Ryotwari and The Cotton Boom

Ryotwari, A new Land Revenue System

• After being adopted in the Bombay Deccan, this income system became known as the Ryotwari settlement because of the people who lived there. The revenue was paid directly to the Ryots, who were pleased with the arrangement. In order to estimate the average income from different types of soil, the revenue-paying capability of the Ryot was appraised, and a percentage of this was set aside as the state’s part

Rationale for New System 

• As British administration spread from Bengal to other parts of India, the colonial government was forced to devise new strategies for increasing its land revenue, which could not be raised due to the capping imposed under the Permanent Settlement Act
• After 1810, agricultural prices increased, resulting in an increase in the revenue of Bengal’s zamindars (landowners and administrators). This increase in price prompted the British to consider a new revenue collection mechanism in order to collect more revenue
• Ricardian Theory of “Average Rent” and the Rise of Rentiers: Colonial administrators incorporated Ricardian concepts into the creation of a new revenue structure. According to Ricardian principles, a landowner’s claim should be limited to the “average rent” that was in effect at the time of the transaction. The state needed to tax more than the “average rent” since it was higher. It is conceivable that cultivators will become rentiers if a tax is not imposed, and that their surplus money will not be reinvested in the improvement of the land. This was reinforced by the history of Bengal, where the zamindars appeared to have transformed themselves into rentiers, leasing out land and subsisting on the money from these rentals
• Thus, the demand for revenues in any other region of the country was no longer fixed in perpetuity as it had been in the past, thereby maximizing profit

Problems with Ryotwari System

• In the 1820s, the need for revenue was so high that peasants were forced to abandon their villages and relocate to new areas, resulting in the accumulation of debt
• Poor soil and varying rainfall: The problem was particularly severe in places with poor soil and fluctuating rainfall. When the rains failed and the harvests were low, peasants were unable to meet their financial obligations
• Drop in agricultural prices: Prices of agricultural items plummeted precipitously after 1832 and did not recover for more than a decade and a half after that. This resulted in a further decrease in the income of peasants

The Cotton Boom

Prior to the 1860s, raw cotton imports into the United Kingdom were dominated by the United States. As a contingency plan, India was considered a country that could provide cotton to Lancashire if the American supply became insufficient.

American Civil War and India 

• When the American Civil War broke out in 1861, a wave of terror erupted throughout the country, prompting messages to be sent to India urging the country to increase cotton shipments to Britain. India possessed excellent land, a climate conducive to cotton growth, and a large pool of inexpensive labour
• The British provided loans to urban sahukars, who in turn extended credit to those rural moneylenders who promised to secure the product in exchange for the advances. As a result, the rioters in the Deccan villages suddenly found themselves with access to what appeared to be an endless supply of credit
• By 1862, India accounted for more than 90 percent of all cotton imports into the United Kingdom

End of American Civil War and the Credit to Sahukars Dries Up

• Cotton production in the United States began to recover in 1865, following the end of the American Civil War, buy Indian cotton exports to the United Kingdom began to drop
• Export merchants and sahukars in Maharashtra were reluctant to give long-term credit because of the state’s financial crisis. They may witness a decrease in the demand for Indian cotton, as well as a decrease in the price of cotton 
• Therefore, they made the decision to cease operations, limit their lending to peasants, and demand recovery of all outstanding debts from their customers

Money Lender and the experience of Injustice 

Money lending was common prior to colonial authority, but the relationship between the moneylender and the Ryots was governed by a number of customary standards that were passed down through generations. 

• Interest more than Principal: One basic rule was that the interest charged could not be more than the principal in the loan. During colonial authority, this social norm was shattered
• Deccan riots commission: According to the Deccan Riots Panel, a moneylender had charged more than Rs 2,000 in interest in one of the numerous cases probed by the commission

System of deeds and bonds as new oppressive system 

• Limitation law and loopholes: Loan bonds signed between moneylenders and ryots would be valid for only three years under the terms of a Limitation Law passed by the British in 1859, with the moneylender being required to sign a new bond every three years. However, there were loopholes in the law, which were exploited by moneylenders to their advantage
• Compound interest on exorbitant rates: The unpaid sum — that is, the original loan plus the accrued interest – was entered as the principal on which a new set of interest charges was calculated when a new bond was signed

The Deccan Riots Commission

• When the revolt spread in the Deccan, the Government of India, worried by the memory of 1857, pressurised the Government of Bombay to set up a commission of enquiry to investigate into the causes of the riots. The commission reported that the government demand was not the cause of peasant anger. It was the moneylenders who were to blame. This argument is found very frequently in colonial records. This shows that there was a persistent reluctance on the part of the colonial government to admit that popular discontent was ever on account of government action

Timeline

• 1765: Diwani of Bengal was purchased by the English East India Company
• 1773: The East India Company Regulating Act was passed by the British Parliament in order to govern the activities of the East India Trading Company
• 1793: In the 1800s, a permanent settlement was established in Bengal. The Santhals begin to migrate to the Rajmahal hills and establish themselves there
• 1818: The Bombay Deccan was the site of the first revenue settlement
• 1820s: Prices for agricultural commodities have begun to decline
• 1840s-50s: The Bombay Deccan is undergoing a steady trend of agrarian expansion
• 1855-56: Santhal insurrection
• 1861: The cotton craze begins
• 1875: Ryots in Deccan villages have taken to the streets in protest

Conclusion

The Ryotwari system took the most oppressive turn during famine. The countryside was being devastated by a famine that occurred in the years 1832-1834. Inevitably, they had to borrow money, but once they had borrowed money, the ryot found it difficult to repay it. As debt accumulated and loans went unpaid, peasants’ reliance on moneylenders grew stronger.