Land Revenue Policy of the British

Background

When the British East India Company received the Diwani rights (right to collect land revenue) of Bengal, Bihar, and Orissa on 12 August 1765, it marked a turning point in Indian history. Until then, the Company had largely seen itself as a trader, concerned with buying cheap Indian goods and exporting them to Europe at high profits. But with the grant of Diwani by the Mughal emperor, the Company suddenly found itself in the shoes of a Diwan, responsible not just for trade but also for governance—specifically, the collection of land revenue.

Now here lies the irony: while the Company had the powers of a ruler, its mindset remained that of a trader. A trader’s instinct is to maximize profit in the shortest time, while a ruler’s duty is to ensure stability, welfare, and continuity. This mismatch between role and mindset created the first major crisis of colonial administration.

Inherited System from the Nawabs

Initially, the Company did not set up a new machinery. It simply retained the revenue collection system of the Bengal Nawabs. But unlike the Nawabs, who had a stake in the prosperity of the region, the Company’s employees were mostly concerned with personal enrichment. Their corruption and interference soon threw the system into complete disarray.

The result was devastating: in 1769–70, Bengal witnessed one of the worst famines in Indian history, in which nearly one-third of the population perished. Instead of providing relief, the Company was obsessed with keeping revenues high, which worsened the suffering of the people. This tragedy made it clear that a regular and systematic revenue policy was necessary.

The First Experiment: Auction-Based Revenue Collection

In 1772, the Company took its first step towards reform. Under Warren Hastings, the land revenue system was reorganized on the principle of auctioning rights.

• The right to collect revenue was given to the highest bidder (often zamindars, middlemen, or even speculators).
• The idea was simple: whoever promised to pay the highest revenue to the Company would be allowed to collect it from the peasants.

However, this experiment failed miserably for two main reasons:

1. Instability in Company’s Revenue
   • The bids were often unrealistically high because zamindars and speculators competed fiercely.
   • But in reality, actual collection fell short—sometimes drastically—leading to instability in the Company’s income.
2. No Agricultural Improvement
   • Since cultivators and zamindars never knew what the next year’s assessment would be, there was no incentive to invest in better cultivation.
   • Agriculture requires stability, but uncertainty in assessment discouraged any long-term planning.

Thus, the Company realized that revenue farming through auctions could not sustain either agriculture or state finances.

The early phase of British land revenue policy, therefore, can be seen as one of experimentation and blunders. The Company had suddenly become the ruler but lacked both administrative experience and concern for the peasantry. The famine of 1770 exposed its indifference, and the failure of the auction system showed that mere short-term profit-seeking could not provide a stable foundation for governance.

From here began the long series of land settlement experiments—Permanent Settlement, Ryotwari Settlement, Mahalwari Settlement—that we will study in a while. Each was an attempt to balance the Company’s hunger for revenue with the need for stability in Indian agriculture.

👉 In short, the story begins with the Company as Diwan (1765), moves to famine and chaos (1769–70), and then to Hastings’ failed auction experiment (1772). These developments laid the groundwork for the major land revenue systems of the colonial period.

Excellent—now we move to the Permanent Settlement of 1793, one of the most decisive policies in colonial India.

Permanent Settlement System (1793)

Background: Why was a new system needed?

By the 1770s, Bengal’s rural economy was in deep crisis.

• Recurrent famines (like the Bengal famine of 1770) had devastated agriculture.
• Agricultural output was declining, and the Company’s revenue remained unstable.

British officials debated on how to create a more secure and regular system. They felt that two measures were necessary:

1. Securing property rights → So that those who owned land would have an incentive to improve it.
2. Fixing revenue demand → So that cultivators and landlords could plan ahead without fear of ever-increasing taxes.

The Evolution Towards Permanency

• 1772 – Five-Year Settlement (Warren Hastings): Rights of tax collection auctioned to highest bidder. Failed, as bidders defaulted.
• Annual Settlement (later Hastings): Too unstable.
• 1789 – Decennial Settlement (Lord Cornwallis): Revenue demand fixed for 10 years.
• 1793 – Permanent Settlement: The decennial arrangement was declared permanent, never to be revised.

