DAMODARAM SANJIVAYYA NATIONAL LAW UNIVERSITY VISAKHAPATNAM, A.P., INDIA

Land reforms in India

ECONOMICS II

UNDER THE GUIDENCE OF

Prof. G. Ramachandrudu &Mr. Abhishek Sinha

D.THARUN KUMARSEM-III

2014-032

CONTENTS

1)Introduction........................................................................................................................6

2)Trends In Indian Population In Last Century (1901-2001)...............................................7

2.1)Period Of Stagnant Population (1901-1921).......................................................8

2.2)Period Of Steady Growth (1921-51)...................................................................9

2.3)Period Of Rapid High Growth (1951-81)...........................................................9

2.4)Period Of High Growth Rate With Definite Signs Of Slowing Down (1981-2001).....10

3)Factors That Affect Population Growth............................................................................11

3.1)Infant Mortality..................................................................................................12

3.2)Early Marriage....................................................................................................12

3.3)Level Of Education.............................................................................................12

3.4)Use Of Contraceptives........................................................................................12

3.5)Other Socio-Economic Factors...........................................................................12

4)Pre Independence Policies.................................................................................................13

5)Post Independence Policies...............................................................................................13

5.1)Population Policy Of 195...................................................................................13

5.2)Population Policy Of 1974 & 1979....................................................................13

5.3)National Population Policy 2000........................................................................16

6)Demographic Transition In India......................................................................................18

7)Analysis Of 2011 Census Report......................................................................................23

8) Bibliography....................................................................................................................30

Objectives/Aims of the Study

The major objectives or aims of this research work are as follows :

To study about the history of land reforms.

To study and understand the measures taken or the legislations passed regarding these

land reforms.

To study about the effect of these land reforms on the society.

Significance & Benefit of the study

This study would be a decent research work on the land reforms in India. The

researcher would study and analyze various policies, legislations and government steps

regarding these land reforms.

Scope of the Study

The scope of this research work would be limited to the Indian context and

would not touch upon other countries. The researcher would further limit the scope by

considering only the post independence population policies of India.

Research Methodology

The researcher would like to do a doctrinal study about the topic by referring to

various books and articles available on the topic. The researcher would do a detail analysis on

the various post independence population policies of India.

Introduction

In India, over 70% of the population resides in rural areas with majority depending on land

based activities for their livelihood. Studies have shown that owners of productive plots of

land tend to be economically better off, and generally conform to at least a minimum standard

of living. They also have greater bargaining power since they are in a position to control not

only the direct benefits arising from their land, but also to share in the benefits derived by

labourers who work on their land. In this context, landlessness is the main cause of rural

poverty. In addition to food insecurity and vulnerability to exploitation, landlessness brings

various obstacles in routine functioning of the agrarian system. In the absence of a legal title,

it is difficult for the landless to obtain insurance for their crops, loans from banks, avail of

benefits from Government schemes such as Indira Awas Yojana, etc. A common problem for

the rural landless is the inability to profit from their labour and nvestment.

Land Reforms were envisaged as an important instrument of change directed at removing

institutional and motivational obstacles standing in the way of modernisation of agriculture

and creation of more egalitarian social structure. After independence, land reforms were

made an important and integral part of the rural development programmes in India.

The major objectives of land reforms in India are as follows:

(1) Restructuring of agrarian relations to achieve egalitarian social structure;

(2) Elimination of exploitation in land relations;

(3) Actualisation of the goal of “land to the tiller”;

(4) Improvement of socio-economic conditions of the rural poor by widening their land base;

(5) Increasing, agricultural production and productivity;

(6) Facilitating land base development of rural poor; and

(7) Infusion of a greater measure of equality in local institutions.

