The Permanent Settlement

In 1797, the estates of the Raja of Burdwan, a powerful zamindar of Bengal, were put up for auction, because he had failed to pay the revenue he owed (his arrears). But over 95 per cent of the sale was fictitious: many of the buyers were the Raja's own agents, buying on his behalf.

Why did such things happen? By the 1770s, the rural economy of Bengal was in crisis, with recurrent famines and falling agricultural output. The East India Company wanted to encourage investment in farming and to secure its revenue.

The answer was the Permanent Settlement, introduced in 1793 under Governor-General Charles Cornwallis. The Company fixed the revenue that each estate had to pay for ever. The settlement was made with rajas and taluqdars, who were now classified as 'zamindars'.

British officials hoped to create a loyal class of landowners who would invest in improving their land, since any extra income would be theirs; and to get a regular flow of revenue.

How did it work? A zamindar's estate included many villages. He collected rent from the cultivators, paid the fixed revenue to the Company, and kept the difference as his income. Fixed revenue, but very uncertain zamindars.