Land Reforms In India: An Unfinished Business

The Traditional Land Reforms

The Britishers in India were not at all keen in adopting progressive land reforms measures for the rural farmers. So, after independence, we adopted several measures to usher in long stalled land reforms.

1. Abolition of Intermediaries

Intermediaries like Zamindars, Talukdars, Jagirs and Inams had dominated the agricultural sector in India by the time the country attained independence. Soon after independence, measures for the abolition of the Zamindari system were adopted in different states.

Reason: This kind of system was exploitative for tenants and Zamindars never invested in agriculture because their rights were not permanent, which ultimately led to low production.

Outcome: Tenants came in direct contact with government, though he continued to pay rent which was very nominal. This was the most successful land reform in the country, but it benefited only one class of tenants, who were owners of land prior to British land revenue system

1. Tenancy Reforms

This reform sought to provide security of tenure to tenants, so that land owners cannot evict them arbitrarily along with regulation of rent. This reform sought to prevent exploitation and giving security of tenure so that they could invest in land. This reform required tenants to legally register with the govt. in order to get protection.

Outcome: This reform was not very successful, except in states of West Bengal and Kerala, because of lack of political will at the state level. Moreover, since landowners were politically active, they didn’t allow the tenants to register with govt. 

3. Ceiling on Land holdings and Redistribution of Surplus land

The third important step of land reforms relates to the imposition of ceiling on land holdings. Ceiling on land holdings implies the fixing of the maximum amount of land that an individual or family can possess.

This reform sought to bring parity in terms of distribution of land through two aspects: one, the fixation of ceiling limit and two, the acquisition of surplus land and its distribution among the small farmers and landless workers. This reform was accompanied by Bhoodan movement, (launched by Acharya Vinoba Bhave)

Outcome: Actually, the limit on ceiling was kept very high and the redistributed land was mostly infertile land

4. Consolidation of Land Holdings

Consolidation of Holdings means bringing together the various small plots of land of a farmer scattered all over the village as one compact block, either through purchase or exchange of land with others.

Reason: The average size of land holdings in India is very small. The size of the holdings is decreasing but number of holdings is increasing over time. This is due to the inheritance laws. If farms are small and scattered, we cannot go for mechanization, etc.

Oucome: Not very successful, because the owners did not had conclusive rights so there was fear among farmers that they may lose land ownership. Moreover, there is mix of fertile and non-fertile land, so it was difficult to get same quality of land.

5. Cooperative Farming

It has been advocated to solve the problems of sub-division and fragmentation of holdings. In this system, farmers pool their small holdings for the purpose of cultivation and reap benefits of large scale farming.

Reason: Economies of scale can reduce input cost

Outcome: This was the least successful land reform in the country due to inconclusive ownership rights.

Current Scenario

Now, the land ceiling cannot be implemented because landholdings are small, but, land consolidation and tenancy reforms are more relevant now.

Market-led Land Reforms

These reforms come into picture after the 1991 economic reforms, which gave private sector larger role to play. Post-1991 reforms, land became important for industrial and infrastructure as well, along with agriculture.

1. Modernization of Land Records

This reform seeks to solve the issue of inconclusive land ownership rights. This includes survey of land holdings in the country and digitization of land records and revenue records, so there is less subjectivity in terms of ownership rights. It is significant reform because it will facilitate land consolidation.

National Land Records Modernization Program –  It was launched in 2008, to modernize management of land records, minimize scope of land/property disputes, enhance transparency in the land records maintenance system, and facilitate moving eventually towards guaranteed conclusive titles to immovable properties in the count.

This will facilitate easy purchase and selling of land.

2. Facilitating Land Leasing

There should be compulsory registration for all the land owners and lease holds. Registration of landowners will ensure security of land ownership. They can lease their land to landless/tenants and settle in urban areas. The idea is that, since there is massive rural-urban migration and those who are well-settled in urban areas can lease their land to their village counterparts.

At present, NITI Aayog is preparing a model agricultural land leasing law, to formalise leasing of agricultural land.

3. Land Acquisition for Public Purpose

In 2013, govt. enacted “The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013″, to provide just and fair compensation to farmers while ensuring that no land could be acquired forcibly.

There was a big debate on this issue over the last year, when NDA govt. brought an amendment bill, which sought to remove all necessary checks (such as consent clause, social impact assessment, minimum consent requirement, etc) in land acquisition for 5 sectors namely – defence, rural infrastructure, affordable housing, industrial corridors and infrastructure where central govt. owns land.