👉 The system was designed by John Shore (later Governor-General, 1793–98) during Lord Cornwallis’s tenure.

Objectives of the Permanent Settlement

The British hoped to achieve a “win-win” arrangement:

• For the Company → A stable, regular flow of revenue.
• For the Zamindars → A sense of security; since revenue demand would never increase, they would be motivated to invest in agriculture and benefit from surplus.

Thus, the Permanent Settlement (also called the Cornwallis System or Zamindari Settlement) was introduced first in Bengal and Bihar (1793) and later extended to Orissa, northern Madras, and Varanasi.

Features of the Permanent Settlement

1. Fixed Land Revenue
   • Zamindars (rajas, taluqdars) were recognised as intermediaries.
   • They collected rent from peasants and paid a fixed share to the Company, permanently settled.
   • 89% of the rent (10/11th) went to the Company, while zamindars kept only 11%.
   • Any increase in productivity or rents went entirely to the zamindars, not the Company.
   • This, the British believed, would encourage zamindars to improve agriculture.
2. Ownership of Land
   • Zamindars were made hereditary and transferable owners of land.
   • Earlier, they were just revenue collectors, but now they became proprietors.
   • Cultivators—who traditionally had rights over the soil—were reduced to mere tenants, vulnerable to eviction and exploitation.
3. Sunset Clause (or Sunset Law)
   • Revenue had to be paid punctually on the due date, regardless of crop failure.
   • If payment was delayed even by a single day—by “sunset”—the zamindar’s estate could be auctioned off.
4. Temporary Zamindari Settlement
   • In parts of Central India and Awadh, a temporary zamindari settlement was tried.
   • Here too, zamindars were landowners, but their revenue demand was revised periodically, unlike the permanent Bengal system.

Why was it significant?

The Permanent Settlement was revolutionary because:

• For the first time, the British introduced the idea of private property in land on a large scale.
• It was expected to create a class of loyal landlord-aristocrats who would support the colonial state.
• But at the same time, it disempowered peasants and entrenched feudal exploitation.

Wonderful—now we are at the most crucial part: the consequences of the Permanent Settlement. This is where we move from theory to practice, from intentions to realities. The British had introduced this system with lofty ideas—stability of revenue, prosperity of agriculture, creation of a loyal landlord class—but in actual practice, it produced contradictions, sufferings, and distortions in Indian rural life. Let’s unpack this step by step.

Benefits of the Permanent Settlement

From the Company’s point of view, the Permanent Settlement initially looked like a success:

• Ease of administration: Instead of negotiating with lakhs of cultivators, the Company only had to deal with a limited number of zamindars.
• Stable income for military expenses: The Company now had a guaranteed, fixed inflow of funds—essential for maintaining its army and bureaucracy.

This explains why the British hailed it as a “scientific” settlement in the beginning.

Problems Faced by Zamindars

The system that was supposed to benefit zamindars turned out to be a trap for many of them:

1. Arbitrary fixation of revenue: The demand was fixed without consulting zamindars, and at very high rates.
2. Insecurity of tenure: If a zamindar failed to pay revenue—even for a single season—he could lose his estate under the Sunset Law.
3. Mass auctions of estates: By 1815, nearly half the zamindaris of Bengal had changed hands. Old hereditary zamindars were displaced, and their lands went into the hands of merchants, moneylenders, and new elite classes.

Thus, instead of creating a stable landed aristocracy, the policy created instability at the top.

The Rise of Jotedars

Parallel to the weakening of zamindars, a new class gained power: the Jotedars (also known as haoladars, gantidars, mandals).

• They were rich peasants, often combining cultivation with moneylending and trade.
• Within the village society, their authority was stronger than that of zamindars.
• They could resist zamindari officials, delay revenue payments, and even buy zamindari estates during auctions.

👉 This shows how the Permanent Settlement reshaped rural power: the British thought zamindars would be the pivot of rural society, but instead, Jotedars emerged as the real grassroots power-brokers.

