English · हिन्दी · తెలుగు · தமிழ் · മലയാളം · मराठी · ಕನ್ನಡ

Land revenue and the agrarian economy

Economic impact of British rule · Part 1 / 2 · Fact-checked on 26 October 2026 · how we check

Written with AI from the sources listed at the bottom of this page, then fact-checked by a separate AI.

Why land revenue mattered after the diwani, Warren Hastings's revenue farming, Cornwallis's Permanent Settlement (1793) and its effects, the Ryotwari system of Read and Munro (Madras, Bombay), the Mahalwari system (Regulation VII of 1822, Regulation IX of 1833), a comparison of the three, the commercialisation of agriculture, and rural debt from the Deccan Riots (1875) to the Punjab Land Alienation Act (1900).

Land revenue was the backbone of the Company's finances. After it took the Diwani of Bengal in 1765, the tax on land paid for its armies, its administration and much of its trade, and every later conquest added more land to tax. Whom to tax, how much and for how long were questions that shaped village life across British India. The Company answered them in three main ways: the Permanent Settlement with the Zamindars of Bengal and Bihar (1793), the Ryotwari system settlement with individual cultivators in Madras and Bombay, and the Mahalwari system settlement with village communities in the north-west. This part explains each system, compares them, and then follows two changes they set in motion: the Commercialisation of agriculture and the spread of rural debt. Part 2 turns to the drain of wealth, the decline of crafts, railways and famines.

At first the Company tried to collect as much as it could, as fast as it could. Under the Dual government (1765–72) Indian deputy officials collected the revenue on its behalf. When Warren Hastings took direct charge in 1772, the right to collect revenue was auctioned to the highest bidders for five years, and in 1777 he turned to yearly settlements instead. Both methods failed. Revenue farmers who had bid too high squeezed the peasants and then fell into arrears, and nobody had a reason to improve land that might pass to another bidder the next year. Collections swung up and down, while the directors in London wanted a steady and predictable income. That search for certainty led to the reforms of Lord Cornwallis.

Lord Cornwallis, Governor-General from 1786 to 1793, settled the revenue of Bengal and Bihar with the Zamindars, first for ten years (1789–90) and then, by a proclamation of 22 March 1793, for ever. This is the Permanent Settlement, also called the zamindari system. Its makers had several aims. The Company would know exactly what it was to receive each year and would save the cost of repeated assessments. The zamindars, now secure owners, were expected to invest in their estates as improving landlords were thought to do in England. And a class of landholders who owed their position to the Company would, it was hoped, stand by it. John Shore, a senior revenue official, shaped much of the scheme, though he had argued for waiting before making it permanent.

The settlement made the Zamindar the owner of the land, free to sell, mortgage or bequeath it, as long as he paid the fixed revenue. The amount was based on what estates had paid in the recent past and was never to be raised. The state took the larger part of the rent the zamindar collected, roughly ten-elevenths, and left him about one-eleventh. Payment had to be on time: under what came to be called the sunset law, an estate whose dues were not paid by sunset on the due date could be put up for auction. The peasants who actually tilled the soil were left to make their own terms with the zamindar, and their customary rights were not recorded. The system was later extended to the Benares region and to parts of the Madras Presidency.

The results disappointed almost everyone except a new class of landholders. In the early years the fixed demand was heavy, and many old zamindar families failed to pay on time and lost their estates at auction to merchants, moneylenders and officials, who often lived in Calcutta, far from their lands. Many zamindars leased their rights to middlemen, who leased them on again, so that several layers stood between the state and the cultivator; this subinfeudation, through tenures known as patni, was given legal recognition in 1819. Tenants without written rights faced rising rents and eviction. In time the state lost as well, because higher prices and output raised rents but not the fixed revenue. Later laws tried to protect cultivators: the Bengal Rent Act of 1859 and the Bengal Tenancy Act of 1885 gave occupancy rights to many of them.

In the south and west the Company settled directly with the cultivator. The Ryotwari system system began as an experiment by Alexander Read and Thomas Munro in the Baramahal, territory taken from Tipu Sultan in 1792, and became the general system of the Madras Presidency after Munro became its Governor in 1820. In the Bombay Presidency it was brought in after the Peshwa's lands were taken in 1818, and later reworked through detailed surveys begun in the 1830s by Wingate and Goldsmid. Under it each registered holder, the ryot, dealt with the state himself and paid a money revenue fixed on the area and estimated quality of his fields. The settlement was not permanent: it was revised every twenty to thirty years, usually upwards. Its supporters argued that it cut out the middleman and suited regions without large hereditary landholders.

In practice the Ryotwari system system made the state itself the landlord. The ryot could occupy, sell or mortgage his holding only as long as he paid, and assessments were often set so high that in a bad year he had to borrow to meet them. Revenue officials fixed the rate, and a peasant had little chance to dispute it. Collection was strict and at times harsh, and the periodic increases took away much of any gain from better farming or higher prices. Because land could now be transferred, it became security for loans, and a ryot who could not repay might lose it to his creditor. A system meant to free the cultivator from the zamindar often left him dependent on the revenue official and the moneylender instead.

In the North-Western Provinces, much of present Uttar Pradesh, a third system took shape. Holt Mackenzie, a senior revenue official, proposed settling the revenue with the village or estate, the mahal, as a whole, and Regulation VII of 1822 began this Mahalwari system system. It proved slow to apply, and Regulation IX of 1833, under Bentinck, simplified it with field surveys and maps; Robert Merttins Bird and later James Thomason carried out settlements for about thirty years. The revenue was assessed on the whole mahal, its members were jointly responsible for paying it, and a headman, the lambardar, usually collected and paid it. Each holder's share was written into the village record. The system was later used in Punjab and parts of central India. Like ryotwari, it was revised periodically and its assessments were often heavy.

