Land Revenue Reforms

Earlier, the Permanent Settlement was guided by mercantilist interest. However, in the early decades of the 19th century, India was being developed as a British commodity market.

In this era, new revenue arrangements viz. Ryotwari and Mahalwari systems were developed during this period to suit the changed requirements of the British government. Permanent settlement was not expanded to other areas. Now, the British adjusted the revenue-strategy according to the special characteristics of the agrarian structure in each region.

Ryotwari Settlement

Ryotwari system of land revenue collection was first introduced in Madras by its Governor Thomas Munro. In this system the land revenue was to be collected directly from the cultivators, instead of being collected through intermediaries as under the zamindari system. A direct relationship was created between the Government and the cultivator.

It had many features of revenue system of the Mughals. Where the land revenue was imposed directly on the ryots (the individual cultivators who actually worked the land) the system of assessment was known as Ryotwari.

It was argued that though the Company would be getting more revenue, the peasants would be paying less, as intermediaries would be eliminated from the system.

This system was introduced in Madras Presidency, Bombay Presidency, Assam and some other portions covering 51% area of British India.

Ideological Factors:

• • Indian Paternalism:
  • ◦ Many English officers like Reed, Munro and Elphinstone, who had first-hand knowledge about the region, felt that Ryotwari system was as per local Indian tradition where the cultivator had enjoyed certain rights since time immemorial. The super-imposition of the zamindari settlement would completely disrupt the existing local order.
• • Utilitarian economics: Capitalist thinkers like David Ricardo targeted landlords in their ‘Rent Theory’. This philosophy had a ‘distaste for landlordism’, as per Eric Stokes.
  • ◦ Maximization of Revenue: Rent was surplus from land.
    • ■ If the cost production and labour/equipment is deducted from the total produce, what remains is the surplus.
    • ■ This surplus was equated with rent and the government can legitimately claim a large portion of it as revenue.
  • ◦ Elimination of unproductive intermediaries: Zamindar was a parasite who had no role in producing value. Yet, he received a fraction of land revenue. Therefore, it theoretically suggested eliminating the intermediaries and state should appropriate larger share.
• • Effect of Scottish Enlightenment: It too denied the role of landlords in production and gave greater importance to agricultural peasants. It celebrated the importance of yeoman farmer in agricultural societies.

Material Factors:

Firoj Sarwar has argued that the Ryotwari System was more pragmatic than doctrinal.

• • Inapplicability of Zamindari system:
  • ◦ There were no zamindars holding big estates with whom revenue settlement could be struck. Local chiefs in these regions had been eliminated or reduced to insignificance.
  • ◦ In Zamindari, the government was deprived of the opportunity to increase the revenue, so CoD was dissatisfied. They needed the right to enhance the revenue in future, as and when possible.
• • Company-government at this stage needed more resources due to constant wars (Madras government was chronically short of funds) and to satisfy the needs of British industrialization.
  • ◦ Thus, the arrangement was to be made directly with the actual cultivators (ryots).
• • The state’s direct dealing with an individual farmer meant that it had direct access to the area being cultivated and the income that accrued from it. Both helped the state assess and collect the revenue better.

Ryotwari System: Madras Presidency

Ryotwari was first implemented in Barahmahal region by Colonel Alexander Reed in 1792 when the region was taken from Tipu Sultan. Soon, Thomas Munro elaborated and implemented it in some districts in 1810, in the areas of Malabar, Canara, Coimbatore, Dindigul. When he became the Madras Governor, he implemented it throughout the presidency in 1820. This system was in operation for nearly 30 years.

Ryotwari System: Bombay Presidency

The British took away the land of western India from the Marathas and there needed the management of land revenue. Elphinstone, a disciple of Munro, attempted to implement the Ryotwari system in Bombay. The land revenue was too high upto 1836. In 1836, certain reforms were brought in after the survey conducted by Wingate and Goldsmith, which was slightly more rational. Based on this, land revenue rate was reduced.

