Tenancy reform was an important component of land reform in post-Independence India, and in most States, leasing of agricultural land — or tenancy — is legally regulated or, in some cases, banned altogether.

Now the Niti Aayog has published a Report of the Expert Committee on Land Leasing, chaired by T. Haque (Government of India 2016). The main argument of the Report is that land leasing be deregulated. The Report states that there is a strong case “to legalise and liberalise land leasing for much needed agricultural efficiency, equity, occupational diversification and rapid rural transformation.” With this sweeping justification (in a few pages), the Report has proposed a model land leasing Act. The main features of the Model Act are (a) permitting or legalising land lease, (b) giving freedom to landowners to take back the land after the lease period, and (c) allowing the terms and conditions of land lease to be determined by mutual negotiation between landowner and tenant.

In a recent article, Sukhpal Singh has provided a useful critique of the proposed law (Singh 2017).

To me, one of the most astonishing recommendations of the Report is that governments should not regulate or fix rents and that the terms of tenancy be mutually agreed between lessor and lessee. Village studies reported by Singh (2017), as well as studies conducted by the Foundation for Agrarian Studies, show that there are diverse forms of tenancy in contemporary rural India, varying in terms of length of tenure, form of payment (fixed or share), mode of payment (cash or kind), and, most importantly, in terms of the power relations between lessor and lessee. Excessive and exploitative rent payments have been recorded in different parts of India.

To illustrate, in Ananthavaram village of Guntur district of Andhra Pradesh, a survey in 2005-6 showed that tenancy contracts had become more exploitative than those reported by a study of the same village in 1974 (Ramachandran, Rawal and Swaminathan, 2010). Scheduled Caste landless households were the majority of tenants. They leased in land from Caste Hindu landowners on fixed rent-in-kind tenancies: of an average production of 18.9 quintals of paddy per acre, 16.2 quintals (or 86 per cent) was the rent payment. Tenants invariably made a huge loss in the paddy-growing kharif season, a small part of which was recouped through cultivation of a rabi crop (cash permitting) and incomes from livestock raised on paddy straw.

The justification for de-regulation of the terms of lease is that “the rural poor have become politically more powerful through panchayat raj institutions and other democratic forces. Therefore, it is no longer true that a formal tenancy relationship would be exploitative.” The members of the Committee are clearly unfamiliar with everyday life in rural India and the persistence of huge socio-economic inequalities, whose influence continues to permeate democratic institutions.

Another clause in the Model Act states that a delay of three months in payment of rent or lease shall constitute major default and entitles the landowner to terminate the lease. In the context of climate variability, and where small cultivators are the most affected by fluctuations in weather as well as in market factors, a period of three months is clearly too short to recover from large adversities.

There are many more issues to be examined in detail but even a quick reading of the Report shows that the Model Act is a model of the gap between policy makers and rural reality.

References

Government of India (2016), “Report of the Expert Committee on Land Leasing,” Niti Aayog, New Delhi, available at http://niti.gov.in/writereaddata/files/document_publication/Final_Report_Expert_Group_on_Land_Leasing.pdf
Ramachandran, V. K., Rawal, V., and Swaminathan, M. (eds.) (2010), Socio-Economic Surveys of Three Villages in Andhra Pradesh: A Study of Agrarian Relations, Tulika Books, New Delhi.
Singh, Sukhpal (2017), “Tenancy Reforms: A Critique of NITI Aayog’s Model Law,” Economic and Political Weekly, Jan 4, pp. 17-19.