A new revenue system

The British needed to rethink land revenue after the Permanent Settlement proved financially limiting. The problem was simple: once the revenue demand was fixed forever, the state could not claim any share of rising agricultural profits. As prices rose after 1810, Bengal zamindars grew richer while the colonial treasury stayed flat. This was unacceptable to a government always hungry for more money.

So in territories annexed during the nineteenth century, the British abandoned the Permanent Settlement and introduced temporary revenue settlements instead. The most important of these was the ryotwari system, first implemented in the Bombay Deccan (present-day Maharashtra).

Why the shift from Permanent Settlement?

Three main reasons drove the change:

• Rising agricultural prices after 1810 increased the value of harvests. Under the Permanent Settlement, the state's share was fixed, so it could not tap into this growing wealth. The zamindars of Bengal pocketed the entire gain.
• The colonial state wanted to maximise land revenue. A fixed demand was a ceiling on income. Temporary settlements allowed the government to revise rates and capture a larger share whenever prices or productivity rose.
• Ricardian economic ideas shaped official thinking. By the 1820s, the economist David Ricardo was famous in England. British officials in India had studied his theories in college. When they designed the early settlements in Maharashtra, they applied these ideas directly.

British officials believed Bengal's history proved Ricardo right. The zamindars there had indeed turned into rentiers — they leased out land and lived on rental incomes without improving agriculture. To prevent this elsewhere, a different system was needed.

Features of the ryotwari settlement