Ijaradari System

In 1772, Warren Hastings, the Governor of Bengal, introducing the Ijaradari System, or Revenue Farming, wherein revenue collection rights were auctioned annually to the highest bidder.The government grants the authority to gather land revenue to a contractor who offers the highest bid for a set period within a district or sub-division. However, contractors aimed to extract maximum sums from farmers, leading to oppression and impoverishment. This system of competitive bidding artificially inflated revenue demands, unrelated to actual agricultural production. Also, revenue collections fluctuated widely, causing financial uncertainties for the East India Company. This was replaced with the Permanent Settlement System by Lord Cornwallis.

Following the Battle of Buxar in 1764, the East India Company (EIC)acquired the Diwani rights for Bihar, Bengal, and Odisha from Mughal Emperor Shah Alam II. Despite this acquisition, the EIC chose not to disrupt the existing system. Instead, they appointed European officers to oversee and manage the Zamindars within these regions. The revenue collection increased to 150 lacs in the first year itself i.e. 1765 (which was 80% more than the previous year) But this was due to the ruthless practices adopted to earn revenue. This led to complete devastation of the agrarian economy which led to Great Bengal Famine of 1770. The revenue of the company also did not increase because the corrupt European officers appointed did not possess the understanding of local situation. In this scenario, Warren Hastings was appointed as Governor of Bengal in 1772.

The Ijaradari System was a revenue collection system used during the Mughal period and later adopted by the British in India. In 1772, Warren Hastings started giving out annual lease of land for collection of taxes. Later, Land Settlement was done for 5 years based on auction. Hence this settlement was also called as Five-Year settlement. But in 1777, Warren Hastings reverted to an annual basis again.

The Ijaradari System (Revenue Farming) was started during Delhi Sultanate. But it fell into disrepute under Sher shah and Akbar. It was again revived by Jahangir and became widespread during the 17th CE. Finally, it was reintroduced during Jahandar Shah’s rule. Later, Warren Hastings introduced it in 1772. Before Ijarahdari system, revenue was extracted during Mughal Empire based on a Subah. In each Mughal province or Subah, a Diwan was assigned the duty of gathering revenue and sending it to the Empire. The Diwans, in turn, would appoint certain Zamindars who were responsible for directly collecting taxes from the peasants.

• Right of revenue collection of a particular area wasauctioned to the highest bidder.
• Hence, the system was not hereditary.
• The Revenue farmers can levy beyond the fixed tax to be given to the East India Company.

• Extortion of farmers: Contractors aimed to extract the highest possible sums from farmers, leading to their oppression, extortion, and impoverishment.
• Non-payment issues: Numerous contractorscommitted to paying excessively high amounts, which they failed to collect despite resorting to oppressive measures
• Gave rise to a class of bankers Ijaradari System gave rise to a class of bankers, often from urban areas, who invested in revenue farming. They posed a continuous threat to the welfare of the zamindars.
• Corruption:Corruption prevailed in the allocation of contracts, resulting in financial losses for the government due to nepotism
• Unrealistic revenue demand: The Ijaradari System operated through competitive bidding,artificially inflating the revenue demandedby the State. Consequently, it had minimal correlation with the actual levels of agricultural production.
• Revenue fluctuations for EIC: Even the EIC did not benefit because revenue collections fluctuated widely causing financial uncertainties.

The Ijaradari System, introduced by Warren Hastings, had profound negative consequences on the agrarian economy and governance in the Bengal region. Its non-hereditary and auction-based nature led to exploitation, corruption, and unrealistic revenue demands, causing financial uncertainties for the East India Company.The emergence of a banker class further complicated the socio-economic landscape. These challengesprompted Lord Cornwallis to initiate extensive reforms in the revenue administration, culminating in the implementation of the Permanent Settlement in 1793.