How Land Leasing Reforms Are Slowly Getting Off The Ground

A few years down the line, will it be possible for a tenant farmer and an agricultural land owner to sign a formal agreement on leasing land? It could, if an initiative being spearheaded by the NITI Aayog, which has notched up some initial success, gains traction. If it does, more land will be brought under cultivation.

In Uttar Pradesh, the Revenue Code and the Zamindari Abolition and Land Reforms Act have been amended to create a more conducive environment for land leasing. Madhya Pradesh has enacted a new law doing much the same. And Odisha has a draft legislation on the subject ready.

Both Uttar Pradesh and Madhya Pradesh had laws that allowed only certain categories of persons (disabled persons, widows and single women, minors, a person in jail, members of the armed forces) to lease out their land to tenants to farm.

The Uttar Pradesh Revenue Code amendment now extends the benefit of land leasing to anyone in any public or private service, business trade or profession. A provision in the Uttar Pradesh Zamindari Abolition and Land Reforms Act, which gave tenants full rights to land after 12 years, has been deleted.

Madhya Pradesh’s all-new Act has no restrictions at all. Its provisions set out very clearly the rules of engagement between land owners and tenants.

Giving comfort to land owners, the two states now cap the period of tenancy – three years in Uttar Pradesh and five years in Madhya Pradesh.

State governments are slowly beginning to understand the need for reforming land lease laws, says T Haque, chairman of the special cell on land policies in the NITI Aayog. Haque has been advocating reform of land leasing laws for close to a decade now and it is only now that he is beginning to see his efforts bear fruit. Haque headed the expert committee on land leasing set up last year by the Aayog. The report, submitted in March, drew up a model Agricultural Land Leasing Act, which Haque is persuading state governments to adopt.

If you’re wondering what the fuss is all about, since there are so many tenant farmers across the country – 20 million, according to this report – here’s a quick lowdown. Post Independence, most state governments passed laws that cut the feudal and exploitative power of landlords. The idea was to protect the rights of tenant farmers and limit the powers of the land owners.

Most of these laws either abolished tenancy outright or imposed a number of restrictions on it, making it unattractive, on paper. Kerala, Jammu and Kashmir and Manipur, Haque’s report points out, have banned tenancy. A number of other states – Bihar, Karnataka, Madhya Pradesh, to mention a few – allow only some categories of people to lease out their land to tenant farmers. The four most common categories are disabled persons, widows, minors and armed forces personnel. Other states – Punjab, Gujarat, Maharashtra, for example – do not expressly prohibit tenancy but gives tenants rights over land that they have cultivated for a certain number of years. In Andhra Pradesh, tenancy has to be for a minimum of six years and can be terminated only with the permission of a special judicial officer. In addition, the land owner has to leave at least half the land that was leased out to the tenant.

“By intention, the existing laws are titled towards tenants but, in effect, they are anti-tenant,” Haque points out.

One, the laws only ended up encouraging informal, verbal tenancies. “Tenancy happens because of demand,” Haque points out; tenant farmers have little other employment avenues. They, then, have no choice but to go along with informal agreements, with the threat of eviction constantly hovering over them. “Only 4 per cent of tenanted area has been transferred to tenants across the country,” says Haque. “Of the remaining area, 33 per cent have seen tenants being evicted.” In Andhra Pradesh, he points out, 30-40 per cent of land is under tenancy and it is as high as 70 per cent in some districts.

Two, since there is no agreement in their name, the tenants, who are actually tilling the land, cannot access credit through formal banking channels. This puts them at the mercy of money lenders or even the landlord at usurious rates. They cannot apply for insurance for the same reason. And above all, when the government hands out compensation for cash losses, they cannot claim it; it goes to the landlord. And, as NITI Aayog’s member, agriculture, Ramesh Chand pointed out in this interview, even direct benefit transfer for farmers will hit this hurdle; any cash payout will only go to the landlord, not the actual farmer.

The bans and restrictions on land leasing have also hit the agriculture sector. Not all landowners have the stomach for informal agreements – they worry about tenants taking over their land. This fear is exacerbated in states where laws allow adverse possession of land by tenants after a period. In Gujarat and Maharashtra, Haque points out, tenants are entitled to purchase the land after a time period at prices determined by the government. In Bihar, 12 years of tenancy entitles tenant for occupancy. Land owners, therefore, prefer to keep the land fallow. Haque says 10-12 per cent of cultivable land in many states is fallow. At a time when there is a pressing need to increase agricultural production, reform of land lease law is of utmost importance.

Besides, land owners who may not have surplus funds to invest in non-agricultural businesses, will now be able to use the money they earn from leasing out land to try their hand at entrepreneurship. In some states, the returns can be very handsome – in Punjab, where informal tenancies are quite common, the average rent is Rs 30,000-40,000 an acre, Haque points out. “Land leasing is a win-win for both land owners and tenants,” he says.

As chairman of the special cell on land policies, Haque is persuading state governments to change their land lease laws, pointing out that recognising tenancies and providing a legal framework for these will also add to states’ revenues. He’s not facing any open resistance but find politicians seeing this is a sensitive issue and not pushing hard for it. “There is still no awareness; it is not a voter issue yet,” he says.

Apart from Uttar Pradesh, Madhya Pradesh and Odisha, Haque is finding the governments of Andhra Pradesh and Telengana quite receptive. He had talks in Andhra Pradesh recently and the chief secretary has announced consultations on the subject. He and his team are also talking to the governments of Bihar, Kerala and Uttarakhand.

Along with this, Haque is also pushing for land titling reforms. The lack of proper land records is a huge constraint to the productive use of land. He, however, feels the approach to land titling till now – focusing on computerisation – is flawed. “First, land records need to be updated in a way that is litigation free. Every transfer has to be recorded and digitised,” he says. He favours a localised approach where gram sabha meetings are called and the local revenue official brings land records and gets them verified on the spot. “This will be very transparent and will cost no more than Rs 50,000 to Rs 1 lakh per village,” he says. Updating and digitisation of land records has been done in a fool proof manner in Gujarat and in some villages in the Warangal district of Telengana.

But land titling will be a long-drawn out affair and Haque doesn’t want land lease reform to be held hostage to it. Even if there are no proper land records, land which is not under litigation (that will be only 10 per cent or so) can be leased out immediately, he says. “This issue needs to be taken up in campaign mode.”