Land Reform in India: Issues and Challenges

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Land Reform in India: Issues and Challenges
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As the basis of all economic activity, land can either serve as an essential asset
for a country to achieve economic growth and social equity, or it can 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 experienced the latter reality. During colonialism, India s traditional
land-use and landownership patterns were changed to ease the acquisition of
land at low prices by British entrepreneurs for mines, plantations, and other
enterprises. The introduction of the institution of private property delegitimized
the 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 system1 at the cost of the jajmani relationship2 that
the landless shared with the landowning class. By no means a just system, the
latter was an example of what has been described by Scott (1976) as a moral
economy, and at the least it ensured the material security of those without land.
Owing to these developments in a changing social and economic landscape,
India at independence inherited a semifeudal agrarian system. The ownership
and control of land was highly concentrated in the hands of a small group of
landlords and intermediaries, whose main intention was to extract maximum
rent, either in cash or in kind, from tenants. Under this arrangement, the
sharecropper or the tenant farmer had little economic motivation to develop
farmland for increased production; with no security of tenure and a high rent,
a tenant farmer was naturally less likely to invest in land improvements, or use
high-yielding crop varieties or other expensive investments that might yield
73
higher returns. At the same time, the landlord was not particularly concerned
about improving the economic condition of the cultivators. Consequently, agricultural
productivity su ered, and the oppression of tenants resulted in a progressive
deterioration of their well-being.
In the years immediately following India s independence, a conscious
process of nation building considered the 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, land reforms were visualized as an important pillar of a strong
and prosperous country. India s first several 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, especially with
regard to issues such as the abolition of intermediaries, protection to tenants,
rationalization of di erent tenure systems, and the imposition of ceilings on
landholdings. Fifty-four years down the line, however, a number of problems
remain far from resolved.
Most studies indicate that inequalities have increased, rather than decreased.
The number of landless laborers has risen, while the wealthiest 10
percent of the population monopolizes more land now than in 1951. Moreover,
the discussion of land reforms since World War II and up through the most
recent decade either faded from the public mind or was deliberately glossed
over by both the national government of India and a majority of international
development agencies. Vested interests of the landed elite and their powerful
connection 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
liberalization, privatization, and globalization (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, who are also the powerful decision
makers has become more a matter of housing, investment, and infrastructure
building; land as a basis of livelihood for subsistence, survival, social
justice, and human dignity has largely been lost.
International Financial Institutions (IFIs) and Issues Related to Land in India
Any reform is as difficult an economic exercise as it is a political undertaking,
since it involves a realignment of economic and political power. Those who are
74 land and agrarian reform: historical perspectives
likely to experience losses under reform naturally resist reallocation of power,
property, and status. The landholding class, therefore, is unlikely to willingly
vote itself out of possession, nor should it be expected that they would be uniformly
inflamed by altruistic passions to voluntarily undertake the exercise.
Hence, one cannot underestimate the complexity of the task at hand. However,
the political will of the landowning class is as much a challenge to the redistributive
process as are the existing legal and structural dimensions of the current
landholding regime. A brief review of the legal history that has accompanied
India s land struggles is therefore a necessary detour for continuing
this discussion in all its complexity.
Loopholes in land tenure legislation have facilitated the evasion of some of
the provisions in land ceiling reforms by those large landholders who have
wanted to maintain the status quo. At the same time, tardy implementation at
the bureaucratic level and a political hijacking of the land reform agenda, by
both the state and private interests, have traditionally posed impediments in
the path of e ective land reforms. Even in regional states throughout India that
have attempted reforms, the process has often halted midway with the cooptation
of the beneficiaries by those working to resist any further reforms. For
instance, with the abolition of intermediary interests, some middle-income
farmers have gained economic leverage through the expansion of agricultural
export. The most a luent of these tenants have acquired a higher social status
as the rise in agricultural productivity, land values, and 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.
Land-related problems such as tenancy rights and access to land for subsistence
farming continue to challenge India. The importance of the land issue
may be inferred from the fact that, notwithstanding the decline in the share
of agriculture in the GDP, more than half of India s population (nearly 58 percent)
is dependent on agriculture for livelihood. Yet more than half of this population
(nearly 63 percent) own smallholdings of less than 1 hectare, with large
parcels of 10 hectares of land or more in the hands of less than 2 percent. The
absolute landless and the nearly landless (those owning up to 0.2 hectares of
land) account for as much as 43 percent of total peasant households (Mearns
1999).
