Land Reforms in India
BIBIN THOMAS
One of the most ticklish questions in Indian economy has been the nature and relevance of land reforms. Advocated and implemented for decades as a major instrument of state-mediated and progressive socio-economic change, the very utility of land reforms has increasingly been questioned in the post-1991 reform era. Comprehensive land reforms were among the first priorities of the Government of India immediately after Independence
With the twin objectives of achieving social equity and ensuring economic growth, the land reforms programme was built around three major issues:
1. Abolition of intermediaries.
2. Settlement and regulation of tenancy.
3. Regulation of size of holdings.
The central thesis behind the abolition of intermediaries, underlined by the first as well as the Second Five Year Plan, was that owners themselves should operate and manage farm business, and so the tenant-landlord nexus should be put to an end. The intermediary’s privileges were conceived as having an adverse impact on agricultural productivity as well as denying the tiller of the soil his rightful place in the economy. ‘Between 1947 and 1954 … a law for the abolition of the zamindari system was adopted [passed] by the state legislature and then ratified by the President of India. However, these acts of agrarian reform did not affect landownership in the ryotwari areas where system was in existence, i.e. 57 per cent of the country’s occupied land.
Tenancy reforms were launched to confirm the rights of occupancy by tenants, regulate rents on leased land and to secure their possession of tenanted land. It was argued, especially in the context of the spread of modern technology, that the tenants lacking a security of tenure and paying excessive rents suffer a relative decline in inputs compared to the owners. To this end the following recommendations were made by the Chief Ministers’ Conference in 1967:
1. The rate of interest should not be more, preferably less, than 1/4 or 1/5 of the gross produce.
2. Records of tenancy should be prepared and maintained.
3. Tenants in cultivating position of land should be given complete security of tenancy by: i) staying all evictions; ii) suspending rights of resumption where such rights had been given to landowners; and iii) regulating voluntary surrenders in such a way landowners do not get an advantage by persuading tenants to surrender their tenancy.
The third major land reform plank was regulating the size of land holdings through ceiling as well as consolidation to correct the extremely skewed distribution of agricultural land. It was designed to (i) to meet land hunger of working cultivators, (ii) to reduce the disparities in agricultural income, ownership, and use of land, and (iii) to increase rural employment in the sector. At the same time, consolidation of holdings was also advocated to group together the numerous tiny and scattered holdings of poor cultivators in order to form bigger tracts, susceptible to more efficient management. Cooperative farming on these would increase productivity and employment through economies of scale. The large, economical units of consolidated land, it was opined, would mitigate the problem of poor yield and enhance productivity through economies of scale and also increase employment.
Of all these laws only the abolition of intermediaries was achieved successfully. The bulk of the zamindars’ lands were alienated: 87% in Uttar Pradesh and 84% in Bihar for instance; and the landlord class lost close to 60% of the land it had owned previously. However, it was achieved at a great cost to the Exchequer as the compensation to the intermediaries came to be some 7,000 million rupees. The source from which these compensation payments were drawn was the land-revenue paid to the state by the ex-tenant farmers now farming on the land alienated from former zamindars’ estates. In most cases the tenant farmers continued to pay the same land-rent as before, but now to the state direct.
As to the implementation of the two other sets of reforms, namely tenancy and regulation of land holdings, legal, administrative, and other factors became principal bottlenecks. In most cases and for a long time, the factual evidence and administrative machinery for enforcement of the laws just did not exist. For instance, land policy in the First Five Year Plan was formulated without sufficient knowledge about the size and distribution of agrarian land holdings. It was in the 8th round of the National Sample Survey in 1954 that a considerable volume of data was collected for the first time; this too was submitted to the Union Government only in 1960, a full six years later.
On tenancy reforms, from a lifetime of study, P. S. Appu has concluded that the laws have not put an end to absentee ownership of land, nor has it led to the disappearance of tenancies. Being a state subject, there have been striking differences in the track records between the various States in the formulation and enforcement of the reform measures. It was not before the Operation Barga in 1978, for instance, that tenancy reforms met with any noticeable success in West Bengal , and then overtook the rest of the country in a most spectacular manner. If political will is taken as the main reason behind the success of tenancy reforms there, the absence of such a will must be held responsible for its failure elsewhere. Taking the country as a whole, by 1992, ownership rights over 14.4 million acres of land have been conferred on some 11 million tenants. That constitutes, however, no more than 4% of operated area. The seven States of Assam, Gujarat, Himachal Pradesh, Karnataka, Kerala, Maharashtra, and West Bengal account for 97% of the beneficiaries. Practically no benefits accrued to the tenants in the other states.