Revenue in cash on fixed dates pushed farmers towards crops they could sell. The Commercialisation of agriculture means growing crops for the market, often for export, rather than mainly for the household and the village. Indigo was grown in Bengal and Bihar for European planters, who tied peasants to unfair contracts; the indigo revolt of 1859–60 in Bengal was a reaction. Cotton spread in the Deccan and Gujarat, jute in eastern Bengal, opium under a government monopoly in Bihar and around Benares for sale to China, and tea on British-owned plantations in Assam. Prices were now set by distant markets. When the American Civil War (1861–65) cut Britain off from its usual cotton supply, Deccan cotton prices soared; when the war ended they fell sharply, leaving many cultivators in debt. Commercial farming brought money into some villages but tied peasants to traders, lenders and world prices.

Debt became the heaviest burden of rural India. Revenue had to be paid in cash even after a poor harvest; land, now transferable property, could be mortgaged; and the new civil courts enforced written bonds strictly. The moneylender, who was often also the grain dealer, gained most, and land began to pass from cultivators to creditors who did not farm. In 1875 peasants in the Poona and Ahmednagar districts attacked moneylenders and burned their bonds and account books in what became known as the Deccan Riots. A commission inquired into the outbreak, and the Deccan Agriculturists' Relief Act of 1879 gave indebted peasants some protection in the courts, including against imprisonment for debt. In Punjab, the Punjab Land Alienation Act of 1900 limited the transfer of land from agricultural to non-agricultural groups. Such laws eased the symptoms, but the pressure of revenue and debt remained.

The three settlements answered the same question in different ways, but they shared one purpose: the largest steady revenue for the state. The Permanent Settlement fixed the demand for ever and created a landlord class between the state and the peasant; the Ryotwari system and Mahalwari system systems kept the state's share open to revision and made the cultivator or the village pay it directly. Under all three, land became a commodity that could be bought, sold and mortgaged, revenue had to be paid in cash, and the peasant was drawn into markets and into debt. These pressures lie behind many peasant movements of the nineteenth and twentieth centuries, and behind the nationalist critique of British economic policy, which Part 2 takes up with the drain of wealth.

Exam traps

• The Permanent Settlement (1793) is Cornwallis's, not Warren Hastings's; Hastings tried five-year revenue farming (1772) and yearly settlements (1777).
• Under the Permanent Settlement the revenue was fixed for ever; under Ryotwari and Mahalwari it was revised periodically.
• Ryotwari was settled with the individual cultivator, Mahalwari with the village or estate as a whole; do not swap them.
• Thomas Munro (with Alexander Read) is linked with Ryotwari in Madras; Holt Mackenzie, R. M. Bird and James Thomason with Mahalwari in the North-Western Provinces.
• Regulation VII of 1822 began Mahalwari; Regulation IX of 1833, under Bentinck, revised it. Neither concerns the Permanent Settlement.
• The sunset law belongs to the Permanent Settlement: an estate whose dues were unpaid by sunset on the due date could be auctioned.
• The Deccan Riots (1875) were directed against moneylenders, not against planters; the indigo revolt (1859–60) was in Bengal against European planters.
• The Deccan Agriculturists' Relief Act (1879) and the Punjab Land Alienation Act (1900) dealt with rural debt and land transfer, not with fixing land revenue.

Recap

• Land revenue paid for the Company's armies and administration after the diwani of 1765.
• Warren Hastings: five-year farming by auction (1772), then yearly settlements (1777); both failed.
• Permanent Settlement: Cornwallis, ten-year settlement 1789–90, made permanent 22 March 1793; zamindar as owner; about ten-elevenths to the state; sunset law.
• Its effects: auctions, absentee zamindars, patni subinfeudation (legalised 1819), insecure tenants; Bengal Rent Act 1859, Bengal Tenancy Act 1885.
• Ryotwari: Read and Munro (Baramahal, 1792), Madras from 1820, Bombay after 1818; revenue from each ryot, revised every 20–30 years; the state as landlord.
• Mahalwari: Holt Mackenzie, Regulation VII of 1822; Regulation IX of 1833 (Bird, Thomason); village jointly responsible, lambardar; North-Western Provinces, Punjab.
• Commercialisation: indigo (revolt 1859–60), cotton, jute, opium monopoly, Assam tea; cotton boom and bust around the American Civil War (1861–65).
• Debt: Deccan Riots (1875), Deccan Agriculturists' Relief Act (1879), Punjab Land Alienation Act (1900).

Practice questions

Sources

• The Bengal Regulations, including Regulation I of 1793 (the Permanent Settlement), Regulation VIII of 1819 (patni tenures), Regulation VII of 1822 and Regulation IX of 1833 (settlement of the North-Western Provinces); the Bengal Rent Act (Act X of 1859), the Bengal Tenancy Act, 1885, the Deccan Agriculturists' Relief Act, 1879 and the Punjab Land Alienation Act, 1900 — https://www.abhilekh-patal.in
• The Imperial Gazetteer of India, Vol. III (The Indian Empire: Economic) and Vol. IV (The Indian Empire: Administrative, chapter on land revenue), Government of India, 1907–09 — https://dsal.uchicago.edu/reference/gazetteer/
• Report of the Committee on the Riots in Poona and Ahmednagar, 1875 (Deccan Riots Commission), Government of Bombay, 1876; National Archives of India, Abhilekh Patal — https://www.abhilekh-patal.in
• The Fifth Report from the Select Committee of the House of Commons on the Affairs of the East India Company, 1812 (revenue administration of Bengal and Madras) — https://www.abhilekh-patal.in