ECONOMICS

Market-led Land Reforms Since 1991

Land Reforms constituted an important constituent of the agricultural policy during the
first three five year plans. However, from 1970s onwards with the introduction of the New
Agricultural Strategy (NAS), the policy focus shifted from land reforms to technological
modernization of the sector. However, the land reforms, which did not received much attention
during the decade of 1970s and first half of 1980s, were approached in a different way from mid-
1980s onwards. Post-1991 reforms period introduced these reforms in a more formal manner.
The fundamental difference of these reforms compared to the earlier set of reforms was that
these reforms acknowledged land to be an important resource, not only for agriculture but for
other sectors as well like infrastructure development.

A shift towards infrastructure development had already started since 1980. With
emphasis on liberalization policies since mid-1980s, it was decided by the government that land
reforms should also be market-driven and should be aimed at national income growth even if it
leads to some negative externalities and costs. This point of view was promoted further by the
international organizations like International Monetary Fund and World bank when these
organizations were helping the Indian economy in tackling the Balance of Payments crisis of
1991. Three important components of these reforms were- modernization of land records,
facilitating land-leasing and to create fair and steady process of land acquisition for public
purposes.

Modernization of land records was initiated during the seventh five year plan when
steps like scientific survey of the unsurveyed land, registering the name of tenant and
sharecropper in the land records, strengthening the revenue system at the lowest level and
providing training facility to revenue officials had been taken. The most important step in this
direction was taken during the eighth five year plan by implementing the digitization of land
and revenue records in selected districts. In 2008, the government launched National Land
Records Modernization Programme (NLRMP) which aims to update and digitize land records by
end of 12th Five Year Plan i.e. 2017. Its aim is to move from presumptive title to conclusive or
legally valid title. The land transaction cost is also expected to fall with this reform and it would
encourage small and medium enterprises to enter into land transactions.

The NDA government has also encouraged the process through Digital India Land
Records Modernization Programme (DILRMP) by providing financial assistance to the states for
digitization of their land records. The integrated land information management system under the
programme facilitates an online and single-window access to information related to any plot of
land. This ensures more conclusive ownership rights for the land-owners thereby reducing the
land disputes. Although all land records are not yet digitized the process continues in most of the
states with about 90% of land getting digitized by 2019. Karnataka was the first state to complete
land records digitization followed by Andhra Pradesh and Tamil Nadu. However, despite
reasonable success in digitization process, care has to be taken to ensure that before digitization
the land records are correct. In Andhra Pradesh, for instance, there were many flaws found in

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digital land-records when government used these records to provide direct subsidies on
fertilizers.

The second market led land reform is associated with land leasing. With economic
development, urbanization has also accelerated leading to rural urban migration also by the land
owners in search of better employment. However, they often face the problem of not being able
to lease their land due to lack of conclusive title. Therefore, land has to be left untilled or some
family member has to stay back to take care of the land. Under the reform of facilitating land
leasing, it has been proposed that both the land owners and the leaseholds should be
compulsorily registered. It will allow the landless farmers to get land for cultivation while the
land owners can get rent without fear of losing ownership over the land.

In order to facilitate land leasing under an institutional framework, an Expert Committee

on land leasing was appointed by NITI Aayog under the chairmanship of T Haque (NITI Aayog
2016). On the basis of the recommendations of the committee, the Model Land Leasing Act,
2016 with the following features has been proposed:

(i) Legalize Land leasing: It will ensure conclusive ownership rights for the land owners
and also provide security of tenure to the tenants. In long-run, it is going to promote
agricultural efficiency, equity and poverty reduction.
(ii) Allow resumption of land automatically after the agreed lease period
(iii) Terms and conditions of the lease agreement to be decided mutually by the land
owners and tenants.
(iv) Facilitate the tenants to get benefits like bank credit and agricultural insurance.
(v) Incentivise the tenants to make investment in land improvement.

Despite urgent need for an institutional framework on land leasing, some issues need to be
addressed under the above Model Act. First, under the act land can be leased out for purposes
other than crop cultivation. It can lead to leasing of land for other commercial activities like
plantation crops, animal husbandry and agroprocessing which can impact the land-use pattern.
Second, the ‘lessee cultivator’ is defined as a “person who leases in agricultural land” without
specifying whether corporates and absentee landlords can also come under this purview apart
from the farmers or group of farmers. Although corporates can benefit agriculture by bringing
more investments, the choice of crops should not be purely motivated by profit as it can impact
goals like food security. Further, the Model Act allows the lease contracts for indefinite period.
This feature can go against the lessor (land owner) as they sometimes lease out their land in the
hope of getting some alternate job opportunities which may or may not succeed. In case of death
of the lessor, it can become more difficult to resume operations on the land by the family of
lessor from an influential lessee.

