• As the Governor-General from 1786 to 1793, Lord Cornwallis professionalized, bureaucratized and Europeanized the Company’s administration.

• He also outlawed private trade by the Company’s employees, separated the commercial and administrative functions, and enhanced the salaries of the Company’s servants.

• As revenue collection became the Company’s most essential administrative function, Lord Cornwallis granted legal ownership of land to the zamindars in Bengal.

• In return, the Zamindars had to pay the government fixed revenue by a certain particular date.

• This arrangement was to last for ever; hence, the title ‘Permanent Settlement’ was given.

• This system was also known as the Zamindari system.

• The immediate consequence was that as now the Zamindar became the owner of the land, the peasant was reduced to the status of a tenant on his own land.

• Moreover, now land became a negotiable property and the state was excluded from agricultural expansion and development, which came under the purview of the Zamindars.

• In Madras and Bombay, however, the ryotwari (peasant) settlement system was set in motion, in which the peasant cultivators had to pay annual taxes directly to the government.