Land Leasing – Much needed reform

AGRICULTURE/ ECONOMY/ GOVERNANCE

Topic: General Studies 2,3:

• Government policies and interventions for development in various sectors
• Indian Economy and issues relating to planning, mobilization, of resources 

Land Leasing – Much needed reform

Context: While the slew of reforms announced by government empower the farmers economically, tenancy reform is arguably that ‘last-mile’ intervention that would complement these bold initiatives

Agrarian distress in India is due to reasons like

• Increased frequency of natural calamities due to Climate Change
• Shocks in farm income triggered by crash in commodity prices 
• Increasing input cost
• Inadequate access to formal credit
• Bad agronomic practices – preference to water intensive commercial crops
• Informality of land tenure affecting the tenant farmers

Did You Know?

• As per NABARD All India Rural Financial Inclusion Survey (2016-17), All-India, 12% households leased-in agricultural lands. The incidence of tenancy is under-reported as tenancy in most states is not permissible legally.
• As per 70th round of NSSO Report (2013), the share of small and marginal farmers in the total leased-in land is 52%

Why tenancy reform is needed?

• Inclusiveness: Land tenure security is the cornerstone to achieve broader goals of inclusive agriculture growth.
• Efficiency: Many empirical studies validate the hypothesis that productivity of leased-in land can be comparable to that of owner-operated land if legal recognition is provided to tenancy.
• Access to services: Legal recognition and formalisation of land leasing would enable tenants to access credit, insurance and high-yielding input
• It facilitates a paradigm shift in disbursement of fertiliser subsidy: Formalisation of tenancy helps to switchover from product subsidy to delivery of fertiliser subsidy through DBT.
• To increase the outreach of direct income support schemes: Rs 18,253 crore has been disbursed to 9.13 crore farmers under PM-KISAN during the lockdown (till May 10). However, it excluded tenants in the absence of authentic and credible database of tenant cultivators
• Migrants welfare in post-COVID times: Migrant labourers who have returned to their villages during the lockdown may not go back to their host states in the near term. They may prefer to work as tenant farmer and legalisation of tenancy will prevent their livelihoods from disaster

Way Ahead – Nudging the States

Even though land is a state subject, Centre can nudge States to undertake various reforms: 

• Unique Opportunity to push reforms: In the 2020-21Budget, Finance minister proposed to encourage state governments to undertake implementation of model Central laws issued such as 
  • Model Agricultural Land Leasing Act, 2016; 
  • Model Agricultural Produce and Livestock Marketing (Promotion and Facilitation) Act, 2017; 
  • Model Agricultural Produce and Livestock Contract Farming and Services (Promotion and Facilitation) Act, 2018. 
• Leveraging Technology: Computerisation of land records and their updation in all states is needed to have data bank which helps in evidence based policy making
• Change in Mindset:  Land leasing should be viewed as an ‘economic necessity’ and not merely as a feature of ‘semi-feudal agrarian structure’
• Much Needed: Tenancy reform is arguably that ‘last-mile’ intervention that would complement these bold initiatives and enhance the equity and inclusivity of the resultant growth process.

Connecting the dots:

• Contract Farming
• Green Revolution 2.0