Chapter 6 Systems of Land Tenure in the British India – Indian Economy

6

Systems of Land Tenure in the British India

Introduction

From times immemorial, the right of the State to claim a portion of the agricultural produce has been recognized in almost all countries on the assumption that the government, as the custodian and guardian of society’s interests, is the ultimate proprietor of all lands and therefore the revenue received by the State from the people has been considered in the nature of rent from such domains. The collection of such revenue necessitated certain classification; Banerjee categorizes the proprietary rights into five clauses where, (i) the government may be the direct owner: (ii) the cultivator or landowner may be, for all practical purposes, considered as proprietor, paying revenue to the government. This is the system which obtains in the ryotwari tracts; (iii) the government may recognize one grade of proprietor between itself and the actual land-holder. The most perfect example is found in the Zamindar of Bengal; (iv) the government may recognize two grades of proprietors between itself and the actual land-holder. This form is found in cases where the overlord’s right had not developed so far as to make him sole landlord and all others mere tenants; and (v) the government may recognize certain sub-proprietary rights, for example, patni, dar-patni.

Land tenures may be defined as the system of rights and responsibilities of the owners and cultivators of land in relation to the State. Here, we can distinguish clearly three parties which are interested in land in all countries, the State, the landlord and the cultivators, the role of middlemen being insignificant to be taken into account of even if they exist in some societies. The landlord provides the capital for agricultural machinery and development of new lands and also expert knowledge and business organization. The peasant supplies the labour and the State holds the balance between the two parties.

The Gradual Growth of Land Tenures in India

The present system of land tenures is the result of exchanges and growths through a series of experiments. From very ancient times, the State took a share of the produce on the threshing floor. The accepted Codes of Manu mentioned one-sixth of the gross produce as the legitimate share of the King, though it might rise to one-fourth in times of war and other emergencies. Later on the share of the State was fixed on an estimate of the standing crops. Later still, this share was converted into a money payment, Sher Shah attempted to universalize the system of money payment and, under Akbar, his Finance Minister, Todar Mal, undertook a preliminary survey of soil fertility and the government’s share was fixed at one-third of the gross produce, for nine years at a time. But with the break-up of the Moghul Empire, and the increasing independence of the Provincial Governors, the practice of leasing the revenue of large tracts of the country became common. As a result of such leasing out of lands, a sort of revenue farmers, came into being who paid nine-tenths of the collections to the government and retained the remaining one-tenth as their remuneration. As the central administration and its control over far-off territories deteriorated further, the system of auctioning the right to collect revenue was adopted. The result was that the peasant cultivators were squeezed and the revenue collectors profited.

The oppressive collections apart; a more fundamental change was taking place as regards proprietary rights. Generally, the revenue farmers were the old Rajahs and, as the central authority relaxed, the revenue farmers became hereditary, cultivated the waste lands as their own, appropriated the neighbouring lands by fair, or foul means and claimed to be proprietors of the lands from which they collected the revenue. The political disorganization of the times and the need for ready money on the part of the government helped the spread of the system, from Bengal to the Deccan, and to the UP and the Punjab with some slight modifications according to the circumstances and the situations prevalent in the localities concerned. The regular survey and assessment of Akbar’s days had disappeared and the cultivators were subjected to all sorts of oppressive exactions and, finally, reduced to the position of mere tenants-at-will. The revenue farmer on the other hand, became the Zamindar, the owner of the land.

The Period of Transition

When the East India Company established its political dominion in India and took up the reins of government, they wanted to evolve a system of dealing with the landed interest. The officials of the Company had little interest in anything beyond the extortion of the maximum revenue from the landed gentry, and for that purpose the prevalent arrangements suited them better, after effecting, of course, their characteristic elements of security, certainty, and a certain measure of uniformity. But the element of uniformity could not be widely applicable as there was already a diversity of land tenure in the subcontinent. Therefore, whatever uniformity they were able to achieve, was not of kind but of degree only. There have been three main kinds of settlement following the fact that settlements were either with landlord estates (Zamindari), with village estates or ‘Mahal’ (Mahalwari), or with separate holdings (Ryotwary). A simpler classification was that certain settlements are ‘Permanent’ made once for all; and others ‘Temporary’, where the assessment was revised after a certain period of years.