Problems Faced by Cultivators

The real victims were the peasants (ryots):

1. High Rent: Zamindars squeezed them beyond what the Company demanded.
2. Insecurity of Tenure: Unlike before, peasants had no guaranteed rights. If they defaulted, they could be evicted easily.
3. Debt Trap: To pay rents, they often borrowed from moneylenders. Defaults meant loss of land.
4. Legal Harassment: British regulations (1793, 1799, 1812) allowed zamindars to seize tenants’ property without court approval. This gave legal sanction to oppression and exploitation.

Thus, the cultivator’s life became one of rent, debt, and eviction, pushing rural Bengal into cycles of poverty.

Problems Faced by the Company

Ironically, even the Company did not benefit in the long run:

1. Loss of Revenue Growth: In the early 1800s, as agricultural prices rose and cultivation expanded, zamindars’ incomes increased. But the Company’s share remained frozen due to the permanent fixation.
2. Lack of Agricultural Improvement: The hope that zamindars would invest in land was misplaced. Many preferred to live luxuriously in Calcutta on rent income, instead of risking investments in agriculture.
3. Displacement of Loyal Allies: Because so many zamindars lost estates through auction, the Company could not even secure a stable landed aristocracy in the early years.

So, what was meant to be a “scientific settlement” soon looked like a blunder in fiscal policy.

Why did the British Make Zamindars Landowners?

This question often puzzles students, since before 1793 zamindars were not landowners, only revenue collectors. So why did the British elevate them into hereditary proprietors?

Historians suggest three explanations:

1. Misunderstanding (English Model):
   • In England, the landlord was the central figure in agriculture.
   • British officials wrongly assumed that Indian zamindars were the same.
2. Political Need:
   • Being foreign rulers, the British needed local allies.
   • By granting zamindars property rights, they turned them into a buffer class, loyal to colonial rule.
   • Indeed, later history proved this correct—zamindars largely sided with the British against popular movements.
3. Financial Security:
   • The Company wanted stable and predictable revenue.
   • By making zamindari rights heritable and saleable, estates themselves became collateral security for revenue.
4. Administrative Convenience:
   • Collecting taxes from a few hundred zamindars was far easier than from millions of peasants.

The Limits of the System: Why It Was Not Extended

After 1810, agricultural prices rose sharply. This meant Bengal zamindars grew richer, but the Company’s revenue share remained static.
👉 Hence, the British did not extend the Permanent Settlement beyond Bengal.

In later annexed territories of the 19th century, they preferred temporary settlements (revised periodically), which gave the state the flexibility to increase revenue with changing times.

In Summary

• Winners initially → Company (stable revenue) + Zamindars (ownership rights).
• Victims → Peasants (high rents, insecurity, exploitation).
• Losers in the long run → Even the Company (no share in rising agricultural prosperity).

The Permanent Settlement thus stands as a classic colonial paradox—a system meant to ensure stability, but which ended up producing instability, oppression, and stagnation.

Now, let’s move to the Ryotwari Settlement (1820), the second major experiment in British land revenue policy. If the Permanent Settlement represented the “zamindar-centric” model of Bengal, the Ryotwari System was its opposite—placing the cultivator (ryot) at the center. But as we will see, the promise of empowering the peasant turned into another story of oppression and poverty. Let’s try to understand this

Ryotwari System (1820)

Why Ryotwari? Background and Rationale

When the British expanded into South and South-Western India, especially after the wars with Tipu Sultan, they faced a new situation:

• Unlike Bengal, there were no hereditary zamindars with large estates.
• Village society was more fragmented, and the old system of intermediaries was weak.

Officials like Alexander Reed and later Thomas Munro (Governor of Madras) argued:

1. If zamindari was imposed, it would disrupt the existing village system.
2. The Company should deal directly with cultivators (ryots).
3. Unlike the Permanent Settlement, the Company must retain the right to revise revenue, so it could benefit from rising prices.

Thus, the Ryotwari Settlement was tried on a small scale by Reed and later expanded systematically by Munro. It eventually covered Madras Presidency, Bombay Presidency, Assam, and Burma.

