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Why direct payment to Punjab farmers needs tenancy reforms to be smooth & successful

In order to claim payments for procured foodgrains, Modi govt wants farmers to present proof that they have authority to cultivate the plot on which the crop was grown.

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Ghanaur/Rajpura: The Punjab government has finally implemented direct payment for farmers against foodgrain procurement, but there are fears that its impact may be derailed by another agricultural marketing reform the central government is eyeing: Land record integration.

Under the reform, before farmers are paid for their foodgrains, they are required to present proof that they have authority to cultivate the plot on which the crop was grown. This could mean land records, which prove ownership, or lease deeds or undertakings.

The reform is meant to streamline procurement by preventing practices such as farmers from other states selling their wheat and paddy in Punjab under the lure of higher prices.

In Punjab, 50 per cent of the farmers are believed to lease their land, primarily based on verbal agreements. 

Legal provisions in Punjab allow tenants to either claim permanent tenancy on a certain plot, or seek ownership at a nominal rate, if they have cultivated a plot for a fixed number of years. This, coupled with a desire among some landowners to evade tax on the rent earned, means few wish to put these agreements on paper.

Farmers are consequently afraid the new reform may leave them at the mercy of landlords. 

On their part, land owners acknowledge the absence of formal agreements, but defend it. This is how they ensure their rights to a certain piece of land are not violated or challenged, they claim.

The central government wanted the reform to kick in from the ongoing rabi marketing season, but an appeal from the Punjab government has earned them a six-month reprieve.

Speaking to ThePrint, Punjab Food Minister Bharat Bhushan Ashu said the state government is seized of the matter and will make sure that the new system leaves no one out.

The concerns of the farmers, meanwhile, are echoed by the arhatiyas or commission agents, who served as intermediaries for the procurement payments before the direct benefit transfer kicked in.

They say the provision will put farmers at a greater disadvantage than the payment-through-arhatiyas system, which was done away with to prevent tillers from getting exploited. Some problems, they add, may also arise for land owners. 

Also Read: Give us a choice, say farmers & agents as Punjab rolls out direct payment for wheat procurement

Many a problem

Gurmail Singh, a Rajpura-based farmer, told ThePrint about his worries as he arrived at his local mandi this week to sell two trolleys of wheat. He cultivated the wheat on 10 acres, seven of which is leased. 

“The farmer will slog for six months to grow the crop on leased land, but, with the new payment system, money will go to the owner of the land. Till now, the arhatiyas used to give us money as soon as the government gave it to them, but we can’t say the same for land owners,” he said.

Shamsher Singh of village Bhedwal, who was also at the mandi to sell his wheat, said owners “who lease out land to tenant farmers fear that if they give the land-related documents, which are often known as fard or jamabandi, the tillers might take a loan against their land”. 

“This might create disputes for property in the future. Also, there are chances that the farmer might claim permanent tenancy of the land with the help of those documents, so there is no way landowners will give us documents for the land that have our name.”

Sucha Gill, a professor at the Chandigarh-based Centre for Research in Rural and Industrial Development, an autonomous research institute, pointed out that under Punjab law, “someone who is occupying or is a tenant on a piece of land for more than six years, they get permanent tenancy rights”. “Hence, no landowner will give in writing that anyone is cultivating their land,” he added.

According to the Punjab Land Revenue Act, the owner of a piece of land is identified as khud kashtkar (self-cultivator), whether they are cultivating it or not. This is described by some as a factor that further deters landowners from finalising written agreements.

Then there is a 2020 rule brought by the Punjab government, under which it decided to allot a plot to small and marginal farmers at a reasonable pre-determined price if they have been occupying and cultivating it for more than 12 years.

An official from the Punjab mandi board said most of the “lease agreements in states are generally verbal arrangements and not on paper as landowners don’t want these things on record because it helps them evade tax payment for rent on leased land”. 

“More importantly, under various tenancy rules, the tenant can show these records… and thereby claim ownership of the land after some years,” the official added, not wishing to be named.

Anil Nanda, who leases out 17 of the 25 acres he owns in Rajpura, said the fear is very real for land owners like him.

“Two of my sons are settled in Canada and my three daughters are settled in Australia. I cultivate eight acres of land in keeping with my capabilities and lease out the rest of it,” he added.

