LSP Working Paper 12 Access to Natural Resources Sub-Programme Land and livelihoods Making land rights real for India s rural poor Tim Hanstad, Robin Nielsen and Jennifer Brown Rural Development Institute (RDI) USA May 2004 FOOD AND AGRICULTURE ORGANIZATION OF THE UNITED NATIONS Livelihood Support Programme (LSP) An inter-departmental Programme for improving support for enhancing livelihoods of the rural poor.
Land and livelihoods Making land rights real for India s rural poor Tim Hanstad, Robin Nielsen and Jennifer Brown Rural Development Institute (RDI) USA May 2004 Cover photograph by Tim Hanstad This paper was prepared under contract with the Food and Agriculture Organization of the United Nations (FAO). The positions and opinions presented are those of the authors alone, and are not intended to represent the views of FAO.
Land and livelihoods The Livelihood Support Programme The Livelihood Support Programme (LSP) evolved from the belief that FAO could have a greater impact on reducing poverty and food insecurity, if its wealth of talent and experience were integrated into a more flexible and demand-responsive team approach. The LSP, which is executed by FAO with funding provided by DfID, works through teams of FAO staff members who are attracted to specific themes being worked on in a sustainable livelihoods context. These crossdepartmental and cross-disciplinary teams act to integrate sustainable livelihoods principles in FAO s work, at headquarters and in the field. These approaches build on experiences within FAO and other development agencies. The Programme is functioning as a testing ground for both team approaches and sustainable livelihoods principles. Email: lsp@fao.org Access to natural resources sub-programme Access by the poor to natural resources (land, forests, water, fisheries, pastures, etc.), is essential for sustainable poverty reduction. The livelihoods of rural people without access, or with very limited access to natural resources are vulnerable because they have difficulty in obtaining food, accumulating other assets, and recuperating after natural or market shocks or misfortunes. The main goal of this sub-programme is to build stakeholder capacity to improve poor people s access to natural resources through the application of sustainable livelihood approaches. The sub-programme is working in the following thematic areas: 1. Sustainable livelihood approaches in the context of access to different natural resources 2. Access to natural resources and making rights real 3. Livelihoods and access to natural resources in a rapidly changing world This paper contributes to the first thematic area by identifying issues that are central to consideration of land access in rural India and by providing suggestions for opportunities for positively impacting the livelihoods of the rural poor.
Making land rights real for India s rural poor TABLE OF CONTENTS 1. INTRODUCTION...1 2. ANALYTICAL FRAMEWORK: SUSTAINABLE LIVELIHOODS...1 3. KEY ISSUES...5 3.1 Rethinking tenancy...6 Introduction: the limitations of tenancy reform...6 Tenancy markets: theory and comparative experience...6 Tenancy in India: a bit of background...7 The tenancy liberalization debate: the current status...10 Opportunities for donors and NGOs...11 3.2 The untapped potential of land sale markets...15 The mixed bag reality of land sales markets...15 Land purchase as a mechanism for broadening land access...17 Land purchase programmes in India...20 Land purchase: opportunities for donors and NGOs...22 Restrictions on alienation of land: an opportunity to relax...24 3.3 Does size matter? A summary of the benefits of small plots...28 Small field plots...28 House-and-garden plots...29 Opportunities for donors and NGOs...30 3.4 Women and land: a need for multi-level transformation...31 The impact of gender inequality on livelihoods...31 The narrow path to women s land ownership...32 Toward an equitable future: opportunities for donors and NGOs...38 3.5 Possibilities in panchayats: the challenges of local land management...41 Background on decentralization...41 Land-related functions of panchayats...42 Unknown capacity to meet land-related duties...46 Opportunities for donors and NGOs...47 3.6 Education and advocacy: implementation of existing laws...48 Educating the public: the lesson of Operation Barga...48 Legal aid...50 Opportunities for donors and NGOs...53 4. MAKING RIGHTS REAL: A SUMMARY OF OPPORTUNITIES FOR DONORS AND NGOS...55 4.1 Rethinking tenancy...55 4.2 The untapped potential of land sale markets...55 4.3 Home gardens and other small plots...55 4.4 Women and land: a need for multi-level transformation...56 4.5 The possibilities in panchayats...56 4.6 Education and advocacy: implementation of existing laws...56 5. CONCLUSION...58 Bibliography...59 iii
Making land rights real for India s rural poor 1. INTRODUCTION Land is at the centre of rural lives in India. Land has inherent value, and it creates value. A plot of land can provide a household with physical, financial, and nutritional security, and provide a labourer with a source of wages. Land is a basis for identity and status within a family and community. Land can also be the foundation for political power. 1 Sustainable livelihoods analysis provides a constructive framework for examining the significant role land plays in the livelihoods of India s rural poor. The sustainable livelihoods approach focuses on the capabilities of people, and highlights the interrelationships between and among people and the assets they rely on and develop. The analytical process is necessarily forward looking: the process focuses on people s strengths and aspirations as they pursue their livelihood objectives. This paper is similarly forward looking. The paper responds to a request from the Livelihood Support Programme for (a) identification of land-related issues that are central to consideration of land access in rural India and (b) suggestions for concrete opportunities for positively impacting the livelihoods of the rural poor. The paper discusses a range of issues and opportunities, such as possibilities for liberalizing restrictive legislation and expanding the vision of appropriate land grants to include small plots. The paper also considers the role that institutions such as land markets, group land-leasing schemes, and local governance bodies can potentially play in supporting (or undermining) livelihood objectives, and the extent to which institutions can be catalysts for societal change. The paper approaches the issues from the perspective of what is possible, what India s rural population envisions for itself, and the land-related livelihood objectives that might be achievable with well considered and well placed support. 