For the fulfilment of these objectives, the major steps adopted under the land reforms

programme in the country are as follows:

1. Abolition of intermediaries

2. Regulation of landlord-tenant relationship by fixing fair rents, conferring security of tenure

on tenants subject to the landlord’s right to resume limited area for personal cultivation,

bringing tenants into direct relationship with the State in respect of areas which the landlord

is not entitled to resume and gradual conferment of ownership rights on the tenants

3. Redistribution of land by placing ceiling on future acquisition and exiting holdings and

acquiring surplus areas above the ceilings, resettlement of landless agricultural workers and

increasing the size of uneconomic holdings 4. Consolidation of scattered holdings into

compact blocks and prevention of fragmentation and sub-division of holdings below an

economic size1

5. Updating and computerisation of land records - The history of post-independence

India broadly shows three phases. Legislation to abolish intermediaries marked 1948-

54. Then starting in 1953, tenancy reform measures were implemented in many States.

Finally Legislation for imposing ceilings on holdings began in 1956.

Agricultural Land Ceiling

The Land Ceiling Act, in its structure and process, follows the common pattern. The first

enactment in Tamil Nadu on land ceiling was the Tamil Nadu Land Reforms (Fixation of

Ceiling on Land) Act, 1961, (called the Principal Act) which received the assent of the

President on the 15th April 1962 and was published in the official gazette on the 2nd May

1962. The object was equitable distribution of land to the landless by fixing the ceiling on the

holdings of agricultural land so as to render the surplus available for distribution to the

landless poor.

The ceiling limit for a family consisting of five members was fixed as 30 standard acres. For

every additional member of the family consisting of more than five members, 3.3 Land

Reforms and Computerisation of Land Records 124 an additional extent of five standard

acres was allowed in addition to the ceiling area of 30 standard acres, subject to the overall

ceiling of 60 standard acres. Any female member of a family having lands in her own name

on the date of commencement of the Act is entitled to hold stridhana property upto a ceiling

of 10 standard acres. Planters were allowed excess land subject to the maximum of 20% of

contiguous area of existing plantation after getting permission from the Land board under

section 31 of the Act The Act was challenged by writ petitions filed in the Supreme Court in

1 Centre for Communication and Development Studies, Towards a People’s Land Policy: Discussion Paper, 2007

1963 (A.P. Krishnaswamy Naidu and others Vs. State of Madras 1964 – 7 S.C.R. 82) on the

ground that its provisions violated Articles 14, 19 & 31 (2) of the Constitution. Not only was

the Tamil Nadu Land Ceiling Act struck down as unconstitutional, similar attacks were made

to several Acts of other States imposing ceiling on the holdings of the land and attempting to

effect similar agrarian reforms. To shield these Acts against such attacks, Parliament passed

the Constitution Seventeenth Amendment Act on the 20th June 1964. The Statement of

objects and reasons for the Act shows that in as much as “several State Acts relating to Land

Reforms were struck down on the ground that the provisions of those Acts were violative of

Articles 14, 19 and 31 of the Constitution and that the protection of the Article 31-A was not

available to them”, it was “proposed to amend the definition of “estate” in Article 31-A of the

Constitution by including therein lands held under ryotwari settlement as also other lands in

respect of which provisions are normally made in Land Reforms Enactments” and it was also

“proposed to amend the Ninth Schedule by including certain State enactments relating to and

Reforms in order to remove any uncertainty or doubt that may arise in regard to the

unvalidity”. Accordingly, Parliament passed the Seventeenth Amendment Act, 1964,

effecting change not only in Article 31-A of the Constitution by adding a proviso after the

existing proviso in clause (1) but also substituting a new sub clause (a) in (2) and including in

the Ninth Schedule not less than forty four Acts of different States, of which one item was

the Act struck down by the Supreme Court.

The 17th Amendment Act was itself challenged in the case of Sajjan Singh V State of

Rajasthan (1965-1 S.C.R.933). A number of Writ Petitions were filed in the Supreme Court

under Article 32 of the Constitution in the year 1966, Golaknath V. Punjab (1967-2

S.C.R.762) challenging not only the validity of the Constitution Seventeenth Amendment Act

of 1964 but also Constitution Fourth Amendment Act 1955 and Constitution First

Amendment Act 1951 in so far as they affected the petitioner’s fundamental rights. Five

learned Judges of the Supreme Court held all the amendments to be valid while four other

concurred in the judgement delivered by Subba Rao, C.J., holding that although the above

amendment Acts abridged the scope of the fundamental rights thus violating Article 15 of the

Constitution, they could not be struck down because of the earlier decision of the Supreme

Court to the contrary. One learned Judge took the view that the fundamental rights were

outside the amendatory process if the amendments sought to abridge or take away any of

those rights but the First, Fourth and Seventh Amendments being part of the Constitution, by

acquiescence for a long time could not be challenged and they contained authority for the

17th Amendment. The judgement in Golaknath’s case were rendered on 27th February, 1967.

