Land Revenue Policies

After the diwani of Bengal, Bihar and Orissa was granted to the East India Company in 1765, the maximization of revenue from the colony became the primary objective of the British administration.

Agricultural taxation was the main source of income for the company, which had to pay dividends to its investors in Britain. Therefore, the British administration tried out various land revenue experiments to this aim. These experiments also partly determined the relationship that the colonial state would share with the people it governed.

In 1772, the Governor of Bengal, Warren Hastings, introduced a system of revenue farming in the province of Bengal. In this system European District Collectors would ‘farm’ out the right to collect revenue to the highest bidder. This system was a total failure and ruined the cultivators because of the arbitrarily high revenue demands.

To undo this disaster, Cornwallis introduced the system of Permanent Settlement in 1793. Under this system, ‘zamindars’, who earlier only had the right to collect revenue, were established as the proprietors or owners of land. The state’s demand for land revenue was permanently fixed. But if the zamindars were unable to pay the full tax on time, their lands would be taken away and auctioned by the state.

Through this system, the state tried to create an enterprising class of landowners, who would try to improve crop production in their fields to earn profits. Besides, it would be simpler for the state to deal with a limited number of zamindars than with every peasant, and a powerful section of society would become loyal to the British administration.

But this system led to greater impoverishment of the tenant-cultivator because of the burden of high revenue assessment. It also caused great difficulty for zamindars, many of whom were unable to pay the revenue on time and lost their lands. A large number of traditional zamindar houses collapsed. The system also encouraged subinfeudation i.e. many layers of intermediaries between the zamindar and cultivator, adding to the woes of the peasantry.

To keep out intermediaries from revenue collection, so that the state could acquire a larger share of the income from land, the Ryotwari System was started by Alexander Read in 1792, for the Madras Presidency. Later it was introduced in the Bombay Presidency as well. Under this system, revenue was initially collected from each village separately, but later each cultivator or ‘ryot’ was assessed individually.

Thus, peasants not zamindars were established as property owners. Although this system increased the revenue collected by the state, the assessments were faulty and the peasants overburdened by the taxes. The landed intermediaries continued to flourish.

In the north and northwest of India the Mahalwari Settlement was followed after 1822 where the state made settlements with either the village community or, in some cases, the traditional ‘taluqdar’. Each such fiscal unit was called a ‘mahal’. Under this system, some recognition was given to collective proprietary rights.

As a result of the revenue policies of the British, agriculture stagnated and peasants almost became tenants at will. They also increased the number of landed intermediaries, and strongly entrenched the figure of the moneylender in the countryside.

Landlords and zamindars became an important class and collaborators of British colonial rule. The acquisition of diwani rights meant that the Company could now tap the wealth of local rulers, zamindars and merchants in the rich province of Bengal and use them to buy the goods that would be shipped to Britain for sale.

Large quantities of wealth, including illegal incomes of company officials, made its way to Britain from Bengal. Company officials amassed huge fortunes before they returned home, and they were referred to as ‘nabobs’ in Britain, on account of their flashy lifestyles. A lot of this money was used to fuel the Industrial Revolution in Britain. The greed for incomes from land revenue also led the Company to pursue an aggressive policy of territorial expansion in India.