The Permanent Zamindari Settlements, 1793

The grant of the ‘Diwani, the right to collect all the revenue of Bengal, Bihar and Orissa in 1765’, gave the East India Company a legal status in the collection of revenues as well as in the administration. But the Company’s servants did not understand it and they entirely lacked the knowledge of revenue matters and the impenetrable mysteries of land tenures and left the land revenue which was at the time the most fruitful of the Company’s revenues, to be collected by the Nawab’s officers up to 1772. Under this dual system, the cultivators were oppressed by both the revenue officials of the Nawabs and the servants of the Company, but protected by neither. In 1773, the Company determined to stand-forth as Diwan, that is, to collect its own revenues and to administer the fiscal system itself. Accordingly Warren Hastings adopted in that year a system of letting out estates to the highest bidders for a period of five years, but the Court of Directors in their anxiety to declare high dividends to their shareholders insisted on annual leases. The result was that the revenue-paying agencies were changing every year and arrears became the rule, and the peasants were made more miserable than before. ‘The proceedings of the Board of Revenue from 1773–1776 record a monitor’s list of large deficits, defaulting Zamindars, absconding farmers and deserting ryots,’ reads the Cambridge History of India. The wavering settlements were continued up to 1786 and the centralization of revenue administration ‘reduced the collections to chaos’. It was to relieve the agricultural distress and better the system of revenue collection that Cornwallis was sent to India in 1786 to introduce the Permanent Revenue Settlement.

The Permanent Zamindari Revenue Settlement was introduced, at first in Bengal, extended to Benares in 1795, and later to certain parts of Madras Cornwallis announced first in 1790, the settlement of land revenue for 10 years with Zamindars, who were recognized as possessing full proprietary rights. Later on in 1793, with the approval and blessings of the Court of Directors, the newly settled decennial system was given the term of perpetuity, and hence, the name Permanent Settlement. The main features of the Permanent Settlement of 1793 as summarized by the Indian Taxation Enquiry Committee report of 1924–25, were briefly as follows:

  1. The settlement was made with the Zamindars who were declared proprietors of the areas over which their revenue collection extended so that they might have some legal status which could enable them to fulfil their obligations to the government and induce them to take an interest in their estate.
  2. The assessment fixed on the land was declared to be unalterable for ever and the government specifically undertook not to make any demand upon Zamindars or their heirs or successors.
  3. The assessment was fixed approximately at ten-elevenths of what the Zamindars received in rent from the ryots, the remaining one-eleventh being left as the return for the trouble and responsibility of collection.

Demerits of the System

The high expectations entertained at the time of the Permanent Settlement were doomed to frustration. The Zamindars did not take any active interest in the development of their estates as they were expected to do. They became merely a set of absentee-landlords fattening on the high rents collection from the miserable cultivators. Their agents, the naibs and dewans ejected out whatever they could from the ryot with an iron fist. Further, the proprietary rights of the cultivators were sacrificed and their position was reduced to that of tenants-at-will at the mercy of the collectors of revenue. The Zamindars were interested neither in the extension of cultivation nor in the improvement of the village. Because of all these factors, the position of the ryot became very grave and nothing could be done by the revenue officials of the State to improve the lot of the peasantry as the Zamindar stood in between them. Moreover, an element of inelasticity was introduced in revenue collection and the State was robbed of its rightful share in the unearned increment of land to the extent of not less than Rs 3 million a year, according to one estimate. It meant that the State got no share in the increasing value of the land or its produce and that as revenue was needed other people had to make good the deficit, while the permanently settled landowners escaped. From the administrative point of view also the permanent settlement became synonymous with a policy of non-interference in the Zamindari estates, and as a consequence, government officers were much less in touch with the tenants than in Provinces-managed raiyatwari. It had been one of the greatest administrative handicaps that, throughout the 19th century, the administration had to carry on without any village maps, any record-of-rights and without the wide knowledge of local conditions and customs. By far the greatest evil of the system had been sub-infeudation. This was due to the large margin between the fixed land revenue and the economic rent of the land which had led to the creation of a number of middleman with subdivision rights in land between the Zamindar and the actual cultivator. ‘In some districts, the sub-infeudation has grown to astonishing proportions, as many as fifty or more intermediary interests, having been created between the Zamindars at the top and the actual cultivator at the bottom’. In such a situation, the land under the Zamindar was nobody’s concern. The responsibility for agricultural welfare could not be fixed at any particular link in the chain between the Zamindar and the actual cultivator. Thus, the system from every point of view was productive of positive mischief.

