Land-leasing: Where are the tenancy reforms?

June 9, 2020 3:20 AM

While the slew of reforms announced would, no doubt, empower the farmers economically, tenancy reform is arguably that ‘last-mile’ intervention that would complement these bold initiatives and enhance the equity and inclusivity of the resultant growth process.

 Computerisation of land records and their updation has to be top priority. It’s an open secret that a reform like land leasing requires strong political capital and commitment to the poor. Computerisation of land records and their updation has to be top priority. It’s an open secret that a reform like land leasing requires strong political capital and commitment to the poor.

By Arabinda K Padhee & Jugal Mohapatra

Agrarian distress in in the country, as studies indicate, has unfortunately manifested through a large number of farmer suicides. These are linked to production losses owing to natural calamities, shocks in farm income triggered by crash in commodity prices, default in repayment of agricultural debt, informality of land tenure, etc. As per the National Crime Records Bureau’s Accidental Deaths and Suicide in India 2016 report, released in November 2019, nearly 1,000 tenant farmers committed suicide during the year. Sadly, loss of lives of ‘informal’ tenants seldom gets attention.

The NABARD All India Rural Financial Inclusion Survey (2016-17) indicates growing tendency of agricultural households to lease-in land for agricultural use. All-India, 12% households leased-in agricultural lands. It is significantly higher in Bihar (28%), West Bengal (27%), Odisha (27%), UP (16%), Telangana (10%) and Chhattisgarh (9%). Interestingly, many of these states are key suppliers of interstate migrants (56 million, as per 2011 census).
As per 70th round of NSSO Report (2013), the share of small and marginal farmers in the total leased-in land is 52%, whereas the share of large farmers is only 7%. Figures for 2012-13 from this report indicate percentage of tenant holding for Andhra Pradesh (42.3%), Bihar (28%), West Bengal (21.7%), Odisha (20.6%) and UP (10.6%), with an all-India average of 13.7%. The all-India average of leased-in areas in tenant holdings is only 10.2%. Admittedly, incidence of tenancy is under-reported in these surveys as tenancy in most states is not permissible legally.

Efficiency and equity aspects
While experts have hailed the latest tranche of reforms unveiled for agriculture by the Centre as ‘game-changing’ and the ‘1991 moment for Indian agriculture’, we argue in favour of land tenure security as the cornerstone to achieve broader goals of inclusive agriculture growth. First, from the efficiency perspective, many empirical studies validate the hypothesis that, ceteris paribus, productivity of leased-in land can be comparable to that of owner-operated land. Legal recognition and formalisation of land leasing would enable tenants to access credit, insurance and high-yielding inputs. Tenancy reforms have the potential to raise agriculture productivity. From the standpoint of equity, small and marginal farmers, having a major share in the area leased-in, would have greater access to land in case tenancy is accorded legal recognition.

Tenancy & direct income support
In the first tranche of welfare measures, the advance release of Rs 2,000 under PM-KISAN directly to bank accounts was a major benefit to farmers. As per reports, Rs 18,253 crore has been disbursed to 9.13 crore farmers under PM-KISAN during the lockdown (till May 10). But this scheme has excluded tenants in the absence of authentic and credible database of tenant cultivators. Without a legal framework for tenant farmers, the benefits would never reach the poor. Access to inputs, credit and technology, besides insurance cover and crop damage assistance during a disaster, is a far cry for this vulnerable community.

Another spin-off from legalising tenancy would be to facilitate a paradigm shift in disbursement of fertiliser subsidy. This is a constraint that has held back switchover from product subsidy to delivery of fertiliser subsidy through DBT.
The package for agriculture and allied sectors under third tranche of Atmanirbhar Bharat includes measures to deregulate key commodities from the Essential Commodities Act—to enact a central legislation to free restrictions on interstate trade along with enforcement of quality standards and price assurance of agricultural produce through a facilitative legal framework (contract farming).

The package includes public investments to strengthen agri-infrastructure, logistics and capacity building, besides creating scope for private sector participation.

The reforms, if implemented in the right spirit and with the cooperation of states, can unleash growth of the agricultural sector. However, the land leasing legislation missing from the list is disappointing; it’s a significant omission. Even though land is a state subject, the package could have addressed this structural issue with suitable tweaking to bring the states on board at one go. The finance minister in this year’s Budget had proposed to encourage state governments to undertake implementation of model laws issued by the Centre such as Model Agricultural Land Leasing Act, 2016; Model Agricultural Produce and Livestock Marketing (Promotion and Facilitation) Act, 2017; and Model Agricultural Produce and Livestock Contract Farming and Services (Promotion and Facilitation) Act, 2018. The Covid-19 stimulus package offered that unique opportunity to push these reforms.

Nudging the states
Land reforms by many states, post-Independence, consisted of abolition of intermediaries, redistribution of ceiling surplus lands to poor and consolidation of landholdings. Now, with the dynamics of agricultural development, reducing landholding size and the need for occupational mobility by taking surplus manpower from agriculture, land leasing is viewed as an ‘economic necessity’ and not merely as a feature of ‘semi-feudal agrarian structure’.

Various think tanks and government panels have advocated legalisation of land leasing to bring private investments into the sector and conserve agricultural land. Since 2016 , the NITI Aayog has circulated a Model Land Leasing Act to all the states. It has given a flexible template to the states to design state-specific legislations. Rent on leased land, period of lease, etc, have been suggested to be freely negotiated by the parties concerned (landowner lessors and lessee cultivators) without any interference from the government.

Small and marginal farmers (86% of farm households) contribute significantly to India’s food basket. Initial impressions and anecdotal evidence suggest that a section of migrant labourers who have returned to their villages during the lockdown may not go back to their host states in the near term. They may prefer to work in their marginal farms or in other wage employment opportunities in nearby towns. In such a scenario, a policy framework on land leasing would enable these small holders, migrant labourers and landless workers to ‘lease-in’ land from the absentee landlords willing to lease-out.

While the slew of reforms announced would, no doubt, empower the farmers economically, tenancy reform is arguably that ‘last-mile’ intervention that would complement these bold initiatives and enhance the equity and inclusivity of the resultant growth process. Computerisation of land records and their updation has to be top priority. It’s an open secret that a reform like land leasing requires strong political capital and commitment to the poor. Hence, the Centre must ‘nudge’ (with appropriate incentives) the states to come on board to bridge this missing piece of agricultural reforms. The sooner the farmers get the benefit of reforms, the better.

 

Padhee is country director, ICRISAT, Mohapatra is former Chief Secretary, Odisha. Views are personal

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