Macroeconomics

A'new' land reform policy in India?

  • Blog Post Date 11 October, 2013
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Dilip Mookherjee

Boston University

dilipm@bu.edu

The Ministry of Rural Development has recently issued a draft of a new National Land Reform Policy. In this article, Dilip Mookherjee discusses the key features, and presents his views on the pros and cons of the draft policy.



In July 2013, the Ministry of Rural Development issued a draft of a new National Land Reform Policy1 . It is being described by the media as a draft of a bill that the current government intends to introduce in Parliament. Is this a sign that India will at last make a serious attempt to deal with a longstanding problem responsible for perpetuation of widespread poverty, high inequality and agricultural stagnation?

Distributing land to the poor

Most of the draft Bill deals with land distribution to the poor. On this dimension, it echoes previous land reform legislation in the country in being full of pious hopes and utopian socialist ideals, with little chance of any actual impact. The basic fact is that this is a state subject, and subject to political will of state governments, which is essentially lacking, except in a few states which have already done what they could.

It ignores the fact that many states are sitting on land which has been appropriated from those with more than the ceiling, and which has not been distributed to the landless. No one knows for sure what is happening to this land, but most reports from the media and even land officials, say that the land is being illegally used by local parties and politicians in various ways, such as leasing out to earn rents, or allotting on a discretionary basis to whoever they personally favour. Or it lies fallow. Large and medium farmers do not want this land distributed to the poor for fear that it will jack up wages at which they hire workers, and empower poorer sections who they would rather keep in a subordinate position.

Dismal state of land records

The other reality the draft Bill ignores is that it is very difficult for any government to identify who owns how much land. So it is hard to enforce ceilings, or identify the genuinely landless. The fundamental reason is the sorry state of land records. The last cadastral surveys were carried out under the British colonial administration - there have been none in Independent India. Such is our real commitment to land reform! Land records are kept on a plot by plot basis, so it is hard to know how much one individual (and even more so one household) owns. There are innumerable benami records. No one really knows how many members there are in any given household. The nature of land (for example, whether or not irrigated) are based on surveys conducted in 1940 and hence, are utterly unreliable. And then, given the state of our courts, appeals will mount and take decades to settle. Landed households have shown repeatedly there is no end to the legal manoeuvres and delaying tactics they can adopt to stall any concrete action. In this environment, any attempt to enforce land ceilings or identify the genuinely landless is a utopian exercise.

What will it take to straighten this? The large and difficult step is identification of existing lands, households and their current status, which will require extensive consultation with local communities by a state government with the requisite political will. It required a social movement in West Bengal when the Left Front started the exercise in the late 70s. This has to be followed by computerisation of the records, a single window registration process thereafter for adjustment and transfers, and simplification and streamlining of the land revenue system, which is currently encouraging a lot of illegal land transactions.

The draft Bill does propose some initiative along the latter lines (but only towards the end of the document, almost as an afterthought). In this one respect the Central government can actually help, by developing the necessary information systems, training state government personnel, and providing state governments with fiscal incentives for computerisation and modernisation of land records. Legal reforms will be necessary in the High Courts, and the Centre could develop suitable blueprints.

But the Centre is quite powerless to induce state governments on the first and more difficult step, as that depends ultimately on political will of state politicians. Unless it is prepared to enlarge the scope of fiscal assistance to state governments in the next Finance Commission on condition that they carry out the necessary land surveys.

Registration of tenants is fraught with the same difficulties. Identifying who is leasing to whom is very difficult for the government, or anyone who is an outsider to the village. Attempts to enforce tenancy registration end up driving most tenancy underground. It is resisted vigorously by owners who tend to be politically more powerful. To the extent that it is implemented, it increases the outside options of tenants. For those registered, it helps increase productivity and lower poverty, as shown by studies of the West Bengal tenancy reforms in the 1970s and 80s. But one needs the political will and administrative ability to enforce, which is typically lacking. It is also unclear how much tenancy there still is in the country - it has been shrinking over time and accounts for less than 10% of operational holdings nation-wide (National Sample Survey (NSS) data).

Distress sales

There are many other areas where laudable goals are followed by an utter lack of serious thinking. To deal with distress sales, it is suggested that a credit facility for poor landowners in distress be developed. There are no further details. Given the well-known difficulties of lending to the poor, combined with the difficulties of identifying the poor, and who is in distress and who is not, and the obvious fact that these loans will be money giveaways in practice, this is an utterly quixotic suggestion.

Land acquisition

The other big issue is land acquisition, an issue on which I have laid out my views in previous columns. Setting the compensation amount at four times the market price is not just draconian, arbitrary and heavy-handed, it avoids the question of how ‘market price´ will be assessed based on land records that are based on British-time surveys.

The ceiling limits on exemptions for religious, education, charitable institutions to a single plot of 15 acres are patently ridiculous. There will be a further proliferation of institutions opened under different names to circumvent this regulation, while genuine charitable and educational institutions will be stymied.

Forest Rights Act

There is a lot of space devoted to the 2006 Forest Rights Act. Yet hardly any thought to why (or even the awareness that) its implementation has been so slow. A recent study by E. Somanathan (Indian Statistical Institute, Delhi Centre) and his collaborators in Udaipur district finds less than 3% of intended beneficiaries have benefitted, and less than 1% of forest land has been transferred2. It seems the majority of claims have been filed by those not deserving, while the process set up has deterred most of those deserving to come forward to file a claim. The draft Bill proposes involving local panchayats and gram sabhas, which makes sense. But whether this makes a real difference depends on how well these local institutions are functioning.

Consolidation of land

One area where progress could be achieved is consolidation of land, where the government helps owners with fragmented plots to exchange holdings. Uttar Pradesh seems to have made some progress in this respect, and other states could be encouraged to make similar efforts. This is one area where there will be little or no political resistance, as it ends up in a win-win for everyone. This is one area where the Central government could actually make a difference, by developing blueprints and providing technical assistance to the states. In my own field experience, there is a huge demand from landowners for consolidation, as the fragmentation of properties is now widespread with individual parcels too small to be economically viable. Yet, this important issue is ignored in the draft bill.

A version of this column has appeared in Business Standard.

Notes:

  1. http://rural.nic.in/sites/downloads/latest/Draft_National_Land_Reforms_Policy_July_2013.pdf
  2. http://www.theigc.org/publications/working-paper/exploratory-research-impact-forest-rights-act-2006-deforestation-tribal
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