2. ANALYTICAL FRAMEWORK: SUSTAINABLE LIVELIHOODS A livelihood comprises the capabilities, assets, and activities required for a means of living. A livelihood is sustainable when it can cope with and recover from stresses and shocks and maintain or enhance its capabilities and assets both now and in the future, while not undermining the natural resource base. 2 A sustainable livelihoods approach is a holistic method of addressing development issues that centers the discussion on people s livelihoods. 3 Sustainable livelihoods is a chameleon-like concept that can serve many functions: it is at once an established development objective, an analytical tool used to understand the factors influencing a 1 See generally World Bank (Klaus Deininger), 2003. Land Policies for Growth and Poverty Reduction, WORLD BANK POLICY RESEARCH REPORT (Washington D.C.: World Bank), at 1-3; Robin Mearns, 1999. Access to Land in Rural India: Policy Issues and Options, WORLD BANK POLICY WORKING PAPER (Washington D.C.: World Bank), at 19. 2 Diana Carney, 1998. SUSTAINABLE RURAL LIVELIHOODS (Russell Press Ltd.: Nottingham), at 4; R. Chambers and G. Conway, 1992. Sustainable Rural Livelihoods: Practical Concepts for the 21st Century, IDS Discussion paper 296 (Brighton: IDS). 3 Department for International Development ( DFID ), 2001. Sustainable Livelihoods Guidance Sheets (DFID: London), at 1.1 1
Land and livelihoods community s ability to enhance their livelihoods, and a method of eradicating poverty. 4 The sustainable livelihoods approach seeks to increase the sustainability of the lives of poor people through promoting six core objectives: More secure access to, and better management of, natural resources; More secure access to financial resources; A policy and institutional environment that supports multiple livelihood strategies and promotes equitable access to competitive markets; Better nutrition and health; improved access to high quality education, information, technologies, and training; A more supportive and cohesive social environment; and Better access to basic and facilitating infrastructure. 5 In facilitating these objectives, development activities should be: People-centered; Sensitive to locally relevant criteria such as caste and gender; Multi-level (i.e. link local perspectives to higher policy level considerations); Conducted in partnership between public and private entities; and Sustainable. 6 Underlying the sustainable livelihoods approach is the theory that people draw on a range of capital assets or poverty reducing factors to further their livelihood objectives. 7 Assets are categorized as social, human, natural, physical, financial, and political, and may serve as both inputs and outcomes. 8 Various vulnerability factors over which people have little or no control (such as environmental disasters and political unrest) impact the assets. Assets are also filtered through policies, institutions, and processes that determine the degree to which the people s livelihood objectives are realized. 9 Within this framework, land can play multiple positions. Secure access to land can be a livelihoods objective. Land is also a natural asset through which other livelihood objectives, such as gender equality and sustainable use of resources, may be achieved. In addition, land can be a route or opportunity through which a multitude of other assets become accessible. 10 See Table 1. 4 John Farrington, 2001. Sustainable Livelihoods, Rights and the New Architecture of Aid, ODI Natural Resource Perspectives Paper, No. 69, June 2001, at 3. 5 DFID, at 1.2. 6 DFID, at 1.3; Farrington, 2001, at 3. 7 DFID, at 2.3. 8 Pari Baumann, and Subir Sinha, 2001. Linking Development with Democratic Processes in India: Political Capital and Sustainable Livelihoods Analysis, ODI Natural Resources Perspectives Paper No. 68 (London: ODI). 9 DFID, at 1.1-1.2 and 2.3. 10 Pari Baumann, 2002. Improving Access to Natural Resources for the Rural Poor, FAO LSP Paper (Rome: FAO), at 19. 2
Making land rights real for India s rural poor TABLE 1: SUSTAINABLE LIVELIHOODS ( SL ) APPROACH TO LAND RIGHTS 11 SL DEVELOPMENT OBJECTIVES SL FRAMEWORK FOR ANALYSIS SL METHOD OF POVERTY ERADICATION More secure access to, and better management of, land Land is a natural asset central to rural livelihoods Land rights create a basis to access other poverty-alleviating assets/livelihood outcomes: A policy and institutional environment that supports multiple livelihood strategies and equitable access to all Improved nutrition, access to education and training More secure access to financial resources More supportive and cohesive social environment Land is a natural asset subject to vulnerability factors such as environmental change, political upheavals, and conflict. Land is natural asset filtered through policies, institutions, and processes (land laws and policies, dispute resolution systems, selfhelp groups, intrahousehold relations, credit markets, extension services) Human (health, skill development, food security) Financial (income, credit, crops, livestock) Social (land-based networks, community land management, labour relationships, dispute resolution) Natural (land and resource preservation through more sustainable use of land) Physical (housing, structures) Political voice A simple example illustrates how a sustainable livelihoods approach focuses on the relationships among the assets that a household has, develops, and relies upon to meet its livelihood objectives. Clear title to a small amount of land around a house may allow a household to expand its assets include a cow. The skills learned by the family in caring for the cow increase the family s human assets. The family consumes the cow s milk, improving nutrition and thus adding to the family s human assets. The cow or the house plot may serve as collateral for a loan to purchase more land, adding to the family s financial assets. Family members who graze the cow on common land may interact with other villagers with whom they had no prior contact. The grazing group relationships are a social asset that may provide a forum for exchanging valuable information or entering into work sharing agreements from which all participants benefit. The family s relationship with other villagers like the cow, the milk, and the additional land diversifies the family s assets, and helps protect the family, its assets, and its livelihood objectives against vulnerability factors. The sustainable livelihoods approach also recognizes that policies, institutions, and processes influence access to and use of assets, which ultimately impacts livelihoods. India s land laws, policies, and land reform distribution processes may impact whether the family has a plot large enough to maintain a cow and whether it is able to add to its land holding. The panchayat may identify the family as qualifying for a government house plot programme. A credit market will allow the family to obtain a loan, and formal and informal village governance groups may dictate whether 11 The information in the Table 1 is drawn from DFID s guidance sheets. 3