Ceiling laws were enacted and enforced actually in two phases, the earlier phase covering the

period from 1960 to 1972 before the National Guide Lines were laid down and the latter since

1972 after the adoption of the National Guide Lines. There were two units of application,

namely, the individual land holder and the family. The classes of land, which were exempted

from the operation of ceiling laws varied widely in the States.2

legislative measures had loop-holes which were taken advantage of by the bigger landed

interests to circumvent the laws. In anticipation of the ceilings, the big land holders

partitioned their holdings and fictitiously transferred them in pieces to other individuals

through benami transfers on a very large scale. The entire ceiling legislation was examined

by the Central Land Reforms Committee, which made certain recommendations on the basis

of which the Chief Ministers in their Conference held in July, 1972, laid down the ‘National

Guide Lines’ that were to govern the ceiling legislation in future. The post 1972 ceiling

legislation has been rationalised and put more or less on a uniform basis through out the

country based on the National Guide Lines.

Meanwhile, by the Tamil Nadu Land Reforms (Reduction of Ceiling on Land) Act, 1970, the

ceiling for a family of not more than 5 members was reduced to 15 standard acres. The

exemption granted under the Principal Act for lands grown with sugarcane and grazing lands

was withdrawn by Act 41/71 with effect from 15.1.1972 and the overall ceiling limit of 60

standard acres was reduced to 40 standard acres by Act 20/72 and then to 30 standard acres

by Act 30/72. Originally the trusts were exempt but later by Act 37/72, a ceiling limit was

fixed according to the character of the trust, and the trusts were prohibited from acquiring

agricultural lands after 1.3.1972. However, if any trust acquired land after 1.3.1972 for

educational or hospital purposes, such trust may apply to Government for grant of permission

under Section 37-B of the Act. Act 20/72 provided for grant of permission by Government

under Section 37-A for industrial and commercial undertakings to hold lands in excess. For

the surplus lands taken over by Government, amount is payable which earlier was fixed on

the basis of multiples of the net annual income which was the amount of fair rent less the land

revenue. The multiples which ranged from 12 to 9 times for slabs of Rs.5,000 of the net

2 Kaushik Basu (eEd.), Land Reform in India, available at econ.lse.ac.uk/staff/mghatak/landref.pdf

annual income were brought down by Act 39/72 so as to range from 12 to 2 times. The

amount is payable in 10 annual instalments.

The Constitution 24th Amendment Act which came into force on November 5, 1971

amended Article 368. The Constitution 24th Amendment Act enacted that Parliament may in

exercise of its constituent power amend by way of addition, variation or repeal any provision

of the Constitution in accordance with the procedure laid down in Article 368, and that

nothing in Article 13 shall apply to any amendment under Article 368. Following the

majority decision in Bank Nationalisation case (R.C. Cooper V. Union of India, (1970) 3

SCR 530 : (1970) 1 SCC 248), that ‘compensation’ meant “the equivalent in terms of money

of the property compulsorily acquired” according to ‘relevant principles’ which principles

must be appropriate to the determination of compensation for the particular class of property

acquired, the Constitution 25th Amendment Act which came into force on April 20, 1972

amended Article 31 (2) and Article 31 (2-A) of the Constitution. The effect of these two

amendments was two-fold. First, no property shall be compulsorily acquired or requisitioned

save for a public purpose and save by authority of law which provides for an amount which

may be fixed by law or which may be determined in accordance with such principles and

given in such manner as may be specified in such law. The word ‘amount’ was substituted for

‘compensation’ in the sub-article by the 25th Amendment. Secondly, nothing in Article 19

(1) (f) shall affect any law or is referred to in Article 31 (2). The second part of the

