During the 1st hundred years (1757-1857) of British rule, the British authority exploited India in 3 ways, 1. By collecting maximum land revenue through introduction of new land revenue system and procuring raw agricultural products for their own industry, 2. by destroying the old Indian industrial system and 3. by occupying the internal and external market for Indian goods.The British in India, in order to consolidate their position wanted to establish their control over the administrative machinery of India. To hold the administrative system, the first measure, which the British had adopted was the consolidation of the financial system under their own supremacy. Therefore the British introduced the system of land revenue, which became the chief source of their income. Land being the important source of income, the British used it as their instrument to control the entire revenue system. Hence they introduced several land revenue system to use land as the instrument of strengthening their economic condition in India. Three kinds of land revenue systems were introduced by the British in India.
1. The Permanent Settlement,
2. Mahalwari Settlement,and
3. Ryotwari system.
The word Mahalwari is derived from the term Mahal, referring to a neighbourhood or quarter. Under this system the unit for revenue settlement was the individual village. The village land belongs jointly to the village community technically called the body of co-shares The body of co-shares is jointly responsible for the payment of land revenue though individual responsibility was always there.If any co-sharer abandoned his land it was taken over by the village community as a whole. The village community was the owner of village 'common land' including the forest land, pastures etc. However the Mahalwari system of land revenue was prevalent in northern India.
The northwestern provinces and Oudh came under the dominion of the British Supremacy at different times. In 1801, the Nawab of Oudh surrendered to the company the district of Allahabad and adjoining areas which were known as the 'ceeded districts'. After the second Anglo-Maratha war the company acquired the the territory between the Jamuna and the Ganges. These territories were called the 'conquered povinces'. After the last Anglo-Maratha war, Lord Hastings acquired more territories in Northern India.
Lord Wellesley, the first lieutenant Governor of the ceeded districts made a land revenue system with the Zamindary and the farmers for three years. According to this land settlement, state demand was fixed higher by 20 lakhs rupees during the very first year over the Nawab of Oudh's demand. Moreover, another burden of rupees 10 lakhs was added before the third year was out.The company in acquiring the land revenues followed a policy,which was very rigid.
The Government of William Bentinct later made a thourough review of the scheme of 1822, by which the Mahalwari was introduced.