Land and livelihoods common land may be used for grazing. These institutions play a critical role in supporting and adding to assets and livelihoods. The story could easily go the other way: the same policies, processes, and institutions can dilute and destroy assets and opportunities. A family may possess a house plot but not have title to it because a boundary dispute lingers in the Revenue courts. The plot may not be large enough to maintain a cow. The panchayat may mistakenly omit the family from a list of beneficiaries for a government programme. The family may obtain a loan from a moneylender because it has no collateral and needs to pay dowry and wedding costs for a daughter, and if the family is unable to pay back the loan, it could lose the house plot. Analysis of existing institutions, policies, and practices and how they create, support, or undermine assets is, accordingly, an essential component of sustainable livelihoods analysis. The discussion that follows identifies key land issues in light of livelihood objectives and considers the extent to which institutions, policies, and processes assist or constrict the rural poor s ability to attain those objectives. The discussion of each issue concludes with the identification of opportunities for tangible actions designed to make land rights real for India s poor. 4
Making land rights real for India s rural poor 3. KEY ISSUES The sections below address the following land issues: 1. Tenancy; 2. Land markets; 3. Small plots; 4. Women s access to and control of land; 5. The role of panchayats; and 6. Implementation of existing laws. The sections discuss these issues from all three sustainable livelihood approaches: as development objectives, as means to eradicate poverty, and as starting points for analyzing the factors influencing an individual or community s ability to pursue its livelihood objectives. Specifically, section 3.1 reviews the unintended effects of tenancy reform in India, describes the rural poor s expressed interest in creating new tenancy relationships, and imagines ways in which tenancy restrictions could be redesigned to benefit the poor. Section 3.2 considers the reputation of land sales markets for excluding the poor and offers examples of ways in which the sales market could be used to assist the rural poor to access land. Section 3.3 summarizes the potential benefits of small garden plots and the gathering political momentum that is fueling small plot projects in several states. 12 Section 3.4 provides a brief overview of the importance of women s role in rural livelihoods and the obstacles to women s access to and control of rural land. The section discusses options for processes and institutions that may ultimately reduce the gender inequality in the control of rural land and the assets that flow from such control. Section 3.5 s focus on panchayats describes the pivotal role local governing institutions could play in assuring land access and the need to clarify the authority of such institutions over land issues. Finally, Section 3.6 highlights community education programs and legal aid services as processes and institutions necessary to assure that existing (and future) laws and policies supporting the land rights of the rural poor are implemented and effective. As this brief overview reveals, the sections confront the challenges of land access in rural India at different stages and with approaches tailored to the nature of the individual issues. But while the approaches and perspectives may differ among issues, the core remains the same: the discussion of each issue is focused on and grounded in the interests and capabilities of the rural poor. Most importantly, each issue was selected for discussion because unique opportunities exist to influence the livelihoods of India s rural poor in a positive and sustained fashion. 12 This section is a summary of RDI s paper, Robert Mitchell and Tim Hanstad, 2004. Small Homegarden Plots and Sustainable Livelihoods for the Poor, LSP Working Paper (Rome: FAO). 5
Land and livelihoods 3.1 Rethinking tenancy Introduction: the limitations of tenancy reform Several decades ago, most Indian states adopted tenancy legislation that either prohibits or regulates and restricts the leasing of agricultural land. Driving the legislation was an unequivocal intent to benefit poor tenant farmers. And some did benefit. India-wide, tenants acquired owner or owner-like rights to about four percent of the total operated area. 13 At the same time, however, tenancy reform has had the unintended consequence of depriving the rural poor of access to much larger amounts of land. The legislation limited land access for land-poor households, left some tenants stranded without legal protection and vulnerable to evictions, and prevented landowners and tenants from benefiting from the inherent equities and efficiencies of a land rental market. Much of India may be approaching a point where some of the opportunities lost by the rural poor as a result of the well-intentioned legislation can now be reclaimed. This section summarizes the theory and comparative experience on the benefits of land rental markets, overviews the existing law, frequency, and nature of tenancy in the various Indian states, describes current status of policy dialogue on this topic, and identifies opportunities for donors and NGOs in three areas: (1) research; (2) policy dialogue; and (3) innovative land rental pilots. Tenancy markets: theory and comparative experience Throughout much of the 20 th century, tenancy in India (as in many parts of the developing world) was cast in the role of an exploitative institution and charged with negatively impacting socially optimal equity and productivity outcomes. Ascribing tenancy as exploitative in pre- and immediately post-independence was understandable. In an agrarian setting characterized by strict social and economic hierarchy and where overwhelming numbers of rural poor lacked access to land and any other economic opportunity, tenants had little bargaining power and many landlords exploited their positions of social and economic privilege. As a result, in the decades following Independence, most Indian states passed legislation that imposed total bans or significant restrictions and regulations on tenancy. Two purposes fueled the legislation: uplifting the poor and achieving higher agricultural productivity. Since the enactment of the legislation, a broader consensus in the economic literature concludes that land rental markets in general and sharecropping relationships in particular can play a substantial role in increasing land access for the poor. Rental markets can supply a critical rung on the agricultural ladder toward land ownership, particularly as growing economic opportunity (especially non-agricultural) and sociopolitical advancements begin to remove feudal-like vestiges and improve the bargaining position of poor tenants. 