An ambitious movement to achieve redistribution of land, called Bhoodan, was launched by a prominent Gandhian Vinoba Bhave in the early fifties. ‘The essential feature of this movement was the voluntary requisition of land which was subsequently redistributed among peasants who owned little or no land at all.’ Launched in the Telangana region to counter the militant peasant struggle there, the Bhoodan movement made some notable headway in Bihar and Uttar Pradesh, where, by 1955, the landlords voluntarily relinquished over 4.3 million acres. However, most of this land ‘proved unfit for cultivation’ whenever it was not disputed property. The second phase of the movement was Gramdan, the giving away of the whole villages, which would belong to the village community as a whole. The movement was virtually non-existent beyond a handful of tribal pockets where private property in land did not matter in any case.
It is in the field of redistribution and consolidation of land holdings that the reforms have met with the least success, mainly because they met with a most determined resistance from the very substantial and politically influential landed interests, quite unlike the handful of politically isolated intermediaries. It was not before mid-1960s that ceiling laws could be passed in the majority of states. Even then enough loopholes remained which enabled landlords to circumvent legislation ‘while in the remainder they had still to pass through the various readings in the legislatures’. Even after the law, ‘the landlords succeeded with little difficulty in circumventing the new laws making full use of the numerous loopholes in them.’ For instance, the law allowed division among the members of a joint family, by taking recourse to which the total holdings of landlord family remained several times over the legal limit. ‘As experience was to show, after the “ceiling” acts had been applied in Andhra Pradesh and Bengal , hardly any surpluses were revealed.’ By 1992, only about two million hectares of surplus land, amounting to less than 2% of the operated area on a pan-Indian scale with very wide regional differences, could be distributed to some 4.76 million beneficiaries.
As the land reforms reach an impasse, a series of considerations have raised serious doubts about their continuing relevance as to whether they are really the best way for achieving growth with general well-being and whether they are in harmony with the ongoing liberalisation of Indian economy. Demographic and economic forces have proved more effective than legislation in bringing about a redistribution of land in favour of medium and, and even more, marginal farmers. The latter, it is said, now dominate the agrarian landscape in most of India
On the other hand, widespread poverty and hunger remain. In particular, the plight of the landless or near landless, whose number has steadily grown over the decades and is estimated to constitute almost half the agricultural population, requires urgent attention. Above all, agricultural growth has, in general, been sluggish in India
Many critics such as V. M. Dandekar argue that the ceiling and tenancy laws not only do not have much relevance in this sorry state of affairs but also must share part of the blame at least for perpetuating them. The most critical long-term impact of the ceiling law has been, as pointed out by Hanumantha Rao, that it killed the land market, and thereby the scope for investment in land, by preventing an increasing concentration in landholding through depeasantisation. ‘The same is true’, Dandekar says, ‘of the present tenancy laws which have practically abolished lease market in land’.
Among the alternative policy prescriptions that have been put forward, those of Dandekar constitute the most radical departure from the prevailing policies. Dandekar advocates exposing agriculture to the full play of market forces through either an outright abolition or gradual relaxation of the ceiling and tenancy laws. His is essentially a plea for unrestrained growth through modernisation of agriculture that will bring benefit to all, if differentially.
From a similar perspective, another prescription is to encourage corporate sector to enter agriculture for commercial production of high-value and processed agricultural products, and earn thereby valuable foreign exchange. The corporations should set up agro-processing units in the rural areas and help in diversifying agriculture, encourage contract farming, and also develop infrastructural support in the area of their operation.
Once the market forces are fully unleashed and business people from outside begin to invest in the agricultural sector, it would also become necessary to impose agricultural income tax and agricultural holding tax. These taxes then could be used, among other things, to build up infrastructure and provide employment in the countryside.
Such prescriptions however cannot be assessed in terms of their economic soundness alone. One must also take into account their implications for employment as well as recognise the social, political, and cultural milieu in which they have to operate.
Expert opinion is divided on the question of employment. Some fear that modern technology being generally labour saving and capital intensive, its introduction will aggravate further the unemployment problem. In support, studies by S. K. Ray and others are cited showing that the employment elasticity of output in agriculture has fallen sharply in the post-new technology agriculture. However it does not necessarily imply an aggravation of the problem; it just means that a growth in productivity does not lead to a proportionate increase in employment. On the contrary, data show a threefold increase in the number of agricultural labourers in Panjab between 1961 and 1981, the increase in demand having to be met by large-scale migrations from eastern UP and Bihar . Fears of increasing unemployment due to mechanization have not materialised so far. The victims of tractorization, it has been well said, were bullocks, not labour.
In the end, the social and political costs of the policy prescriptions will need to be carefully examined. By all reckonings, while poverty and hunger may become a thing of the past, the distribution of income would tend to be more skewed. This may become a cause of serious concern through the social friction that it would intensify. Ultimately, the success or even the initiative for such policy measures would depend on the extent to which our decision-makers believe them to be compatible with the politics of competitive populism.
Prepared by,
BIBIN THOMAS
BA ECONOMICS
ST.THOMAS COLLEGE PALA
bibinbtp@yahoo.in