Suggested Readings

1. Indian Express: Farmer needs a new deal
2. Indian Express: Land Titling

Published with inputs from Pushpendra

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Affordable segment: High land cost a wall before ‘Housing for All’

Note4Students:

Land acquisition is the biggest issue concerned with government as it hinders various developmental projects. The news card discusses all problems related to land and also suggests solutions.

From UPSC perspective following things are important:

Prelims level: NITI Aayog, Various acts related to land, PMAY, Housing for all, RBI, SLR

Mains level: How land acquisition is affecting government’s growth agenda and what can be done to solve the problem.


News:

1. Niti Aayog has identified high cost of land as one of the key factors constraining “rapid expansion” of low-income housing

Context:

1. Government plans to build 2 crore houses for urban poor (including economically weaker sections and low-income groups) under Pradhan Mantri Awas Yojana
2. Under the Housing for All scheme, the government in January announced creation of two new middle-income categories in urban areas, and one scheme for rural areas

Changes in scheme:

1. Interest subvention is being provided for loans upto Rs. 12 lakh and this is expected to cover nearly 65 per cent of the home loan customers of public sector banks (PSBs)

Supportive move by RBI:

1. The Reserve Bank of India reduced the standard assets provisions on individual housing loans to 0.25 per cent, and also lowered the risk weights on such lending in a move that could make loans for new homes cheaper
2. Standard asset provisions is the amount of money that is set aside by banks for every loan made
3. RBI also reduced SLR limit in its June monetary policy review.
4. The reduction in the statutory liquidity ratio (SLR) by 50 base points to 20 per cent, would help provide more liquidity to banks and it is expected that lending institutions could further lower the interest rates on loans

Supply side constraints:

1. Slew of measures undertaken by the government and the central bank may be a step to resolving the demand side issues that would increase the coverage of affordable housing but various supply side constraints still remain
First: Due to Urban Land Ceilings and Regulation Act, 1976, large chunks of vacant land have disappeared from urban land markets
Second: Many sick public sector enterprises own large unused land parcels in prime localities. Central and state governments own substantial urban land that remain unused or subject to encroachment
Third: The Land Acquisition Act, 2013 fixes compensation for acquired land at high levels, which makes the land acquired for affordable housing expensive
Fourth: Floor space index (FSI) in Indian cities is “extremely low”, which ranges between 1-1.5  and this results in scarcity of horizontal space in urban areas

Suggested Solutions by NITI Aayog:


1. While most of the states have now repealed the Urban Land Ceilings and Regulation Act, 1976, priority should be releasing the large pieces of land caught up in litigation, for public use
2. For the land parcels held by state-owned companies, the process to close such sick PSUs was already underway, but should be expedited, as one of the ways to release this land would be shutting down these units
3. Land Acquisition Act, 2013 has to be amended in order to provide simple solution to this source of high price of land
4. Regarding horizontal space, FSI needs to be increased in urban areas in order to utilise less space available more efficiently

Cash for land is just not done: SC

  1. Supreme Court: Agreed to hear the plight of the landless victims of the Sardar Sarovar Project in detail
  2. It observed that giving cash instead of land to farmers who lost their fertile lands to the mega dam project is “tentatively” not acceptable
  3. Issue: As per the Narmada Tribunal Award and the Supreme Court verdicts, all adult sons were indisputably entitled to five acres of cultivable and irrigable land, and any discrimination would lead to the violation of the constitutional rights of the oustees.
  4. However, the farmers are left with neither land nor livelihood despite there being binding orders from the Supreme Court upholding their right to land
  5. Earlier: SC had also dismissed an application by the Madhya Pradesh government and the Narmada Valley Development Authority for a modification of the apex court judgments of 2000 and 2005 upholding land rights for adult sons of the Sardar Sarovar Project-affected farmers

Note4students:

This can be cited as an example in essay on development.

Land-related conflicts in India threaten investments of Rs12 trillion, says report

  1. Issue: Land-related conflicts in India affect about 3.2 million people and impact investments worth over Rs 12 trillion ($179 billion)
  2. Source: Report by Rights and Resources Initiative, a global coalition of non-profit organizations, and Tata Institute of Social Sciences
  3. Examples: Stalling of projects like Vedanta’s Group’s bauxite mining project in Odisha’s Niyamgiri Hills and Posco’s $12 billion Odisha steel project
  4. Solution: Implementation of the Forest Rights Act (FRA) and the Panchayati Raj Extension to Scheduled Areas (PESA)
  5. Another study found that 14% projects announced between Jan 2000 and Oct 2016 were stalled due to land acquisition conflicts

Are Indian farmers at risk as states bypass acquisition laws?

