Permanent Settlement

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Part of a series on the
History of Bengal
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The Permanent Settlement, also known as the Permanent Settlement of Bengal, was an agreement between the East India Company and landlords of Bengal to fix revenues to be raised from land that had far-reaching consequences for both agricultural methods and productivity in the entire British Empire and the political realities of the Indian countryside. It was concluded in 1793 by the Company administration headed by Charles, Earl Cornwallis.^[1] It formed one part of a larger body of legislation, known as the Cornwallis Code. The Cornwallis Code of 1793 divided the East India Company's service personnel into three branches: revenue, judicial, and commercial. Revenues were collected by zamindars, native Indians who were treated as landowners. This division created an Indian landed class that supported British authority.^[1]

The Permanent Settlement was introduced first in Bengal and Bihar and later in Varanasi and also the south district of Madras. The system eventually spread all over northern India by a series of regulations dated 1 May 1793. These regulations remained in place until the Charter Act of 1833.^[1] The other two systems prevalent in India were the Ryotwari System and the Mahalwari System.

Many argue that the settlement and its outcome had several shortcomings when compared with its initial goals of increasing tax revenue, creating a Western-European style land market in Bengal, and encouraging investment in land and agriculture, thereby creating the conditions for long-term economic growth for both the company and region's inhabitants. Firstly, the policy of fixing the rate of expected tax revenue for the foreseeable future meant that the income of the company from taxation actually decreased in the long-term because revenues remained fixed while expenses increased over time. Meanwhile, the condition of the Bengali peasantry became increasingly pitiable, with famines becoming a regular occurrence as landlords (who risked immediate loss of their land if they failed to deliver the expected amount from taxation) sought to guarantee revenue by coercing the local agriculturalists to cultivate cash crops such as cotton, indigo, and jute, while long-term private investment by the zamindars in agricultural infrastructure failed to materialise.