Revenue Systems of British Raj

Revenue Systems of British Raj

This article deals with ‘ Revenue Systems of British Raj – UPSC.’ This is part of our series on ‘Modern History’ which is important pillar of GS-1 syllabus . For more articles , you can click here



Changes in Revenue system during British Empire

  • Pre Colonial Indian society was a feudal society & in its place was established semi-feudal & semi-colonial structure
  • Old feudal structure was mostly dismantled
  • Land now become a commodity ie it became alienable private property & peasant’s occupancy right of land was totally abolished
  • Extraction of maximum surplus from the peasant’s produce became the basis of early system of colonial plunder
  • Indian economy & agriculture was converted into a raw material supply appendage to metropolitan Britain


Three important land revenue settlements were introduced in three different regions

Permanent Settlement Bengal , Bihar & Orissa By Cornwallis
Ryotwari Settlement Bombay & Madras Presidency By Munro & Elphinstone
Mahalwari Settlement North + North West + Parts of Central India By Mackenzie

These systems differed only in nomenclature but aim was same – plunder of India & maximisation of revenue


Main Characteristics of these Systems

  • British land revenue settlement  introduced in India the notion of private property in land. Such kind of land- proprietorship meant that its holders were granted ownership rights. Although, in the pre-colonial times, a massive and pyramidal structure of leasing and sub- leasing of revenue functioned and cultivators also enjoyed certain rights in land according to local customs, yet, there were no well-defined proprietary rights. The British invested such rights in certain groups in accordance with the local conditions. Thus they favoured certain groups of landed magnates who were integrated into the colonial agrarian structure & such groups were to become the powerful allies of the British.


  • Overassessment of revenue and inflexible method of collection :  attempt to maximise the land-revenue demand. Revenue demands were fixed in cash rather than on a proportion of produce, or kind and  assessments were generally exorbitant.


  • Impetus to Money lending and usury : As a result of exorbitant land-revenue demands, peasants borrowed money from rural creditors and grain dealers in order to avoid defaults. Sale and auction of land tended to increase as cultivators usually borrowed money on the security of their newly acquired proprietary rights in land. This created agrarian tensions.


  • Commercialization of Agriculture

During Dual Government in Bengal

  • 1765 :  Under Treaty of Allahabad , East India Company got Diwani Rights of Bengal, Bihar & Orissa from Mughal Emperor
  • But Clive & his successors continued old system of revenue collection i.e. through intermediaries or zamindars in which revenue official after deducting 10% of revenue  deposited remaining in treasury . Collected amount increased from 81 lakh in 1764 to 2.3 crore in 1771
  • East India Company’s administration wasn’t concerned with how revenue would be collected & what impact it will have on common people. They increased their demand every year , collectors in turn demanded more from peasants
  • Peasants were the main sufferers & many of them left land


Ijaredari System

  • Farming System : Warren Hastings in 1772  introduced the farming system by which agriculture estates were auctioned out to highest bidder for leases not extending beyond 5 years
  • Obviously, such contractors (they were called ‘farmers’ in those days), would try and extort as much as possible during the period that they held the contract; it would not matter to them if people were ruined &  production in the later years declined.
  • As there was no permanence of tenure, the farmers took no binding interest in the development of land & it proved disastrous
  • Colonial officials began to feel that a sound administration must have security as its basis & nothing but a Permanent Settlement could ensure that
  • Appointed Amini Commission(first commission in British India) in 1776 to enquire real value of land which submitted report in 1778


Permanent Settlement


  • Cornwallis realised that the existing system was impoverishing the country, ruining agriculture and was not producing the large and regular surplus that the Company hoped for. Company’s trade also suffered, because of the difficulty in procuring Indian goods for export to Europe. Production of silk or cotton, two of the Company’s major export items, was mainly agro-based
  • Was introduced by Lord Cornwallis but it was not his brainchild . Even before  Cornwallis, number of  officials were advocating for tax being permanently fixed eg Alexander Dow in his book History of Hindostan & Pitts India Act of 1784 also laid down directions for Permanent Settlement of land revenue
  • Introduced by Cornwallis as decennial (10 years) settlement & made permanent in 1793
  • Introduced in Bihar, Bengal , Orissa & some parts of Varanasi & some parts of Madras