Ryotwari: Evaluation

Characteristic Features	Consequences
Unlike the Zamindari system, every registered raiyat was considered as the owner of the land, and the agreement of land revenue was made with him	In reality, under the Ryotwari Settlement the state became the virtual zamindar. It did not bring positive changes in the life of cultivators because the large number of landlords had been replaced by the British government.
The cultivator cannot be evicted by Government so long as he pays the fixed assessment. (The system was expected to increase the security of the cultivator and removed the Zamindar the middleman.)	Community land was owned by the government.
The assessment rate was fixed and did not vary from year to year.	The quantum of rent was fixed arbitrarily by the Company officials. The system of survey and measurement was abandoned. Thus, land revenue in reality was very high, sometimes even 50-55% of the total produce. The people were left with bare maintenance with available resources. Moreover, the government retained the right to enhance land revenue at any time.
Ideally the Ryotwari system was supposed to be based on fixation of the rent for each Ryot and each field.	When most of peasant started declining cultivation, they were forced to do by government.
A Ryot was to be given a choice to accept or reject the offer made by the government’s assessment for a particular piece of land. Thus, a Ryot had the option annually of increasing or diminishing his holding, or of entirely abandoning it.	Harsh collection: The peasants were also not allowed any exemption in case of bad harvests or natural calamities. The cultivators had to pay revenue even the produce was partially or completely destroyed by droughts or floods. Both force and fraud were used to extract maximum rent from the cultivators.
The land revenue was temporarily fixed for 30-40 years. Thus, a temporary agreement (not permanent) was done with the ryots and the revenue could be increased periodically.	Those who failed to pay it, were deprived the ownership of land by mean of confiscation of the land.
In unfavourable seasons, remissions of assessment are granted for entire or partial loss of produce.	No uniformity in the determination of land revenue. Privileged farmers had to pay relatively less revenue
The land was made salable. The ryots were given right of transaction of land. He is at liberty to sublet his property, or to transfer it by gift, sale, or mortgage.	Cultivation was no longer profitable. Many peasants abounded agriculture and escaped into forests or neighbouring native states.
	The system had become obnoxious and repressive, which was brought out by the Report of the Madras Torture Commission in 1855. It was found that only 14.5 million acre land was under the plough and 18 million acre fertile land was lying fallow due to extremely heavy burden. Only after that the government was forced to provide some relief.
	Gradually, due to over-assessment, the land shifted from the poor peasants to rich peasants. Therefore, a landlord class established (like zamindar), which began crop-sharing.

• • Thus, the agriculture was ruined in Ryotwari areas. Production declined sharply. Even the availability of food grains was seriously affected. Poverty, hunger and famine became widespread.
• • Land lost its market value in Ryotwari areas, as nobody wanted purchase it as agriculture was not profitable.
• • Since there was no maximum limit on the amount of land a person could own, big landlord emerged in fertile delta of Kaveri.
• • The distress of peasantry was acknowledged by the Company’s government in the report. In the second round of settlements arrived at in the 1840s, the tax burden was reduced considerably (Firoj Sarwar). Unfortunately, this was neutralized by the excessive powers granted to revenue collectors.
• • Moneylenders were afraid to invest money due to high revenue rate. When a reformed version was introduced (1854-55), the land gained market value but now money leaders started capturing land of poor peasants. Soom, an extremely severe problem of rural indebtedness emerged and the peasants got no benefit.

Mahalwari Settlement

First it came into force in North (central region of the Mughal Empire), and later implemented in NW, Punjab, Awadh and some part of Central India. In these regions, the panchayat system was quite active.

Features:

• • The name mahalwari has been derived from the word mahal or village. Here the settlement was struck with the village headman or with the leading families of the village collectively.
• • In Mahalwari system, a group of villages (Mahal) was taken as a unit, and thus rent was fixed for the entire Mahal. The rent was collected through the village Pradhan/muqqadam/lambardar or any other cultivator of high standing in the village. It was such villages committee was held responsible for collection of the taxes. Thus, the revenue settlement was made mahalwise (estatewise).
• • However, every cultivator had a joint responsibility for payment of the rent. So, ownership rights were vested with the peasants. The private responsibility of the farmers remained.

It was implemented by Holt McKenzie for the first time in 1822. He is regarded as the father of Mahalwari settlement. The rent here remained arbitrary and too high. Revenue arrears mounted and soon the entire system virtually broke down under the weight of high rent. The agricultural depression of 1828 made the situation worse.

Subsequently, an attempt was made to retrieve the system by the Regulation of 1833 which did bring some relief to these cultivators. Thomson and RM Bird played a role in its evolution during the time of Lord Bentinck. The Settlement was made for 30 years in UP and for 20 years in Punjab and the Central Provinces and 66% of the net produce of the land was fixed as the share of the state. Lord Dalhousie further rationalized the system in 1855 and reduce the burden to 50%. The revised settlement was led astray by corrupt settlement officers who did not pay heed to the carefully laid out rules in collecting revenue. Misery and discontent continued.

