Assertion: In areas that were under direct British rule, there was a distinct method of revenue collection called the raiyatwari system of land settlement    
                                                  

     Reasoning: The cutivators in these areas became very poor due to exploitation of Raiyatwari system.

Assertion (A) is true but Reasoning (R)  is not correct.

Many districts of colonial India were administered through the zamindari system. In other areas that were under direct British rule had what was called the raiyatwari system of land settlement (raiyat means cultivator in Telugu). In this system, the ‘actual cultivators’ (who were themselves often landlords and not cultivators) rather than the zamindars were responsible for paying the tax. Because the colonial government dealt directly with the farmers or landlords, rather than through the overlords, the burden of taxation was less and cultivators had more incentive to invest in agriculture. As a result, these areas became relatively more productive and prosperous.