The reality represented by these statistics, however, did not seem to worry
the governments of the late 1970s and 1980s. It was only in the 1990s, with
the initiation of the economic restructuring process, that the issue of land
Land Reform in India: Issues and Challenges 75
reform resurfaced, albeit in a di erent garb and with a di erent objective and
motivation. Whereas the government-led land reforms had been imbued
with some e ort to attain equity, social justice, and dignity, the new land
reform agenda is solely market driven, and aimed at increasing GDP regardless
of any externalities or costs associated with the process. Promoted and
guided by various international financial institutions (IFIs) such as the World
Bank and the International Monetary Fund (IMF), government emphasis on
land reform since the 1990s reflects and seeks to fulfill the macroeconomic
objectives of these multilateral economic institutions.
While the return of land reform to the government s list of priorities is a
welcome development, the manner in which it is being undertaken its objectives,
and, consequently, its impact on people, especially those already marginalized
and now being further deprived of a stake in the system raises a
number of questions and prompts one to look for alternatives. The remainder
of this chapter, therefore, will devote its energies to identifying and monitoring
the implementation of certain specific IFI-sponsored programs in particular
states with a view to examining their short-term and long-term impact on
the lives and livelihoods of local residents. It is hoped this shall enable an
informed critique of the IFI-led land reform programs and serve as a lesson
for peoples elsewhere in India and in other regions of the globe.
Market-Led Land Reform: The Current Emphasis on Land Administration, Titling, and Registration
In their analyses of India s land reform program, most international financial
institutions have highlighted the basic problems that rural poor people face is
accessing land and security of tenure, and they advocate redress of this situation
through the structural reform of property rights, to create land markets
as part of a broader strategy of fostering economic growth and reducing rural
poverty (Mearns 1999). A large emphasis has, therefore, been placed on the
need to establish the basic legal and institutional framework that would facilitate
a market takeo in land and resource exchange. The goals of the new legal
framework include e orts to improve property rights as a means to protect
environmental and cultural resources, facilitate productivity-enhancing
exchanges of land in rental and sales markets, page link land to financial markets,
use land to generate revenue for local governments, and improve land access
for the poor and traditionally disenfranchised.
The neoliberal package endorsed by the IFIs includes a number of reforms
76 land and agrarian reform: historical perspectives
that will transform the current system of land tenure into a market-oriented
system of exchange. This tranformation includes a number of incremental
steps that begin with titling and cadastral surveys (mapping). The latter are
then formally tied to the establishment of state land registries, the creation of
new landholding legislation, the concomitant establishment of a land administration
department within the state, and finally the removal of restrictions on
land leasing (see figure 1 in the introduction to part II of this volume). A similar
plan had already been put forward as early as 1975, when a land reform policy
paper published by the World Bank described land registration and titling
as the main instruments for increasing an individual s tenure security and
linked titling and registration to the establishment of flourishing land markets.
The process of land tenure formalization provided the major tools land titles
and cadastral mapping that were to enable the use of land as collateral for
credit.
While none can argue against the need for straightening land records and
providing secure land titles and registration, the motivation for the exercise
must delve deeper than the mere creation of land markets for private profit.
The belief that land markets alone would take o and address the historical
inequality that was their foundation has been challenged by the reality of
India s ongoing crisis in food security. The shift in agriculture that has taken
place since the first period of World Bank endorsed privatization schemes in
the 1970s points to an important historical and economic trend that has complicated
the more recent attempts at marketization and poverty reduction in
the twenty-first century. Industrialization, and the limits placed on national
development programs to that end, exacerbate already existing inequalities in
land distribution. The shift in Indian agricultural policy toward export and the
increased embrace of neoliberal economic model casts much doubt on the purported
benefits of the current World Bank land reform agenda in India.
The Commercialization/Industrialization of Agriculture
The influence of industrialization on national and international economic systems
has reshaped the manner in which agriculture is conducted and for what
purpose. From a family, or, at the most, a community a air, agriculture has
been professionalized into an industry in which a farmer produces for the
global market. Indeed, modern farming methods and techniques3 have transformed
agriculture into a science of food production and a system of commodity
distribution.
