As British rule expanded from Bengal to other parts of India, new systems of revenue were imposed. The Permanent Settlement was rarely extended to any region beyond Bengal.
Because, agricultural prices rose, increasing the value of harvest produce, and enlarging the income of the Bengal zamindars.
Since the revenue demand was fixed under the Permanent Settlement, the colonial state could not claim any share of this enhanced income.
Keen on expanding its financial resources, the colonial government had to think of ways to maximise its land revenue.
So in territories annexed in the nineteenth century, temporary revenue settlements were made.
Also, when officials devise policies, their thinking is deeply shaped by economic theories they are familiar with.
By the 1820s, the economist David Ricardo was a celebrated figure in England.
In Maharashtra when British officials set about formulating the terms of the early settlement in the 1820s, they operated with some of these ideas.
According to Ricardian ideas,
a landowner should have a claim only to the “average rent” that prevailed at a given time.
When the land yielded more than this “average rent”, the landowner had a surplus that the state needed to tax.
If tax was not levied, cultivators were likely to turn into rentiers, and their surplus income was unlikely to be productively invested in the improvement of the land.
Many British officials in India thought that the history of Bengal confirmed Ricardo’s theory. There the zamindars seemed to have turned into rentiers, leasing out land and living on the rental incomes.
It was, therefore, necessary, the British officials now felt, to have a different system.