The English East India Company implemented the Permanent Settlement land revenue policy in the Bengal Presidency in 1793. It is considered as a watershed moment in Indian economic and societal history. This was essentially a revenue agreement between the company and the Zamindars. This was first implemented in Bengal, Bihar, and Odisha, and was subsequently replicated in northern Madras Presidency and the Varanasi region. Also, it is called the Zamindari System.
Before the British took over as colonial rulers in Bengal, there was a class of Zamindars who collected land income on behalf of the Mughal Emperor or his representative, the Diwan. The East India Company was given the Diwani of Bengal after the Battle of Buxar in 1764, but the Company found it challenging to gather income from the countless number of farmers in rural regions. They also lacked a grasp of local rules and customs. The Company’s neglect was one of the reasons of Bengal’s terrible famine in 1770.
There was no stable settlement in Bengal in the field of revenue administration prior to the arrival of Lord Cornwallis in India. Cornwallis was the first Governor General who focused on revenue reforms.
At the time of Cornwallis’ appointment as Governor General, India’s cultivators was deplorable and the East Indian Company’s land revenue system was riddled with flaws. As a result, Cornwallis turned to Permanent Settlement for the benefit of the farms.
Lord Cornwallis put in place this system, which was influenced by the existing land revenue system in England, in which landowners were the permanent masters of their lands, collecting revenue from peasants and looking after their interests.
Hastings had instituted the Five-Year Settlement, which granted the top bidder the right to tax collection for five years on a contract basis. However, there was a significant flaw in this system in that, during the bidding, the contractors used to make such a high offer that they neglected to place the amount of the bid in the royal fund.
As a result, this system was changed into an annual system on a contract basis, but this alternative complicated the issue even more. The situation was out of control for the new contractors, who had no expertise with tax implementation. The contract system was detrimental to both the peasants and the Company, and land output started to decline quickly. As a result, the shortcomings of the annual system were readily evident at the time of Cornwallis’ appointment.
Introduction of Permanent Settlement
Cornwallis initiated the Permanent Settlement scheme in order to better the wretched situation of the peasantry and the Company. This permanent settlement lasted in India until the country gained independence.
Cornwallis was given permission by the East India Company to implement permanent settlement in Bengal. It was ordered that first, he should make the revenue settlement with the peasants for ten years and later on, this system ‘should be made permanent.
Cornwallis obtained approval from the British government in 1793, and the permanent settlement was implemented on March 23, 1793. Permanent settlements were implemented in Bengal, Bihar, Orissa, the Northern Districts of Madras, and the Varanasi region of Uttar Pradesh, covering approximately 19% of the total territory of British India.
Cornwallis was greatly impressed by England’s Zamindari system, and while solving India’s social and economic problems, he thought it worthwhile to establish a powerful feudal system in India as well in order to maintain control over the peasants and strengthen the country’s economic position.
Every year, the English officials were caught up with the issue of tax realisation. It made the Company’s revenue uncertain, so he believed it was critical to implement the Permanent Settlement.
Features of Permanent Settlement
Landlords or Zamindars were recognised as the owners of the land. They were given hereditary rights of succession of the lands under them.
The Zamindars could sell or transfer the land as they wished. The Zamindars’ proprietorship would stay as long as he paid the fixed revenue at the said date to the government. If they failed to pay, their rights would cease to exist and the land would be auctioned off.
The state kept no direct contact with the peasants.
The Zamindars were to give 10/11th of the rental they derived from the peasantry to the state keeping only 1/11th themselves. But the sums to be paid by them as land revenue were fixed in perpetuity.
If a Zamindar’s estate’s rental rose due to greater cultivation and agricultural development, or his ability to extract more from his tenants, or for any other cause, he would retain the full increase. The State would make no further demands on him. However, even if the crop failed for whatever cause, the Zamindar was required to give his revenue on time. Otherwise, his properties would be auctioned.
Viewpoint of Scholars regarding Permanent Settlement
Different scholars have expressed divergent opinions regarding the Permanent Settlement. Mr. Marshman remarked this as a bold and wise measure while Mr. Holmes described this settlement was a sad blunder.
James Mill also criticised the move, and Mr Tharnton stated that it was the product of Cornwallis’ total ignorance of Indian matters.
Advantages of the Permanent Settlement
The Indian zamindars were charged with the duty of caring for farmers. Because they were Indians, they could travel to the most remote parts of the area and were well-versed in local traditions.
Because the structure was permanent, there was a feeling of protection for everyone. The company knew how much money it would make. The sum was also guaranteed to the owner. Finally, in place of the patta, the farmers were certain of their lands and knew how much rent was to be paid.
The Company’s employees were relieved of the duty of overseeing revenue management. It freed them up to focus on the Company’s business and other areas of governance such as justice and security.
Since the settlement was of a permanent nature, the Zamindars would have an interest in enhancing the property and thus increasing income.
Disadvantages of the Permanent Settlement
The main disadvantage of this method was that its effectiveness was dependent on the nature of the Zamindars. If they were good, the interests of the farmers and the land were looked after very well. They would make changes to the property that would benefit everyone involved. If the Zamindars were evil, they were careless about the farmers’ difficulties and the land’s conditions.
Permanent Settlement established a class of hereditary landowners who formed society’s upper nobility and usually led lavish and extravagant lives.
The land valuation was incorrect and the land income was set arbitrarily. This meant that income from both productive and unproductive property was anticipated to be generated at the same rate. Farmers were burdened with useless property as a result of this. Also, in the case of productive land, it was a loss of revenue to the government.
The income rates were so high that many Zamindars went bankrupt. This method eventually proved to be catastrophic. The British government issued a warning in 1811 against imposing permanent settlement without a thorough land survey.
The farmers who were demoted to the status of tenants suffered terribly at the hands of their landowners because the government made no laws to safeguard them until 1859. As a result, the Company did a severe injustice to the peasantry.
The Permanent Settlement showed to be more detrimental than beneficial. The Zamindars became more prosperous. During the Mughal period, a Zamindar was only a tax collector, not the owner of the property. With an indefinite agreement granting him ownership rights, Zamindar took a role he had never held before. They all became petty capitalists and engaged in trade and industry.
The Company created a structure through which it was certain of receiving preset earnings as a result of this deal. It also made it simpler to gather income through Zamindars, as prior to this agreement, the company needed large establishments and officials to make annual five yearly assessments.
Since the Permanent Settlement rendered Zamindars landowners, peasants have been at the whim of Zamindars. The peasants had no property rights and could be evicted at any moment. Zamindars have arbitrary powers to evict cultivators and lose agricultural property in the event of non-payment.
Whatever benefits it had, those could be obtained through a compromise lasting nearly fifteen to twenty years. The Company recognised this as well, and as a result, it did not implement it in other areas of India except Northern Circars in the south and the district of Banaras in the north. After India gained freedom, the system was entirely abolished.