14 Both land sales and land rental markets are 13 P. S. Appu, 1997. LAND REFORM IN INDIA;ASURVEY OF POLICY,LEGISLATION, AND IMPLEMENTATION (New Delhi: Vikas Publishing House), at 187. 14 See generally, World Bank (Deininger), 2003., at 84-93; Susanna Lastarria-Cornhiel and Jolyne Melmed-Sanjak, 1998. Land Tenancy in Asia, Africa and Latin America: A Look at the Past and a View to the Future (Draft Report for the Food and Agriculture Organization of the United Nations, 6
Making land rights real for India s rural poor capable of enhancing transfers of land from land-rich to land-poor households. Of the two, theory and empirical evidence indicate that the rental market supplies the more effective conduit. 15 Land ownership remains desirable and conveys greater benefits (particularly concerning credit access, tenure security, and wealth), but access to land via land rental is often a local, first-best alternative to land ownership when the preconditions for the efficient and equitable functioning of land sale markets are absent. Land tenancy markets can also reduce the vulnerability of poor households by offering a more stable livelihood source than frequently volatile and imperfect labour markets. 16 As opportunities in the non-farm economy increase, tenancy markets can facilitate a broader choice of livelihood opportunities such as migration, specialization, and investment. Households better suited to pursue non-farm livelihoods will be benefited if they are able to rent out their land for others to cultivate. Looking to other countries, China s experience indicates that in a growing economy, the role of land tenancy will expand and increase incomes for all. 17 Other research teaches that rental markets have more potential for providing access to the poor in settings where agriculture is not capital-intensive. 18 Tenancy in India: a bit of background Broadly speaking, three major types of land reform legislation were enacted in most Indian states in the decades after Independence: the abolition of intermediary tenures, the redistribution of land via land ceilings; and the regulation of tenancy. 19 The tenancy reforms were justified on grounds of equity and efficiency and aimed to transfer land to the tiller (often including a ban on landlord-tenant relations) and to increase tenants tenure security (through establishing minimum tenancy terms, transforming tenants into owners or perpetual possessors, and registering informal tenancy agreements). Land is largely a state subject in India, so the extent and nature of tenancy regulation and restriction varies from state to state. The states, however, do fall into four general categories: Virtual ban on all agricultural tenancies: Kerala, Jammu and Kashmir. General prohibition on agricultural tenancies, but exempt certain categories of persons such as widows, minors, marginal holders and/or May 1998). 15 Elisabeth Sadoulet, et al., 2001. Access to Land via Rental Markets, in de Janvry et al (eds), ACCESS TO LAND,RURAL POVERTY, AND PUBLIC ACTION (Oxford: Oxford University Press). 16 World Bank (Deininger), 2003, at 85-86. Land tenancy markets serve an important function in equalizing returns to non-tradable factors of production, such as family labour and bullocks in India. If the distribution of the surplus is not too skewed between landlord and tenant, rental will have an important positive impact on equity. E. Skoufias, 1991. Land Tenancy and Rural Factor Market Imperfections Revisited, JOURNAL OF ECONOMIC DEVELOPMENT 16(1): 37-55. 17 M. R. Carter, Y. Yao, and K. Deininger, 2002. Land Rental Markets Under Risk: A Conceptual Model for China, (University of Wisconsin, Madison). 18 Sadoulet, 2001, at 217-218. 19 P. S. Appu, 1997. LAND REFORM IN INDIA; A SURVEY OF POLICY, LEGISLATION, AND IMPLEMENTATION (New Delhi: Vikas Publishing House), xix. 7
Land and livelihoods members of the armed forces: Karnataka, Himachal Pradesh, Madhya Pradesh, Uttar Pradesh, Orissa, and Telangana area of Andhra Pradesh. No explicit prohibition on tenancy, but discourage tenancies by empowering tenants with protected rights on the tenanted land, either as perpetual tenants or through rights to purchase within a specific period: West Bengal, Punjab, Haryana, Gujarat, Maharashtra, Bihar, and Assam. Few restrictions on tenancies, although establishment of minimum lengths of tenancies and/or maximum rent levels: Rajasthan, Tamil Nadu, and non- Telengana areas of Andhra Pradesh. 20 Considering the country as a whole, various rounds of National Sample Survey indicate that the portion of area under tenancy has declined substantially since Independence, to about 8.3 percent of the total operated area in 1992. The NSS data also shows that the percentage of total operated area leased in varies significantly among states. In 1992 it ranged from 2.9 percent of total operated area in Kerala to 33.7 percent in Haryana. This NSS data on tenancy likely suffers from underestimation; the actual extent of tenancy is suggested by a more rigorous study in Bihar, which found the extent of tenancy in the state to be 34 percent of the operated area, compared to the 4 percent figure from the NSS data. 21 Currently, land rental markets play an important but probably under-utilized role in providing land access for the poor. As a consequence of tenancy restrictions and protections, landowners who rent-out must select tenants they trust not to reveal the relationship or assert their rights. Thus, it is generally considered that, all things being equal, larger farmers (who qualify for tenancy protections or because they belong to the same socio-economic class as the landowner) present lesser risks as tenants. If true, then liberalizing the tenancy markets could provide proportionally greater access to the poor. According to NSS data, marginal farmers (those owning < 1 ha) lease-in 16 percent of the total leased-in area, despite comprising about 69 percent of all farm households. Their portion of leased-in land, however, is roughly equivalent to their portion of owned land. On the other extreme, large farmers (those owning > 4 ha) have a much larger share of leased-in area (43 percent) compared to their portion of owned area (32 percent). 22 Table 2 shows the portion of households, leased-in area, and owned area for different sized farm households. 20 See T. Haque, 2001. Impact of Tenancy Reforms on Productivity Improvement and Socio-Economic Status of Poor Tenants, NATIONAL CENTRE FOR AGRICULTURAL ECONOMICS AND POLICY RESEARCH POLICY PAPER #13, and N.C. Behuria, 1997. LAND REFORMS LEGISLATION IN INDIA (New Delhi:Vikas Publishing House). 21 Haque, 47. The NSS data is generally thought to undercount the total area under tenancy due to respondent incentives to conceal tenancy. However, despite this potential flaw, the NSS time series data is still useful for showing trends in the extent of tenancy. 22 NSS 48 th Round (1991-1992). 8