Mahalwari Impact:

• • In the Mahalwari assessment area, especially in Awadh, the taluqdars (big landlords) were uprooted who opposed Mahalwari.
• • In this arrangement too, the oppression of the cultivators by the leaders of the village was inevitable. The headmen of the village misused their power and swindled the poor peasants.
• • Exorbitant rates of the land revenue put tremendous pressure (Normally 65%, going up to 95% of surplus). And unlike zamindari areas, it was fixed temporarily. Thus, on the whole, Mahalwari system also ruined the cultivators giving a field day for moneylenders.

Thus, in Mahalwari region, there was intense peasant rebellion in 1857.

Overall Impact of the Land-Revenue Settlements

The three settlements were based on different principles. At the same time, they were governed by same concern – need to maximize the revenue. Land tax remained the single most important source of the government’s revenue (Neils Charlesworth). In 1858–59, land revenue constituted 50.3% of the government’s total revenue.

By the middle of the nineteenth century the Company’s administration had devised three systems of land revenue administration, creating private property in land and conferring that proprietary right on three different groups. According to a rough estimate, in 1928-29 about 19% of the cultivable land in India was under zamindari settlement, 29% under Mahalwari settlement and 52% under Ryotwari system.

Consequences: Breakdown of village society:

The traditional Indian village had a self-sufficient, self-subsistent character. The villagers in each village used to remit their taxes to the state collectively. Under the new arrangement however, tax was to be assessed separately and individually. The aim of the settlements was to create an atmosphere conducive to trade and investment. As a result, there took place certain associated developments like the growth of a market economy, commodity production, money economy etc. Such developments demolished the self-sufficient character of the village economy of the pre-colonial times. Under the forceful thrust of the various land revenue settlements India’s traditional village economy was shattered. It was indeed a sharp break with the past. To the peasants it was the loss of the old world, but, there was no corresponding gain of a new world. From the cultivators point of view the new arrangements were strange, alien and unintelligible.

Historians debate regarding:

• • How far the earlier zamindars and village headmen were displaced? (BB Chaudhuri)
• • The extent of peasant indebtedness? (Dharma Kumar)
• • Increase in the number of moneylenders? (Neil Charlesworth, H Fukuzawa, Ravinder Kumar)
• • Was there complete rupture of agrarian relations or some continuity? (CA Bayly, Burton Stein).

However, it cannot be gainsaid that there were important changes brought about by the new revenue settlements. These are summarised as below:

• • Revenue demand increased dramatically.
  • ◦ All three ultimately resulted in over-assessment and arbitrary fixation of high rent.
  • ◦ There was rigorous/harsh way of its collection.
  • ◦ A system of cash payment and that too during the harvest time (further aggravated the situation)
  • ◦ The results were arrears of payment, mounting debt, increasing land sales and dispossession. All of this led to miserable condition of peasants (chronic hunger, starvation) and created several famines that occurred all over the 19th century.
• • Land as property
  • ◦ The British created a new form of private property in land for their own benefit (to protect revenue).
  • ◦ As the land became a marketable commodity, landed property changed hands rapidly. Eventually, it led to the evolution of a new set of agrarian relations that was extremely regressive. Overall, it promoted differentiation within the rural society and intensified social conflicts.
    • ■ It strengthened the power of rural magnates (wherever they existed). For example, as pointed out by David Ludden, in many districts in Tamil Nadu, the mirsadars manipulated the system to get privileged rents and convert their collective rights into individual property rights. By the beginning of the twentieth century, there was an affluent group of big landholders whom A. Satyanarayana calls “peasant-bourgeoisie”-who controlled large farms and leased out surplus lands to landless tenants and sharecroppers.
    • ■ The intermediate strata also did well and lived under stable economic conditions.
    • ■ The rights of the small landowners progressively reduced due to indebtedness. The poor peasants were exploited by rich ryots, creditors and lessors, and were forced to hire themselves despite wretched conditions and remained tied to small plots of land. Thus, there also emerged a vast class of landless sharecroppers and agricultural labourers.
  • ◦ Thus, it affected the local power structure. The stability and continuity of the Indian villages were shaken because of this.
• • The introduction of contractual relationship between the owners-tenants initially reinforced the dominant power structures. Gradually it changed social relations. ‘Customary’ rights/practices were ignored.
  • ◦ Various informal arrangements which helped poor people (poor peasants, sharecroppers, landless labourers) to rely on agriculture were abolished.
  • ◦ Rights of women who did not own property but had rights to the produce were totally sidelined.

