Land Reform in India: Issues and Challenges

The Land Question in India: A Brief Historical Review

Manpreet Sethi

As the basis of all economic activity, land can either serve as an essential asset for a country to achieve economic growth and social equity, or it can be used as a tool in the hands of a few to hijack a country’s economic independence and subvert its social processes. During the two centuries of British colonization, India experienced the latter reality. During colonialism, India’s traditional land-use and landownership patterns were changed to ease the acquisition of land at low prices by British entrepreneurs for mines, plantations, and other enterprises. The introduction of the institution of private property delegitimized the community ownership systems of tribal societies. Moreover, with the introduction of the land tax under the Permanent Settlement Act 1793, the British popularized the zamindari system 1 at the cost of the jajmani relationship 2 that the landless shared with the landowning class. By no means a just system, thelatter was an example of what has been described by Scott (1976) as a moral economy, and at the least it ensured the material security of those without land.

Owing to these developments in a changing social and economic landscape,India at independence inherited a semifeudal agrarian system. The ownership and control of land was highly concentrated in the hands of a small group of landlords and intermediaries, whose main intention was to extract maximum rent, either in cash or in kind, from tenants. Under this arrangement, the sharecropper or the tenant farmer had little economic motivation to develop farmland for increased production; with no security of tenure and a high rent, a tenant farmer was naturally less likely to invest in land improvements, or use high-yielding crop varieties or other expensive investments that might yieldhigher returns. At the same time, the landlord was not particularly concerned about improving the economic condition of the cultivators. Consequently, agricultural productivity suffered, and the oppression of tenants resulted in a progressive deterioration of their well-being.

In the yearsimmediately following India’s independence, a conscious process of nation building considered the problems of land with a pressing urgency. In fact, the national objective of poverty abolition envisaged simultaneous progress on two fronts: high productivity and equitable distribution.Accordingly, land reforms were visualized as an important pillar of a strongand prosperous country. India’s ﬁrst several ﬁve-year plans allocated substantial budgetary amounts for the implementation of land reforms. A degree of success was even registered in certain regions and states, especially withregard to issues such as the abolition of intermediaries, protection totenants, rationalization of different tenure systems, and the imposition of ceilings onlandholdings. Fifty-four years down the line, however, a number of problemsremain far from resolved.

Most studies indicate that inequalities have increased, rather than decreased. The number of landless laborers has risen, while the wealthiest 10percent of the population monopolizes more land now than in 1951. Moreover,the discussion of land reforms since World War II and up through the mostrecent decade either faded from the public mind or was deliberately glossedover by both the national government of India and a majority of internationaldevelopment agencies. Vested interests of the landed elite and their powerfulconnection with the political-bureaucratic system have blocked meaningful and reforms and/or their earnest implementation. The oppressed have eitherbeen co-opted with some beneﬁts, or further subjugated as the new focus onliberalization, privatization, and globalization (LPG) has altered government priorities and public perceptions. As a result, we are today at a juncture where land—mostly for the urban, educated elite, who are also the powerful decisionmakers—has become more a matter of housing, investment, and infrastructure building; land as a basis of livelihood—for subsistence, survival, socialjustice, and human dignity—has largely been lost.

International Financial Institutions (IFIs) and Issues Related to Land in India

Any reform is as difﬁcult an economic exercise as it is a political undertakingsince it involves a realignment of economic and political power. Those who areland and agrarian reform: historical perspectiveslikely to experience losses under reform naturally resist reallocation of power,property, and status. The landholding class, therefore, is unlikely to willinglyvote itself out of possession, nor should it be expected that they would be uniformly inﬂamed by altruistic passions to voluntarily undertake the exercise.Hence, one cannot underestimate the complexity of the task at hand. However,the political will of the landowning class is as much a challenge to the redistributive process as are the existing legal and structural dimensions of the current landholding regime. A brief review of the legal history that has accompanied India’s land struggles is therefore a necessary detour for continuingthis discussion in all its complexity.

Loopholes in land tenure legislation have facilitated the evasion of some ofthe provisions in land ceiling reforms by those large landholders who havewanted to maintain the status quo. At the same time, tardy implementation atthe bureaucratic level and a political hijacking of the land reform agenda, byboth the state and private interests, have traditionally posed impediments inthe path of effective land reforms. Even in regional states throughout India thathave attempted reforms, the process has often halted midway with the cooptation of the beneﬁciaries by those working to resist any further reforms. Forinstance, with the abolition of intermediary interests, some middle-income farmers have gained economic leverage through the expansion of agricultural export. The most affluent of these tenants have acquired a higher social status as the rise in agricultural productivity, land values, and incomes from cultivation have added to their economic strength. These classes have sincebecome opposed to any erosion in their newly acquired ﬁnancial or socialstatus.

Land-related problems such as tenancy rights and access to land for subsistence farming continue to challenge India. The importance of the land issuemay be inferred from the fact that, not withstanding the decline in the shareof agriculture in the GDP, more than half of India’s population (nearly 58 percent) is dependent on agriculture for livelihood. Yet more than half of this population (nearly 63 percent) own smallholdings of less than 1 hectare, with largeparcels of 10 hectares of land or more in the hands of less than 2 percent. Theabsolute landless and the nearly landless (those owning up to 0.2 hectares ofland) account for as much as 43 percent of total peasant households (Mearns1999).