Constitution 25th Amendment Act was introduction of Article 31-C which enacts that

notwithstanding anything contained in Article 13 no law giving effect to the policy of the

State towards securing principles prescribed in clauses (b) and (c) of Article 39 shall be

deemed to be void on the ground that it takes away or abridges any of the rights conferred by

Articles 14, 19 and 31; and no law containing a declaration that it is for giving effect to such

a policy can be called in question in any court on the ground that it does not give effect to

such policy.3

The lands notified as surplus on or after 27th October 1978 are governed for the purpose of

payment of amount for the surplus lands by the revised schedule III to the Land Ceiling Act

as amended by Act II of 1979, according to which all surplus lands acquired from a person by

the Government are treated as one unit and the annual value taken as 5 times the land revenue

3 Bharat Dogra, Land Reforms, Productivity and Size, Economic and Political Weekly, 9 February 2002.

for waste and forest lands and 20 times the land revenue or 20 times of (land revenue + Rs.5

or Rs.9 per acre) depending on the type of land (wet, dry, manavari, irrigated etc.) such that

the annual value so determined should not exceed Rs.3500 per acre. The disposal of surplus

lands acquired by the Government is governed by the Disposal of Surplus Land Rules 1965.

An order of priority is laid down for assignment under the Rules. Earlier, a Centrally

Sponsored Programme for providing financial assistance to the

Impact of landlessness on vulnerable groups Women and Land Rights

Vulnerable groups of society, like women and the scheduled castes and tribes, feel the

adverse effects of landlessness more keenly. Protest movements for land rights have seen

significant participation from women, demanding individual land rights. Bina Agarwal points

out that the very concept of individual land rights for women is not considered in economic

theory, since the household is assumed to be one, single unit. This is problematic because it

ignores the gender dynamics within the household. Women, if not given an explicit share in

the family property, are vulnerable to abuse, and even expulsion from the house because of

their lack of bargaining power. Moreover, without land, women are unable to stimulate their

labour and investment or harness their managerial talents This is evident particularly in areas

where male migration is high, and it is left to the woman to make dequate use of credit and

manage farm resources.4

Socially excluded groups

Scheduled castes and scheduled tribes are also particularly vulnerable due to landlessness.

Across rural India, most people belonging to scheduled castes and scheduled tribes are denied

equitable and fair access to land: either they do not possess land or it does not help them meet

their basic needs.

These people do not have assured sources of food or even a legally secure place to build a

house. Without an economic base, they cannot invest innew livelihood options, or plan or

save for the future. As a consequence, they are forced to accept exploitative or humiliating

terms of employment, or migrate. Inevitably, poor health and education levels follow. In this

4 Centre for Communication and Development Studies, Towards a People’s Land Policy: Discussion Paper, 2007

scenario, giving these groups land with clear and secure title is the first step towards their

social, economic and political empowerment

Land Reform as a solution

The answer to the problems posed by landlessness lies in effective land reform legislation.-

Land reform is the redistribution of land from those who have excess of land to those who

have none, with

the objective of increasing the income and bargaining power of the rural poor redistributive

policies seek to secure land right s (e.g. formalisation of land records and legal protection of

ownership rights) and ensure redistributive rights

Legal Framework of land reform in India

Immediately after Independence, land reform occupied centre-stage in Indian policy as it was

considered essential for the process of nationbuilding. In the current neo-liberal framework of

economic development, land reform has unfortunately taken a back seat. However, with the

recent trend across the continent, of increasing landlessness and protests, both violent and

otherwise, against the government’s attitude, it is necessary to bring land reform agenda back

on the table. The Constitution embodies the need for land reform in the Directive Principles

of State Policy.