The system, however, continued in the previously settled provinces as the Company thought it had better not to alter the status quo. But future settlement was not considered as the policy was rejected by the court of directors in 1822 and by the Crown in 1883.

The Protection of the Tenants in the Zamindari Areas

Tenancy Protection: The Permanent revenue settlement effected by the British in Bengal, Bihar, Orissa, the UP and CP and parts of Madras raised the mere tax farmers to the position of proprietors and the original landowners sank to the level of tenants-at-will, whose rents the landlords could arbitrarily enhance. This led to grave evils. The actual cultivator had no incentive to introduce improvements in agriculture for fear of enhancement of rent or even eviction. The Zamindars, contrary to expectations, took little interest in improving the land and degenerated into an idle-rent-receiving class. The increased pressure on land resulting from the growth of population, however, strengthened the position of the Zamindars, who began to rack-rent the tenants. Hence, the State had to intervene to protect the interests of the tenants in the Zamindari areas.

Tenants Legislation began in Bengal and Agra with the Rent Act of 1859, which conferred occupancy rights on the tenants who had cultivated the land continuously for a period of 12 years. This was amended in 1885, 1901 and 1929 to prevent the Zamindars circumventing the provisions of the Act. These and other measures have been adopted in other provinces as well, so that the three ‘Fs’, fair rent, fixity of tenure, and free sale have been conferred on the cultivators. Arbitrary enhancement of rent has been forbidden.

It can be raised only for specific reasons once in 15 years, at a rate not exceeding two annas in the rupee and in all cases of dispute, an appeal can be made to a Court of Law. The tenant cannot be evicted unless it is for certain given reasons such as non-payment of rent due, and compensation for improvements should be paid. The occupancy rights, conferred by these Acts have been declared hereditary, and alienable. Laws have been passed exempting cattle, tools, seed grain, etc., from being included under this Act. Remissions and suspensions of land revenue granted by the government to the Zamindars must be shared with tenants.

The years 1937–39 witnessed a new drive for tenancy legislation. The severe fall in agricultural prices aggravated the poverty of the peasant and caused widespread agrarian discontent. Kisan organizations demanded radical reforms eliminating the landlord class. With the inauguration of Provincial Autonomy and the assumption of office by the Congress Party in various provinces in 1937, several measures were passed to secure the interest of the tenants. All enhancements of rents were suspended for 10 years and the interest chargeable on arrears of rent was limited to 6.5 per cent. The heavy transfer charge, called Nazarana or consent money demanded by landlords, was declared illegal and other cesses of the same variety prohibited. The UP Tenancy Act, 1938, conferred heritable tenancy rights even on tenants working on the ‘sir’ or the private home farms of the landlord, and the maximum area which a landlord could cultivate as ‘sir’ with tenants-at-will was fixed at 50 acres. Rents could be revised only at intervals of twenty years and existing rents were reduced to the levels of 1896–1905. This Act was called expropriatory and was fiercely opposed by landlords, but the ministry contended that such provisions alone could save the Zamindars from actual expropriation. The Bihar Tenancy Act of 1938 and the Madras Estates Land Bill relieved the tenants by reducing the rents to the 1911 level, and the interest on arrears from 12.5 per cent to 6.25 per cent. In Madras, a committee set up by the Congress Ministry recommended legislation declaring the right of the ryot at the soil and fixing the rent payable by the ryot at the 1802 level, but before anything could be done the ministry resigned.

The position of the tenant had improved in general, though it was not wholly satisfactory. The ignorance and illiteracy of the peasant, his poverty and the consequent inability to fight, the absence of alternative employments and the keen competition for land had all combined to nullify the protection given to the cultivator by the Tenancy Acts.

