the importance of zamindars decreases as the English company became the Diwan of Bengal justify the answer
Answers
The Company Becomes the Diwan
On 12 August 1765, Robert Clive, on behalf of East India Company, accepted the Diwani of Bengal from the then Mughal ruler.
The Company became the chief financial administrator of the territory under its control, and so the company had to think and plan the organisation of Bengal in a such a way that it could earn maximum profit out of the territory, profits that could be used to finance their businesses and wars.
As a foreign power, the Company realised that it needed to manage the local rulers in India's villages, because they were respected by the locals and removing them might anger the common people.
Revenue for the Company
Although the Company had become the ruler of Bengal, it continued to work like a trader and did not set up any regular system of assessment and collection. So by 1770, within 5 years of it become the ruler of Bengal, the prices of goods bought by the Company doubled.
This brought great profits for the Company; earlier it had to import precious metals such as gold and silver from Britain to buy goods from India for export to Europe, but after it became the Diwan of Bengal, it started using the revenues from Bengal to buy its goods.
But the economy of Bengal suffered deeply. Peasants were unable to pay the dues, and artisanal production fell because the Company bought the artisans' goods at low prices by force. As a result of such exploitative practices and high prices, there was a famine in Bengal in 1770 that killed 10 million people, a third of Bengal's population.
The Need to Improve Agriculture
The Company knew that most Indians practise agriculture, and if it did not improve agriculture then it cannot continue to earn big revenues.
So the Company introduced the Permanent Settlement in 1793, whereby the zamindars were asked to collect rent from peasants and pay revenues to the Company. The plan was that the Permanent Settlement will ensure a regular income for the Company, and that it will also encourage zamindars (rajas and talukdars) to improve lands in their territories because better lands will give them better revenues, while the amount they had to pay to the Company was fixed permanently.
The Problem with the Permanent Settlement System
Soon after introducing the Permanent Settlement, the Company realised that the zamindars (local landlords) were not improving the farmlands because the amount they had to pay to the Company was so high that they had little money left to improve the farmlands.
By 1810, the Company also started feeling unhappy with the Permanent Settlement, because rising market prices and increased cultivation increased the income of the zamindars, but not of the Company.
Despite the increased revenues, few zamindars showed any interest in improving the lands of their farmers. This was because many zamindars had lost their lands to the Company and had lost interest in improving them, whereas others who had made big losses during the beginning of the Permanent Settlement now saw the chance to make up for their losses instead of spending on improving farmlands.
The cultivators in the villages also found the system unreasonable, because sometimes they had to borrow money from moneylenders to pay the high rents to the zamindars, and if they were unable to pay the money back, they lost their lands that they had cultivated for generations, effectively making them and their families jobless and homeless.
A New System is Devised
By the early 19th century, the Company officials finally felt that they need more money, and a system like the Permanent Settlement that limited the Company's revenues wasn't such a good idea after all.
So Holt Mackenzie, another Englishman, devised a new system called the Mahalwari Settlement, which come into effect in 1822. Under the new system, collectors were asked to visit villages, measure and inspect the lands, and record the customs and rights of the different groups of people who lived there. After taking all of those into account, a revenue was estimated that each village or mahal had to pay, and that amount was also to be revised periodically.
The Munro System
In the south of India, where the lands were owned by ryots (original cultivators), the Ryotwari System was introduced by captain Alexander Read and Thomas Munro, the then Governor of Madras Presidency.
Under the Munro / Ryotwari System, each field was separately and carefully studied before deciding on the amount of revenue to be collected.
All Was Still Not Well
All the three new systems designed and introduced by the British proved to be failures; the Company had imposed these systems to increase their income from the lands and farmers of India, but the revenues they demanded were so high that farmers went bankrupt and died of hunger as their fertile lands became barren and fell into disuse.