“If I give out a written lease proof or land record to the tenant, they can show it as their asset and take various loans… against it. If I die by chance, and the tenant claims ownership or permanent tenancy, how will my daughters and sons manage to secure their right to the land from abroad?” he added.

Punjab Food Minister Ashu noted another issue that may create complications under the new reform. “Sometimes a cultivator takes land on lease from multiple landlords, which will complicate matters further and they will be dependent on the owner of the land for payment of MSP,” he said.

The arhatiyas, meanwhile, see the new system as a blow to the working of the procurement framework, which they claim to have facilitated as an “independent” party.

Paramjeet Singh, an arhatiya at Ghanaur Mandi, said “20-25 per cent of land cultivated in my village is leased”. 

“Giving the land record papers to tenants is a far-fetched thing,” he said, adding that a lot of land papers are generations old. “Many owners of titleship such as grandparents have passed away but their name is still there,” he added.

“Payment, as per the new rule, will go to the owner and a lot of them are NRIs, so how will small farmers chase them for their payment? We sometimes also facilitate the leasing of land, so both the farmers and landowners take their due money from us,” said Paramjeet Singh. 

“If cultivators get the payment directly to the account and then refuse to pass it on, it will be difficult for the owner to lease the land further. If it goes to the owner, then the farmer has to chase them to get their crop payment share. However, we are an independent body and both landowner and farmer need us for their daily needs and loan borrowing, and we disburse their due amount promptly.” 

According to arhatiyas, most tenants make a partial payment upfront for leased land and pay the rest when they get the money for their crops. If the owner gets the money, the arhatiyas said, they will deduct the remaining amount, leaving a meagre sum for farmers. 

Tarsem Singh, an arhatiya in Patiala’s Chapar village, said “most of the land tenancy in Punjab is complicated as the land cultivated under tenancy is unregistered”. 

Also Read: Why 3 new FCI foodgrain procurement orders have triggered anger in Punjab

‘Revamp needed’

Expert Sucha Singh Gill said “over one-fourth of cultivated land will face a crisis if the order of making land records mandatory for crop purchase is implemented”, adding that the present land record system in the state needs to be revamped.

“The state government has to pass a new tenancy Act… if they wish to implement this new reform,” he added.

Even the state government, he noted, doesn’t have a record of land leased, just that of land ownership. “There is an urgent need to change it if the new reforms are to be implemented,” he added.

Ashu said they have “taken up the matter with the central government”. “They have understood our concern as they have given an extension for the same. We will update the system in due process to ensure that no one is eliminated from the current structure and feels alienated,” he added.

(Edited by Sunanda Ranjan)

Also Read: Why Punjab finally relented on direct payment for farmers at 2-hour meet with Piyush Goyal


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  1. So Punjab’s arthiyas and farmers want to keep all their leasing transactions verbal but want govt of india to give in writing about MSP. They dont want laws. Arthiyas should get only commission. It is weird to route the whole payment through arthiyas

  2. Minister Piyush Goel has already urged the government to follow the method developed by Haryana in which the details of tenant/sharecropper can be uploaded on the portal with the disclaimer that this would not be a legal document for claiming ownership through tenancy.

  3. The Print seems to have been bought over by the Arthiyas?!
    What are the Arthiyas – are they Banks to act as intermediaries in an unregulated market? They seem to be keeping money from both sides like the cat who ate all the cream she was supposed to divide fairly.

  4. Exploitation is obviously the name of the game. The tillers gets nothing and is always at the mercy of the landowner or the middleman.
    A culture or brokers is no different than the pimps in the flesh trade. Obviously the DBT has hit at the very root of this corrupt system. Overnight the giver has become the beggar, all the talk of generations of trust and faith has disappears.
    Naturally the generations of exploitation is going to blow in the face.
    The country was held to ransom for years because the supply came from Punjab and Haryana now that the alternate sources are available the bargaining power has disappeared.

  5. So basically sab log mile hue hain but the farmers income and Punjab’s economy are not growing. Centre shook.things up well. But i am.worried it will only embolden their resolve to fight Modi more and not see sense in what is being done. Let’s see how this plays out.

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