- Why it was in News?
- Why the liberalization of land lease markets is need of the hour?
- Examples of land leasing innovation
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Why it was in News?
- Recently, the government constituted a High Powered Committee of Chief Ministers for Transformation of Indian Agriculture.
- Its terms of reference (ToR) pertain largely to matters related to agri-markets.
- This includes reforming the ‘Agricultural Produce and Livestock Contract Farming and Services Act’ of 2018 and the ‘Essential Commodities Act’ (ECA) as well as suggesting measures to strengthen the e-Nam scheme.
- The committee should give urgency to the implementation of the recommendations of T Haque committee on land reforms, which recommended a Model Land Lease Act (2016).
Why the liberalization of land lease markets is need of the hour?
Two fundamental reasons make it imperative that urgency is accorded to the liberalisation of land lease markets.
Size of the average holding
- The size of the average holding has been declining in India for long.
- This raises questions about the economic viability of such lands, especially since they do not provide a respectable income to farmers.
Restrictive tenancy laws
- Restrictive tenancy laws have generated informal tenancy (oral) that is much higher than formal tenancy (through legal papers). This is adversely impacting land-use efficiency.
- As per official records (NSSO, 2012-13), only about 10 per cent of agricultural land is under tenancy as compared to 20 per cent in 1953-54.
- The oral tenants, who are most insecure, do not have legal sanction and are not recognised as farmers.
- This deprives them from availing institutional credit, crop insurance, government-sponsored social benefit schemes and relief support.
- The fear of eviction from the land also disincentivises them from making long-term investments in land improvement, resulting in low capital formation.
- Even the landowners fear losing their proprietary rights, if they lease out for longer periods. As a result, many of them prefer to keep their lands fallow (about 17 million hectares of cultivable land is lying fallow).
Examples of land leasing innovation
- Andhra Pradesh’s Land Licensed Cultivators Act provide suitable channels to deliver loans, subsidies, crop insurance and relief support.
- It does so by issuing eligibility cards to tenants, who raise crops with the explicit permission of the owners.
- Kerala’s Kudumbashree initiative is another innovation that is making decisive steps in poverty eradication and women empowerment.
- Under the initiative, women are motivated to become members of joint liability groups (JLG).
- They then cultivate leased land with assured access to agricultural credit from NABARD and other banking institutions, increasing their returns from farming.
- Recently, China has revised its land lease laws, where farmers can lease out their land, even to corporate entities for cultivation for up to 30 years. Such a move can help attract long-term investments in high-value crops.
- Landowners fear leasing out their lands due to the absence of tamper-proof land records with the revenue departments. Hence, there is need to digitise and geo-tag land records and link them with Aadhaar and the bank accounts of farmers.
- This digitization will create a centralised, transparent and easily assessable land records system in which any class of farmers can access bank credit and crop insurance.
- However, three states – Odisha, Sikkim and Tripura have completed 100 per cent computerisation of land records.
- Reforms in land markets have been pending for a long time due to lack of political will.
- However, it is an opportune time for the High Powered Committee of Chief Ministers to carry out fundamental structural reforms in the institutions which govern land markets.
- Liberalising land lease markets, with computerisation of land records and geo-tagging of farms, though challenging, can give a high pay-off with enhanced capital formation.
- Andhra Pradesh’s and Kerala’s innovative model offer key lessons for policymakers to liberalise restrictive land leasing laws while fully protecting the land rights of the owners.