Main Features of the Ryotwari Settlement

1. Ryot as Owner
   • Each cultivator (ryot) was recognised as the owner of his land, as long as he paid land revenue to the state.
   • He was given a patta (title deed), and he could sell, lease, or mortgage his land.
2. Direct Settlement
   • Revenue was settled directly between government and ryot—no intermediaries.
3. Survey and Assessment
   • Each plot of land was to be carefully surveyed, and tax fixed on the basis of soil, crops, irrigation, etc.
   • Revenue rates were revised periodically every 20–30 years, unlike the permanent zamindari demand.
4. Revenue Revision
   • The state retained the right to increase revenue demand in future.

The Harsh Reality of Ryotwari

While it looked ideal in theory, in practice it became highly oppressive:

1. Government as the “Big Zamindar”
   • The ryot was declared owner, but in reality, he only became a tenant of the government, which demanded very high revenue.
2. Excessive Revenue Demand
   • Rates were so high that even in good harvest years, peasants were left with only bare subsistence.
3. Uncertainty and Debt
   • Since revenue had to be paid even in case of drought or flood, ryots borrowed from moneylenders, lost their land, and sank into debt bondage.
4. Failure of Surveys
   • Although promised, in many districts no survey was ever done. Revenue was fixed arbitrarily based on past payments—this was called “putcut assessment.”
5. Loss of Choice
   • In theory, ryots could give up land if they couldn’t pay tax. But in practice, officials compelled them to cultivate, fearing loss of revenue.

👉 Thus, instead of empowering peasants, Ryotwari became another tool of exploitation, with the state acting as the sole zamindar.

Consequences of the Ryotwari System

1. Peasant Impoverishment
   • Heavy taxation left ryots too poor to invest in land or improve productivity.
2. Collapse of Land Value
   • By mid-19th century, land under ryotwari had almost no market value, since buyers inherited the crushing burden of revenue.
   • Example: In 1855, Madras Presidency had only 14.5 million acres cultivated, while 18 million acres lay waste—showing how oppressive taxation made cultivation unviable.
3. Social Upheaval
   • Traditional village headmen lost authority.
   • The discontent of ryots later found expression in movements like the Deccan Riots of 1875.

Ryotwari: Theory vs. Practice

In Theory	In Practice
Ryot recognised as landowner	Government behaved like the sole zamindar
Detailed surveys before assessment	Revenue fixed arbitrarily (putcut)
Ryot could refuse land if tax too high	Forced cultivation by officials
Peasant security and freedom	Oppression, debt, land alienation

Ryotwari in Bombay Presidency (Post-1818)

Introduction

• After the defeat of the Peshwa in 1818, the British introduced the Ryotwari system in the Bombay Presidency, modeled on Madras.
• It was implemented under Governor Mountstuart Elphinstone, who was a disciple of Thomas Munro.

Pringle’s Assessment and Its Failure

• A systematic measurement and classification of land was started under Pringle, a British officer.
• But here’s the catch: Pringle based his calculations on the Ricardian theory of rent (by the economist David Ricardo). Let’s have a look at what it is:

👉 Ricardo’s theory of rent:

• Rent = producer’s surplus (the extra produce over the cost of production).
• In Ricardo’s logic, if the price of grain rose, rent should also increase.
• This may have worked in England, but it was totally impractical in Indian conditions where agriculture was vulnerable to monsoons, famines, and lacked stable markets.
• As a result, Pringle’s assessments were too high.
• In the Pune district, cultivators could not pay such heavy dues; many abandoned their lands and fled to Hyderabad (Nizam’s territory).
• The system had to be abandoned after some years.

Revised Settlement under Wingate and Goldsmid

• After Pringle’s failure, two officers, Wingate and Goldsmid, designed a more realistic system:
  • They dropped Ricardian theory.
  • They fixed revenue based on actual soil fertility and location.
  • The demand was moderated to a level peasants could pay regularly.
• This new assessment (started 1836) gradually covered most of the Deccan by 1865.
• It proved more successful, as cultivation expanded steadily under the revised system.

Thomas Munro: The Architect of Ryotwari

Now let’s shift to Munro’s life and his contribution, because understanding his role gives context to why Ryotwari took the shape it did.

Early Career

• Arrived in Madras in 1789 as a soldier.
• Fought in the Second and Third Anglo-Mysore Wars against Tipu Sultan.

