Backgrounder Part I: Land Reform in India
Issues and Challenges

January 21, 2003

India inherited a semi-feudal agrarian system. The ownership and control of land was highly concentrated in a few landlords and intermediaries whose main intention was to extract maximum rent, either in cash or kind, from tenants. As a result, agricultural productivity suffered and oppression of tenants resulted in a progressive deterioration of their plight.

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Brief Historical
Purview

As the
basis of all economic activity, land can either serve as an essential
asset for the country to achieve economic growth and social equity,
or it could 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 had
experienced the latter reality. During colonialism, India's
traditional land ownership and land use patterns were changed to ease
acquisition of land at low prices by British entrepreneurs for mines,
plantations etc. The introduction of the institution of private
property de-legitimized 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 at the cost of the jajmani relationship that the landless
shared with the land owning class. By no means a just system, the
latter at least ensured the material security of those without land.⁷

Owing to these
developments, at independence, India inherited a semi-feudal agrarian
system. The ownership and control of land was highly concentrated in
a few landlords and intermediaries whose main intention was to
extract maximum rent, either in cash or kind, from tenants. Under
this arrangement, the sharecropper or the tenant farmer had little
economic motivation to develop farmland for increased production.
Naturally, a cultivator who did not have security of tenure, and was
required to pay a high proportion of output in rents, was less likely
to invest in land improvements, or use high yielding varieties or
other expensive inputs likely to yield higher returns. At the same
time, neither was the landlord particularly concerned about improving
the economic condition of the cultivators. As a result,
agricultural productivity suffered and oppression of tenants resulted
in a progressive deterioration of their plight.

In the years
immediately following India's independence, a conscious process of
nation building looked upon 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, reforms of the land were visualized as an
important pillar for a strong and prosperous country. The first few
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, and especially in areas
like the abolition of intermediaries, protection to tenants,
rationalization of different tenure systems and the imposition of
ceiling on land holdings. Fifty-four years down the line, however,
a number of problems are still far from satisfactorily resolved.

Most studies
indicate that inequalities have increased, rather than decreased.
The number of landless labor has gone up and the top ten percent
monopolizes more land now than in 1951. Meanwhile, the issue of land
reforms has over the years, either unconsciously faded from public
mind or deliberately been glossed over. Vested interests of the
landed elite and their powerful nexus with the political-bureaucratic
system have blocked meaningful land reforms and /or their earnest
implementation. The oppressed have either been co-opted with some
benefits, or further subjugated as the new focus on 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,
and who also happens to be the powerful decision-maker, has become
more a matter for housing, investment and infra-structure building.
In the bargain, the existence of land as a basis of livelihood -- for
subsistence, survival, social justice and human dignity has largely
been lost.

Objectives

It is against this background that
the specific objectives of the Project in India have been articulated
as:

• 
  
  To raise popular and elite awareness
  on issues related to land, particularly in the present context of
  the LPG thrust of the government since the 1990s

• 
  To monitor specific projects and
  programmes being aided by international financial institutions in
  some states of India in order to assess their true impact on the
  rural community directly affected.

• 
  To monitor and scrutinize national
  and transnational economic trends that have a specific bearing on
  issues related to land and agriculture.
  

• To explore the
  efficacy of the current developmental model that perceives land only
  as a factor of production, and not as a means of survival, equity
  and dignity.

• 
  
  To examine possible strategies for
  facilitating reconciliation between the claims of the market over
  land and land reforms to ensure social change based on justice and
  equity.
  

• To document
  historical strategies of land reforms and place them in the
  socio-economic-political context in which they were effective or not
  and accordingly cull out lessons for the future.

• 
  To recommend alternative policies
  and approaches to contemporary land challenges.

• 
  
  To provide research and analytical
  support to the existing land movements, and facilitate better
  networking among them.

• 
  To awaken the weakening social
  consciousness of an increasingly consumerist society by drawing
  linkages between the economic policies of globalization at the macro
  level and its impact on human livelihoods at the micro level.

