Cornwallis's greatest achievement in India was the reorganization of the land taxation, known as the Permanent Settlement of 1793. Agricultural land in Bengal was cultivated by a large number of small farmers, who paid rent to a group of zamindars (landowners). Under the Mughals, the government had collected taxes from the zamindars. The East India Company, however, had tried to set aside the zamindars, and collect land taxes either directly through company officials, or through revenue-farmers, who collected the rent from peasants and paid a lump sum to the government. The new system led to widespread corruption, and the peasants suffered severely. Cornwallis decided to go back to the old Mughal system. He granted legal ownership of their land to the zamindars. In return, they had to pay the government 90 per cent of the rent which they collected from the farmers. These arrangements were to last for ever, hence the title "permanent settlement."

The immediate effects of the permanent settlement were not good. In 1769 Bengal was devastated by a terrible famine. A large number of rural people died from starvation or fled from the countryside. As a result, zamindars found it difficult to collect rent from such ruined farms. Many of them were unable to pay their fixed taxes, and sold their estates. It was not until the beginning of the 1800's, when the population began to increase once again and land which had gone out of cultivation was brought back under the plough, that the great Bengal zamindars again became prosperous.

Courtesy --- karthik.N