  1. States across India are bypassing land acquisition laws by introducing land pooling schemes to speed up industrial and development projects
  2. A move that activists say leaves farmers and the environment vulnerable
  3. Land pooling enables the quick consolidation of small land holdings
  4. Land owners get back a share of developed land, while the state keeps the remainder for its use
  5. It does not require consensus to buy the land, a social impact assessment, rehabilitation for those displaced and compensation of up to 4 times the market value
  6. But with no public consultations, owners may come under pressure from the community or the state to participate

[op-ed snap] The problem with government as landlord | Part 2

  1. Steps being taken: The government’s strategic sales push is putting in place mechanisms that will bring clarity to the asset-stripping issue.
  2. Lessons from the Ministry of Defence: The Ministry’s success in digitizing, indexing and computerizing land records, and the exception made to the rule of non-use of defence land for other purposes, has facilitated the easier transfer of defence land in recent years.
  3. Lessons from the railways ministry: The railways have an exclusive Rail Land Development Authority for developing unused railway land.
  4. Other options: Leasing-But unless the complications associated with leasing laws in states are resolved, it cannot be actively pursued as a strategy.
  5. A Land bank: Similar to the Chinese model, the government recently floated the idea of a SPV or a land bank to consolidate the landholdings of idle PSUs and use them for other public purposes.
  6. The government’s policy think tank NITI Aayog is currently examining the viability of this route
  7. The way ahead: The government should push for land records modernization programme taking lessons from Karnataka’s record in digitization and Rajasthan’s efforts towards registration of land titles.
  8. It is crucial that the states and ministries are on board if the land records modernization programme, the monetizing of PSU land and optimal utilization of available land are to be a reality.

[op-ed snap] The problem with government as landlord | Part 1

  1. Theme: The opportunity costs of vast tracts of unproductive state-owned land.
  2. Background: Issues with disposing of the land owned by PSUs in wake of the government’s move to identify and sell PSUs that are losing propositions.
  3. According to some estimates, around one million acres of surplus land in around 300 central PSUs is lying vacant across the country.
  4. The opportunity cost: Unlocking this surplus land could solve many problems in land-starved cities e.g. allowing for civic infrastructure such as hospitals, schools and roads.
  5. Recommendations of Vijay Kelkar panel: The panel identified monetizing surplus government land from port trusts, railways and PSUs as the ideal solution to India’s urban problems—besides the benefits of unlocking huge revenue and betterment of the fiscal consolidation situation.
  6. The K. Roongta committee constituted by the Planning Commission also proposed this.
  7. Issues with disposing of surplus government land: Lack of adequate land records and the absence of a single comprehensive land database is a major roadblock. Also, in most states, the tasks of integrating land records and registration are handled by separate departments, often leading to incongruity in data sets.
  8. Opposition from trade unions, illegal encroachment and lack of coordination between various ministries are major issues.
  9. PSUs themselves are often in the dark as to the extent and nature of their holdings.
  10. Steps involved in the monetization of PSU land—such as identification of surplus land and approval from the relevant ministries—are lengthy and cumbersome.
  11. The sale process itself is challenging e.g. in the VSNL case, government sold 25% equity to the Tata group in 2002—but it took until August 2016 for the legislative changes that will allow the demerger and productive use of the surplus VSNL land.

[op-ed snap] India’s land laws and FDI

  1. Theme: Removing bottlenecks to foreign investment in India.
  2. Reform agendas in question: Amendments to the land acquisition law and improvements in the ease of doing business
  3. Land acquisition: An ordinance to modernize India’s land laws was promulgated thrice after the incumbent government came to power in 2014; but a law could not be passed due to Opposition resistance. A model land-leasing law formulated by the Niti Aayog was mooted for States to adopt instead.
  4. Issues with the model land leasing law: A billion-dollar plant is unlikely to come up on leased foundations.
  5. As a result, a proposed nuclear plant has moved out from Gujarat owing to land acquisition problems, India’s largest FDI proposal from South Korea’s Posco is all but off, and job creation has hit a five-year low.
  6. World Bank’s Ease of Doing Business index: India moved up 12 places in the index last year and may rise further.
  7. Issues: The index is only based on speed of paperwork in Mumbai and Delhi, where there is little space for big new industries; such rankings don’t directly translate into more FDI.
  8. Getting a construction permit online is no good if large tracts of land cannot be provided job-creating investment.