Move towards Zamindari System

  • Lord Cornwallis came to India as Governor General in 1786 & land revenue has created many problems . Different English officials were expressing different opinions
  • There were two schools
James Grant State was the owner of land & Zamindar was just rent collecting agent . Zamindars have no permanent rights whether as proprietor of soil or as official who collected revenue
John Shore Proprietary rights belonged to Zamindars & state was entitled only to demand customary revenue from them


Cornwallis , who himself was English landlord accepted the version of John Shore


Cornwallis also got Instructions from Court of Directors which said that after assessing the records for past years , a settlement should be made with zamindars for some years that could be made permanent in future. Hence, Lord Cornwallis introduced the Permanent Settlement   in 1793




Main motives behind Permanent Settlement

  • Security of revenue
  • Creating politically reliable landed elite to act  as pillar of colonial rule
  • Since it was Permanent Settlement and state would not increase its demand if land under cultivation increased =>  these Zamindars would invest in land to bring more land under cultivation to increase their income.
  • To solve bullion issue (Indian revenue would be used for trade instead of bullion from Britain)
  • Failure of farming system
  • Capital formation: capital would flow from rural to urban areas(which would increase trade )  & agriculture development
  • Physiocratic school of thinking that assigned primacy to agriculture in a country’s economy



From minutes of Cornwallis

  • The improving landlords would bring the waste lands under cultivation , improve their tenure by better system of embankment & drainage & encourage scientific farming





Main Features

  • Zamindars had several (sometimes as many as 400) villages under them. In Company calculations, the villages within one zamindari formed one revenue estate. The Company fixed the total demand over the entire estate whose revenue the zamindar contracted to pay. The zamindar collected rent from the different villages, paid the revenue to the Company, and retained the difference as his income.
  • Zamindars were made landowners & proprietary  rights were given to them . They were not only to act as agents of government collecting revenue but also became owners of land
  • Ownership of land was hereditary & transferrable
  • Cultivators were reduced to level of mere tenants & use of pasture lands , irrigation lands , fisheries etc were all given to zamindar . Main motive –  zamindars might pay land revenue on time
  • Zamindar were expected to improve condition of tenants & agriculture
  • State kept no direct contact with peasants
  • Zamindars were made proprietors of land & they have to pay give 10/11 of the assessed rental to the colonial state and keep 1/11th of the rental for themselves.
  • In case of excess rental due to extension of farming or greater extraction, zamindar could keep entire increased amount
  • In 1794, Sales Law/ Sunset Law was introduced under which Zamindari rights would be auctioned in event of failure to pay revenue
  • Regulation of 1799 & 1812 – Zamindar was given right to seize property of tenant in case of non payment of rent (the permanent assessment was the largest sum that could be got from the land. It was a heavy and oppressive assessment.  Such oppressive taxes could only be collected by oppressive methods. If the zamindars were not allowed to oppress the peasants then they would not be able to meet the demands of the State)
  • Initial fixation of revenue was made arbitrarily & without consultation with zamindars . Attempt was to secure maximum amount as a result rates of revenue were fixed very high





  • Initially, Zamindars were to give 10/11 of the assessed rental to the colonial state and keep 1/11th of the rental for themselves. However, the sums to be paid by them as land-revenue were fixed in perpetuity. If the rental of a Zamindar’s estate increased due to the expansion of cultivable area or rise in agricultural productivity or simply due to his capacity to extract more from the tenants, he was entitled to keep the entire amount of the increase. This would constitute loss to income of East India Company / State
  • As a result of this settlement, most of the tenants including the pre-existing Khud-khast tenants enjoying occupancy rights in their lands were reduced to the status of mere tenants-at-will of the Zamindars who could easily evict them and enhance their rents.
  • No margin was left for shortfalls due to flood, drought or other calamity. As a result, many zamindars had their zamindaris taken away and sold in the decades immediately after the Permanent Settlement. In Bengal alone, it is estimated that 68 per cent of the zamindari land was sold between 1794 and 1819.
  • Village based zamindars were replaced by rich people from Calcutta who went on buying spree of agricultural estates of old zamindars who fell prey to Sunset Law
  • There is a view that this is the reason why Bengali people didn’t invest in industry because they found investing in land more profitable
  • Process of Sub-infeudation started – Finding it difficult to pay amount, Raja of Burdwan(others followed too)   divided most of his estate into ‘lots’  called Patni Taluqs. Each such unit was permanently rented to a holder called a Patnidar, who promised to pay a fixed rent. If he did not pay, his Patni could be taken away and sold.





