The Permanent Settlement System
The East India Company acquired the Diwani, or control over the revenues, of Bengal, Bihar, and Orissa in 1765. It attempted to keep the old revenue collection system going at first, raising the amount to be collected from Rs 14,290,000 in 1722 to Rs 18,180,000 in 1764 to Rs 23,400,000 in 1771. It made the decision to manage the land revenues directly in 1773. The right to collect revenue was auctioned off by Warren Hastings to the highest bidders. His experiment, however, was a failure.
• Though zamindars and other speculators bidding against each other pushed up the amount of land revenue, the actual collection varied from year to year and rarely met official expectations. This threw the Company's revenues into disarray at a time when the company was strapped for cash. Furthermore, neither the ryot nor the zamindar would improve cultivation if they didn't know what the next year's assessment would be or who would be the revenue collector the following year.
• It was at this point that the idea of setting the land revenue at a fixed amount first arose. Lord Cornwallis finally implemented the Permanent Settlement in Bengal and Bihar in 1793, after much discussion and debate.
• It had two distinct characteristics. To begin with, the zamindars and revenue collectors were transformed into a large number of landlords. They were not only to collect land revenue from the ryot on behalf of the government, but they were also to become the sole owners of the land in their zamindaris. Their ownership rights were made hereditary and transferable.
• Cultivators, on the other hand, were demoted to the status of mere tenants and stripped of their long-standing rights to the land and other customary rights. Some of the rights that were sacrificed included the use of pasture and forest lands, irrigation canals, fisheries, and homestead plots, as well as protection against rent increases.
• In fact, the zamindars had complete control over the Bengal and Bihar tenantry. This was done in order for the zamindars to be able to pay the Company's exorbitant land revenue demand on time.

• Second, the zamindars were required to give the state 10/11th of the rent they received from the peasantry, keeping only 1/11th for themselves. However, the amounts they were required to pay as land revenue were set in stone. If a zamindar's estate rental increased as a result of increased cultivation and agriculture, or his ability to extract more from his tenants, or any other reason, he would keep the entire increase.
• They would not be subjected to any further demands from the state. Simultaneously, the zamindar was required to pay his revenue on time, even if the crop failed for some reason; otherwise, his lands would be sold.
• The initial revenue fixation was done arbitrarily and without consulting the zamindars. The officials' goal was to get the most money possible. As a result, the revenue rates were set extremely high. Land revenue demand nearly doubled between 1765-1766 and 1793.
• If the gross produce of Bengal was taken as 100, the government claimed 45, zamindars and other intermediaries below them received 15, and only 40 remained with the actual cultivator, according to John Shore, the man who planned the Permanent Settlement and later succeeded Cornwallis as Governor-General.
• Between 1794 and 1807, nearly half of the zamindari lands were put up for sale as a result of this high and impossible land revenue demand. Officials and non-officials alike later admitted that the zamindars of Bengal and Bihar did not have proprietary rights over most of the land prior to 1793. The question then arises as to why the British identified them as such.
• One theory is that this was caused in part by a misunderstanding. The landlord was the most important figure in agriculture in England at the time, and British officials mistook the zamindar for his Indian counterpart.
• It is worth noting, however, that British officials made a clear distinction between the two positions in one crucial respect. In the United Kingdom, the landlord was the landowner not only in relation to the tenant, but also in relation to the state.
• However, in Bengal, while the zamindar was the tenant's landlord, he was also subject to the state. In fact, he was effectively reduced to the status of an East India Company tenant. In contrast to the British landlord, who paid a small percentage of his income as land tax, he had to pay 10/11th of his income from the land of which he was supposed to be the owner as tax; and if he did not pay the revenue on time, he could be kicked out of the land and his estate sold.
• Other historians believe that the decision to recognise zamindars as landowners was primarily motivated by political, financial, and administrative considerations.
• There were three guiding factors:
1. Arose from deft statecraft:
• Because the British officials were foreigners in India, they realised that their rule would be unstable unless they acquired local supporters who could act as a buffer between them and the Indian people.
• Due to the large number of popular revolts in Bengal during the last quarter of the eighteenth century, this argument gained immediate traction.
• As a result, they created a wealthy and privileged class of zamindars who owed their existence to British rule and would be compelled to support it by their own basic interests.
• Later, when the zamindars as a class supported the foreign government in opposition to the rising freedom movement, this expectation was fully justified.
2. Financial security:
• The Company had been troubled by fluctuations in its main source of income, land revenue, prior to 1793. Bengal revenue was used to fund the Company's army in expansion wars, the civil establishment in Bengal, Madras, and Bombay, and the purchase of manufactured goods for export.
• The Permanent Settlement ensured income security. The zamindars' newly created property served as a guarantee of this.
• Furthermore, the Permanent Settlement allowed the Company to maximise its profits because land revenue was now fixed at a higher level than it had ever been.
• The process of collecting revenue through a small number of zamindars appeared to be much simpler and less expensive than dealing with lakhs of cultivators.
3. Rise in agriculture production:
• Because land revenue would not be increased in the future, even if the zamindar's income increased, the latter would be motivated to expand cultivation and improve agricultural productivity, as landlords in Britain did.
• The Permanent Zamindari Settlement was later expanded to include Orissa, Madras' Northern Districts, and Varanasi's District.
• The British introduced a temporary zamindari settlement in parts of Central India and Awadh, under which zamindars were given land ownership but the revenue they had to pay was revised on a regular basis. When the government began the practise of giving land to people who had faithfully served foreign rulers, another group of landlords arose all over India.
BENEFITS OF PERMANENT SETTLEMENT
1. Prior to 1793, the Company was beset by fluctuations in its primary source of revenue, namely land revenue. The Permanent Settlement guaranteed income security.
2. The Permanent Settlement allowed the Company to maximise its profits by ensuring that land revenue was fixed at a higher level than it had ever been before.
3. Collecting revenue through a small number of zamindars appeared to be far easier and less expensive than dealing with thousands of cultivators.
4. It was expected that the Permanent Settlement would boost agricultural output.
5. Because land revenue would not increase in the future, even if the zamindar's income increased, the latter would be motivated to expand cultivation and boost agricultural productivity.