IFIs and Issues
Related to Land in India

The task of the
articulation of objectives is several times easier compared to the
challenges that lie ahead in realizing these goals. Any
reform is as difficult an economic exercise as a political
undertaking since it involves a realignment of economic and political
power. The groups that are likely to be the losers naturally resist
reallocation of power, property and status. Obviously, the
landholding class is unlikely to willingly vote itself out of
possession. Neither should it be expected that it would be uniformly
inflamed by altruistic passions to voluntarily undertake the
exercise. Hence, one cannot underestimate the complexity of the task
at hand.

Loopholes in
legislation have facilitated the evasion of some of the provisions,
for instance in ceiling reforms, by those who wanted to maintain the
status quo. At the same time, tardy implementation at the
bureaucratic level and a political hijacking of the land reforms
agenda have traditionally posed impediments in the path of effective
land reforms. Even in states that have attempted reforms, the
process has often halted mid-way with the cooption of the
beneficiaries by the status quoits to resist any further reforms.
For instance, with the abolition of intermediary interests, the
erstwhile superior tenants belonging mostly to the upper and middle
classes have acquired a higher social status. Rise in agricultural
productivity, rising land values and higher incomes from cultivation
have added to their economic strength. These classes have since
become opposed to any erosion in their newly acquired financial or
social status.

Hence,
problems related to land such as concentration, tenancy rights,
access to the landless etc still continue to challenge India. The
criticality of the issue, in fact, may be gauged from the fact that
notwithstanding the decline in the share of agriculture to the GDP,
nearly 58% of India's population is still dependant on agriculture
for livelihood. More than half of this percentage (nearly 63%),
however, owns smallholdings of less than 1 hectare while the large
parcels of 10 hectares of land or more are in the hands of less than
2%. The absolute landless and the near landless (those owning up to
.2 ha of land) account for as much as 43% of the total peasant
households.⁸

This reality,
however, had come to worry the governments little during the late
1970s and 80s. It was only in the 1990s, with the initiation of the
economic restructuring process that the issue of land reforms
resurfaced, albeit in a different garb and with a different objective
and motivation. If the government-led land reforms had been imbued
with a degree, though the extent is debatable, of desire for
attaining equity, social justice and dignity, the new land reforms
agenda is market-driven, as everything else in this phase of economic
globalization, and has at its heart certain other kinds of
objectives. Being promoted and guided by various IFIs, contemporary
emphasis on land reforms reflects and seeks to fulfill the
macro-economic objectives of these multilateral economic
institutions.

While the return of
land reforms to the government's list of priorities is a welcome
development, the manner in which it is being undertaken, its
objectives, and consequently the impact on people, especially those
that are already marginalized and are being further deprived of a
stake in the system, raises a number of questions and prompts one to
look for alternatives. The Project, therefore, shall devote its
energies to identifying and monitoring the implementation of certain
specific IFI-sponsored programmes in particular states with a view to
examining their short-term and long-term impact on the lives and
livelihoods of local residents. This shall enable an informed
critique of the IFI- led land reforms programmes and serve as a
lesson for peoples else where in India and in other regions of the
globe as well.

Market- Led Land
Reforms -- The Current Emphasis on Land Administration, Titling and
Registration
In
their analyses of India's land reforms programme, most IFIs have
highlighted that one of the basic problem that the rural poor face is
access to land and security of tenure. Consequently, they advocate
redemption of this situation through structural reforms of property
rights to create land markets as part of a broader strategy of
fostering economic growth and reducing rural poverty.⁹

A large emphasis
has, therefore, been placed on the need to establish the basic legal
and institutional framework that would improve secure property rights
as a means to protect environmental and cultural resources, to
facilitate productivity-enhancing exchanges of land in rental and
sales markets, to link land to financial markets, to use land as a
sustainable source of revenue for local governments, and to improve
land access by the poor and traditionally disenfranchised. (Emphasis
added).

Through this
approach, land reforms are envisaged in two phases:

1. 
   Phase One -- Dismantling
   Distortionary Policies.
   

• This would
  involve the removal of all restrictions on the sale and purchase of
  land, including those related to minimum and maximum size, and
  revision of procedures for sale of public lands.
  

• It would
  envisage the complete elimination of rent controls so as to increase
  investments and efficiency in agriculture.

• 
  Zoning would also be eliminated,
  except in the case of safeguarding certain environmental concerns.
  Restrictions on land use, if necessary in specific areas, would be
  achieved through instruments other than government legislations,
  such as creation of a market for development rights.