The landlord withheld rent receipts and extracted illegal cesses in spite of the legislation to check such conduct. The grant of occupancy rights had led to subletting of land by occupancy tenants so that the actual cultivators did not benefit and the occupancy tenants had become another class of rent receivers. Further, these rights had increased the credit of the occupancy tenants, who had fallen an easy prey to money-lenders, who had become real owners. There was, therefore, need for legislation to check the tendency of land to pass into the hands of money-lenders or other non-cultivators by imposing restrictions on sub-letting, mortgage or sale. The existence of landlords receiving the rent but doing nothing to improve the land by irrigation, and other such grievances had led to a demand for the abolition of such a class in the interests of agriculture and the cultivators.

The Abolition of the Zamindari System

The Land Revenue Commission of Bengal appointed in 1938 with Sir Francis Floud as Chairman, while acknowledging the advantages of the Permanent Settlement with the Zamindars, came to the conclusion that the evil of the system had advanced very far and no half measures could remedy the situation. It pointed out, among other things, (i) the great loss to the State of the share in the increment of the value of the land due to extension of cultivation and rise in prices; (ii) the loss of revenue from minerals and fisheries; (iii) the absence of contact between the government and the cultivators; and (iv) the encouragement of sub-infeudation, by which a number of intermediaries were created between the Zamindars and the cultivator. Under these conditions, the only remedy was, for the State to acquire all the interest of the mere rent receivers and deal directly with the cultivators as in the ryotwari areas. This would involve a heavy initial expense for the government as the parties would have to be paid a reasonable compensation. The Floud Commission suggested 10 times the net profit now enjoyed by the Zamindars as compensation. At present the movement for the abolition of the Zamindari is almost all over the country and the system stands abolished in all the States where it had been prevalent.

The Temporary Settlements

Permanent Settlement was finally rejected by the court of directors in 1820 and by the Crown in 1883. Thence forward, land revenue was settled with full reference to the proprietary rights and after a careful survey classification and investigation into the productivity of the soil.

The Mahalwari Settlements

In the UP, especially in Agra, villages or Mahals with collective landlord rights predominated. This was the result of the practice of the rulers making grants of villages to their dependants. Though this grant referred only to the State’s share of the produce, the grantee gradually brought the waste land under cultivation, bought up the poorer landlords and finally claimed to be landlord of the whole village. The descendants of the grantees held these lands jointly, while the cultivators sank to the level of mere tenants with no independent rights in the land. The joint proprietors were, sometimes, the descendants of former ruling chiefs or revenue farmers, as in the UP, and the lands were cultivated by tenants. Elsewhere, as in the Central Punjab, the descendants of the original colonizing or conquering groups were the joint owners of the lands. In these areas, the co-sharers themselves cultivated the land.

An attempt was at first made to settle these villages on a permanent basis with a revenue farmer or some other person of note. But in 1819, Holt Mackenzie, the Secretary to a Commission of Enquiry drew the attention of the administration to the existence of village proprietary bodies and the inapplicability of single-landlord ideas to them. The recognition of these joint rights in land led to the Mahalwari Settlement in the United Provinces of Agra and Oudh. This was later extended to the Punjab and Central Provinces where more or less similar conditions prevailed.

A regular survey and demarcation of the lands and a record of holdings and rights were undertaken first and revenue payable was settled with the village bodies, in their collective capacity, a co-sharer or prominence being responsible for the revenue payment, all the sharers being jointly and severally held responsible in case of default. The assessment which was liable to periodical revision was based on the actual rental value of the lands. It was very high in the beginning, being 80 per cent in 1882. Later it was brought down gradually and, later reduced to be below 50 per cent of the rental value. An individual co-sharer is free to move for a partition of individual liability in place of joint liability.

In Agra, there were some old revenue farmers called the talukdars who claimed certain overlord rights over the lands. In such cases, they were allowed 10 per cent of the land revenue and the settlement was higher by that amount which was paid to the talukdars directly from the Government Treasury.