Land Reform in India: Issues and Challenges 77
This shift in agricultural production goals has been promoted most fervently
since the 1980s, by policy makers and politicians, who conceptualize
agriculture more as an industry that must be conducted to maximize profits,
and less as a way of life with social and ecological ramifications. The trend has
been justified by the substantial increases in agricultural output, which, it is
argued, has substantially eased India s national food-security concerns.
Undoubtedly, Indian granaries are overflowing. And yet, the individual in the
typical Indian village is starving to death, and a failed farmer resorts to suicide.
Surely, the disparity between these two realities calls for a closer examination
of the issues involved.
Commercialization of agriculture first gained a foothold in India in the
1960s, with the green revolution in Punjab, when the World Bank, along with
the US Agency for International Development (USAID), promoted agricultural
productivity through importation of fertilizers, seeds, pesticides, and farm
machinery.4 The Bank provided the credit necessary to replace the low-cost, lowinput
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, devalued the
Indian rupee for the five-year plan period (1966 1971) to generate the purchase
of approximately US$2.8 billion in green revolution related technology, a jump
of more than six times the total amount allocated to agriculture by the state during
the preceding plan period (Shiva 1991). Most of the foreign exchange was
spent on imports of fertilizer, seeds, pesticides, and farm machinery.
While subsidizing these imports, the World Bank also exerted pressure on
the Indian government to obtain favorable conditions for foreign investment
in India s fertilizer industry, for import liberalization, and for the elimination
of most domestic controls on prices for basic agricultural products, e.g., grains
and milk. The Bank advocated the replacement of diverse varieties of food crops
with monocultures grown from imported varieties of seeds. In 1969, the Terai
Seed Corporation (TSC) was started with a US$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 the NSP US$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 US$150 million loan aimed to privatize the seed industry and
open India to multinational seed corporations. After the loan, India announced
78 land and agrarian reform: historical perspectives
a New Seed Policy that allowed multinational corporations to penetrate fully a
market that previously had not been directly accessible; Sandoz, Continental,
Monsanto, Cargill, Pioneer, Hoechst, and Ciba Geigy now are among the multinational
corporations with major investments in India s seed sector.
While the revolution did ease India s grain situation and transformed the
country from a food importer to an exporter, it also enabled the rich farming
community to politicize subsidies, facilitate concentration of inputs, and
increase dependence on greater use of capital inputs such as credit, technology,
seeds, and fertilizers. Moreover, the green revolution had increased
Indian food production by only 5.4 percent, while the new agricultural practices
resulted in the loss of nearly 8.5 million hectares, or 6 percent, of the crop
base to waterlogging, salinity, or excess alkalinity (World Resources Institute
1994). Furthermore, although the amount of wheat production doubled over
a period of twenty years, and rice production increased by 50 percent, greater
emphasis has been placed on production of commercial crops such as sugarcane
and cotton at the expense of crops like chickpeas and millet, traditionally
grown by the poor for themselves. These changes in practice have steadily
eroded the self-sufficiency of the small farmer in food grains.
Yet in the face of such statistics successive Indian governments remain
stuck on the same model of agrarian reforms, and they are generously encouraged
by the IFIs. Agriculture is the World Bank s largest portfolio in any country.
One hundred and thirty agricultural projects have received US$10.2 billion
in World Bank financing in India since the 1950s. These projects have generally
taken the forms of providing support for the fertilizer industry, exploiting
groundwater through electric or gas-generated pumps, introducing highyield
seed varieties, and setting up banking institutions to finance capitalist
agriculture.