2. Phase Two-
   Institutional and Legal Reforms
   

   • 
     Constraints in the operations of
     the land markets to be removed through reforms that aim that
     reducing costs of land adjudication, issuing of correct titles, and
     easy availability of crucial market information to interested
     parties.

   • 
     Creation of land laws that remove
     uncertainty facilitates easy and transparent access to the land
     administration system, establish dispute settlement institutions
     and institutionalize property rights.

   
   
   

As is evident, the
bottom line of all these measures is the facilitation of land markets
wherein land is available for sale-purchase from less to more
productive users. It is believed that with proper title deeds
being available for property, it would become easier and less risky
to buy and sell land. As a private commodity, the owner will have a
stake in putting the land to best use, which in WB terminology
implies use that can generate maximum profits.

The manner in which
this exercise would generate access to land for the rural poor is
through the provision of credit to them for purchase of land, making
available to them technical assistance to enable them to plough the
land in keeping with the needs of commercial farming, and providing
them with marketing support. Of course, everything would come for a
price with the farmer being gradually pushed into a process of
indebtedness. Credit would be easily available to have access to
land and other expensive agricultural inputs such as seeds,
fertilizers, pesticides, irrigation, market mechanisms etc. The
market forces at every step would encourage the farmer to take easily
available loans, but vagaries of nature as much as those of the
market could easily bring him to ruin. Bankrupt, he may be forced to
sell the land and either move out of the land market completely,
leaving the fields for the richer and more able farmers/corporations,
or get into the process once again to try his luck.

It is in this
context that the market-driven land reforms that are being encouraged
by the IFIs need to be looked into. None can deny the need for
reform in land administration agencies, for updating of land records
through surveys and settlement of rights, computerization of land
records etc. In fact, one can recall that in the first two decades of
government land reforms after independence, the reformers demanded
these measures. At that time, however, the issues were largely
ignored or neglected owing to lack of institutional support such as
trained staff, equipment, capital etc. The IFIs have rightly
discovered this lacuna and are now offering the financial help and
technical expertise in carrying out the exercise. However, the
purpose for which these reforms are being undertaken in the present
context raises several issues since the motives may not measure up to
those of social justice and dignity for the individual:

1. The IFIs
proclaim increasing access to land for the rural poor by offering
credit. However, how does this help if they simultaneously encourage
macroeconomic and trade policies that negate the benefits of such an
exercise? Policies such as trade liberalization, cutbacks in price
supports and subsidies for food producers, privatization of credit,
commercialization of agriculture, excessive export promotion and
promotion of research in expensive technologies such as genetic
engineering etc undercut the economic viability of the smaller and
poorer farmers. The onslaught of these policies adversely affects
the small farmers leading to high failure rates, mass sell-offs,
increased landlessness, land concentration, even intensified land
degradation, and rural-urban migration. What then is the efficacy of
such land reforms?

2. The
emergence of land markets and the consequent commodification of land
raises several issues for the status of the common property
resources because by codifying social and property relations that
were hitherto implicit, land titling could reduce the
asset-endowment of vulnerable groups with inadequate access to
political power. Therefore, their privatization would spell severe
consequences for those who have survived on it for generations but
have no legal documents to show for the same. Does this not lead to
situations, where common lands may be acquired by powerful
individuals/corporations in violation of long-established rights of
indigenous communities?

3. What impact
would the process of titling and land registration have on the
status of women and indigenous people who often tend to be left out
of these processes?

4. The
market-driven economy emphasizes short-term profit motives with
little regard for the people or environment. Rather, the primacy of
commercial interests in a market society encourages the view that
stretches of densely vegetated forests or other open lands that may
have an intangible ecological value but are not being utilized to
carry out activities that can fetch tangible foreign exchange are
‘non-optimally used resources.' With such perceptions becoming
prevalent, would not the environment, too, become victim to a
thoughtless extraction of maximum profits with little consideration
for the actual ecological value of land? For instance, the
conversion of non-agricultural land to agricultural, or vice versa,
may not be the most judicious use of the land but may be resorted to
for the sake of maximizing profits.