The last land reform during post-1991 time period is associated with land acquisition for
public purposes. The fundamental basis of the reform is to create a balance between certain
types of losses and the need for economic growth. There is loss of property for the land owners

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who lose their ownership without their will. Apart from that, there are certain project affected
people (PAP) who may have faced the loss of livelihood or settlement or both. Economic growth
is associated with the need for land for public purposes like infrastructure and industrial
development, strategic purpose, and research. In order to realise this goal, the central government
had enacted The Right to Fair Compensation and Transparency in Land Acquisition,
Rehabilitation and Resettlement Act (LARR), 2013. However, an amendment bill was
presented in the parliament in 2015 (LAAB). Here we compare some of the provisions/issues
associated with the debate on land acquisition through a comparison of the two legislations.

Similarities

(i) LARR, 2013 had replaced the Land Acquisition Act, 1894 which is outdated and does not
provide for adequate compensation and livelihood provisions. Under LARR the acquirer will be
obliged to pay up to four time market price for land in the rural areas and twice the market price
in the urban areas to the land losers. Here 'market price' refers to the market value in the Indian
Stamp Act for sale deeds or average of top 50% of all sale deeds in similar lands in vicinity.

LAAB, 2015 proposed the same compensation rule.

(ii) Both LARR and LAAB propose a unified legislation for the acquisition of land, provided that
acquisition is governed by public purpose either met by government organization or by some
private sector entity.

Differences

(i) Apart from compensation, the acquirer must also provide livelihood security to the project
affected employed people. Although both LARR and LAAB promise employment guarantee,
while LARR promised it to all project affected persons, LAAB limits it to at least one member of
affected farm household.

(ii) Consent Requirement: It refers to the minimum consent of the PAP needed before land
acquisition. LARR required the consent of at least 80% of the PAP if land was to be acquired for
private projects. For the Public Private Partnership (PPP) projects, it was been lowered to 70%
level.

LAAB exempted five sectors from the consent requirement. These were (a) Defence, (b)
Rural Infrastructure, (c) Affordable Housing, (d) Industrial Corridors and (e) Infrastructure
where Central Government owns land.

(iii) Every acquisition requires a Social Impact Assessment (SIA) by the government, no matter
what is the area of land belonging to a particular land owner under LARR, 2013. This assessment
needs to justify certain ideal features of land acquisition. These features include (a) that land is
acquired for a public purpose; (b) that extent of land acquisition is bare minimum; (c) whether
some alternate land acquisition was found feasible; (d) whether overall benefits from the project
exceed the social cost and cost of assessment; (e) inventory of movable and immovable property

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likely to be impacted; and (f) number of project affected households in terms of job loss and
displacement.

Although SIA is theoretically justified to prevent misuse of land acquisition, it was

criticized mainly on two counts. It was likely to increase the time of land acquisition as it was to
be approved by various bureaucratic levels before land acquisition. Also, SIA does not make
sense if very small area of land is being acquired. However, LAAB, 2015 has not addressed any
of these issues. Rather, the above five sectors were exempted from SIA requirement.

(iv) Under LARR, 2013, a maximum of 5% of irrigated multi-cropped land may be acquired
in a district. This was to minimize the acquisition of agricultural land, particularly of the best
quality. However, under LAAB it was stated that the above five sectors can be exempted from
this requirement on case-by-case basis.

Current Issues

Since LAAB, 2015 could not be passed in the parliament, LARR, 2013 still exists as the
land acquisition legislation from centre. However, land acquisition falls under the concurrent list
and therefore the states can also legislate on land acquisition. Such freedom has always been
there but recently after failure to legislate LAAB has resulted in specific encouragement from
Centre to states to legislate on land acquisition, claiming it to be in line with cooperative
federalism principle. A number of states have gone for such legislations in last few years.
Gujarat and Telangana brought their land acquisition acts in 2016 exempting the large
infrastructure projects from LARR, 2013 provisions and similar legislations were brought by
Jharkhand in 2017 and Andhra Pradesh in 2018.

Other states have also diluted some provisions of LARR, 2013. LARR demanded that
SIA should be reviewed by independent experts but according to a CSE study shows that in a
number of states such review is being done by the government officials. States like MP,
Chattisgarh, UP, WB, Odisha and Maharashtra have come up with a ‘consent land purchase’
policies which allow the government agencies to buy land directly from the farmers at an agreed
price thereby bypassing the need for SIA, rehabilitation and resettlement. Under ‘land pooling’
scheme the states like Gujarat, AP, Rajasthan, Punjab, Haryana and Delhi are acquiring land and
the land owners get a share in the developed land rather than compensation.

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