  • Secured fixed & stable income for the state
  • Expenses of frequent assessment of lands were saved
  • Made a class of Indians who were loyal to British empire & their existence depended on continuance of British empire
  • Before settlement East India Company was required to maintain big establishment of collectors which weren’t required now
  • Judicial services improved because Permanent Settlement set free ablest servants of Company for judicial services
  • Value of land increased because zamindars devoted their attention towards improvement of soil & many wasteland & forests were converted into cultivable land
  • Britishers envisaged that it would be helpful in spreading education as zamindars would act as natural leaders & show public spirit in spreading education & charitable work





  • Permanent Settlement was  a great blunder & it affected adversely the interests of East India Company , zamindars & worst of all that of Peasants
  • System overlooked interests of peasants
        • They were not owners of land
        • Could be expelled from land
        • Couldn’t appeal anyone against rise in taxes
        • Rights over pastures ,forests & canals were abolished as well
        • In 1799 : Zamindars were given right to court & zamindar could also take away their property even if peasant was not able to pay tax due to calamity


  • Created feudalism at top & serfdom at bottom
  • No improvement in agriculture happened . Most of the landowners didn’t take any interest in improvement of land but were merely interested in maximum possible extraction of the rent.
  • Politically although class loyal to them was created but East India Company alienated masses to gain loyalty of few
  • Disadvantageous for Company as although Company’s expenses were increasing, revenue remained same & they lost contact with peasants




Ryotwari System

Reasons for introduction of Ryotwari System

Lord Cornwallis wanted to extend Permanent Settlement to other areas & Wellesley shared same idea & gave orders for extension to Madras presidency but there were problems

  • There wasn’t sizeable Zamindar class in Madras as in Bengal . Still between 1801 to 1807 Permanent Settlement was introduced by recognising Poligars as local zamindars & where poligars were not found , villages were aggregated into estates & sold to highest bidder
  • Scottish enlightenment – They insisted on primacy of agriculture & celebrated importance of farmers within agricultural societies . Thomas Munro & Elphinstone were Scots
  • Nature of Permanency in Permanent Settlement : After 1810, agricultural prices rose, increasing the value of harvest produce, and enlarging the income of the Bengal zamindars. Since the revenue demand was fixed under the Permanent Settlement, the colonial state could not claim any share of this enhanced income. Keen on expanding its financial resources, the colonial government had to think of ways to maximise its land revenue. So in territories annexed in the nineteenth century, temporary revenue settlements were made.
  • David Ricardo’s theory began to influence .  It says that – Rent was surplus from land ie Income – (minus) cost of production – (minus) labour & state has legitimate claim over that at expense of unproductive intermediaries . This  argument was used to eliminate zamindars
  • Most important cause was Financial pressure due to wars   – financial crisis of Madras Presidency worsened by rising expenses of wars .





Experiments in Ryotwari Settlement

  • Started by Alexander Reed in Baramahal in 1792 & continued by Thomas Munro from 1801. But after 1807, System was almost abandoned with departure of Munro back home.


  • 1820 : Munro returned &   he argued
        • Ryotwari was ancient land tenure system & best suited to Indian conditions
        • Security & administration of empire need elimination of overmighty poligars & zamindars
        • Historically land in India was owned by state which collected revenue from individual peasants through hierarchy of officials . When military power of state declined , these poligars appropriated land & usurped sovereignty . Hence, there is need to reverse it now


  • Its adoption was due  to one main reason – it resulted in a larger revenue than any other system could have produced. This was because there were no zamindars or other intermediaries who received any part of the agricultural surplus – whatever could be squeezed from the cultivator went directly to the State. The Madras government was chronically short of funds, and such a system would naturally appeal to it.


