David Ricardo's theory led to the introduction of Ryotwari Land Revenue Settlement in the Bombay Deccan.
Which of the following is NOT true about Ricardo's theory?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → The surplus income was likely to be productively invested by the state in the improvement of the land.
According to Ricardian ideas, a landowner should have a claim only to the “average rent” (OPTION 1) 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 (OPTION 2). If tax was not levied, cultivators were likely to turn into rentiers (OPTION 3), and their surplus income was unlikely to be productively invested in the improvement of the land.