5. The benefits
of secure titles to land may be nullified by market distortions
caused when land is used as a commodity for investment and
speculation. This then inflates land value, making access to land
even more difficult. Therefore, how can land speculation, an
inevitable accompaniment of land market development, help in
providing secure tenure for all -- the major World Bank motivation
for market-led land reforms?

While data is not
yet available, most observers feel that the net result of the
predominance of land markets in regions where they have become
operative has been a deterioration in the access of the poor to land
as they are forced/tempted to sell off land they own, or lose it by
defaulting on credit. None can argue against the need for
straightening land records and the provision of secure land titles
and registration, the motivation for the exercise must delve deeper
than the mere creation of land markets for private profit. The
Project proposes to undertake a study of this issue and its actual
impact on the rural poor by studying the implementation of the
activity in the state of Maharashtra. It also proposes to study
alternative schemes in this regard, such as the one undertaken by the
Maharashtra government in Pune. The simultaneous analysis of two
different methods of undertaking regularization of land records would
reveal lessons for others. It shall also weigh the benefits costs of
these measures against those of land redistribution as a means of
poverty alleviation and for promotion of ecological sustainability.

Commercialization
/ Industrialization of Agriculture

An economic model based on widespread
industrialization has signified profound changes in the manner in
which agriculture is conducted and for what purpose. From a family,
or at the most a community affair, agriculture has been

"professionalised"
into an industry where a farmer produces for a global market. Indeed,
modern techniques of farming such as increased mechanization,
development and widespread use of artificial fertilizers, pesticides
and herbicides, emphasis on economies of scale through larger field
and farm size, continuous cropping, developments in livestock, plant
breeding and biotechnology have transformed agriculture.

This phenomenon has
been promoted by decision-makers who perceive agriculture more as an
industry that must be conducted to maximize profits and less as a way
of life that has social and ecological ramifications. The trend has
been justified by the substantial increases in agricultural output,
which, it is argued, has substantially eased national food security
concerns. Undoubtedly, national granaries are today overflowing. And
yet, the individual in the village is starving to death or a ‘failed'
farmer is resorting to suicide. Surely, this calls for a closer
examination of the issues involved.

Commercialization
of agriculture first struck its root in India in the 1960s with the
Green Revolution in Punjab when the World Bank, along with the U.S.
Agency for International Development (USAID), promoted agricultural
productivity through import of fertilizers, seeds, pesticides and
farm machinery.¹⁰
The Bank provided the credit that was needed to replace the low-
cost, low-input agriculture in existence with an agricultural system
that was both capital- and chemical-intensive. The Indian government
decided that the potential of the new technology far outweighed the
risks and accordingly, the foreign exchange component of the Green
Revolution strategy for the five-year plan period (1966-1971) was
raised to about $2.8 billion, a jump of more than six times the total
amount allocated to agriculture during the preceding third plan.¹¹
Most of the foreign exchange was spent on imports of fertilizer,
seeds, pesticides and farm machinery.

World Bank credit
subsidized these imports while also exerting pressure on the
government to obtain favorable conditions for foreign investment in
India's fertilizer industry, import liberalization and the
elimination of most domestic controls. The Bank advocated the
replacement of diverse varieties of food crops with monocultures of
imported varieties of seeds. In 1969, the Terai Seed Corporation was
started with a $13 million World Bank loan. This was followed by two
National Seeds Project (NSP) loans. This program led to the
homogenization and corporatization of India's agricultural system.
The Bank provided NSP $41 million between 1974 and 1978. The projects
were intended to develop state institutions and to create a new
infrastructure for increasing the production of Green Revolution seed
varieties. In 1988, the World Bank gave India's seed sector a fourth
loan to make it more "market responsive." The $150 million
loan aimed to privatize the seed industry and open India to
multinational seed corporations. After the loan, India announced a
New Seed Policy that allowed multinational corporations to penetrate
fully a market that previously was not as directly accessible.
Sandoz, Continental, Cargill, Pioneer, Hoechst and Ciba Geigy now are
among the multinational corporations that have major interests in
India's seed sector.

While the Revolution
did ease India's food grain situation, transforming the country from
a food importer to an exporter, it also provided space to the rich
farming community to politicize subsidies, facilitate concentration
of inputs increase dependence on greater use of
external inputs such as credit, technology, seeds, fertilizers etc.

