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Posted at: Oct 18, 2017, 12:49 AM; last updated: Oct 18, 2017, 1:01 AM (IST)

Punjab needs structural reforms

There is need to review land ceiling laws. Small landholdings are not conducive to technology adoption, do not allow for economies of scale, nor cover risk associated with crop diversification.
Punjab needs structural reforms
Adopting Tech: Large landholdings are more conducive to technology adoption. Reuters

Sukhdeep Brar

LESS than two decades ago, Punjab was the top state in the per capita income rankings. Today, it ranks 14th. Haryana, which historically used to follow Punjab at the second slot, is now several spots ahead. 

Two factors have contributed to this decline in Punjab:

  • The economic liberalisation of 1991: States that already had an industrial base of sorts were early jumpers on the FDI bandwagon and have continued to benefit from it. They modified policies to woo investmentand put supporting infrastructure in place.
  • Punjab is no longer the sole agriculture powerhouse that it once was: In 1990, Punjab contributed 60% of the wheat and 45% of the rice to the central pool. Owing to improved agricultural production in states such as Haryana and Madhya Pradesh, this contribution has dropped to 43% for wheat and 29% for rice, despite bumper harvests. 

Overhaul farm sector

The agriculture sector is critical to Punjab's economy and needs a drastic overhaul. This overhaul must begin with reform of the ownership and tenancy laws in force since the Mughal times. These archaic laws are at the root of Punjab's governance malaise. 

The land ceiling laws allow individual ownership of 17.5 acres of irrigated land and 32 acres of unirrigated or 'barani' land. Owners with holdings above the limit have found ways to flout the law to retain larger holdings: by transferring land to relatives, servants, etc. In many cases, possession of land acquired by the state under the ceiling laws was never given up by the owner. There are also instances where surplus land has reverted to the owners in connivance with officials. A recent circular issued by the Revenue Department, threatening to review cases of landholdings above permissible limit with a view to enforcing the ceiling laws caused a stir and had to be withdrawn within days. In 2013, the SAD-BJP government had proposed to relax the ceiling limits, but this proposal was abandoned. 

Review farm land ceiling

There are good arguments to do away with agricultural land ceiling. The most fundamental being, hypothetically, that a person can own an entire city but must adhere to unreasonably small limits in agricultural landholding. Breaking the bone of feudalism and redistribution of land to spread welfare gains in a largely poor population were fashionable ideas post Independence. These ideas are misplaced  in the current scenario where economic growth will depend not only on industrial growth, but also on industrialisation of agriculture. Research that links agriculture productivity growth to land redistribution and tenants' willingness to adopt better farming technologies is single-dimensional. There is nothing to suggest that such agriculture practices were not or would not have been adopted by landowners with large landholdings. In fact, small landholdings are not conducive to technology adoption, do not allow for economies of scale, nor cover risk associated with crop diversification. 

The government should review the land ceiling laws to at least liberalise, if not do away with, the restrictions on landholdings. Over time, this will lead to land consolidation, and a shift of labour into areas other than agriculture. 

Typically, the less developed a country, the higher the percentage of its population engaged in agriculture. In Punjab, approximately 40% of the population is employed in agriculture against 48.8% for India. The average for the G-7 countries is 3.86%. Israel, renowned for its technological advancements in agriculture, has only 1% of its population engaged in agriculture. 

Legalise land leasing

The above issues can only be resolved by amending the laws. In 2015, NITI Aayog set up an expert committee under the chairmanship of Dr T Haque to prepare a model agricultural land leasing report. The report, submitted in March 2016, contains a draft law to legalise land leasing that ensures complete security of land ownership rights for landowners and security of tenure for tenants for the agreed lease period with automatic resumption of land after expiry of the agreed lease period. It provides for the terms and conditions of lease to be determined mutually by the landowner and the tenant without any fear on the part of the landowner of losing land right or undue expectation on the part of the tenant of acquiring occupancy right for continuous possession of leased land. It also removes the clause of adverse possession. 

Enacting an agriculture land leasing law based on the Haque committee's recommendations would at once simplify land records, minimise corruption, litigation and conflict, and put an end to the lawlessness and crime that thrives around land disputes. The administration would be able to devote more time to the issues of real governance and the broader development agenda, specifically improving service delivery in key sectors such as education and health. No state can aspire to good governance if flouting the law is legitimised in the most important sector of its economy. For this, Punjab will need structural reforms. 

Who better to free Punjab of the shackles of feudalism and put it on the path to modernisation than Capt Amarinder Singh — who has himself so gracefully made the transition from royalty to a modern leader? It would be a legacy worthy of his stature. 


The writer is a former IAS officer, who retired from the World Bank


Outdated laws damaging social fabric

  • The ownership and tenancy laws prevailing in Punjab and the recognition of adverse possession are at the root of the governance challenges in the state. These laws were needed to keep track of the cultivator for purposes of revenue collection when large tracts of land changed ownership frequently due to frequent conquests during the Mughal period. But these laws make no sense in the modern times. The computerisation of revenue records, while promoting availability and transparency, does not address the problems of outdatedness. 
  • The revenue records do not reflect the reality of tenancy on the ground. In many instances, 'girdawri' or tenancy records have not been changed over decades; they exist in fictitious names, in names of people who are long dead, or people who are not the real cultivators. Record correction is a time-consuming and costly affair at best and, at worst, with potential for violence by third party illegal occupants. The legal process becomes a farce because if a name figures in the girdawri column, you are obliged to treat that person as a cultivator and have to follow due process of law for eviction. 
  • The environment is made worse by the recognition of possession as a right to occupation. These anomalies make a mockery of ownership and nurture criminal gangs. Money paid to either take or maintain possession, gets recycled into criminal activities, including drug trade. This ill-gotten money promotes a lifestyle that the youth want to emulate but cannot afford, which in turn often leads to debt, drugs and petty crime. The social fabric of Punjab has been damaged by these archaic laws through conflicts and protracted legal battles.

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