Administrator of Baramahal (1792–99)

• After Tipu’s defeat (1792), Cornwallis handed over Baramahal (present-day Salem region) to Alexander Reed and his assistant, Munro.
• Munro conducted detailed land surveys and concluded:
  • The “King’s share” of revenue was too high.
  • He suggested reducing the rents, arguing that losses would be offset by better accounting and reduced corruption.
• Importantly, here no zamindar stood between government and cultivator—this influenced his later ideas.

Administrator of Kanara (1799)

• After Tipu’s death, Munro administered West Kanara, further gaining experience in direct settlement.

Collector of Northern Circars (1801–07)

• Managed territories ceded by the Nizam.
• Subjugated the Poligars (hereditary estate holders), further reinforcing his belief that intermediary landlords were problematic.

Conception of Ryotwari

• Around this time, Cornwallis wanted the Permanent Settlement extended all over India.
• Munro strongly opposed this:
  • He argued that South India had no traditional zamindars.
  • Creating zamindars artificially (through auctions) would only empower speculators.
  • Instead, the government should directly settle with ryots.
• This became the intellectual foundation of the Ryotwari system.

Governor of Madras (1820–27)

• In 1820, Munro became Governor of Madras Presidency.
• He formally implemented the Ryotwari system across Madras.
• Also paid attention to education and advocated Indianisation of services (i.e., including Indians in administration).
• Died of cholera in 1827 at Pattikonda (Kurnool district).

✅ So by this point we’ve covered:

• Permanent Settlement (1793, Cornwallis)
• Ryotwari Settlement (1820, Munro) → both Madras & Bombay variants.

Wonderful—now we come to the Mahalwari Settlement (1822), the third major land revenue system of the British. If the Permanent Settlement focused on zamindars, and the Ryotwari Settlement on individual cultivators (ryots), the Mahalwari System took the village (mahal) as the basic unit of revenue collection. Let us try to understand this:

Mahalwari System (1822)

Background: Why Mahalwari?

By the early 19th century, the British realised two things:

1. Permanent Settlement was a financial loss → Since revenue was permanently fixed, the Company could not benefit from rising agricultural prices and expanding cultivation.
2. Ryotwari proved burdensome to peasants → and administratively heavy, since every individual plot had to be assessed.

So, officials wanted a middle path:

• Revenue should not be permanently fixed, but revised from time to time.
• Instead of dealing with either a big zamindar or lakhs of cultivators, they would settle with an intermediate unit—the village (mahal).

Introduction of Mahalwari Settlement (1822)

• Introduced in 1822 by Holt Mackenzie in the North-Western Provinces of Bengal Presidency (today’s Uttar Pradesh).
• Later extended to Punjab, Gangetic Valley, and parts of Central India.
• In Punjab, it was slightly modified and called the village system.

How the Mahalwari System Worked

1. Survey and Records
   • Company officials (collectors) toured villages, measuring fields, inspecting land, and recording customary rights of groups.
2. Revenue Calculation
   • Revenue demand was estimated plot by plot and then aggregated at the village (mahal) level.
   • A mahal could be a single village or a cluster of villages.
3. Responsibility for Payment
   • The village headman (or heads of families in the community) was responsible for collecting revenue and paying it to the Company.
   • Thus, the entire village community was made collectively responsible for revenue.
4. Revision of Demand
   • Unlike the Permanent Settlement, the revenue was not fixed forever.
   • It was periodically revised depending on land conditions, prices, and produce.
5. Community Ownership
   • In principle, the village community collectively owned the land.
   • But in practice, responsibility lay with headmen, who acted as intermediaries between peasants and the state.

Reforms under William Bentinck (1833)

• Lord William Bentinck modified the system to make it more flexible.
• Adjustments were made in rates and assessment methods, giving some relief to villages.