Water Sector Restructuring as Part of Agrarian Reform
Most supporters of land reform view the process as more than the mere redistribution
of land to the landless. Rather, they place an equal importance on the
availability of other inputs that can help turn the piece of land into a productive
asset. In an agricultural country such as India, where two-thirds of the agricultural
production is dependent on irrigation and irrigation accounts for 83
percent of consumptive water use (World Bank 1999a), irrigation schemes that
can enhance agricultural productivity assume special importance. However,
such projects launched by the government have often become entangled in a
range of controversial issues. Questions have been raised about their actual
Land Reform in India: Issues and Challenges 79
80 land and agrarian reform: historical perspectives
merit, about cost versus benefit especially in view of the numbers of people
that may be displaced by such a project about adequate rehabilitation
schemes for people a ected by the project, and so on. Big dams and other
hydroelectric projects naturally bring with them the threats of submergence of
hundreds of villages and the forced displacement of thousands of people. In
the absence of people-friendly rehabilitation and resettlement packages, it
remains questionable whether these development projects are truly worthwhile
since they deprive one population of its livelihood to enhance that of another.
In this context, land acquisition by the government in the name of public purpose
can be seen to raise doubt about the efficacy of such infrastructure development
in the name of agrarian reform. Such issues prompted the World Bank
to withdraw all funding for the still-incomplete Sardar Sarovar Project.5
In an attempt to steer clear of national and local controversies, IFIs have
begun to finance and promote water sector restructuring projects of another
kind. Highlighting the need for a total revolution in irrigated agriculture
(World Bank 1999a, xii), the government of India and the World Bank have
identified the following goals for national rural development:
Modernization of irrigation agencies to make them more autonomous
and accountable.
Improvements in irrigation systems by organizing farmers to take up
operation and management responsibilities. Formation of water-user
associations at the minor and distributaries levels.
Reforms in irrigation financing in order to make state irrigation
departments financially self-sufficient, rationalizing water charges,
and improving collection rates.
Institution of a system of water rights.
In the past, irrigation schemes had led to more severe environmental problems
such as a rise in soil saturation and salinity in irrigated areas, which in
turn brought more severe soil degradation. Not surprisingly, the World Bank
came forward with new aid programs to resolve these problems, and it is now
well into a second phase of water project loan disbursements. In 2001, the
Bank announced two water and irrigation projects in the states of Rajasthan
and Uttar Pradesh (UP).6 The US$140 million credit for Rajasthan and the
US$149.2 million credit for Uttar Pradesh are both on standard IDA7 terms,
with a forty-year maturity and including a ten-year grace period.
Premised on the assumption that irrigated agriculture could be the engine
of agricultural growth but has been constrained by a failing public irrigation and
drainage system, these two projects aim to initiate fundamental reform in water
resources management and irrigation as a means to improve the living standards
of the poor. The projects claim that improving agricultural productivity
will generate additional jobs in the rural sector. In Rajasthan, projected aims are
to benefit an estimated 250,000 farm families and stimulate demand for labor
estimated at approximately 29,000 jobs per year, while in UP, the project is
expected to generate additional employment for 22,000 rural farm families per
year, representing a 24 percent increase in rural farm employment.
In addition, it is claimed that the formation of community groups under
some of the project components will empower the rural population, particularly
women and other disadvantaged people. The project also supports environmental
management capacity, which will benefit a ected communities by
reducing pollution, preventing water-related diseases and improving public
health.
These projects, with their laudable objectives, have just been initiated, and
it would be instructive to monitor their implementation and progress vis- -vis
the actual impact on people in the regions a ected. It must be kept in mind
that the present IFI-led ventures in the sector of water are basically premised
on the following two assumptions: First, in view of the impending water
scarcity there is a need for water resources management in the form of large
projects, for the storage and transfer of river waters. This requires huge
investments that are beyond the capabilities of the government, and hence
require liberal participation of the private sector. Second, in order to ensure
water conservation and its proper distribution, there is a need to establish stable
water markets and fair pricing. The emphasis, therefore, is on the creation
of water markets, which will impinge on important issues of equity, social justice,
and sustainability.
At the same time, the language being used in the water sector restructuring
projects is reminiscent of the Joint Forest Management (JFM) and its emphasis
on participatory management. Under the new World Bank projects, the irrigation
sector, too, is being couched in the same rhetoric of community management,
though now in a less pervasive and publicized manner. In the
management of tanks and lift irrigation (so-called minor irrigation) and even
in the management of canal irrigation, phrases such as participatory irrigation
management (PIM), or the more explicit irrigation management turnover
(IMT), are the new catch phrases. Consequently, all sectoral reform programs
or development projects speak of joint management, co-management, or
shared management.