The Constitution embodies the need for land reform in the Directive Principles of State

Policy Article 39(b) explicitly highlights the need of the state to ensure “that the ownership

and control of material resources of the community are so distributed as best to subserve the

common good.” Among other things, Part IV also emphasizes upon securing to all citizens an

adequate means of livelihood and a decent standard of living. Land reforms legislations have

been placed in the ninth schedule to gurantee their speedy implementation

Issues and challenges of current framework

Entry 18 of List II of the Constitution brings land, and rights over land, under the domain of

the State Legislatures. As a consequence, the statutory framework of land reform in the

country is diverse. owever, it seeks to serve the following objectives

a. Redistribution of ceiling surplus land to the landless

b. Security of tenancy

c. Abolition of intermediaries

While the last objective is no longer a pressing a concern, success in achieving the first two

goals varies among the states. There exist obstacles to identifying ceiling surplus land in the

form of common subterfuges such as dividing the land between family A related issue is the

security of tenancy; along with ensuring protection from arbitrary eviction and overcharging

of rent, land reform framework must also contend with the question of whether tenants are to

be given ownership of the land. Unfortunately, the implementation of land reform legislation

has largely ignored the importance of providing special protection to women in granting them

fair share of land. Nepal for example has a land reform law that pays special attention to the

needs and issues of women. It is especially important that any programme of land reform

provides for special protection of women, especially those who are managing small farms.

Encouraging collective farming through self-help groups, credit schemes and agricultural

extension programmes designed for women can help resolve this problem.

Deliberate policy interventions that see a shift in policy in favour of small farm holdings are

needed. It has also been suggested by scholars that having a progressive land tax, based on

the size of the ownership, could incentivise the sale of some of the larger land possessions.

While such options cannot be discounted, they must be examined carefully before steps are

taken.

Future of land reform

Redistribution of public lands is an easy first step in land reform. In Andhra Pradesh, farmers

have been allowed to encroach on government waste land, and supported with asset and food

subsidies Land reform in Philippines is one of the best examples to learn from, having

successfully redistributed 63% of the total land targeted, most of which have been either

public land or have been obtained through voluntary sale. Experiences from different states in

India as well as from other countries in South Asia show that land reform must be

accompanied by other support services to be really successful. In Philippines, after the

collapse of the Marcos’ administration, land reform was made a priority under the

Constitution and the Comprehensive Agrarian Reform Law (CARL) was implemented with

wide ranging implications. Along with distribution of all agrarian land to the tillers,

support services like credit, market access, infrastructural facilities including irrigation,

water, roads, etc. were ensured to the farmers. The government also used assistance of the

civil society groups to create cooperatives for transfer of technology and promotion of

entrepreneurship. Periodic ssessments are carried out by research groups to determine the

effectiveness of the CARL and the CARP (Comprehensive Agrarian Reform Programme).5

Spotlight: National Council for Land Reforms

In 2007 for the first time the Central Government heard the voice of 25,000 landless poor in

the country, who walked to Delhi in ‘Janadesh Campaign’ as a voice of the deprived and

marginalized in the country. In response, the National Council for Land Reforms was formed

in 2008 under the Chairmanship of the Prime Minister to look into the unfinished task in land

reforms. The council also includes 6 Union Ministers - Minister for Rural Development,

Agriculture, Panchayati Raj, Tribal Affairs, Environment and Forests, and Social Justice and

Empowerment, the Dy. Chairman, Planning Commission, 10 Chief Ministers from the state

of Andhra Pradesh, Bihar, Karnataka, Kerala, Maharashtra, Orissa, Rajasthan, Tripura, U.P

and West Bengal (although the other state ministers are not being included in the committee),

and 8 Land Experts and members of social organizations - Dr. Bina Agarwal, Institute of

Economic growth, DU, Prof. G.K. Chadha, Member, Economic Advisory Council to the

Prime Minister, Prof. V.S. Vyas, Chairperson, Institute for development Studies, and Ekta

Parishad President P.V. Rajagopal and others. Land Reforms as a redistributive programme

are in relevance as they were 50 years ago. Addressing historic inequities in land ownership

is central to the redistributive responsibility of our democracy. In spite of the fact that the

National Council had been formed back in 2008 there has been no proposition for meeting as

of yet. Some agendas undertaken for the projected first meeting of the National Council are:

Both the Central and State governments should come out with their respective Land Reforms

and Use Policy. GOI should launch a Centrally Sponsored Scheme to allocate at least 10 to

15 cents of land to each homeless rural poor on priority basis. Review & Operationalization

of PESA or The Panchayats (Extension to the Scheduled Areas) Act with the expansion of

the areas under it. Empowering the ‘Land Use Board’ with enough resources undertaking the

survey of Common property Resources and Capacity building through training. Current

Status of Land Management with the Computerization of Land Records. Communication

from the Centre to States upon the issues like Reforms in Land Ceiling, and Government,

Bhoodan, Forest and Tribal Lands.