Key Features at a Glance

Aspect	Permanent Settlement	Ryotwari Settlement	Mahalwari Settlement
Introduced	1793 (Cornwallis)	1820 (Munro)	1822 (Holt Mackenzie)
Region	Bengal, Bihar, Orissa	Madras, Bombay, Assam, Burma	NW Provinces, Punjab, Central India
Revenue Settlement Unit	Zamindar (estate)	Individual ryot (cultivator)	Mahal (village/estate)
Ownership	Zamindar made hereditary landlord	Ryot (cultivator) owner (in theory)	Village community collectively
Revenue Fixation	Fixed permanently	Revised periodically (20–30 years)	Revised periodically
Intermediary	Zamindar	None (direct with ryot)	Village headman / community

Significance

• The Mahalwari system was essentially a compromise:
  • Avoiding the rigidity of Permanent Settlement.
  • Avoiding the administrative burden of Ryotwari.
• But in practice, it still overburdened cultivators, since collective responsibility meant the entire village suffered if individuals defaulted.

✅ So, by now, we’ve covered:

1. Permanent Settlement (1793, Cornwallis & John Shore)
2. Ryotwari Settlement (1820, Munro; Bombay variation under Elphinstone, Wingate, Goldsmid)
3. Mahalwari Settlement (1822, Holt Mackenzie; modified by Bentinck)

👉 With these three systems, the broad framework of colonial land revenue policy is complete. Each system had different intermediaries, but the common thread was the same: extract maximum revenue at the cost of the cultivator.

Excellent—this last part brings us to the heart of the long-term impact of British land revenue policies: the transformation of land into a commodity, the spread of indebtedness, and the eruption of agrarian discontent.

Private Ownership of Land: A Colonial Innovation

One of the most far-reaching changes introduced by the British was the idea of private property in land.

• Earlier, in traditional Indian systems, land was tied to community and custom.
• Under British rule, it became saleable, mortgageable, and alienable—in other words, a commodity.

Why did the British do this?

1. Protecting Revenue Interests
   • If peasants failed to pay revenue, they could now mortgage their land to borrow from moneylenders.
   • If they still defaulted, the government could auction off the land to recover arrears.
2. Encouraging Investment
   • The British believed that only ownership rights would motivate landlords and peasants to improve land productivity.

Consequences of Transferability

• Peasants could now borrow against land to pay taxes.
• Moneylenders could take possession of land in case of default.
• Thus, the state secured its revenue, but the cultivator became vulnerable to dispossession.

Debt Trap and Loss of Land

• Heavy revenue demand meant peasants were often forced to borrow from moneylenders at high interest.
• Once indebted, escape was nearly impossible:
  • False accounts, forged signatures, and perpetual debt cycles ensured peasants lost their land.
• During famines and scarcity, this process accelerated—peasants mortgaged land to survive, and moneylenders took over.

By the late 19th century:

• Moneylenders dominated rural society.
• They became symbols of peasant misery and poverty, though in reality they were just one cog in the wider machinery of imperialist exploitation.

Anger Against Moneylenders

Peasants often misdirected their anger towards moneylenders, because:

• The colonial state was distant and abstract, but the moneylender was the visible face of oppression.

Examples:

• Revolt of 1857 → rebels often attacked moneylenders and destroyed their account books first.
• Deccan Riots (1875) → large-scale peasant attacks on moneylenders in western India.

Contrast with Pre-Colonial Times

Before British rule:

• Moneylenders were subordinate to village communities.
• They could seize only personal effects (like jewellery or part of a crop) if debts were unpaid.
• They could not seize land itself.

After British rule:

• Because land became transferable, moneylenders and rich peasants could legally acquire land from cultivators.
• This marked a radical rupture with traditional Indian village stability.

Peasant Uprisings: Agrarian Disruptions

Across all three systems—Permanent, Ryotwari, and Mahalwari—a common pattern emerged:

• Over-assessment of revenue → peasants fell into arrears.
• Debt spiral → reliance on moneylenders, loss of land.
• Land sales and scarcity → dispossession and social tensions.

This led to widespread peasant unrest in the 19th century.

• The commodification of land disrupted traditional community structures.
• Oppression and insecurity provoked numerous peasant uprisings, from the Santhal Rebellion (1855–56) to the Deccan Riots (1875).

The Broader Transformation

Thus, British land revenue policies did not merely change the mechanics of taxation—they transformed the very philosophy of landholding in India:

• Land ceased to be a community resource and became an individual commodity.
• The peasant, once protected by village customs, became a debtor at the mercy of moneylenders and the state.
• Villages, once relatively self-sufficient, were thrown into cycles of poverty, debt, and rebellion.