Permanent Settlement

Background and evolution

After the grant of the Diwani of Bengal, Bihar and Orissa in 1765, the East India Company became responsible for collecting land revenue in a huge, fertile region. The early experiments went badly. Revenue farming through short contracts encouraged contractors to squeeze the peasants, collections fluctuated, and the devastating famine of 1770 exposed how fragile the system had become.

Under Warren Hastings the Company tried five-year and then annual settlements, with poor results. Lord Cornwallis arrived in 1786 with instructions to find a stable arrangement. With the help of officials such as John Shore, he introduced a ten-year (decennial) settlement in 1789–90, and in 1793 it was declared permanent. The thinking reflected British ideas of the time: a class of secure landed proprietors would invest in agriculture, the state would gain a predictable income, and a loyal landed class would support Company rule.

Key features and provisions

• Proprietorship: zamindars, who had earlier been revenue collectors with hereditary rights, were recognised as owners of the land, with the right to sell, mortgage or transfer it.
• Fixed revenue: the amount was fixed for ever at a high level, roughly ten-elevenths of the rent then collected, leaving one-eleventh to the zamindar.
• Sunset law: if the revenue was not paid by sunset on the due date, the estate could be sold at auction, which led to a rapid turnover of estates in the early decades.
• Peasants: the cultivators lost their customary rights and became tenants of the zamindar, often subject to rising rents and eviction; protections came much later, through tenancy laws in the nineteenth century.
• Extension: the system was later applied to parts of Benares and northern Madras, but most of British India came under other systems.