Permanent Settlement in Bengal

The Permanent Settlement in Bengal was a major land revenue system introduced by the British East India Company in the late eighteenth century. Implemented in 1793, it aimed to create a stable and predictable source of revenue for the colonial state while restructuring agrarian relations in Bengal, Bihar, and Orissa. By permanently fixing land revenue demands, the system fundamentally altered the economic, social, and political fabric of eastern India and left long-lasting consequences for Indian agriculture and rural society.

Background and Context

After the Battle of Plassey (1757) and the Battle of Buxar (1764), the British East India Company acquired Diwani rights, granting it authority to collect land revenue in Bengal. The Company initially experimented with short-term revenue settlements, but frequent changes and high revenue demands led to widespread agrarian distress. Influenced by contemporary British economic thought and the belief in private property as a driver of agricultural improvement, colonial administrators sought a permanent solution. The Permanent Settlement was thus conceived as a means to ensure fiscal stability while encouraging investment in land.

Introduction of the Permanent Settlement

The Permanent Settlement was formally introduced in 1793 under the Governor-Generalship of Lord Cornwallis. It permanently fixed the land revenue payable to the Company by landholders, known as zamindars. The revenue demand was set at approximately 90 per cent of the estimated rental value of land, leaving the remaining 10 per cent as the zamindars’ share. Once fixed, the revenue demand could not be increased, regardless of future increases in agricultural productivity or prices.

Key Features of the System

The Permanent Settlement had several defining characteristics that distinguished it from other land revenue arrangements:

• Permanent fixation of revenue: The land revenue demand was fixed in perpetuity, providing certainty to the colonial state and zamindars.
• Recognition of zamindars as landowners: Zamindars were recognised as the legal proprietors of land, with heritable and transferable rights.
• Strict collection mechanism: Failure to pay revenue on time resulted in the auction of zamindari estates under the “Sunset Law”.
• Indirect relationship with peasants: The British government dealt primarily with zamindars, not directly with cultivators.

Role and Position of Zamindars

Under the Permanent Settlement, zamindars became intermediaries between the state and the peasants. They were responsible for collecting rent from cultivators and paying the fixed revenue to the Company. While the system theoretically encouraged zamindars to invest in land improvement, in practice many zamindars were absentee landlords who prioritised rent extraction over agricultural development. Their enhanced legal status significantly increased their social and political power in rural Bengal.

Impact on Peasants and Agriculture

The effects of the Permanent Settlement on peasants were largely adverse. Cultivators had no ownership rights over land and were subject to high rents, arbitrary exactions, and frequent evictions. Since the revenue demand on zamindars was fixed, they often sought to increase their income by raising rents rather than improving productivity. This contributed to stagnation in agricultural techniques, persistent rural indebtedness, and periodic famines, most notably the Bengal famine of 1770, whose effects continued to shape colonial policy.

Advantages and Objectives of the System

From the British perspective, the Permanent Settlement offered several advantages:

• It ensured a stable and predictable source of revenue.
• It reduced administrative costs by limiting direct state involvement in revenue collection.
• It aimed to create a loyal class of landed elites who would support British rule.
  The system was also influenced by the belief that private ownership would encourage agricultural investment and efficiency, mirroring the English landed gentry model.

Criticism and Limitations

The Permanent Settlement faced extensive criticism from both contemporary observers and later historians. The initial revenue assessment was often unrealistically high, leading to widespread default and the sale of zamindari estates. The assumption that zamindars would act as improving landlords proved largely unfounded. Moreover, the neglect of peasant rights and welfare undermined rural stability and contributed to long-term agrarian problems. The rigidity of the system made it unsuitable for responding to changing economic conditions.