Economic Policy (Financial Phase)

The British mechanism of exploitation is most visible in its economic policy. During this period, it can be studied under three headings:

• • Drain of Wealth in the form of home charges;
• • Influx of British Capital in India;
• • Discouraging industrialisation in India.

1. Drain of Wealth (Home Charges)

The nature of drain of wealth had been changing with time.

• • In the mercantile phase, Indian handicraft products, after being purchased through Indian revenues, were exported to Britain.
• • In the Industrial phase, raw materials and agricultural products were exported from India to Britain.
• • In the financial phase, the mode of drain was in the form of home charges i.e. the amount that the Indian government was liable to pay to the British government and private British capitalists.
• • It consisted of many items such as the:
  • ◦ Guaranteed profit of railways,
  • ◦ Interest on government loans,
  • ◦ The amount which was spent in Britain for military purchase for the British Indian army,
  • ◦ Pension to retired British officers,
  • ◦ A portion of the salaries and dividends of British officers and investors, remitted to Britain, etc.
• • In 1901-02, the amount of home charges was estimated at 173 million pounds; of which 64 million pounds was only the guaranteed interest on the railways.
• • Secretary of State used to issue Council Bills in London that was bought by British traders who were the future buyers of Indian products. They used to pay in pounds to the Secretary of state. Then that Council bill was used to draw Rupees from the Indian Revenue account and purchase Indian merchandise. In this way, payment of home charges was done by Indian revenue account.

Debate among scholars regarding the impact of home charges:

• • Nationalist scholars like Dadabhai Nauroji and RC Dutt tried to prove that the total amount which was transferred from India to Britain (home charges) belonged to the category of drain of wealth. RC Dutt even calculated that in 1901-02 roughly 174 million pounds were transferred from India to Britain as home charges.
  • ◦ Major bulk of the home charges was constituted of the unproductive revenue expenditure such as salaries, pensions, military expenditure and interest servicing.
  • ◦ The amount which was brought to India as a capital was lesser than the amount which was taken by the British from India to Britain as profit and remittances.
  • ◦ Instead of focusing on irrigation projects, agriculture credit, British capital was primarily channelised towards railways construction.
  • ◦ The nationalist scholars also argued that by draining India’s surplus production, the British deprived India of capital creation that was necessary to facilitate Indian industrialisation.
  • ◦ In other words, home charges played an important role in deindustrialisation and underdevelopment of India.
  • ◦ Had the civil service been Indianised, there would have been no need to send the pension amount to Britain.
• • On the other hand this Indian view was vehemently challenged by colonial scholars. Old Cambridge scholars such as Morris D. Morris have argued that the amount that was sent from India to Britain as home charges should not be characterised as drain of wealth because:
  • ◦ A major portion of this amount was invested back to India to facilitate investment into India.
  • ◦ Additionally the total amount of home charges was not that much. New Cambridge scholars have estimated that it accounted to roughly 2% of the total Indian Revenue Account.
  • ◦ Above all, they have emphasised that this amount was essential for the development of India through British capital investment.
• • Conclusion:
  • ◦ After closer observation we can say that the total amount of home charges should not be placed under drain of wealth and part of it was invested back in India.
  • ◦ However it is undeniable that it facilitated kind of capital investment that was predatory and exploitative resulting in poverty and underdevelopment.
  • ◦ Additionally home charges prevented native capital formation which may have resulted in the growth of Indian industries.
  • ◦ But there is no denying that amount was huge and if it was not transferred then Indian economic condition would not have deteriorated that badly.

2. Influx of British Capital in India

By the second half of the 19th century, British industrialisation had started reaching stage of capital saturation. Due to rising wages, marginal productivity of investment in the British industry was declining. With the surplus wealth accumulated due to Industrial revolution, the next question was that of its prudent investment. In this scenario, the colonies emerged as ‘attractive destinations’ for British capital because of the following factors:

• • Absence of any native or foreign competition;
• • Presence of a large population that could be put to work;
• • The availability of cheap and abundant labor;
• • Complete Political control which could ensure high returns and protect the British investment from the domestic disturbances.
• • The beneficial effect that the British investment in railways, mining and plantation would have for British industries.

Therefore from 1858 onwards, the British government of India began encouraging the investment of British capital towards the development of connectivity infrastructure, plantations and mines in India. British investors were assured of a minimum 5% return on any investment in the Indian railways that were constructed by the Government of India through British contractors by issuing railway bonds to the British public.

• • Over the late 19th century, roughly half the British capital invested in India went towards the development of the railways.

