Why India needs a land leasing framework

Ensuring food and nutrition security and tackling the looming threat of climate change makes land reforms necessary.

Restrictive land leasing legislations in many parts of the country have led to informal and concealed tenancies without security of tenure

PM-KISAN (Pradhan Mantri Kisan Samman Nidhi) is one of the largest income support schemes for small-holder farmers in the world. A targetted support to the agriculture sector is always a welcome move. However, the initiative does not cover landless agricultural labourers and the sharecroppers/tenants, thanks to unavailability of credible records. As per the Agriculture Census 2010-11, there are 138.35 million farm-holdings in India, of which 92.8 million are marginal (<1 ha) and 24.8 million are small (1-2 ha). Even though small and marginal farmers account for more than 85% of total farm holdings, their share in operational area is only 41.2%. About 1.5-2 million new marginal and small farmers are added every year due to law of inheritance. Predominance of smallholders demonstrates their importance in the agriculture policy landscape. Besides, agricultural landless labourers; pastoralists; fishermen and sharecroppers/tenants/lessee cultivators equally contribute to agricultural growth and deserve special attention.

Land reforms in India have not been successful across several states, with the exception of Operation Barga in West Bengal. The land reform legislations in post-Independence India consisted of redistribution of surplus land from the rich to the poor, abolition of intermediaries, security of tenure to tenants (and tenancy regulations) and consolidation of landholdings. Agricultural productivity and farm-size are inversely related; therefore, policies must raise land productivity through appropriate technologies. It is equally important to legalise land leasing to enhance farm efficiency.

Many studies have established direct linkages between tenure security and income security. Ensuring land leasing through a legal framework incentivises tenant cultivators to invest and conserve agricultural land resources, which, in turn, leads to increased land productivity and profitability. Recently, the NITI Aayog recognised that land lease should be viewed as an “economic necessity”, not mere “feudal agrarian structure”.
Enacting appropriate land leasing laws should be the highest priority of state governments. Such pro-farmer moves (though often viewed with suspicion by political executives and influential groups within the farming communities) are expected to benefit Indian agriculture and, ultimately, raise farmers’ incomes. The committee on Doubling Farmers’ Income (DFI) of the Government of India has also recommended legislating the model Agricultural Land Leasing Act (brought out by NITI Aayog) to ensure private sector investments in agriculture. The bottleneck of credit flow to lessee farmers/sharecroppers/tenants could be addressed by legalising land leasing, as land is often used by lending financial institutions as collateral for farm loans. The existing legislations on land revenue matters are diverse and complex across the states. The model Land Leasing Act doesn’t specify the rent on leased land and the period of lease and has rightly left it to the concerned parties in the land lease market (landowner lessor and lessee cultivators) without any interference from the government. Few states like Madhya Pradesh, Maharashtra and Uttarakhand have implemented the suggested land leasing legislation with some modifications suiting local contexts. States like Odisha and Uttar Pradesh are considering amendments to their existing revenue laws to legalise land leasing. There is no legal ban on leasing in a few states viz. Andhra Pradesh, Tamil Nadu, West Bengal and Rajasthan. There are few states like Odisha, Karnataka and Uttar Pradesh, where specific persons/institutions (armed forces personnel; privileged raiyats) are permitted to lease out their agricultural lands.

Restrictive land leasing legislations in many parts of the country have led to informal and concealed tenancies without security of tenure. This has ultimately resulted in impeding investments in the agriculture sector and, thus, impacted agri-productivity. The fear of agricultural lands falling into the hands of the sharecroppers after a specific period (due to restrictive clauses) has also led to large chunk of lands (as high as 25 million hectares, as per some estimates) remaining fallow in the country. With an enabling framework, legalising land leasing could correct such anomalies. With rising levels of income, the prices of agricultural lands are going up and, therefore, landless agri-labourers and small/marginal farmers can’t afford to purchase new parcels of lands. Land tenure security and collective farming are also in the interest of smallholder agriculture. From the evidence in India and the rest of the world, ensuring poor people’s access to the land lease market could prove to be a gamechanger for enhancing farmers’ income. However, such a big-ticket reform needs strong political will and demands corruption-free implementation.

Another important aspect is ensuring effective modernisation and digitisation of land records. The computerisation of land records, land-property transactions and the registration processes has not matched the challenges of land revenue administration so far. The process of mutation and updating of land records has been slow in many states. The poor maintenance of land records and slow pace of digitisation of land revenue administration is negatively impacting agriculture. High resolution satellite imagery coupled with ground truthing has also been suggested for the survey operations. Aadhaar is uniquely positioned to assist the ongoing process of modernising land records to validate land assets. As land ownership in India is presumptive, moving the existing system to one of state-guaranteed conclusive titles is often advocated. However, the proposed titling would require a massive upgradation of land records and existing processes through computerisation, capacity building of stakeholders and amending the appropriate land laws. This can be carried out in the PPP mode, as already demonstrated in few states of India. Police records in many Indian states show that land disputes are the reason behind a sizeable chunk of cognisable offences (as high as 40% in Bihar) and, therefore, an updated record of ownership would help farmers avoid land-related litigations.

Ensuring food and nutrition security and tackling the looming threat of climate change makes land reforms necessary. A land reforms agenda, particularly the land leasing legislations and updated land records, should receive the highest priority to increase incomes of smallholders, tenant farmers and sharecroppers.

About the authors:

Dr Arabinda Kumar Padhee

&
Dr Pramod K Joshi
Director for South Asia, International
Food Policy Research Institute (IFPRI)