India is today at an inflection point in her long history. With an economy growing in excess of 8%, she is well poised to quadruple her GDP to around $6 trillion over the next 20 years. This rapid growth has the possibility of solving the challenge of poverty, which has eluded us for over 250 years. As an agrarian economy in the midst of a transformation to a modern industrial one, India has to find a solution to 52% of her population depending on agriculture, making up only 15.7% of GDP, growing slowly at 2-3%, while the rest of the economy grows at over 10%. This obviously calls for greater industrialisation, a much faster pace of urbanisation and a more productive use of land.
India has enough land, with a land mass of 264 million hectares, 160 million hectares of arable land and 125 million hectares of cultivated land. India is truly blessed having the second largest quantum of irrigated arable land, but with low productivity, less than 50% of world averages. So, the challenge for rapid economic growth is not the availability of land, not any fear of reduced food grain production but essentially of a shift of people from land to industry and of land use and the consequent pain of such a large change.
Land is an emotive issue. We are a people who are traditionally attached to our farms, a country of villages, a country which reveres its land as a mother. Our roots are in our villages even though 35% now live in urban areas. Rapid industrialisation and the creation of job calls for greater use of land for industry, obviously impacting the current owners. After independence, to protect our people, our founding fathers put restrictions on ownership of land, making land an illiquid asset, abolishing Zamindari and bringing in land reforms to give land to the tillers and to empower them against feudal interests, making the State the sole authority to acquire and dispossess people of their land in public interest.
In the absence of a liquid land market, this obviously led to low compensation and impoverishment of our farmers. Today, there is resistance to the State acquiring land for industry and our farmers have understood well the debilitating impact of being dispossessed of their land.
We also have now an active environment movement with an activist polity which aims to protect our environment while also promoting growth. Land, industry and environment have become an almost impossible trinity, very often at loggerheads, on top of which is a political and industrial class which sees acquisition of land as the shortcut to immense riches, the makings of a great tragedy which may deprive India and her people, the best opportunity of economic development ever in her long history.
The solution lies, as everything in our society, in greater empowerment of all citizens. First, we need to empower our people so that they have the unfettered right to sell their land at the best price to any buyer of their choice. Our current laws have restrictions on land use, on our ability to buy and sell land and the State acts as an oppressive agent in between, fostering corruption and enhancing transaction costs.
Second, we need to improve our road network such that industry can spread out and buy land at lower costs at a distance from our cities without compromising on their access to markets and a speedy supply chain. This will overall reduce costs, improve productivity, and enhance growth. It will also enhance the value of marginal land greater enhancing the wealth of more citizens.
Third, we need to make our environment laws more transparent, enhance self-certification and processes such that there is a speedier resolution of conflicts. Today, the law is hostage to vested interests from industry, government and civil society. Obviously, industries which poison our environment freely need stronger regulation and focus, but greater transparency, better self-certification and right standards should obviate the need for such high levels of government intervention which has bred corruption and reduced the velocity of growth and created bigger vested interests and hurt honest citizens.
Fourth, we need massive investment in skill development and in education. The great majority of our farmers do not want their children to become farmers nor can land offer them a decent living. Deprived of marketable skills and education, they are forced to remain on their lands, further sliding down the poverty curve. All of us, some time in the past had, our forefathers attached to the land eking out their living. But they had the courage to move away, or were forced to move away, but this move is what has made us today have an enhanced economic stature. If we were to stick to the land, all of us would be poor today. No society has developed with such a large percentage of its population rooted to the soil. Perforce we have to urbanise, industrialise, shift people out of their lands, skill them, educate them so that they can compete in a modern economy and prosper. It is this failure which is causing us such social stress and pain almost disrupting our social fabric, creating a million mutinies and armed movements and widening the gap between the urban and the rural, the middle class and the poor.
Fifth, we must tackle the challenge of low productivity of agriculture. We had the Green Revolution and saved ourselves because we trained our farmers in new methods, gave them access to technology and inputs. Since then, we have ignored training our farmers and are stuck with low productivity. In the US, 300,000 farmers produce enough to feed half the world! We need a new movement in India focusing on training and technology. This will reduce the demands on land, create income in the hands of our farmers and enhance the shift to a more educated society.
Lastly, we need more economic freedom. Today, the government as the intermediary distorts land values, prevents price discovery or the creation of a liquid land market, impoverishes our farmers by denying them the right price for their land, preventing them from exercising their right to property by bad laws, fosters cronyism and corruption, prevent rapid economic growth and has a non transparent environment policy which gives veto powers to a few! The State focuses on the enrichment of a few rather than carry out its constitutional obligation of ensuring the free exercise of our rights and of investing in skilling, educating, and empowering its citizens.