5 Land Reforms And Computerisation Of Land Records

Certain significant issues concerning the Land Reforms, like the empowerment of the Gram

Sabha, Ensuring Women Rights for Land, Governance issues and policies relating to Land,

Tenancy-sub tenancy issues, Role of the Panchayats in Land Management and

Administration including in the North Eastern States.

Economic Arguments in Favour of Land Reform

The most obvious argument in favour of land reform is equity. In a land- scarce country with

a significant section of the rural population below the poverty line , the case for ensuring that

everyone has access to some minimum amount of land seems compelling from this point of

view . However, this is a general argument in favour of redistribution, not necessarily

redistribution in kind (i . e ., land) . To make that case, one needs to understand the economic

forces that govern the allocation of land.

We begin with two empirical observations . First, small farms tend to be more productive

than large farms . This inverse farm- size productivity relationship is widely documented (see

Banerjee, 1999 for a review of the literature) . Another empirical regularity is that owner-

cultivated plots of land tend to be more productive than those under sharecropping tenancy

(Shaban, 1987) .

Given these observations, one could make an argument in favour of land reform based not

only on equity considerations, but also on efficiency considerations . For example , the

inverse relationship between farm size and productivity suggests that land reform could raise

productivity by breaking (less productive) large farms into several (more

productive) small farms . Also, lower productivity under sharecropping suggests that land

reform could raise productivity by converting sharecroppers into owner-cultivators .

But this raises the question as to what prevents market forces from getting rid of the

asymmetry and the resultant inefficiency? Saying that the inverse farm- size productivity

relationship is driven by diminishing returns is not satisfactory, since that assumes that land

cannot be sold or leased. For example , if a small farmer is more productive , and a large

farmer less productive , then the latter would be better off leasing some land to the former .

Similarly, if sharecropping is inefficient relative to owner-cultivation, a landlord should sell

the land to the sharecropper to make him an owner-cultivator, and get a share of the resulting

productivity gains .

Clearly, an explanation of these facts must be based on some frictions in the operation of the

land market, or some other input relevant for agricultural production.

A leading explanation of both these facts is based on incentives . A small farmer cultivates

his land with own and family labour, while a large landowner uses hired labour who have

lower incentives to put in effort . Similarly, a sharecropper effectively faces an income tax of

50% (the most commonly observed sharing rule in the absence of tenancy legislation being

50: 50) and naturally puts in less effort. This however, raises a deeper question : why cannot

these parties design contracts that would get rid of the incentive problem?

A key assumption here is that some inputs , such as effort, care and maintenance of land, are

inherently difficult to monitor . As a result, unless the party that is supplying these inputs are

full residual claimants (i . e ., retain 100% of the profits) they will undersupply these inputs .

A landowner can offer a contract that has this property: a fixed rent contract . This says the

landlord simply gets a fixed fee, and the tenant keeps all the residual earnings . If everyone

lived for one period, this would be equivalent to selling the land to the tenant . However , if

the tenant is poor, then even though this contractual arrangement would be efficient , it might

not be in a landlord’ s interest to do so.

Consider a simple example . Suppose given the scarcity of land, the fixed rent that would

induce the landlord to lease out a given plot of land is Rs. 100. However, since the tenant is

poor and does not have enough liquid wealth, he may not be able to pay this rent up front, or

guarantee to pay it irrespective of whether the output is high or low . He may be able to pay a

guaranteed fixed rent of only Rs. 50. It is in the landlord’ s interest then to ask for a share of

output, even though that would reduce effort, since he gets a higher expected rent . He would

not ask for too high a share of output though, since at some point reduced effort would start

reducing his expected rent (this is like the Laffer curve in the context of income taxes : if tax

rates are too high, cutting taxes may actually raise revenue via increased labour supply) .