Making land rights real for India s rural poor Table 2: Area Leased-in and Owned by Size Categories of Owned Holdings Percentage of Percentage of Total Percentage of Total Owner-Operators Leased-In Area Operated Area Owned Marginal (< 1 ha) 69% 16% 17% Small (1-2 ha) 22% 19% 34% Medium (2-4 ha) 5% 22% 18% Large (> 4 ha) 4% 43% 32% Source: National Sample Survey 48 th Round (1991-1992) The implementation of tenancy reform legislation has generally been weak, nonexistent, or counterproductive, resulting in eviction of tenants, their rotation among landlord plots to prevent them from acquiring rights, and a general worsening of their tenure security. In one of the most comprehensive books on India s land reforms, P.S. Appu concludes that, as a result of all the various tenancy reform legislation, tenants acquired ownership or owner-like rights in only about 4 percent of the country s operated area (and 97 percent of this in only seven states). Meanwhile, tenancy reform legislation led to the large-scale eviction of tenants on about 30 percent of the operated area. These evictions took place even (and perhaps more often?) in the states that benefited large numbers of tenants with ownership or owner-like rights. 23 These substantial costs of tenancy reform, that have already been realized, do not receive enough attention, particularly in the states that have significant numbers of tenancy reform beneficiaries. Apart from the past costs of large-scale evictions, many commentators point to the ongoing costs of this large body of tenancy reform legislation. These include: (1) reduced supply of land available for rent, resulting in decreased land access for poor (and other) households who would like to rent-in; (2) non-use or under-utilization of land by landowners who are unwilling or unable to cultivate their land and fear losing their land if they rent it out; and (3) lack of any legal protection for most tenants who are forced to operate in concealed, informal tenancies. RDI team members, although quite sympathetic to the pro-poor agenda objectives of those who promote continued or even stronger tenancy regulation/restriction, have seen more and more evidence and become increasingly convinced that the tenancy reform legislation operates to restrict livelihood opportunities for the poor. For example, in an RDI survey of 400 rural households in Karnataka we found: 91 percent of respondents answering definitively state that the existing tenancy restrictions harm landowners. 94 percent of respondents answering definitively state that existing tenancy restrictions harm the landless. 38 percent of respondents answering definitively report that at least one farmer in their village keeps land fallow rather than renting it out because renting may lead to the loss of such land. 45 percent of respondents answering definitively state that tenancy prohibitions should be lifted. 24 23 Appu, 1997, at xxi. 24 This is surprisingly low given that a great majority of respondents report that the restrictions harm 9
Land and livelihoods In the course of Rapid Rural Appraisal research in various states, we generally find that: Knowledge of the specific tenancy reform provisions in law is low, but most rural households recognize that landowners risk losing some (often substantial) rights to their land when they rent it out. Thus, when land is rented, it is given to people who can be trusted not to assert rights and, for an extra measure of protection, those tenants are typically rotated, often every year. Although tenancy reform laws are rarely implemented, they often play a major role in landowner decisions about renting out land and lead to less active rental markets than would otherwise be expected and to some sub-optimal utilization of land. Land-poor households almost always wish that more land was available for rental. 25 They do not fear exploitive landlord practices near as much as they fear not being able to access land to improve their livelihoods. The tenancy liberalization debate: the current status Liberalizing or removing tenancy reform legislation is a controversial issue in India. Most policymakers lack a balanced understanding of the tradeoffs and make illinformed assumptions that the existing legislation protects the poor. They are unfamiliar with the potential that liberalization of tenancy restrictions has to benefit the poor, and they lack a pressing reason to alter their settled thinking on the subject. Nonetheless, there are a growing (but still modest) number of voices advocating generally for tenancy liberalization. Some of those pro-liberalization voices point out that the debate cannot be reduced to a choice between status quo and liberalization. Rather, because different socio-economic-legal settings merit varying treatments, the option in each setting (or state) will necessarily reflect the nature and extent of ongoing regulation. 26 The voices advocating some manner of liberalization have carried the day in some policy documents, 27 but have not yet achieved significant changes in law or on-ground realities. both landowners and the landless, and given that 38% of respondents report that such restrictions cause landowners in their village to keep land fallow. The apparent discrepancy can perhaps be explained because some (or most?) respondents assume that lifting the restrictions on tenancy also means that those registered occupants who directly benefited at the time of land reforms implementation will lose their benefits. 25 An anecdote: In Uttar Pradesh, where share-cropping is a common livelihood strategy of poor households, we have conducted interviews on land reform and land market issues in four districts. Our questions included inquiries about the respondents knowledge of existing legislative restrictions on tenancy. On several occasions in one district, we were implored by poor sharecroppers not to ask such questions to landlords in their village. They explained that several years earlier after another research team visited their region, a rumour started that the state government was going to provide much greater protections to sharecroppers. As a result, many of the landlords in the village stopped giving out their land for sharecrop and the sharecroppers suffered. These very poor sharecroppers recognized that even rumours about policy measures to protect sharecroppers can have unintended, negative consequences. 26 See Haque, 134-142 and Pushpendra and B.K. Sinha, 1999. Some Aspects of Tenancy Debate: Implications for Policy Reforms, Contributory Papers for National Workshop on Whither Tenancy? (Moussoorie: Centre for Rural Studies), xi-xvi. 27 Including the GOI Tenth Five-Year Plan and Karnataka State s Agricultural Policy. 10
