was to increase the tax collections with little concern for the Peasantry or age-long practices followed in India.
The permanent settlement system
•In 1793, a permanent settlement was introduced by Lord Cornwallis for Bengal Bihar, and Orissa.
•Under this, the company concluded the kind of long-term revenue contract with the zamindars as they act as intermediaries to collect the land revenue from peasants.
•The total share of the revenue collected under this system was divided into 11 parts and got distributed in the following manner –
British East India Company –10 parts out of 11 parts. ( 10/11)
Zamindars –1 part out of 11 parts. ( 1/11)
•This policy of land revenue collection is also known as the policy of assessment forever.
•The system was most prevalent in West Bengal, Bihar, Odisha, UP, Andhra Pradesh, and Madhya Pradesh.
The Permanent Settlement Agreement
•According to the Permanent Land revenue settlement the Zamindars were recognized as the permanent owners of the land.
•They were given instruction to pay 89% of the annual revenue to the state and were permitted to enjoy 11% of the revenue as their share.
•The Zamindars were left independent in the internal affairs of their respective districts.
Reasons for the introduction of the permanent settlement policy
The historians like Bipin Chandra believed that the policy of permanent settlement was guided mainly by political, financial, and administrative reasons.
Political reasons
•British, being foreigners, felt that their role would be unstable unless they acquired local supporters.
•These local supporters act as a buffer between them and the people of India.
•This view gathered significance as the last quarter of the 18thcentury saw a large number of popular revolts in Bengal.
Financial reasons
•The permanent settlement guaranteed a fixed and stable income.
•The newly created zamindars acted as security of this.
Administrative reasons
•Zamindars were required to pay a fixed amount in cash on a fixed date as land revenue to the treasury, irrespective of what they could collect.
•In this way, the process of revenue collection became much simpler for the East India company.
Merits of the permanent settlement system
•This system was beneficial to the zamindars. They were the owners of the lands and they became very loyal to the company.
•This system secured a fixed and stable income for the company. This settlement avoided the evils of periodical settlements.
Demerits of permanent settlement system
For the Cultivators:In villages, the cultivators found the system oppressive and exploitative as the rent they paid to the zamindar was very high while his right on the land was quite insecure.
•The cultivators often had to take loan to pay the rents, on failing to pay the rent, they were evicted from the land.
For the Zamindars:The revenue had been fixed so high that the zamindars found it difficult to pay, and those who failed to pay the revenue lost their zamindari.
•The zamindars were not so keen about improving the land. As long as they could give out the land and get rent, they preferred it.
For the Company:By the first decade of the 19th century, the cultivation slowly expanded and prices rose in the market.
•Although this meant an increase in the income of Zamindars, it was no gain for the company since it could not increase a revenue demand that had been settled permanently.
D. Neeharika Reddy – Renowned educationist, mentor and Advocate. Graduated from Gujarat National Law University with B.Sc. L.L.B (Hons.). She has 9 years of experience in mentoring civil services aspirants and mentored more than 500 students in Polity, Geography and Sociology optional. She has also authored Polity book for Civil service aspirants.
