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.
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.
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.
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.