Making land rights real for India s rural poor In the present policy dialogue on this topic, there is an overpowering tendency to view the tenancy debate within the twin context of the need to attract investment into agriculture and to facilitate a smooth process of land transaction during economic transformation without relying upon land sale markets. Particularly in government circles, 28 a view that enhanced investment will cure agricultural backwardness dominates. Those promoting liberalization of tenancy restrictions often connect the desired liberalization to increased investment by (and benefits accruing to) large farmers or agri-business concerns, a connection that generates understandable resistance from those representing the interests of marginal/small farmers and agricultural labourers. The Tenth Five-Year Plan recognizes the problems with state tenancy restrictions, but offers little in the way of specific policy guidance: [T]he prohibition of tenancy has not really ended the practice. On the other hand, it has resulted in agricultural practices that are not conducive to increased production. This, in turn, also depresses employment opportunities for the landless agricultural labourers. Section 3.2.73. The ban on tenancy, which was meant to protect tenants, has only ended up hurting the economic interests of the tenants as they are not even recognized as tenants. As a result, they are denied the benefits of laws that provide security of tenure and regulate rent. Section 3.2.35. The policy dialogue and debates on agricultural land tenancy could benefit from: (1) more empirical evidence (translated into coherent policy recommendations) on current tenancy restriction impacts on the poor and the likely effects of liberalizing such restrictions; (2) a livelihoods perspective on the topic; and (3) a more coherent and consistent message from pro-poor constituencies that tenancy liberalization may make sense. Opportunities for Donors and NGOs Research Both Indian and foreign academics have conducted or are conducting research on the land tenancy topic in India, but not all of the work generated is useful. The land tenancy articles filling scholarly journals are often based on village studies conducted in relative isolation. Few have attempted to compile and summarize the findings (and policy implications) from the credible studies. Perhaps more importantly, the great majority of the research related to tenancy in India is focused on productivity and efficiency concerns rather than on equity or land access issues. To the extent the research does consider equity issues, it tends to be focused on who is renting in or out with an emphasis on the poor s (landless, small, and marginal farmers) relative share of the tenancy market. Moreover, some such 28 GOI, Policy Relating to Sharecropping and Leasing, Department of Rural Development, December 1997; and GOI, Concept Note on Legalising Leasing of Agricultural Land, Prime Minister s Office, July 1999. 11
Land and livelihoods researchers often implicitly assume that tenancy relationships are zero-sum outcomes in which the larger farmer (whether as landlord or tenant) always wins and the smaller farmer always loses. We are unaware of any research (other than our own very limited efforts) focusing on the perspectives of those whom tenancy restrictions are intended to protect. Research that includes the views on tenancy and tenancy restriction held by that population could provide valuable input to the policy dialogues on this topic. We offer the following suggestions as particularly valuable research topics or approaches: Compiling and summarizing existing studies on tenancy in India, with a view towards informing the policy dialogue with a comprehensive overview. Research on views of the rural poor concerning tenancy. This might involve both quantitative and qualitative methods. What do those for whose protection tenancy restrictions were adopted think about the continued use of tenancy restrictions and how do they view the alternatives? Poor, rural individuals (male and female; tenants, small landlords, and wage laborers who may be prospective tenants; etc) typically have useful, experienced-based, and highly relevant viewpoints on policy alternatives and their likely impacts. These should be explored in a variety of agro-climatic and socio-economic settings. Research focusing on links between livelihoods of the poor and tenancy or experience of the poor in tenancy markets from a livelihoods perspective. Such research should look at the participation of the poor in both renting in (on share and fixed) and renting out and the role that renting-in and/or rentingout plays relative to other livelihood activities pursued by such households. The research could explore how tenancy arrangements assist or inhibit a household s acquisition of other assets and the extent to which tenancy may (or may not) promote the livelihood objective of attaining secure access to land, reduce vulnerability factors, and diversify livelihood strategies. Policy consensus building and advocacy The policy dialogue around agricultural tenancies in India in recent years has been characterized by much smoke but little fire. Various groups have sponsored high-level national seminars on the topic in recent years (GOI Department of Rural Development 2003; National Institute of Rural Development 1992, 1999; Lal Bahadur Shastri National Academy of Administration 1999; National Centre for Agricultural Policy 1995, 1997; National Planning Commission, 1988). The efforts appear to have had little impact on actual legislative change. Many of the recommendations and consensus statements resulting from such seminars and from studies do not distinguish between the treatment of those who have already realized protections from existing tenancy legislation and options for designing 12
