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HomeOpinionLand reform a game-changer that Narendra Modi government has overlooked

Land reform a game-changer that Narendra Modi government has overlooked

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It must be the core priority for any government that wants to improve the agricultural situation.

In the run-up to the big 2019 elections, the last few months of the Narendra Modi-led government seem to have been defined by a prevailing agrarian crisis. While the Centre, the opposition and the state governments jostle to provide fiscal support and farm loan waivers, fundamental reform for land use is being overlooked. It has a cascading effect on productivity, growth, and access to credit.

Land reform should be a core priority for any government aiming to meaningfully improve the agricultural situation. Yet, an examination of the present government’s track record highlights its failure to develop a holistic vision for reforming the land market.

In its initial days, the NDA government got mired in controversy over amendments to the land acquisition law passed by its predecessor. In light of a backlash, it had to disband its proposed amendments. That put any serious debate on land reform on the backburner.

While some states have amended the land acquisition law based on local needs, it is uncertain whether they will stand up to the Supreme Court’s scrutiny. Besides, reform is about more than land acquisition.

There are four major issues that hinder entrepreneurship, access to credit and higher growth inland market. The first is the poor quality of land records. The lack of good records creates uncertainty about land rights and encumbrances. This inhibits investment for both agriculture and industry, creates significant impetus for litigation, and leads to financial exclusion of those who cannot prove their right to their property.

The second is the framework of restrictions on the transferability of land rights, depending on the type of land, proposed land use, and the occupational or residential role of the interested buyer.

Also read: India’s farm economy needs liberalisation, not periodic political charity

Specifically, restrictions on leasing, sub-leasing and rental arrangements discourage consolidation of land and give rise to further informality (and subsequently, inaccurate land records).

Third, administrative procedures are complex and create impediments that hamper the smooth functioning of the land market. While India has made considerable progress on the Ease of Doing Business index in the last few years, it continues to be ranked at 166 on the ease of registering property.

The Registration Act, 1908 and state revenue laws require the completion of two separate processes to effect a land transfer. This, and poor state capacity, leads to interminable delays in completing the process.

Any overhaul will require a careful evaluation and rethink of the administrative processes enshrined in existing laws.

To focus on easing restrictions on land transfers, the NITI Aayog formed an expert committee that proposed the liberalisation of the land leasing market. This panel drafted a model law for consideration and adoption by states but on this count, too, it is unclear what progress has been made. While Uttarakhand and Uttar Pradesh now permit leasing, other states have not moved in this direction.

Fourth, there is a high volume of property litigations. A survey conducted by DAKSH in 2018 found that two-thirds of civil litigations were related to land and property. The overwhelming number of litigants surveyed had an annual income of less than Rs 3 lakh and had not studied beyond school.

Also read: Indian farmers need a new deal and not just loan waivers

Litigation is, therefore, an additional cost borne by the poor for transacting in land and property—it is a significant road block for higher growth and productivity.

The government has had little to show in terms of addressing these issues in the past five years. The decade-old National Land Record Modernisation Programme (NLRMP) aimed at improving land records was rechristened the Digital India Land Record Modernisation Programme (DILRMP), but fundamentally, the scheme has remained the same despite low-to-middling success across states.

A three-state study conducted by the National Council for Applied Economic Research (NCAER), the National Institute for Public Finance and Policy (NIPFP) and the Indira Gandhi Institute for Development Research (IGIDR) found significant shortcomings in the implementation of DILRMP across states, albeit for different reasons. (Note: The author was involved in the NIPFP study of DILRMP implementation in Rajasthan.)

The joint study recommended moving to outcome-driven indicators for measuring progress across states, and incentive-based fiscal support to states based on their performance.

Also read: Farm income in India hasn’t been this bad in almost 20 years, and it may be too late for Modi to fix

It is unclear whether any key decision has been made upon the recommendations.

Although land is a state subject, it is for the central government to incentivise states to undertake reforms, and to provide knowledge and capacity-building platforms.

The BJP-led NDA government has, however, focused only on immediate demands rather than bring about a fundamental reform – one that could reap benefits for the economy in the long run.

The author is a Senior Research Analyst with Carnegie India. Views are personal. 

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  1. The problem with land is quite simply related to the greed of the center, state or other buyer. Land records in my limited area (Mohali – Punjab) are digital. Everyone wants land at the cheapest price – even if it means cheating the poor and uneducated landowner (not all are uneducated). The real estate developer has large sums of black money, and does not want to pay the land owner in white. Very often the land owner does not want white either. The only way to do this is to keep circle rates of land transfer at 1/4 to 1/6 the market price of the land. The loser is the Sate government – clearly corruption is involved in this wonderful measure. As far as Industry is concerned it is willing to pay exorbitant and /or realistic prices for everything except land. It is almost as if the cost of land should never be a part of the project so that the industrialist can rake in profits at the expense of the land owner. Why is there no intermediate process for land owners to part share or fully share the risk if they so desire. Once digital land records are there litigation can only take place because the entire legal system is corrupt. Do not blame the poor land owner.

  2. Sorry, why r u trying to influence indirectly. Instead please elaborate on the deeds of individual neta snd let the voters decide.

  3. Yogi and his cow politics, ubiquitous upper caste faces will certainly dent BJP, its amazing why the Chanakya shah didn’t counter SP by propping up another Yadav leader, upper caste prejudices still run

  4. Bjp is going to be clean sweep without any doubt…how many smart cities has been built. How many village HV change which are adopted by the mp’s .no job created in last 5 years..only Hindu Muslim ,mob_ lynching ,ram Mandir & useless topics HV been buzzing …GST & demonetization broke the market more modi …

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