As India aims to attain $ 5 Trillion economy, major reforms are needed in all four major pillars of economy, these are land, labour, capital & organisation. The present dispensation has initiated reforms in 3 out of these 4 segments viz labour reforms have been started by simplifying labour laws. Bank mergers and bank privatisation, public listing of LIC, creation of bad banks is being contemplated which will help to improve lending and capital formation, on the organisational front our entrepreneurs and start-ups have proved their mettle in developing world class organisations.
One major reforms which is yet to take off from the drawing board is Land reforms, which has the potential to bring huge prosperity to rural population, in absence of Land reforms we find that a large segment of rural population migrating to urban areas in search of employment, in spite of owning land which could have been leveraged to generate low-cost capital
Before colonial rule, land used to be in the hands of community. The British introduced permanent settlements and appointed landlords who came to be known as zamindars or jagirdars, they paid a fixed commission to East India company. Farmers purchased land from zamindars and gave it on hire for cultivation to tenants, there were also landless labourers who tilled the land in return for remuneration.
The tenants paid rent in cash or crop or a mix of both. Thus, the zamindars formed an intermediary between the state and the farmers and they in turn appointed a series of intermediaries to collect rents, this led to exploitation of frmers, abandoning of agriculture and migration of population from villages to cities.
The colonial rulers treated land only as a source of revenue, so much so that the district administrators came to be known as “District collectors” a nomenclature which is still in use.
Land reforms -Post Independence
Due to exploitation of the rural population with the introduction of intermediaries, widespread movements happened for the rights of sharecroppers and landless labourers in pre- and post-independent India.
The “Tebhaga” movement in the 1940s pressed for reducing share crop payment to the zamindars. The movement was primarily concentrated in the Bengal province. At that time the sharecroppers had to give half of their produce to the landlords, the demand of the movement was to reduce this to one third, subsequently this movement led to enactment of major land reforms in West Bengal viz Operation Barga which led to giving land rights to sharecroppers.
The constitution also listed land as a state subject which led to dissimilarity in land reforms across states, this affects industry and investment as investors must deal with different policies in different states.
Decreasing size of Land holding: – Over the years the benefits from land reforms started diminishing as property got divided among the children of landowners thereby reducing the size of land holdings, this coupled with archaic laws prevented the sale of agricultural land for non-agricultural use, which prevented the farmers to leverage their land and take loans.
As per the 10th agricultural census 2015-2016, there are five kinds of land holdings in India according to the sizes, which are as follows: –
|Sl No||Size-Groups||Classes (In hectares)|
0.50 < 1.00
|2.||Small||1.00 < 2.00|
3.00 < 4.00
|4.||Medium||4.00 < 5.00|
5.00 < 7.50
7.50 < 10.00
|5.||Large||10.00 < 20.00|
20.00 & above
Source: All India report on agriculture census 2015-16
The average size of holdings had shown a continuous decline over all the census periods from the fact that in 1970-71 it was 2.28 hectares, which reduced to 2.00 hectares in 1976-77, 1.84 hectares in 1980-81, 1.69 hectares in 1985-86, 1.55 hectares in 1990-91, which again declined to 1.41 hectares during 1995-96, 1.33 hectares in 2000-01, 1.23 hectares in 2005-06, 1.15 hectares in 2010-11 and 1.08 hectares in 2015-16.
Small and Marginal holdings constitute 86.2 % of total land holdings at present,13.2 % is medium and rest is Large land holdings.
Title deeds -An Inconclusive proof of land ownership
Land ownership is determined based on title deeds in states, the title deed is not conclusive proof of ownership, it is only a transfer of title, as a result banks also insist for other collaterals apart from title document while sanctioning loans, as a result, only 3 % of private and public land is leveraged for capital. Absence of conclusive ownership title has other impacts as well, about 60 -70 % of court cases are clogged by land related disputes, migrants labour leaving their family behind in the villages due to fear of losing their property to land grabbing by relatives or land mafia.
Use of Technology to resolve legacy issues in Land reforms
The issues plaguing landowners can be solved with the extensive of technology, at present 23 states have digitised their land records and land registration process, under the Govt of India’s Digital India Land record modernisation programme (DILRMP),
India must move from description of property by tahsildars or registrars to digitally geo tagged land boundaries with the help of drone and linked to the owner/s Aadhar, this will also lead to identification of Ghost owners and weeding them out, the title should be authenticated by the government which will lend credibility to property documents, the documents can then be made in to dematerialised forms and facilitate in ease of transfer, storage etc. This can also be used to facilitate long term lease of lands from the owner instead of the present method of land acquisition where the landowner feels short changed once the market prices rise as commercial activities, infrastructure development takes place in the acquired land.
The Swamitva Yojana initiated by Govt of India is a step in the right direction, it aims to address many of the issues plaguing the land ownership in the country, the scheme envisages mapping of land in rural areas using drone technology and satellite mapping and setting the boundaries to the property without errors.
The respective owners of the property will get the property card after the survey, this card can be used to get loans from banks thereby saving the villagers from loan sharks, middlemen and micro finance companies charging a high rate of interest.
This will also unlock a huge amount of capital in rural areas, which will spur entrepreneurship in villages thereby triggering huge economic growth.
Another possible solution could be community ownership of Land in the form of a company with each farmer having a stake or share, this will help in collective bargaining, pooling of resources, risk mitigation etc, however there should be an Independent regulator overseeing such companies.
The Land reforms thus have the potential to make India more than a $5 trillion economy.