According to the passage, the permanent settlement vested :

revenue collecting rights to zamindars.

land ownership rights to the state.

land ownership rights to zamindars.

customary rights to peasants.

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Answer is Wrong!

This question was previously asked in

UPSC CAPF – 2010

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According to the Permanent Settlement, introduced by Lord Cornwallis in 1793, the zamindars were recognized as the proprietors or owners of the land. They were given ownership rights, which were heritable and transferable, in contrast to their previous position which was often that of revenue collectors or intermediaries with more limited rights.

The Permanent Settlement established a fixed revenue demand that zamindars had to pay to the state, irrespective of the actual collection from the peasants. Failure to pay the fixed amount by the sunset date (Sunset Law) led to the auctioning of the zamindari. This system aimed to ensure a stable revenue for the company and create a loyal class of landowners.

While the zamindars were granted land ownership rights, the rights of the actual cultivators (ryots) were not clearly defined and were often neglected, leading to their exploitation by the zamindars through arbitrary rent increases and evictions. The Permanent Settlement was primarily implemented in Bengal, Bihar, and Orissa.

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