Moreover, a study by the World Resources Institute, published in
1994, showed that the Green Revolution only increased Indian food
production by 5.4% while the agricultural practices that were
followed have resulted in nearly 8.5 million hectares or six percent
of the crop base being lost to water logging, salinity or excess
alkalinity. Furthermore, although the amount of wheat production has
doubled over a period of 20 years, and rice production has gone up by
50%, greater emphasis has been placed on production of commercial
crops like sugarcane and cotton etc at the expense of crops like
chickpeas and millet that were traditionally grown by the poor for
themselves. This has steadily eroded the self-sufficiency of the
small farmer in food grains.

Yet, governments
remain stuck on the same model of agrarian reforms and are being
generously encouraged by the IFIs. Agriculture is the World Bank's
largest portfolio in any country. 130 agricultural projects have
received $10.2 billion Bank financing in India since the 1950s.
These projects have taken the form of providing support for the
fertilizer industry, ground water exploitation through pump-sets,
introduction of high yielding variety of seeds, setting up of banking
institutions to finance capitalist agriculture etc.

Not surprisingly,
then, the trend towards commercialization of agriculture has only
intensified and in the process given rise to a number of questions:

1. Has not the
   promotion of the modern concept of agrarian reforms resulted in a
   radical transformation of agricultural practices through the
   introduction of new seed varieties, cultivation of cash crops,
   increasing use of fertilizers and chemicals and the charging of
   user-fees for irrigation and drinking water etc and thereby resulted
   in a sharp division in the farming community between the prosperous
   agri-business farmers and the small farmers trying to keep pace with
   market demands of commercial agriculture?
   

2. There is also a
   tendency to monopolize different agricultural activities, including
   production and distribution of seeds, knowledge etc. In addition,
   with liberalization, comes the entry of foreign capital into the
   farming sector, either through direct control over production or
   through contract farming. Corporate and contract farming encourages
   the cultivation of cash crops and fruits instead of food crops on
   even small pieces of land. Will this not steadily erode the
   self-sufficiency of the small farmer in the area of food grains?
   More so, if the cash crop fails, the small farmer is not adequately
   covered by any policy of the government, thereby becoming as
   vulnerable to natural vagaries as to market forces. Also, would not
   increased production translate into lower prices for products
   because of the simple demand-supply law, thereby making it even more
   difficult for small and marginal farmers to redeem the high costs of
   production?

3. 
   Would not the lack of economic viability in the farming activity
   lead a farmer to sell/lease land to domestic big landholders or
   foreign direct investors¹²,
   and migrate into cities? How then would the city infrastructure
   bear the additional burden?
   

4. Production of
   agricultural commodities for exports necessitates their smooth,
   reliable and timely delivery to the markets. The development of such
   infra structure amounts to land acquisition by the government in the
   name of "public
   purpose," but have adequate provisions been made for the
   rehabilitation and resettlement of the displaced tribals?

5. What impact has
   all this had on diversity in Indian agriculture? It has been
   alleged that the introduction of monocultures exacerbates social
   inequities by discriminating against small farmers who cannot afford
   the necessary expensive inputs like fertilizer and pesticides.
   Besides, the preservation of biodiversity is vital for local
   populations because ecosystems suffering from a loss of biodiversity
   end up losing their capacity to support the human populations
   dependent upon them.

6. At the same
   time, the impact on the environment cannot be ignored either. Is the
   excessive use of chemical inputs not already resulting in massive
   land degradation, soil erosion, siltation of reservoirs, local
   climate changes, desertification and loss of land productivity?

7. What are the
   implications of commercial agriculture on the larger issue of food
   security -- for the nation, and for the individual?
   

8. How are the
   issues of genetically modified crops going to play themselves out in
   the national and international political arenas and what impact
   would they have on the lives and livelihoods of the farmers
   concerned?

None of these issues
is of a minor nature or simple in solution. The Project proposes to
examine the phenomenon of commercialization of agriculture in the
state of Andhra Pradesh that has most enthusiastically embraced
agricultural reforms, including power and water sector reforms that
have a bearing on agriculture. Yet, the state has also been in the
news in recent times for farmers committing suicides or selling vital
body organs to pay back loans taken for expensive agricultural
inputs. The Project endeavors to explore the linkages.

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FOOTNOTES