British Land Revenue Policy and Its Economic Impact
British Land Revenue Policy and Its Economic Impact
This topic gives 3 questions and is where a Bihar candidate has a direct stake, because the Permanent Settlement was applied to this state and shaped its agrarian structure for a century and a half. It is also the ground on which the peasant movements of the next topic grew.
The Three Systems
| System | Introduced by | Year | Where | Revenue paid by |
|---|---|---|---|---|
| Permanent Settlement | Lord Cornwallis | 1793 | Bengal, Bihar, Odisha | Zamindar |
| Ryotwari | Thomas Munro, Read | 1820s | Madras, Bombay | Cultivator directly |
| Mahalwari | Holt Mackenzie | 1822 | North-West Provinces, Punjab | Village as a unit |
The Permanent Settlement fixed the revenue demand permanently and recognised the zamindar as the owner of the land, on condition that he paid on time. The cultivator, who had held customary rights, became a tenant.
- The demand was fixed in perpetuity, so the state gained nothing as agriculture expanded.
- The Sunset Law meant a zamindar who failed to pay by a fixed hour on a fixed day lost his estate at auction.
- Zamindars sublet to intermediaries, who sublet again — producing layers of rent-takers between the state and the cultivator.
- The cultivator bore the whole burden and had no security of tenure.
✗ Under the Permanent Settlement the cultivator became the owner of the land | ✓ The zamindar became the owner; the cultivator became a tenant
Why It Mattered So Much in Bihar
Bihar lay squarely within the Permanent Settlement area, so its agrarian society was reorganised around zamindari. Intermediaries multiplied, rents rose, and tenants had little protection.
This is the direct background to the Champaran Satyagraha and to the Kisan Sabha movement that began in Bihar in 1929. The peasant movements of the twentieth century were a response to a revenue system introduced in 1793, and a good answer connects the two rather than treating them as separate chapters.
The Economic Impact
| Effect | What happened |
|---|---|
| Drain of wealth | Indian revenue used to buy Indian goods for export, and to pay British costs |
| Deindustrialisation | Indian handicrafts collapsed against machine-made imports |
| Commercialisation of agriculture | Cash crops such as indigo and cotton replaced food crops |
| Famines | Repeated and severe through the nineteenth century |
| Railways | Built from the 1850s, serving trade and troop movement first |
The drain of wealth theory was developed by Dadabhai Naoroji in Poverty and Un-British Rule in India, and it is the single most asked item in this topic. His name and the phrase belong together.
Deindustrialisation is the concept a question tests through its effect: weavers and artisans, unable to compete with cheap machine-made cloth, returned to the land, which increased pressure on agriculture. India moved from exporting finished cloth to exporting raw cotton and importing cloth — a reversal that is asked directly.
Indigo and Bihar
Indigo was one of the cash crops forced on cultivators, and Bihar was a major indigo district. Under the tinkathia system in Champaran, a tenant was required to plant indigo on a fixed share of his holding, for almost no payment.
So the chain runs: Permanent Settlement 1793, zamindari and intermediaries, commercialisation, forced indigo, and finally Champaran in 1917. A Bihar paper may ask any single link, but the chain makes all of them answerable.
स्थायी बंदोबस्त 1793 — कॉर्नवालिस, बंगाल-बिहार-ओडिशा।
TRE pointer: The system, author, year and region table is the whole of this topic's factual weight, and Cornwallis with the Permanent Settlement of 1793 covering Bihar is the row a state paper wants. Dadabhai Naoroji and the drain of wealth is the second guaranteed item. The reasoning question is why peasant movements began in Bihar, and the answer starts in 1793, not in 1917.
60-Second Recap
- Permanent Settlement 1793 by Cornwallis in Bengal, Bihar and Odisha; zamindar became owner.
- Ryotwari settled with the cultivator; Mahalwari with the village as a unit.
- The Sunset Law auctioned estates of zamindars who paid late.
- Dadabhai Naoroji gave the drain of wealth theory in Poverty and Un-British Rule in India.
- Deindustrialisation pushed artisans back to the land and reversed the cloth trade.
- Forced indigo under tinkathia in Champaran grew out of this system.
Frequently Asked Questions
Which land revenue system applied to Bihar?
The Permanent Settlement, introduced by Lord Cornwallis in 1793 for Bengal, Bihar and Odisha. It fixed the revenue demand in perpetuity and made the zamindar the owner of the land, reducing the cultivator to a tenant without security of tenure.
Who gave the drain of wealth theory?
Dadabhai Naoroji, in his book Poverty and Un-British Rule in India. He argued that Indian revenue was being used to purchase Indian goods for export and to meet British administrative and military costs, so wealth flowed out without any return.
What is meant by deindustrialisation?
The collapse of Indian handicrafts, especially textiles, in the face of cheap machine-made imports from Britain. Artisans who lost their livelihood returned to agriculture, increasing pressure on land. India began exporting raw cotton and importing finished cloth.
How is the Permanent Settlement connected to the Champaran Satyagraha?
The settlement created a zamindari structure with layers of intermediaries and no tenant security, which allowed planters to impose forced indigo cultivation under the tinkathia system. Champaran in 1917 was a response to conditions the 1793 settlement had made possible.