  • In Bombay : Introduced by Elphinstone in 1819 after defeat of Marathas . There was no large Zamindars here too


  • Instead of collecting from the zamindars, they began to collect directly from the villages, fixing the amount that each village had to pay. After this they proceeded to assess each cultivator or ryot separately – and thus evolved what came to be known as the ‘Ryotwari’ system.




Main features of Ryotwari Settlement

  • Revenue was assessed for each cultivator or ryot separately
  • It created individual property right in the land & it was vested in peasants rather than in zamindars .
  • It was a temporary settlement & was to be revised periodically (20 years )



Unirrigated Dry Land 50% of Gross Produce
Irrigated Wet Land 2/3rd of Gross Produce
  • Land revenue was not assessed as in the case of Madras on basis of gross agriculture produce 
  • Fertility of land & market price of agricultural produces were given priority in assessing land revenue upon ryots


But in order to be attractive & equitable , it required detailed land survey, quality of land , area of the land, average produce of every piece of land had to be assessed but in practice these estimates were often guessworks & hence revenue demand often was very high .








Impact in Madras

  • Peasants soon discovered that large number of zamindars were replaced by one giant zamindar ie Colonial state
  • Raised revenue income of government but put cultivators in great distress . In many areas no survey was carried out & tax of a ryot was assessed on an arbitrary basis based on village accounts
  • Revenue to be  paid by ryot was fixed on entire farm & not on each field which might have varying irrigation facilities & hence different levels of productivity
  • Contrary to Munro’s insistence that cultivator would be given freedom to take as much or as little land as he choose , this provision was dropped in 1833 . Government  officers began to compel the cultivators to hold on to (and of course, pay for) land that they did not really want to cultivate. Since cultivation was not voluntary, it was always difficult to collect the revenue, and so the use of beating and torture to enforce payment was also widespread. These methods were exposed by the Madras Torture Commission in 1854. After this certain reforms were introduced. A scientific survey of the land was undertaken, the real burden of tax declined, and there was no need to use violent and coercive methods to collect revenue.
  • Even  Ryotwari system didn’t eliminate village elites as intermediaries between government & peasantry . Privileged rents & rights of the Mirasidars were recognised & Mirasidars were pivotal to  British ideal of sedentary agricultural community .




Impact of Ryotwari System in Bombay

Impact of Ryotwari in Bombay is subject of major controversy as it give rise to rural uprising in Bombay Deccan in 1875 aka Deccan Riots , in which marwaris & banias were attacked because of alienation of peasant’s land.


Historians differ on the impact of Ryotwari

Neil Charlesworth
  • It  reduced village Patil to ordinary peasant & a paid employee of government reducing his power . In other regions eg Gujarat where superior rights of Bhagdars & Narwadars were respected , there was stability.
  • Hence,   power vacuum was created


Ian Cataunch
  • Dispossession of land did occur but that didn’t necessarily cause Deccan riots


Ravinder Kumar


  • Significant social upheaval was being caused by Ryotwari system which undermined the authority of village headman & thus causd a status revolution or redistribution of social power in the villages of Maharashtra”  & ultimately propelled into Deccan riots .
  • Kumar further argue that there were combination of factors such as
      • the dislocation of the economy by the American Civil War,
      • an ill-conceived revision of land tax,
      • agitation initiated by the Poona Sarvajanik Sabha
      • And finally the longstanding hostilities between the Kunbi peasants  and money­ lenders.

Mahalwari  System

  • Introduced in 1822
  • Introduced in parts of Central India, Punjab & parts of UP
  • First serious attempt towards this by MACKENZIE (Secretary to govt in territorial department)
  • It was a modified version of the Permanent Settlement
  • The new regulation permitted the government officials to form settlement with all co-sharers in mahals or estates jointly owned by the village communities
  • Total revenue thus fixed was to be shared by the members of co-sharing body
  • In this , revenue was to be collected through Pradhan or village headman or Lumbardar (influential landowners) .In the records the word used for a fiscal unit was a ‘mahal’, and the village wise assessment therefore came to be called a mahalwari settlement.
  • Joint proprietary rights in land were vested in the village communities .
  • There was problem of over assessment in this system too so that maximum share can be extracted from peasants
  • Was not permanent & was revised periodically but peasants were made to go through same kind of oppression


Leave a Comment