The Malguzari Settlement in Central Provinces

The Malguzars were revenue farmers under the Maratha rulers. In course of time, they strengthened their position and claimed landlord rights. The British, in their anxiety to make someone responsible for revenue payments, had conferred proprietary status upon them and recognized them as heads of villages although the villages were of the ryotwari type. Thus, the ryots were degraded to the status of mere tenants. The government sought to remedy this by settlement the amount payable by the tenant to the Malguzar, as well as the amount payable by the Malguzar to the government. Assessment was based on the productive capacity of the soil and the average net profits of cultivation, and the Settlement was made subject to periodic revisions.

The Ryotwari Settlement in Madras and Bombay

The Ryotwari Settlement system prevailed in Madras, Bombay, Berar in Sind and in Assam. The  features of Ryotwari tenure are: (i) the underlying principle of State ownership of all lands including waste lands, (ii) the holder of the land possessing the right to use, transfer and relinquish the occupancy of the holding and enjoying these privileges so long as he pays the land revenue and (iii) the assessment of land revenue being fixed for a period of 20 to 30 years and being periodically revised and settled anew.

After the initial blunder in Madras when the government failed in its attempt to impose the Zamindari system, the Revenue Settlement was preceded by a derailed survey and registration of holdings and rights, classification of soils, sources of irrigation, etc. The assessment was fixed at 50 per cent of the net produce and the settlement was effected directly with the ryot, whose proprietary rights were legally recognized. Full occupancy rights, heritable and transferable without any direct sanction of the government were also recognized. This system was obtained with slight modifications in the Bombay Presidency.

The Bombay Settlement and the Madras Settlement have the same features, such as demarcation of boundaries, determination of survey numbers which once fixed are not altered, and the classification of soil, etc., but the mode of payment is different. Whereas in Madras the base of the assessment was on the net produce, in Bombay it was used only as a basis for the distribution of the total revenue demand fixed for the area. In Bombay Presidency, the relative values of the soil were classified once for all according to the depth, texture, capacity for retention of moisture and other physical properties bearing on fertility into several groups, and expressed in fractions of a rupee, 16 annas representing the best class of soil. There were three stages in the assessment: (i) grouping of talukas according to climatic, situational and the general conditions of cultivation, (ii) determination of the aggregate revenue demand from the area, which is done with reference to its revenue and its past economic position, and (iii) determination of the revenue liability from aggregate to detail, the fixing of land revenue assessment of individual survey numbers and subdivisions. The Bombay system was more empirical and needed local knowledge and experience.

Reform in Ryotwari Areas

The position of the cultivators in the Ryotwari areas is not ideal. In Madras, Bombay and the Punjab, the actual cultivator is steadily losing his proprietary rights in the land to the middleman and money-lending classes and is degenerating to the position of a tenant-at-will. This transfer of land to non-agricultural classes cannot help agricultural efficiency or improvement and, hence legislative interference is necessary. Further, the position of the contractual tenants has to be improved by legislation conferring occupancy rights on the actual cultivators and fixing maximum rents payable by the cultivators.

The land revenue system itself has to be placed on a uniform and scientific basis. The basis and rate of assessment differ in different parts of the country. The land tax is not progressive and presses heavily on the small and generally uneconomic holdings, while the large landowners get off rather lightly. This anomaly becomes all the more oppressive in the absence of a tax on large agricultural incomes. The Tariff Inquiry Committee 1925 and the Bombay Land Revenue Assessment Committee 1927, recommended a uniform system of land assessment at not more than 25 per cent of the annual value and the limitation of local taxation to a maximum of 25 per cent of land revenue. The Bombay Land Revenue Assessment Committee further recommended a maximum limit of enhancement of 25 per cent. These recommendations, coupled with a pretty long-term settlement and automatic remissions in bad years, were meant to promote agricultural progress in Ryotwari areas.

Discussion Questions

6.1. What do you understand by the system of land tenure? What were the different land tenure systems prevailed in India before Independence?

6.2. What do you understand by ‘Zamindari Settlement’? What were the drawbacks found in that system? Who were the major losers under the system?

6.3. Why was the Zamindari Settlement abolished by the government in India? Which other land settlement came to replace it, and with what results?