Making land rights real for India s rural poor prospective tenancy relationships. 29 This muddling of objectives and target populations has stalled progress; many opponents of tenancy liberalization assume that liberalization necessarily leads to an erosion of the rights previously secured by beneficiaries of tenancy reforms (e.g., recorded bargadars in West Bengal, occupancy tenants in Karnataka, etc.). In addition, the policy dialogue, like the research, is characterized by overall productivity concerns more than by equity concerns. The most vocal advocates for tenancy liberalization tend to be those emphasizing agricultural productivity issues, while those supporting the status quo (or even more stringent tenancy reform laws or implementation) tend to be those emphasizing equity concerns. We are not aware of any representatives of agricultural labour or small and marginal farmers who promote liberalization of the tenancy laws. Possible and extremely useful opportunities for donors and NGOs might include: Sponsoring workshops involving the rural poor and their representatives to discuss tenancy (perhaps in the wake of research of the type suggested above), with an aim to inform the policy dialogue, especially around issues of how to liberalize. Sponsoring workshops on the international experience concerning tenancy and tenancy reform, including what is appropriate regulation of agricultural tenancies (building on the recent FAO guidelines on leasing 30 ). Innovative NGO land leasing activities Several NGOs in India are using agricultural land rentals as a mechanism for benefiting poor households. One of those groups is the Deccan Development Society in Andhra Pradesh, which has supported groups of poor women in their efforts to access land through tenancy. 31 These activities started in the mid-1980s when groups 29 RDI has recommended that Indian states consider amending tenancy legislation in order to better meet both equity and efficiency objectives. We have recommended that the basic objectives be twofold: (1) consolidate the benefits of past tenancy reform by converting protected, registered, or occupancy tenants into owners; and (2) liberalize ongoing tenancy prohibitions and excessive tenant protections. We have offered the following guidelines on such changes: (1) In settings where past tenancy reform beneficiaries are not full owners, convert them into owners. At the very least, ensure that tenants who have been granted long-term rights under earlier legislation retain those benefits. (2) In settings where tenancy is now prohibited, allow for tenancy but include provisions that prevent the most exploitative landlord practices. (3) Provide that lease agreements be in writing, using a mandatory, standardized form that clearly states the rent amount and length and terms of the lease. The law should guarantee the tenant the right of exclusive possession for the duration of their agreement, but should not set maximum rent payments or minimum length of terms. (3) Clearly state that new tenants will not be given any long-term or hereditary rights to land beyond that contained in the written agreement. (4) In settings were there are fears that liberalizing leasing will result in excessive land concentration, consider revising land ceilings to include owned and rented-in land. 30 FAO Land Tenure Studies Number 2: Good practice guidelines for agricultural leasing arrangements. 31 For another example of NGOs using rental markets to benefits groups of poor women, see the discussion of the Bihar NGO in section 3.4 of this paper. 13
Land and livelihoods of landless, Dalit women mobilized through DDS activities took unutilized and degraded land on lease in order to improve their household food security. The women s groups invested their labour to make the land productive. While the women tenants benefited from the production (and low lease rates), the landowners benefited not only from the rental income, but even more significantly from the land improvements. These group leasing activities took place in the Telengana area of Andhra Pradesh, where the law allows only small farmers to rent-out and where the tenancies must be for a minimum of five years with rent set at a maximum ranging from three to five times the land revenue. All of the DDS programme lease agreements have been oral, with terms of one to five years, and lease rates ranging from about Rs 1,000 to 4,000 per acre, well above the legal maximum. Neither the landowners nor the peasants perceive the extra-legal nature of the agreements as presenting a significant risk. RDI visited these activity sites and interviewed several of the women that have participated in the leasing activities. All of the women appeared very satisfied with the activities and reported that the project had significantly increased their household food security. Several of the groups had gone on to purchase land through a Scheduled Caste Development Corporation land purchase programme and reported that their experience with leasing helped build their farming and farm management skills and their confidence to pursue the land purchase opportunity. The experience of this DDS activity was of significant interest to the World Bank and its counterpart in designing a land purchase component to a large rural poverty alleviation project in Andhra Pradesh. Unfortunately, the legislative restrictions on land tenancy prevented the project from pursuing rental mechanisms for increasing land access. (UNDP may be supporting similar activities that help groups of women access land through leasing.) 32 We offer the following suggestions as possible opportunities for donors and NGOs: Within a livelihoods perspective, document and disseminate experience of DDS and (perhaps) other similar NGO leasing activities. For example, the extent to which leasing activities fulfill the objective of obtaining secure access to land and create opportunities to obtain other assets could be explored and programme participants surveyed regarding their perspective on the effectiveness of institutional support. In an appropriate setting (where the tenancy laws do not present constraints), collaborate with an NGO to conduct a leasing pilot, perhaps with written lease agreements that are informed by recent FAO study on lease agreement best practices. 32 See http://www.undp.org.in/webbook/enlrg-spc-wmn-india.htm 14