This rent extraction vs . incentives trade-off (see Banerjee , Gertler and Ghatak, 2002 for a

formal analysis) can explain the persistence of inefficiency in the land market . This would

explain both the stylized facts mentioned above , and why market forces will not necessarily

get rid of the implied productivity losses.6

An alternative form of friction that can explain these facts is that, due to an imperfect legal

system, the market for land does not operate well . For example , if leasing out land entails a

risk that it might be hard to evict the tenant if the landowner wishes to withdraw land for

owner-cultivation at some later point, then the land leasing market would not work well .

Indeed, in their cross - state analysis of tenancy laws in India, Conning and Robinson (2005)

6 Smitu Kothari, Whose Nation? The Displaced as victims of displacement, Economic and Political Weekly, 15 June 1996.

show that tenancy laws , though designed with the aim of helping tenants , actually reduced

the extent of tenancy.

So far we did not consider the issue of heterogeneity of farmers in terms of ability, and of and

in terms of soil quality. For example , a key econometric concern is whether the empirical

observations mentioned above control for unobserved heterogeneity. If these observations are

purely driven by unobserved variations in farmer quality or land quality then the efficiency

case for land reform is weakened. For example , if higher ability farmers prefer to cultivate

smaller plots of land (as opposed to being constrained to do so) or landowners prefer to lease

out lower quality plots to sharecroppers , then in the absence of any other frictions such as

those mentioned above , land reform will not raise average productivity. 1 However, there is

some evidence (e.g., Rosenzweig and Binswanger, 1993 on farm size and productivity, and

Shaban, 1987 on sharecropping) to suggest that these empirical facts are not purely driven by

heterogeneity in farmer quality or land quality. For example , Shaban (1987) finds , after

controlling for land quality, that the same farmer puts in less effort in plots of land that he

cultivates as a sharecropper compared to plots of land that he cultivates as an owner-

cultivator .

To sum up, incentive problems and imperfect property rights are the leading explanations for

the distortions in the allocation of land. These arguments imply that land reform will raise

productivity as well as serve the goal of equity.

As a matter of fact redistributive policies that fall short of full- scale land reform can also

have positive productivity effects . These include policies that increase- the wealth or income

of the rural poor or their bargaining power vis-à-vis landowners (Banerjee , Gertler , and

Ghatak, 2002 refer to these as empowerment strategies) . 2 Given that the loss of efficiency is

due to the trade-off between rent extraction and incentive provision, any strategy that reduces

the ability of landowners to extract rents will raise efficiency, even if they fall short of land

reform, and will also serve the goal of equity. However, some of these strategies , such as

regulation of tenancy, might have a negative effect from the point of view of reducing the

incentive of landowners to lease out land. This is likely to be a particularly important concern

for poorly-implemented tenancy reform legislation: the presence of the tenancy law would

have the negative effect on the land lease market as described above , and at the same time

the positive incentive effect on tenants may only be partially realized. We will return to this

point in our discussion of empirical work on land reform in India .

The above arguments also suggest that even if equity is the only consideration, there may be

a case for redistribution of land as opposed to any other form of redistribution. For example ,

if, because of imperfect property rights the market for land sales and rental is very thin, then a

direct intervention in the land allocation method may be required to improve the conditions of

the rural poor . This would typically require a combination of reforming property rights in

land (e.g., formalization of land records and legal protection of ownership rights) and

redistribution (stipulating a land ceiling and redistributing surplus land.

Conclusion

In this essay we reviewed the economic arguments in favour of land reform and showed that

they are based on frictions in the allocation of land. These frictions could either be due to

agency costs or imperfect property rights . We then evaluated the evidence on land reforms in

India . The evidence suggests that land reforms had a negative effect on poverty, while the

effect on productivity is mixed. In states where these measures were strongly implemented,

the effect of land reform on productivity seems positive

Bibliography

Web sources :

Ebsco database : http://www.search.ebscohost.com

Hein online database : http://www.heinonline.org

E-Law Resources : http://e-lawresources.co.uk/Mens-rea-reckless.php

NDTV : http://www.ndtv.com