Arshad Shaikh examines the issue of landholding and land reforms in the context of India’s agrarian economy and farmers’ distress, checking if we achieved the objectives for which land reform was carried out. He looks at the concept of consolidation of landholding now being promoted as a panacea to boost the agriculture sector, discusses the moral dimension of land reforms, and evaluates if they were fair or merely revolutionary.

India’s agriculture sector is colossal. The latest data reveals that it contributed about 20% to our GDP (that works out to around Rs 52,400 lakh crores) and around 10% of our exports. Further, it employs nearly half our population. Hence, success in this sector is linked to the economic success of our nation. Yet we hear stories in the media that talk about India’s agrarian crisis and our country having the highest farmers’ suicide rate. The recent long-fought farmers’ agitation against three farm laws shows the dichotomy between the government and the peasants of our country on such fundamental issues as remunerative pricing and market access.

Often the issues enumerated while discussing problems confronting Indian farmers are insufficient water supply, poor use of technology, over-dependence on traditional crops, poor storage facilities, lack of good transport and storage infrastructure, poor implementation of government schemes and exploitative credit system. However, the issue of small and fragmented landholdings is also quite critical in the context of helping our farmers to raise their income levels. It is a serious challenge to our agrarian economy and needs a multi-dimensional approach for finding a viable and sustainable solution.

THE ISSUE OF LANDHOLDING

India has the largest area of cultivated land in the world (1.89 million square kms) followed by the US (1.68 million square kms), Russia (1.26 million square kms), China (1.23 million square kms) and Brazil (0.8 million square kms). The cultivated area as a percentage of the total area is as follows – India (57%), US (17.1%), Russia (7.4%), China (12.9%) and Brazil (9.4%). Unfortunately, the total number of farms in India is 146.45 million, lowering our average farm size to become a mere 1.08 ha (hectares i.e. 2.66 acres or 107 guntha or 4.2 bigha).

This is even more concerning when we realise that our farm size is shrinking over time (it was 2.00 ha in 1976-77 and 1.41 ha in 1995-96). Compare this with the average farm size in other countries – US (178.4 ha), Brazil (72.8 ha) and even the UK (70.9 ha). The only two countries that have an average farm size less than India are China (where 93% of the farms have a size less than 1 ha) and Japan (where 88% of farms have a size less than 2 ha). 63% of Indian farms have a size of less than a hectare. 20% between 1 ha and 2 ha and 9.1% between 2 ha to 5 ha.

With these numbers in mind, it would be appropriate to check the value of the agricultural output in these countries. According to the World Bank and OECD data, China has an agricultural output worth $978 billion followed by India $396 billion, US $178 billion, Indonesia $133 billion, Nigeria $84 billion, Brazil $81 billion, Pakistan $71 billion and Japan $57 billion. There is one important insight to be gained from the analysis of the above data. China with 35% less cultivated land (i.e. 12.9% of its total area) and a small average farm size compared to India has a farm output that is nearly 2.5 times that of India.

POPULATION AND RURAL INCOME

From 1970-71 to 2010-11, the number of farms in India grew at a rate (194%) proportionate to our population growth in that period (189%). This increase is directly linked to the division of landed property, according to the customs of inheritance. Research data shows that small farmers are more productive than large farmers are. Therefore, despite farming in an efficient manner, small farmers with marginal holdings remain poor, as they do not have enough surplus produce to generate enough income to support them. Research shows that growth in income for farmers is proportional to their farm size. Hence, the call for doubling of farm incomes may apply only to those with large landholdings i.e. those having more than 10 ha of land.

Another way of looking at the problem is through the axiom of constant returns to scale. The higher output per acre in smaller farms is because of the higher input of labour. However, the profitability increases with the size of the holding. Profitability implies surplus output over costs.

The National Statistics Office (NSO) of the Ministry of Statistics and Programme Implementation (MoSPI) carried out a survey on “Land and Livestock Holdings of Households and Situation Assessment of Agricultural Households” in the rural areas of India in 2019. The survey showed that the average monthly income per agricultural household during the agricultural year 2018-19 was Rs 10,218. Of this amount, income from wages was Rs 4,063, from crop production Rs 3,798, from farming of animals Rs 1,582, from non-farm business Rs 641 and from leasing out of land Rs 134. We therefore conclude that the income of an average Indian farmer is no more than that of a labourer.

WERE LAND REFORMS, GOOD OR BAD?

Under the British rule, farmers in India did not own the land they cultivated. The land was concentrated in the hands of zamindars, who leased out land through exploitative tenancy contracts. Post-Independence, land reforms were carried out that had four major components: 1) the abolition of the zamindari system; 2) tenancy reforms; 3) fixing ceilings on landholdings; and 4) consolidation of landholdings. These reforms freed the Indian farmer largely from the bondage of the zamindars. They got rid of the exploitative system of tenant farming, wherein the tenant farmers were forced to pay 35% to 75% of their produce to the owners of the land.

The land ceiling reforms aimed at imposing some upper limit to the amount of land a person could own to avoid the concentration of land in the hands of a few. Consolidation of landholdings meant that fragmented lands had to be reorganised into one plot by purchasing or exchanging the plots of land. In some states, it was made compulsory while in the rest it was voluntary.

In the 1950s and ‘60s there were reform movements like the Bhoodan and Gramdan that urged the landed classes to voluntarily surrender a part of their land to the landless peasants. Another example of a success story of land reforms in India is the Operation Barga launched by the Left government when it came to power in West Bengal in 1978.

There were many loopholes in the Land Reforms Act (1955) which was utilised by the landlords against the sharecroppers/bargadars. Operation Barga plugged those loopholes through legal amendments that prevented landlords from forcibly evicting their bargadars. The bargadars were given hereditary rights to the land. The state now guaranteed a fair share of the crop (75% for non-labour inputs and 50% if the inputs were from the landlord). This prevented the exploitation of the sharecroppers by the landowners.

Even though the pace of land reforms has been slow with many flaws in the implementation process, it has inserted a fair degree of social justice into the agrarian economy. We must appreciate that our country did not experience the mass killings carried out by the Russians (Dekulakization) and the Chinese (early Mao era). However, the usurpation of private property by the state for redistribution is a debatable issue and requires a detailed exposition.

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