Making land rights real for India s rural poor 3.2 The untapped potential of land sale markets The land sale market may be the dark horse among the institutions capable of facilitating land tenure security for the rural poor. Land sale markets have a reputation to overcome: despite their theoretical efficiency, small farmers and, particularly, landless households typically face great difficulty purchasing land. As noted in the tenancy discussion, land rental markets usually play a more significant role than land sale markets do in assisting land-poor households to access land. Nonetheless, sale markets should not be discounted; when those markets operate for the benefit of the poor, the poor receive the most valuable of natural assets land ownership. This section discusses two land sale market issues that have potential to support the livelihood objectives of the rural poor: (1) land purchase schemes that benefit the land-poor; and (2) the enhancement or relaxation of restrictions on the alienation of certain categories of land. The mixed bag reality of land sales markets Explanations for why more radical reallocation of ownership holdings do not occur through land sale transactions abound. The following are the most prominent: Underdeveloped rural credit markets prevent development of land markets and constrain poor households ability to finance land purchases; 33 Land prices exceed the land s productive potential value because land is an important source of collateral, social status, and risk insurance; 34 Government policies favoring large landowners (tax policies and agricultural or rural development programmes) prevent such landowners from selling land; High transaction costs; 35 and Low levels of land sale market activity are self-perpetuating because farmers who might otherwise engage in interim transactions (selling land while intending to buy again in future) dare not because of the low supply of land on the market. Land sale markets are often accused of increasing land concentration and tagged with responsibility for the downward mobility of many rural households. Actual practice often but not always proves otherwise. Land sale markets can result in either 33 Hans Binswanger, and Mark Rosenzweig, 1986. Behavioural and Material Determinants of Production Relating in Agriculture, JOURNAL OF DEVELOPMENT STUDIES 22, no. 3. 34 See Hans Binswanger, Klaus Deininger, and Gershon Feder, (1993). Power, Distortions, Revolt and Reform in Agricultural Land Relations, in HANDBOOK OF DEVELOPMENT ECONOMICS, ed., J. Behrman and T.N. Srinivasan (1993); Dilip Mukherjee, 1997. Informational Rents and Property Rights in Land, in PROPERTY RELATIONS, INCENTIVES AND WELFARE, ed., John Roemer; and Pranab Bardhan, 1997. Size, Productivity, and Returns to Scale: An Analysis of Farm-Level Data in Indian Agriculture, JOURNAL OF POLITICAL ECONOMY 31, no. 6. 35 M. R. Carter and D. Mesbah, 1993. Can Land Market Reform Mitigate the Exclusionary Aspects of Rapid Agro-Export Growth? WORLD DEVELOPMENT 21(7). 15
Land and livelihoods higher or lower land concentration and in either upward or downward mobility depending on the characteristics of buyers and sellers, their reasons for sale-purchase transactions (i.e. extent of distress sales), and their access to non land-based income sources. 36 Grossly inegalitarian landownership patterns almost always result from an allocation of land by governmental or other authorities (e.g. feudal lords or colonial rulers) and not from the operation of land markets. 37 Although there is little evidence of increasing land concentration in rural India since the mid-19 th century, 38 land sale markets are commonly believed to have operated to the detriment of India s small and marginal farmers. The combination of British colonial rule and accompanying 19 th century land settlements, freely negotiable land rights, and oppressive taxation did result in the dispossession of heavily indebted small cultivators through foreclosures to moneylenders. It is difficult, however, to elevate the role played by land sales markets to the driving force behind land dispossession in that set of historical circumstances. A similarly mixed picture of the role played by land sale markets emerges from recent longitudinal studies conducted throughout India. The results of nine recent studies break down as follows: Four studies indicate that land sale transactions generally operated to reduce land access for small and marginal farmers (two in Punjab, one in U.P., and one in M.P.); 39 Three studies indicate that land sales operated to increase land access for small and marginal farmers (two in West Bengal and one in A.P., M.P., Maharashtra and Gujarat); 40 and Two studies showed little net change in the landholding structure, with both upward and downward mobility (in U.P. and Maharashtra). 41 36 Mearns, 1999, at 21. 37 Binswanger, et al., 1993, note 34. 38 Alan Heston, and D. Kumar, 1983. The Persistence of Land Fragmentation in Peasant Agriculture: An Analysis of South Asian Cases, EXPLORATIONS IN ECONOMIC HISTORY 20: 199-220. 39 See Kripa Shankar, 1993. Land Transfers: A Case Study (in Uttar Pradesh); S.S. Grewal and P.S. Rangi, 1981. An Analysis of Agrarian Structure in Punjab, INDIAN JOURNAL OF AGRICULTURAL ECONOMICS 24 (1981); Kailah Sarap, 1995. Land Sale Transactions in an Indian Village: Theories and Evidence, INDIAN ECONOMIC REVIEW30, no. 2 (in Madhya Pradesh); and Baldey Singh, 1982. LAND MARKET:THEORY AND PRACTICE IN RURAL INDIA (in Punjab). 40 Vikas Rawal, 2001. Agrarian Reform and Land Markets: A Study of Land Transactions in Two Villages of West Bengal, 1977-1995, 49 ECONOMIC DEVELOPMENT AND CULTURAL CHANGE 611; S. K. Bhaumik, 1993. TENANCY RELATIONS AND AGRARIAN DEVELOPMENT: ASTUDY OF WEST BENGAL; and Vishwa Ballabh and T.S. Walker, 1992. Land Fragmentation and Consolidation in Dry Semi-Arid Tropics of India, ARTHA VIJNANA 34, no. 4 (in ten villages of AP, MP, Maharashtra, and Gujarat). It is noteworthy that two of the three studies in which land sale markets operated in favor of the small and marginal farmers were in West Bengal, a state which has been the most active in implementing land ceiling legislation. It is also noteworthy that among this relatively small sample of studies, there appears to be some relationship between relative land market activity and whether the markets worked in favor of small and marginal farmers. The relatively active land sale markets appear to be more often associated with situations where markets were acting in favor of the small and marginal farmers. This is an area ripe for further research. 41 G. Mani, and Vasant P. Gandhi, 1994. Are Land Markets Worsening the Land Distribution in Progressive Areas?: A Study of Meerut District in Western Uttar Pradesh, INDIAN JOURNAL OF AGRICULTURAL ECONOMICS 49, no. 3; and D.W. Attwood, 1979. Why Some of the Poor Get Richer: 16