Land Revenue System in British India- UPSC Modern History Notes

Land Revenue System in British India

Land revenue settlement refers to the system in which land tax revenue is agreed between the owner of the occupied land or any other assigned leader and government. The government collects tax revenue directly from cultivators (Ryotwari) or indirectly through an appointed representative (Permanent settlement).

Early revenue settlement under British Rule

Background

• The company got Diwani rights of Bihar, Bengal and Orissa in 1765 (Treaty of Allahabad) under Robert Clive.
• British started to finance its trade through these revenue collections. Earlier, to buy Indian goods for trading, they imported gold and silver from Britain.

Features of Early Land Revenue System in British India

• They had retained the basic administration established by the Nawabs of Bengal.
• The Zamindars were recognised as the land owners.
• The main revenue collector of the Company was Naib (deputy) Dewan, who collected the revenue on behalf of the company.

Shortcomings

• It led to corruption and continual interference of the company’s servants in the administration.
• This disorganised revenue settlement was one of many reasons for the Bengal famine of 1769-70.

The Izaredari system/The Temporary settlement (1773)

Background

• The administration and revenue settlement during Clive led to lawlessness and corruption among officials.
• Warrant Hastings (1772-1785) abolished the revenue settlement during the Robert Clive.
• In 1773, he introduced the Izaredari system in Bengal and took direct charge of Diwani rights.

Features

• The government were recognised as land owners.
• The right to collect revenue from an area was auctioned for a particular time.
• The highest bidder was called Izaredar, who offered to pay the largest amount to the company.

Shortcomings

• As it was based on speculative profit making, the auction rates were unrealistically high, leading to the peasants’ oppression.
• The rates were not uniform, which led to the instability of food prices.
• Moreover, the revenue collections fluctuated widely, causing financial uncertainties in the administration.
• This system also led to corruption, such as profitable contracts on very easy terms being given to the friends and ‘benamidars’ of men in power, leading to loss to the company.
• The sole purpose of the settlement act was revenue maximisation; thus, there was little consideration for the investment in land.

Permanent settlement/zamindari system (1793)

Background

• The Izaredari system led to the decline in agriculture, further leading to the handicrafts’ deterioration.
• Moreover, the company could not get the surplus revenue it wanted for buying Indian goods.
• The company officials and then governor of Bengal, Lord Cornwallis (1786-93), believed that the settlement system’s uncertain and arbitrary character had led to corruption and oppression.
• Lord Cornwallis introduced Permanent settlement in 1793.
• Zamindars were made buffers between the state and the people.
• The rates were fixed permanently with the expectation of –
  • Stable revenue for the states.
  • Reduction in corruption that existed when officials could alter the assessment at will.
  • Investment by the zamindar in improving the land productivity if the production is increased.