Rajasthan first to pass ‘titling’ law

  1. News: Rajasthan passed a landmark legislation providing statutory backing to land records, effectively guaranteeing land and property ownership
  2. Purpose: It will create an efficient and transparent modern land market, provide certainty of tenure and end litigation that often hinders development projects
  3. Once an individual is accorded legitimate rights to land, which at present can be disputed, their ability to trade these rights improves dramatically
  4. Impact: It will lead to transparency and will create a sense of confidence among land owners

Land Bill panel granted 6th extension

  1. Context: The Joint Committee of Parliament examining the contentious land Bill was granted a 6th extension of its term for over four months
  2. Reason: Several states are yet to furnish details to it on a clause relating to compensation
  3. The law had become applicable for national highway projects from January 2015
  4. There has been a large number of disputes by affected owners, who were seeking higher compensation

NITI Aayog plans model lease law

NITI Aayog has taken up with the States a proposal for unlocking the value of farmland through leasing.

  1. NITI Aayog will prepare a a model land leasing law for the States to use for reforming land lease provisions.
  2. The interested landowners could deposit their land parcels in a land bank for cultivators to lease land.
  3. The land bank will act as a intermediary and transfers rent from the actual cultivator to owner while charging a small fee to cover its costs.
  4. This is expected to permit the consolidation of operational landholdings, given the fragmentation of farmland holdings in the country.

Land ordinance gets a burial

  1. The land acquisition ordinance would be allowed to lapse, without any re-promulgation.
  2. But, the govt. will include 13 points to reform the land acquisition law to benefit farmers.
  3. These 13 points will be brought under the rules, so that farmers do not face financial loss.
  4. Earlier, govt. failed to create consensus in Parliament to get its amendments to the contentious land acquisition Act cleared.

Land ordinance to go; States to frame law

  1. Govt. has indicated that Land Ordinance will be allowed to lapse on August 31.
  2. Although, govt. will wait for the report of the joint committee in Parliament on the ordinance before winter session.
  3. But, PM has almost decided to allow States to put in place their own laws on land acquisition.
  4. At NITI Aayog’s meeting, which was violated by Congress minister’s, some states were interested to add these features to their land acquisition laws.

Govt. ready to make a U-turn on land bill

  1. The 6 amendments to the LARR Act, 2013 may be taken back by the Govt.
  2. The controversial amendments include – consent clause, SIA requirements, replacing ‘public company’ with ‘public entity’, restoring clause on action against defaulting officers, dropping special category projects proposed to be free of SIA and consent clause.
  3. The move might end the logjam in the Parliament.

SC seeks Centre’s reply on re-promulgation of land ordinance

  1. Acting on a petition filed with it, the SC asked the Center reason for re-promulgation of Land Acquisition Ordinance.
  2. In the famous Cooper case, the SC had said that re-promulgating ordinances without getting them passed in the Parliament/Legislature is against the ethos of the Constitution.

Is re-promulgation of land ordinance valid, SC asks Centre

  1. The Supreme Court agreed to examine the constitutionality of the President’s re-promulgation of the Land Acquisition Ordinance.
  2. This is the first time this court is holding a hearing on an ordinance promulgated by the President under Article 123 of the Constitution.
  3. The government has to reply on a plea to hand over the trail of documents detailing the decision leading to the re-promulgation.
  4. An ordinance has a life of 6 months if promulgated when Parliament is not in session. Once the Houses are in session, the Land ordinance expires in 6 weeks.

Questions (attempt in the comments section)

1

It is argued that a state-centric strategy on land acquisition will permit a more nuanced approach and It would also promote competitive federalism. Critically discuss how.

2

“The problem of land acquisition needs to be recast as the problem of efficient use of land, including the reclamation of unutilized land, the optimal alignment of complementary inputs, and the honest discharge of social responsibility aided by technology.” In the light of ongoing debate on land acquisition and challenges therein, critically comment on the statement.

3

How is the new ordinance on land acquisition legislation – the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act (LARR) is different from its earlier version? Critically examine.

4

In the light of ongoing controversy on land acquisition law, it is argued that the states in India should be allowed to bring their own legislation to amend land acquisition act or enact their own land laws. Critically examine the merit in this argument.







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