Impact of British Capital

Positive:

• • The Railways, ports, canals etc. were vital in integrating India internally and with the Global economy.
• • Further, railways, plantations and mines created by British were the roots of future Indian industrialisation.
• • British Capital investment played a fundamental role in transforming India from a purely agrarian economy to a partially industrialised economy.

Negative: Despite the above mentioned steps, British capital could not be credited for transforming Indian economy. These benefits were simply the unintended consequences of colonial exploitation. Actual consequences of the British economic policies were:

• • Unbalanced regional growth – The real aim of British infrastructural policy was to connect Indian hinterlands to coasts in order to secure stable transport network for their goods. In this endeavour those regions with less commercial value were ignored.
• • Deindustrialisation – Influx of cheap capital goods, decline of Indian ruling class, lopsided impact of British capital, discriminatory trade and financial policies led to deindustrialisation.
• • Neglect of Indian economic priorities – Neither the infrastructure, nor the benefits accruing out of it were meant for welfare of India and Indians.
• • Poverty and famines were prevalent.
• • Underdevelopment of skilled and technical workforce – Indian workforce was generally confined to unskilled tasks whereas skilled and expensive skills were outsourced to Britishers.

3. Prevention of the development of Indian capital

Basic contradiction merged in the imperial economy during the financial phase:

• • On the one hand, British capital investment in India had to be encouraged but at the same time it was important to prevent the rise of Indian industries.
• • Therefore the bulk of British capital investment was directed towards the construction of connectivity infrastructure, mining and plantations.
• • This would allow the British to secure sufficient mineral and agriculture raw material for their industries while penetrating the Indian economy.
• • Further during this phase, strict foreign trade regulations were imposed upon India to isolate it from the global market.
• • The development of native industry was strangled with the following mechanisms:
  • ◦ One way free trade
  • ◦ Introduction of foreign exchange and investment regulations to prevent the entry of non-British capital to India while encouraging the entry of British capital.
  • ◦ Discriminatory freight rates
  • ◦ Exclusive British control over Indian shipping
  • ◦ Non extension of credit to Indian entrepreneurs by British banks and Investment houses.
  • ◦ Further, native industries faced the following additional limitations:
    • ■ Administrative apathy
    • ■ Non availability of skilled labour
    • ■ Shortage of technical and managerial experts
    • ■ Shortage of raw material which was exported to Britain
    • ■ Insufficient Power infrastructure
    • ■ Lack of Capital goods
    • ■ Social backwardness of Indian society
    • ■ Lack of indigenous technical research
    • ■ Lack of indigenous entrepreneurs (even the few which rose were dependent on British)
• • Despite this, some Indian industrialists established factories in India:
  • ◦ Indian capital was invested in sectors where British capital was absent.
  • ◦ Indian cotton industries appeared in the Bombay-Gujarat belt but the Jute industry did not see significant Indian investment.
  • ◦ Gradually by the early 20th century, Indian industries began diversifying. A large number of core, and heavy industries along with consumer goods industries emerged.
  • ◦ The general attitude of the British towards Indian industries remained hostile.
  • ◦ Periods when British capital faced crisis bore golden opportunities for Indian industries. For example when British capital was withdrawn during World wars and the Great depression, Indian investment started increasing.

4. Indian Capital and Nationalism

• • Initially Marxist scholars viewed Indian industrialists and British from the lens of class collaborators. They considered capitalists as hostile to mass movements and an exploitative class.
• • However, even among Marxists, Bipan Chandra says that Indian capitalist class had developed a long term contradiction with imperialism while retaining short term dependence on and accommodation with it. Similarly, Aditya Mukherjee talks about a multi-pronged capitalist strategy to overthrow imperialism but maintain capitalism. Recent studies point out that at this time capitalist was not a matured class.
• • Secondly, recent historiography also shows that there was a conflict between British and capitalists. The British capital had traditionally been hostile towards Indian capital. They hardly belong to the same class.
• • Thirdly, Indian capitalists had always been supportive of national movement led by the Congress. In fact a symbiotic relationship was shared by the two.
• • Through the Congress, a bridge had emerged between the industrialists and the working classes which resulted in greater class cooperation rather than conflict.
• • But at the same time Indian capital definitely had a moderating effect on the movement. They preferred constitutional and phased movement instead of a radical and phased one.
• • Probably their influence played an important role on Gandhian philosophy of Trusteeship and Struggle-Truce-Struggle strategy.
• • Therefore, Indian capitalist class worked as both the fuel and the brakes of the national movement.
• • In this scenario it would be difficult to dismiss them simply as an exploitative and unpatriotic class.