Monday, September 14, 2015

NITI Aayog has set up an expert committee under the chairmanship of T Haque, former chairman of the Commission for Agricultural Costs and Prices, to prepare a model agricultural land leasing act in consultation with states

The committee will consist of top representatives from seven states and officials from rural development ministry as well as the Aayog, and will have a term of three months to submit its proposals. The states which are part of the committee include Andhra PradeshUttarakhand, Punjab, Maharashtra, Rajasthan, Assam and Meghalaya. 

As per the terms of reference, the committee 
  • will review the existing agricultural tenancy laws of states, 
  • examine the distinctive features of land system in erstwhile zamindari, ryotwari and mahalwari areas 
  • suggest appropriate amendments, keeping in view the need to legalise and liberalise land leasing for agricultural efficiency, equity, occupational diversification and rapid rural transformation. 

Why this committee ?
  • Having failed to bring about changes in the Land Acquisition Act and the entire LAND ORDINANCE connundrum, such model is being proposed which can facilitate States undergo industrialisation

What are certain issues which the committee can  tackle and few suggestions ?

  • Currently, conversion of agricultural land for non-agricultural use requires permission from the appropriate authority, which takes a long time. State governments can address this barrier by either an amendment of the law to permit non-agricultural use or by the introduction of time-bound clearances of applications for the conversion of agricultural land use in the implementing regulations
  • Some states have an excellent provision: 12% of acquired land is returned to the farmers after development. Given the appreciation in land prices after development, this 12% may soon be worth more than the original farmland acquired.This again will make the farmer a partner, not a victim, of development. By aiming to give the farmer a very high price for land.

  • Acquisition can be designed as a 33-year, 50-year or 99-year leases with substantial down payment plus annual rent (linked to the cost of living). The farmer should have an entitlement to buy a certain number of shares in the company at face value.When the lease ends after 33/50/99 years, his heirs should be able to repossess the land or negotiate a fresh lease.  Leasing will transform the farmer from a victim to a landlord. A farmer without land has no social status. A landless person loses status, and this carries not just humiliation but other social costs, like the inability to attract desirable grooms for daughters.A farmer with Tata and Birla as tenants will have high social status.
  • Every state should identify NOGO areas unfit for industrialisation, and give automatic approval for all other areas. This will end the confusion, facilitate industrialisation, and expand jobs.
Yet compulsory land acquisition makes farmers view industrialists as foes. To end this, farmers must have a stake in industry too. Some industrialists have tried offering shares in their companies to farmers, but share values are notoriously volatile and uncertain. Besides, industries can go bankrupt, and not pay their rents.
  • The safest solution is for state governments, which cannot go bust because of their tax powers, to lease the land and sub-lease it to industrialists where required. The states must be responsible for all payments to farmers. Farmer preferring to sell outright should have that option too. Part of the developed land should be returned to farmers as part of the compensation package (as we have seen the 12 percent example above)

Moral of the story !!

With such an approach, no social impact reports, rehab schemes or majority votes are needed, since farmers are not actually losing land. This will speed up projects amicably, ensure rapid economic growth, and create millions of new jobs. It will make farmers partners in industrialization, not victims..


Counter Argument ---

Now from the Industry's perspective.
  • We should remember that the average landholding size in India is 1.1 ha and is decreasing with every year. For a typical industrial corridor, or say an airport, we would need to acquire tens of kilometers of land. Imagine the kind of work bureaucrats would need to do, and the kind of red tape the corporate would face in finalizing all the lease agreements.
  • After 100 years, will the government have to negotiate with the 4th or 5th generation owners for small parcels of lands piecemeal at a time to keep the highway or a atomic power plant intact?
    And if the assumption with the 100 year time frame is that lease would be auto-renewed by that generation, why not permanently acquire the land in the first place?
  • All throughout the developed world, the law of eminent domain is simple, make it easy for the private players to acquire the land while being mindful about the sensitivities of farmers through rightful compensation. When the entire world is actually spreading red carpet for manufacturers we shouldn't be giving them red-tape by inviting them to "Make in India".

Let's wait for the panel to study all this aspects, the report will come some time ..and we will analyse even that :) that's what upsc aspirants are supposed to do :)

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