Land lease is an idea whose time has come

It will make the coercive powers of the land acquisition law irrelevant, though including it in the central Bill would be unconstitutional

The proposal to amend the central Land Acquisition Bill to provide for leasing of land rather than acquiring it is just not constitutionally feasible. Land is a state subject and the Centre cannot legislate on leasing at all. But as an idea it is great and should be welcome. The initiative, however, has to come from the state governments who should amend their tenancy laws to facilitate the entry of industry in the land market, and promote willing buyer-willing seller transactions that will make the coercive provisions of the land acquisition law irrelevant.

There are two laws that need to be addressed to make leasing possible. In almost all states except Punjab, Haryana, Assam, Andhra Pradesh (but not Telangana) and Tamil Nadu, there are tenancy laws that do not permit land being leased to agriculturists for agriculture. Maharashtra goes a step further and bans even sale of agricultural land to a non-agriculturist. Second, in almost all states, there are provisions that agricultural land cannot be used for industrial purposes, unless written permission is taken from a designated authority, which is time-consuming and encourages corruption. Both these laws need to go.

A ban on leasing was imposed after Independence in almost all states to encourage owner-cultivation and to give security of tenure to sharecroppers and tenants. Although such laws should continue in tribal areas where agricultural markets are not well developed, in other states where the mode of production has become capitalist, there is a need to liberalise and free leasing-in of land from all government controls.

Studies show that the lease market facilitates a shift of control of land to smallholders and tenants. Big owners are found to lease out and the resultant distribution of operational area is less uneven than the ownership pattern. Thus, the lease market enables the landless to gain access to land that, in turn, enhances employment opportunities since poor farmers tend to saturate their land with inputs of labour. In areas experiencing technological change and high growth, marginal farmers may also gain by leasing out their area and taking up non-farm employment while still retaining ownership and the right to resume their control over the land after the lease period.

When I was rural development secretary in the Government of India some 15 years ago, I wrote to all states that the time had come to repeal such laws and to permit leasing of land. The experience of Punjab and Haryana shows that free leasing has not brought back landlordism in a new garb, as was the fear that led to stricter control on tenancy. The states did not heed to my advice, however.

The second issue of freeing from all controls conversion of land-use for industrial purposes should also be addressed. Industry serves a social purpose since employment generation per unit of land is higher in non-agricultural uses than in agriculture. Growth through industrialisation and urbanisation would not only increase labour productivity, but will also reduce pressure on farmland by pulling people away from land to non-farming occupations.

The argument that this would lead to food scarcity is bogus. Today, 60 million tonnes of food grain is rotting in government godowns and is being eaten by rats while cattle in the US and the UK are being fed another 10 million tonnes of our grain that is exported. So we have more than enough food, if exports are banned and internal offtake improved, and we can afford to change the land-use of our farm lands to a great extent.

Besides, should not the farmer decide whether he should grow food or not? If he is getting a lifelong opportunity of earning from the land in some other way, why should anyone prevent that? There is no scarcity of land in this country. What is contentious is the issue of passing over ownership of land.

Incorporating such a provision in the Land Acquisition Bill, however, would be grossly unconstitutional. The State List under item 18 of the Seventh Schedule of the Constitution mentions, "Land, that is to say, rights in or over land, land tenures including the relation of landlord and tenant, and the collection of rents; transfer and alienation of agricultural land; land improvement and agricultural loans; colonisation". So how can the Centre in an Act of Parliament decide on whether land should be leased by a landowner and for what purpose? Moreover, the land acquisition law is an enabling Act, not a compelling Act. The states are free not to use the coercive powers given to them under the Central law.

The writer is Member, National Advisory Council