The reality represented by these statistics, however, did not seem to worrythe governments of the late 1970s and 1980s. It was only in the 1990s, withthe initiation of the economic restructuring process, that the issue of landreform resurfaced, albeit in a different garb and with a different objective andmotivation. Whereas the government-led land reforms had been imbued with some effort to attain equity, social justice, and dignity, the new landreform agenda is solely market driven, and aimed at increasing GDP regardless ofany externalities or costs associated with the process. Promoted andguided by various international ﬁnancial institutions (IFIs) such as the World Bank and the International Monetary Fund (IMF), government emphasis onland reform since the 1990s reﬂects and seeks to fulﬁll the macro economic bjectives of these multilateral economic institutions.

While the return of land reform to the government’s list of priorities isawelcome development, the manner in which it is being undertaken—its objectives, and, consequently, its impact on people, especially those already marginalized and now being further deprived of a stake in the system—raises anumber of questions and prompts one to look for alternatives. The remainderof this chapter, therefore, will devote its energies to identifying and monitoring the implementation of certain speciﬁc IFI-sponsored programs in particular states with a view to examining their short-term and long-term impact on the lives and livelihoods of local residents. It is hoped this shall enable aninformed critique of the IFI-led land reform programs and serve as a lessonfor peoples elsewhere in India and in other regions of the globe.

Market-Led Land Reform: The Current Emphasis on Land Administration, Titling, and Registration

In their analyses of India’s land reform program, most international ﬁnancialinstitutions have highlighted the basic problems that rural poor people face isaccessing land and security of tenure, and they advocate redress of this situation through thestructural reform of property rights, to create land marketsas part of a broader strategy of fostering economic growth and reducing ruralpoverty (Mearns 1999). A large emphasis has, therefore, been placed on theneed to establish the basic legal and institutional framework that would facilitate a market takeoff in land and resource exchange. The goals of the new legal framework include efforts to improve property rights as a means to protectenvironmental and cultural resources, facilitate productivity-enhancingexchanges of land in rental and sales markets, link land to ﬁnancialmarkets,use land to generate revenue for local governments, and improve land accessfor the poor and traditionally disenfranchised.

The neoliberal package endorsed by the IFIs includes a number of reformswill transform the current system of land tenure into a market-orientedsystem of exchange. This tranformation includes a number of incrementalsteps that begin with titling and cadastral surveys (mapping). The latter arethen formally tied to the establishment of state land registries, the creation ofnewlandholding legislation, the concomitant establishment of a land administration department within the state, and ﬁnally the removal of restrictions onland leasing (see ﬁgure 1 in the introduction to part II of this volume). A similar plan had already been put forward as early as 1975, when a land reform policy paper published by the World Bank described land registration and titlingas the main instruments for increasing an individual’s tenure security andlinked titling and registration to the establishment of ﬂourishing land markets.The process of land tenure formalization provided the major tools—land titlesand cadastral mapping—that were to enable the use of land as collateral forcredit.

While none can argue against the need for straightening land records andproviding secure land titles and registration, the motivation for the exercisemust delve deeper than the mere creation of land markets for private proﬁt.The belief that land markets alone would take off and address the historicalinequality that was their foundation has been challenged by the reality ofIndia’s ongoing crisis in food security. The shift in agriculture that has takenplace since the ﬁrst period of World Bank–endorsed privatization schemes inthe 1970s points to an important historical and economic trend that has complicated the more recent attempts at marketization and poverty reduction inthe twenty-ﬁrst century. Industrialization, and the limits placed on nationaldevelopment programs to that end, exacerbate already existing inequalities inland distribution. The shift in Indian agricultural policy toward export and theincreased embrace of neoliberal economic model casts much doubt on the purported beneﬁts of the current World Bank land reform agenda in India.

The Commercialization/Industrialization of Agriculture

The inﬂuence of industrialization on national and international economic systems has reshaped the manner in which agriculture is conducted and for whatpurpose. From a family, or, at the most, a community affair, agriculture hasbeen “professionalized” into an industry in which a farmer produces for theglobal market. Indeed, modern farming methods and techniqueshave transformed agriculture into a science of food production and a system of commodity distribution.

This shift in agricultural production goals has been promoted most fervently since the 1980s, by policy makers and politicians, who conceptualizeagriculture more as an industry that must be conducted to maximize proﬁts,and less as a way of life with social and ecological ramiﬁcations. The trend hasbeen justiﬁed by the substantial increases in agricultural output, which, it isargued, has substantially eased India’s national food-security concerns. Undoubtedly, Indian granaries areoverﬂowing. And yet, the individual in thetypical Indian village is starving to death, and a “failed” farmer resorts to suicide. Surely, the disparity between these two realities calls for a closer examination of the issues involved.

