In the book 'Punjabi Century' we have a chapter 'Canal Colonisation and Socio-Economic Change'. The Chunian Colony was the next project situated in southern part of Lahore district. It was settled in two stages, between 1896-98 and 1904-06. Like its two predecessors, it was a small colony, with an allotted area of 103,000 acres. It was irrigated by an extension of the Upper Bari Doab Canal, which watered proprietary lands in Amritsar and Lahore districts. Eighty per cent of the land was allotted in the form of small holdings of up to 50 acres, known as 'peasant' grants. Grantees were pre-dominantly from within Lahore district, among them Jats and Sikhs were the best represented. In the area colonised in 1896-98, they comprised around 35 per cent of the grantees.

Apart from peasant colonisation, other forms of land utilisation was also adopted in Chunian, which were to continue on a much larger scale in later colonies. Around 12,000 acres were sold by auction. For the state, auctions were a far quicker method of obtaining returns on investment, but they were without most of the political benefits to be derived from land grants. Also allotted were 5,000 acres in 'civil' grants, ranging in size from 50 to 250 acres. The recipients were retired government officials, rewarded for their administrative services. Also, around 2,000 acres were allotted to military pensioners, whose share was to increase significantly in later colonies. In addition to the 'peasant' grants, Sikhs obtained land through other categories as well.

It was with the opening up of Lower Chenab Colony in the Rachna Doab that agricultural colonisation assumed significant importance for the recent history of the Punjab. This was the largest of the canal colonies, with an allotted area of over two million acres. Colonised between 1892 and 1905, with further extensions in the late 1910s and 1930s, the colony entirely took up the newly-created Lyallpur (now Faisalabad) district carved out of Gujranwala, Jhang and Lahore districts. The colony also extended into other contiguous areas in these three districts. The lower Chenab Canal subdivided into three major networks, those of the Rakh, Jhang and Gugera branches, which were colonised in sequence. The colony headquarters, Lyallpur, was a completely new town, and in time became an important market centre, overshadowing older towns like Jhang and Chiniot. After 1947, Lyallpur became a major centre for Pakistan's emerging textile industry.

The proprietary claim of the indigenous Jangli population having been discounted, this vast area was categorised as Crown or state waste-land. It was open to the administration to allocate the land as it wished. Three basic types of grants were adopted: peasant or abadkar (40-50 acres); yeoman or sufedposh (50-150 acres); and capitalist or rais (150-600 acres); peasant grantees received around 80 per cent of the allotted lands, making the colony an area held predominantly by small holders. Yeoman and capitalist grantees were allowed to acquire proprietary rights, after a qualifying period of five years.

Peasant grantees, however, were intended to remain as occupancy tenants, with the state retaining ownership of these grants. This relationship of owner and tenant was also reflected in a host of contractual regulations concerning a variety of agrarian and civic practices. Examples ranged from regulated inheritance to the proper maintenance of abadies, field boundaries and water channels.

These 'terms and conditions' were resented by the colonists, who regarded them as arbitrary and unjust, and subject to arbitrariness from the subordinate native bureaucracy that was responsible for their enforcement. Within a few years of settlement, a political agitation built up in the canal colony villages, with the demand that these tennurial conditions be lifted and proprietary rights allowed to the peasant grantees. The government was not willing to alienate its beneficiaries. After a commission of enquiry, it acceded to these demands. This relapse of the state's interventionist role was embodied in the Colonization of Government Lands (Punjab) Act, 1912. The grantees became proprietors and they could revert to traditional practices and arrangements (as over in heritance), rather than conform to the many stipulations through which the British had intended to raise them to 'a higher level of civilisation.'