What was the impact of the Limitation Law passed by the British in 1859 on the ryots of the Deccan? 1. It stated that loan bonds would have validity…

The correct option is 2 only.

Explanation

The Limitation Law of 1859 was introduced by the British administration as part of the legal reforms following the transfer of power to the Crown. It was designed to regulate the credit market in the Deccan and address the issue of perpetual indebtedness among ryots.

Statement 1 is Incorrect:
The Limitation Law stipulated that loan bonds signed between moneylenders and ryots would have validity for only three years. The statement claiming a validity of ten years is factually wrong.

Statement 2 is Correct:
The legislative intent behind the law was indeed to check the accumulation of interest over long periods. The British authorities believed that limiting the bond's validity would enforce frequent settlements and prevent interest from spiraling out of control.

Statement 3 is Incorrect:
In practice, the law had the opposite effect. To prevent the debt from becoming time-barred, moneylenders forced ryots to sign new bonds every three years. During this renewal, the unpaid accumulated interest was added to the principal. Thus, the law effectively allowed moneylenders to compound the principal and interest, trapping peasants deeper in debt.

Key Takeaway:
The Limitation Law of 1859 limited the validity of loan bonds to three years. While intended to protect peasants, it was manipulated by moneylenders to enforce compound interest through the renewal of bonds, eventually contributing to the Deccan Riots of 1875.