Commercialization of agriculture ﬁrst gained a foothold in India in the1960s, with the green revolution in Punjab, when the World Bank, along withthe US Agency for International Development (USAID), promoted agriculturalproductivity through importation of fertilizers, seeds, pesticides, and farmmachinery. The Bank provided the credit necessary to replace the low-cost, lowinput agriculture in existence with an agricultural system that was both capital- and chemical-intensive. The Indian government decided that the potentialof the new technology far outweighed the risks and, accordingly, devalued theIndian rupee for the ﬁve-year plan period (1966–1971) to generate the purchaseof approximately US$2.8 billion in green revolution–related technology, a jumpof more than six times the total amount allocated to agriculture by the state during the preceding plan period (Shiva 1991). Most of the foreign exchange wasspent on imports of fertilizer, seeds, pesticides, and farm machinery.

While subsidizing these imports,the World Bank also exerted pressure onthe Indian governmentto obtain favorable conditions for foreign investmentin India’s fertilizer industry, for import liberalization, and for the eliminationof most domestic controls on prices for basic agricultural products, e.g., grainsand milk. The Bank advocated the replacement of diverse varieties of food cropswith monocultures grown from imported varieties of seeds. In 1969, the TeraiSeed Corporation (TSC) was started with a US$13 million World Bank loan.This was followed by two National Seeds Project (NSP) loans. This program ledto the homogenization and corporatization of India’s agricultural system. TheBank provided the NSP US$41 million between 1974 and 1978. The projectswere intended to develop state institutions and to create a new infrastructurefor increasing the production of green revolution seed varieties. In 1988, theWorld Bank gave India’s seed sector a fourth loan to make it more “marketresponsive.” The US$150 million loan aimed to privatize the seed industry andopen India to multinational seed corporations. After the loan, India announcedNew Seed Policy that allowed multinational corporations to penetrate fully amarket that previously had not been directly accessible; Sandoz, Continental,Monsanto, Cargill, Pioneer, Hoechst, and Ciba Geigy now are among the multinational corporations with major investments in India’s seed sector.

While the revolution did ease India’s grain situation and transformed thecountry from a food importer to an exporter, it also enabled the rich farmingcommunity to politicize subsidies, facilitate concentration of inputs, and increase dependence on greater use of capital inputs such as credit, technology, seeds, and fertilizers. Moreover, the green revolution had increasedIndian food production by only 5.4 percent, while the new agricultural practices resulted in the loss of nearly 8.5 million hectares, or 6 percent, of the cropbase to waterlogging, salinity, or excess alkalinity (World Resources Institute1994). Furthermore, although the amount of wheat production doubled overa period of twenty years, and rice production increased by 50 percent, greateremphasis has been placed on production of commercial crops such as sugarcane and cotton at the expense of crops like chickpeas and millet, traditionallygrown by the poor for themselves. These changes in practice have steadilyeroded the self-sufﬁciencyof the small farmer in food grains.

Yet in the face of such statistics successive Indian governments remainstuck on thesame model of agrarian reforms, and they are generously encouraged by the IFIs. Agriculture is the World Bank’s largest portfolio in any country. One hundred and thirty agricultural projects have received US$10.2 billionin World Bank ﬁnancing in India since the 1950s. These projects have generally taken the forms of providing support for the fertilizer industry, exploiting groundwater through electric or gas-generated pumps, introducing highyield seed varieties, and setting up bankinginstitutions to ﬁnance capitalistagriculture.

Water Sector Restructuring as Part of Agrarian Reform

Most supporters of land reform view the process as more than the mere redistribution of land to the landless. Rather, they place an equal importance on availability of other input s that can help turn the piece of land into a productive asset. In an agricultural country such as India, where two-thirds of the agricultural production is dependent on irrigation and irrigation accounts for 83percent of consumptive water use (World Bank 1999a), irrigation schemes thatcan enhance agricultural productivity assume special importance. However,such projects aunched by the government have often become entangled in arange of controversial issues. Questions have been raised about their actualland and agrarian reform: historical perspectivesmerit, about cost versus beneﬁt—especially in view of the numbers of peoplethat may be displaced by such a project—about adequate rehabilitation schemes for people affected by the project, and so on. Big dams and otherhydroelectric projects naturally bring with them the threats of submergence ofhundreds of villages and the forced displacement of thousands of people. Inthe absence of people-friendly rehabilitation and resettlement packages, itremains questionable whether these development projects are truly worthwhilesince they deprive one population of its livelihood to enhance that of another. In this context, land acquisition by the government in the name of public purpose can be seen to raise doubt about the efﬁcacy of such infrastructure development in the name of agrarian reform. Such issues prompted the World Bankto withdraw all funding for the still-incomplete SardarSarovar Project.

In an attempt to steer clear of national and local controversies, IFIs havebegun to ﬁnance and promote water sector restructuring projects of anotherkind. Highlighting the need for a “total revolution in irrigated agriculture”(World Bank 1999a, xiii), the government of India and the World Bank haveidentiﬁed the following goals for national rural development:

• Modernization of irrigation agencies to make them more autonomous and accountable.