Disruption of Traditional Economy

  • After the grant of Diwani Rights, the English tried to collect maximum revenue from the cultivators by giving out land to the highest bidder for five years.
  • To avoid faults in the tax assessment of land and the uncertainty of revenue collections, the British introduced Permanent Settlement under Lord Cornwallis.
  • The British decided to make the settlements with the Zamindars, and not with the ryots.
  • As the British Empire expanded towards South and Western India, the Ryotwari and the Mahalwari settlements were introduced in these areas.
  • Philip Francis, the councillor of Warren Hastings anticipated the idea of Permanent Settlement in a Minute in 1776.
  • Other British officials like Alexander Dow, Henry Pattulo also recommended a system like Permanent Settlement.
  • In case the zamindar was unable to pay before sunset of the last day of the calendar year, according to the Sunset Law, his zamindari would be confiscated and auctioned.
  • Gradually, the Permanent Settlement was extended to 19% British territory in India covering Bengal, Bihar, Odisha (formerly Orissa) and Varanasi division of U.P.
  • The Permanent Settlement gave rise to a group of intermediaries like Pattanidars.
  • The Floud Commission recommended the abolition of Permanent Settlement and finally the free Indian government abolished it in 1953.
  • The annexation of Peshwa and Mysore lands made it imperative for the Company to have a land revenue settlement in these areas.
  • Alexander Reed was authorised to settle land revenue in Tipu Sultan’s territory of Bara Mahal in 1796.
  • When Thomas Munro became the Governor of Madras in 1820, he re-examined the Ryotwari system and settled 1/3rd of the gross produce of land as rent.
  • Apart from the Ryotwari system, the Mahalwari settlement was introduced in some areas of British India like Punjab, Central Provinces and parts of North-Western Provinces.
  • Dadabhai Naoroji in his book ‘Poverty and un-British Rule in India’ and R.C Dutt in ‘Economic History of India’ exposed the nature of British exploitation in India.
  • Famine broke out in Orissa and Madras in1865-66 in which 20 lakh people died.
  • There were famines in Western U.P, Bombay, Punjab, Karnataka and Maharashtra too.
  • John Stuart Mill and William Hunter severely criticised the British rule and its economic policy for frequent famine outbreaks.


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