Permanent settlement was the land revenue policy formulated by Sir John Shore and was introduced by Lord Cornwallis in 1793. It covered all together 19% of the total cultivable land under company rule.
The following are the terms of the permanent settlement:
- Zamindars were recognized as owner of the lands. Zamindars were given the rights to collect the rent from the peasants.
- The realized amount would be divided into 11 parts. 1/11 of the share belongs to Zamindars and 10/11 of the share belongs to East India Company.
- The Zamindars were also given Judicial powers
- The Sunset Law come into force in the event of Zamindars becoming defaulters.
- The system was introduced for a period of 10 years.
Effect of the system
The effects of this system both on the zamindars and ryots were disastrous. As the revenue fixed by the system was too high, many zamindars defaulted on payments. Their property was seized and distress sales were conducted leading to their ruin. The rich zamindars who led luxurious lives left their villages and migrated into towns. They entrusted their rent collection to agents who exacted all kinds of illegal taxes besides the legal ones from the ryots.
This had resulted in a great deal of misery amongst the peasants and farmers. Therefore Lord Cornwallis‘ idea of building a system of benevolent land-lordism failed. Though initially the Company gained financially, in the long run the Company suffered financial loss because land productivity was high, income from it was meagre since it was a fixed sum. It should be noted that in pre- British period a share on the crop was fixed as land tax.