Land scarcity will perhaps be the single greatest constraint to India’s development.
The Budget has has many schemes for landless labourers who are, more often than not, marginal farmers. Their entitlements become important. Agricultural labour cannot be separated from land in rural India. Let’s look at statistical base. The NSS Usual Status defines an agricultural labourer as a person offering labour or looking for work for defined periods in a year or a week, as the case may be. On the other hand, labour time disposition data is aggregated in terms of time and not individuals, and works with half days in a week. Some half days could be spent on farmland or in a kitchen garden in homestead land. Census definitions approximate Usual Status definitions. Some clever reform officials doubt national statistics, so employment is counted from pension entitlement statistics rather than economic structure.
Indira Gandhi recognised the importance of homestead land for housing programmes. Her successors continued that tradition. In the larger policy context, special provisions were made to protect landless labourers in land acquisition for non-agricultural purposes. As we move over to non-agricultural growth as an overriding priority, these nuances of ‘protecting’ the rights of landless labourers become diffused, if not ignored, in policy objectives. The vent for surplus models of growth have little scope for such concerns.
Land scarcity is going to be perhaps the single greatest constraint to development and has been seen as so. Local bodies were traditionally the repositories of what are called common resources. Those who work or live off a resource are obviously the first to be affected and need to be consulted. We need to build models of cooperation rather than clash. These are not simple matters, and while best practice cases exist, we do not, as yet, have working systems. The idea that land is not an economic good in the market which lies behind the tenancy legislation is irrelevant in practice, for the greatest change that has taken place in rural India is that land was also being transferred voluntarily from very small peasants to middle peasants, in what was called “reverse tenancy”.
The Budget is full of schemes for housing, pensions, access to exciting e-markets and so on. The central principle we have to work on is whether the small farmer and/or the landless labourer stakeholder will be a part of the institutional process of organising agriculture or not? I also believe that such stakeholder participation is efficient, but I am sufficiently well-trained in economics to accept that this is a concept of dynamic and not short-run efficiency.
Tenancy records have to be straightened so that tenants who farm around two-fifths of the land can leverage their assets in bargains with the corporates. Some want to operate from the farm to the fork all by themselves if allowed to, which is seldom, while others span the whole range, but don’t enter the field or the last line retailer. In fact, with large foreign tie-ups, some have explicit strategies of strengthening producer companies as also the mom-and-pop stores.
Even if distribution is corporatised, as proposed by FDI in retail trade, there will be the need for the kinds of strategic policies that China followed of integrating of informal sector distribution and artisan-based urban activities with supermarkets. The growth strategy of the NDA government is very clearly stated. It is unequivocal and it is unconditional. The NITI Aayog has given a refreshingly new focus on thinking on industrial policy. It has repeated a classical perspective on the manufacturing sector as an engine of growth and the need to remove many cobwebs from the industrial policy environment. It begins its analysis of the manufacturing sector by underlining that India’s manufacturing sector is low productivity and low wage. It points out that China’s industrial productivity per worker is three times that of India. Small firms employing less than 20 workers account for 72% of employment but 12% of output in the manufacturing sector. “Our workers are overwhelmingly employed in low productivity and low wage employment,” (NITI Aayog, 2017, p.31). The NITI Aayog is clear that cobwebs must be removed and we need more formal sector jobs. Recent trends bring out the underlying text. But the link with inclusive growth should be restored.